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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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CASTECH ALUMINUM GROUP INC.
(Name of Subject Company)
CASTECH ALUMINUM GROUP INC.
(Name of Person(s) Filing Statement)
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COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
148380108
(CUSIP Number of Class of Securities)
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NORMAN E. WELLS, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CASTECH ALUMINUM GROUP INC.
2630 EL PRESIDIO STREET
LONG BEACH, CALIFORNIA 90810
1(800)468-5052
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and Communications
on Behalf of the Person(s) Filing Statement)
With a copy to:
CHARLES M. NATHAN, ESQ.
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004
(212) 859-8000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is CasTech Aluminum Group Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 2630 El Presidio Street, Long Beach, California 90810. The title
of the class of equity securities to which this Solicitation/ Recommendation
Statement on Schedule 14D-9 (this "Schedule 14D-9") relates is the common stock,
$.01 par value (the "Common Stock"), of the Company.
ITEM 2. TENDER OFFER OF THE BIDDER.
This Schedule 14D-9 relates to the tender offer (the "Offer") by CALC
Corporation, a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of Commonwealth Aluminum Corporation, a Delaware corporation
("Parent"), to purchase all outstanding shares of Common Stock at a price per
share of $20.50, net to the seller in cash (the "Offer Price"), without interest
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated August 22, 1996 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together constitute the "Offer").
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of August 19, 1996 (the "Merger Agreement"), among Parent, the Purchaser and
the Company. The Merger Agreement provides, among other things, that as soon as
practicable after the consummation of the Offer and satisfaction or waiver of
all conditions to the merger, the Purchaser will be merged with and into the
Company (the "Merger"), and the Company will continue as the surviving
corporation (the "Surviving Corporation"). A copy of the press release issued by
the Company and Parent on August 19, 1995 is attached as Exhibit 1 to this
Schedule 14D-9 and is incorporated herein by reference. A copy of the Merger
Agreement is attached as Exhibit 2 to this Schedule 14D-9 and is incorporated
herein by reference.
Based on information in the Offer to Purchase, the address of the principal
executive offices of the Purchaser and Parent is 1200 Merdinger Tower,
Louisville Galleria, Louisville, Kentucky 40202.
ITEM 3. IDENTITY AND BACKGROUND.
(a)
The name and business address of the Company, which is the person filing
this Schedule 14D-9, are set forth in Item 1 above.
(b)
Each material contract, agreement, arrangement and understanding and
actual or potential conflict of interest between the Company or its
affiliates and (i) its executive officers, directors or affiliates and (ii)
Parent, its executive officers, directors or affiliates, is described in the
attached Schedule I or set forth below.
THE MERGER AGREEMENT
The Merger Agreement provides that, promptly after expiration of the Offer
and the receipt of any required approval by the Company's stockholders of the
Merger Agreement and the satisfaction or waiver of certain other conditions, the
Company and the Purchaser will be merged. Upon consummation of the Merger (the
"Effective Time"), each then outstanding share of Common Stock not owned by
Parent or any direct or indirect subsidiary of Parent (other than shares of
Common Stock held by stockholders of the Company who perfect dissenters' rights
under applicable law) will be converted into the right to receive $20.50 in
cash, without interest thereon or such greater amount which may be paid pursuant
to the Offer (the "Merger Consideration").
The Merger Agreement contains customary representations and warranties of
the Company and the Purchaser. The representations and warranties of the Company
generally are qualified so that they are deemed accurate so long as the
inaccuracy would not have a Material Adverse Effect (as defined in the Merger
Agreement). Material Adverse Effect is defined in the Merger Agreement to be a
material adverse effect on the financial condition, properties, business,
results of operations or prospects of the Company and its subsidiaries taken as
a whole.
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The Merger Agreement also contemplates the amendment, effective at the
Effective Time, of Article Fourth of the Company's Certificate of Incorporation
to provide that the aggregate number of shares which the Company shall have the
authority to issue is 1,000 shares of Common Stock, par value $.01 per share.
The obligations of the Company, the Purchaser and Parent to effect the
Merger are subject to the satisfaction of certain conditions set forth in the
Merger Agreement, including (i) the purchase by the Purchaser of shares of
Common Stock pursuant to the Offer, (ii) the receipt of stockholder approval, if
required, and any required governmental consents or approvals and (iii) there
being no injunction or other order issued or any law enacted which prohibits the
consummation of the Merger or makes such consummation illegal.
TERMINATION OF THE MERGER AGREEMENT. According to its terms, the Merger
Agreement may be terminated at any time prior to the Effective Time, whether
before or after approval by the stockholders of the Company by the mutual
consent of Parent and the Company, by action of their respective Boards of
Directors. In addition, the Merger Agreement may be terminated by either Parent
or the Company if (i) the Purchaser or any affiliate of Parent shall have
terminated the Offer without purchasing any shares of Common Stock pursuant
thereto; provided, in the case of termination of the Merger Agreement by Parent,
such termination of the Offer does not constitute a breach of the Merger
Agreement and Parent is not in violation of the terms and conditions of the
Offer or (ii) without fault of the terminating party, the Merger shall not have
been consummated by March 31, 1997 whether or not such date is before or after
the approval by holders of shares of Common Stock. The Merger Agreement may be
terminated by Parent (unless the Offer shall have been consummated and persons
designated by Parent shall constitute a majority of the members of the Board of
Directors of the Company) if (i) the Company shall have failed to comply in any
material respect with the covenants or agreements contained in the Merger
Agreement to be complied with or performed by the Company at or prior to such
date of termination and, with respect to any such failure that can be remedied,
the failure is not remedied within five business days after Purchaser has
furnished the Company with written notice of such failure, or (ii) the Board of
Directors of the Company has withdrawn or modified in a manner adverse to Parent
or the Purchaser its approval or recommendation of the Offer, the Merger
Agreement or the Merger or shall have resolved to do any of the foregoing. The
Merger Agreement may be terminated by the Company if Parent or the Purchaser (i)
shall have failed to comply in any material respect with the covenants or
agreements contained in the Merger Agreement to be complied with or performed by
Parent or the Purchaser at or prior to such date of termination and, with
respect to any such failure that can be remedied, the failure is not remedied
within five business days after the Company has furnished the Purchaser with
written notice of such failure, (ii) shall have failed to commence the Offer
within the time required or (iii) (x) if the Company is not in material breach
of any of the terms of the Merger Agreement, (y) the Board of Directors of the
Company receives an unsolicited written offer with respect to a merger,
consolidation or sale of all or substantially all of the Company's assets or an
unsolicited tender or exchange offer for shares of Common Stock is commenced,
which the Board of Directors of the Company determines in good faith is more
favorable to the stockholders of the Company than the Offer and the transactions
contemplated by the Merger Agreement, and the Board of Directors determines,
after consultation with its outside counsel that approval, acceptance or
recommendation of such transaction is required in accordance with its fiduciary
obligations under applicable law and (z) the Company prior to such termination
pays to Parent in same day funds $7,000,000 plus an amount equal to Parent's
out-of-pocket expenses, up to a maximum of $3,000,000 including fees and
expenses paid to investment bankers, lawyers and financing sources incurred in
connection with the transactions contemplated by the Merger Agreement.
TAKEOVER PROPOSALS. The Company has agreed in the Merger Agreement that
neither it nor any of its subsidiaries nor any of the respective officers and
directors of the Company or its subsidiaries shall, and the Company shall direct
and use its best efforts to cause its employees, agents and
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representatives (including, without limitation, any investment banker, attorney
or accountant retained by the Company or any of its subsidiaries) not to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making of any proposal or offer (including, without limitation, any proposal or
offer to stockholders of the Company) with respect to a merger, consolidation or
similar transaction involving, or any purchase of all or any significant portion
of the assets or any equity securities of, the Company or any of its
subsidiaries (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") or, except as required to comply with the fiduciary
duties of the Company's Board of Directors under applicable law after
consultation with outside counsel, engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any person relating to an Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal. The Company has
agreed to notify Parent as promptly as reasonably practicable if any such
inquiries or proposals are received by, any such information is requested from,
or any such negotiations or discussions are sought to be initiated with the
Company.
The Merger Agreement provides that if (x) (i) the Offer shall have remained
open for a minimum of at least 20 business days, (ii) after the date of the
Merger Agreement any corporation, partnership, person, other entity or group (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
other than Parent or the Purchaser or any of their respective subsidiaries or
affiliates (collectively, a "Person") shall have become the beneficial owner of
15% or more of the outstanding shares of Common Stock or any Person shall have
commenced, or shall have publicly announced an intention to commence, a tender
offer or exchange offer for 40% or more of the outstanding shares of Common
Stock or made any other Acquisition Proposal, (iii) the Minimum Condition (as
defined in the Merger Agreement) shall not have been satisfied and the Offer is
terminated without the purchase of any shares of Common Stock thereunder, and
(iv) within six months following such termination, the Company enters into an
agreement with respect to an Acquisition Proposal with any person or other
entity other than Parent or any person or other entity becomes the beneficial
owner of 90% or more of the outstanding shares of Common Stock in either case at
a price per share of $20.50 or more, or (y) the Purchaser shall have terminated
the Merger Agreement as described in subclause (i) of the third sentence of the
second preceding paragraph at any time after any person shall have made an
Acquisition Proposal or the Company shall have taken any action with respect to
Acquisition Proposals that would be proscribed by the Merger Agreement but for
the exception therein allowing certain actions to be taken if required by
fiduciary duty or as described in subclause (ii) of the third sentence of the
second preceding paragraph and, in either case, within six months following such
termination, the Company enters into an agreement with respect to an Acquisition
Proposal with any person other than the Purchaser or any person or other entity
becomes the beneficial owner of 90% or more of the outstanding shares of Common
Stock in either case at a price per share of $20.50 or more or (z) the Company
shall terminate the Merger Agreement pursuant to subclause (iii) of the last
sentence of the second preceding paragraph, then the Company, if requested by
Parent, shall promptly, but in no event later than five days after the date of
such request (other than a termination pursuant to subclause (iii) of the last
sentence of the second preceding paragraph, in which case payment shall be
concurrent with termination), pay Parent a fee of $7,000,000 which amount shall
be payable in same day funds, plus an amount equal to Parent's out-of-pocket
expenses, up to a maximum of $3,000,000, including fees and expenses paid to
investment bankers, lawyers, and financing sources, incurred in connection with
the transactions contemplated by the Merger Agreement. If the Company fails to
promptly pay such amount, and, in order to obtain such payment, Parent or the
Purchaser commences a suit which results in a judgment against the Company for
the fee set forth above, the Company shall pay to Parent or the Purchaser its
costs and expenses (including attorneys' fees) in connection with such suit,
together with interest on the amount of the fee at the prime rate of Citibank
N.A. on the date such payment was required to be made.
The Merger Agreement may be amended by action taken by the Company, Parent
and the Purchaser at any time before or after approval of the Merger Agreement
by the stockholders of the
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Company but, after any such approval, no amendment shall be made which decreases
the Merger Consideration per share of Common Stock or which adversely affects
the right of the Company's stockholders under the Merger Agreement without the
approval of such stockholders.
The Merger Agreement also provides that each holder of an outstanding option
to purchase shares of Common Stock (an "Option") granted under any employee
stock option plan of the Company, whether or not exercisable, shall be entitled
to receive at or after the Effective Time, an amount in cash in cancellation of
such Option equal to the excess of the Merger Consideration over the exercise
price per share of such Option multiplied by the number of shares previously
subject to such Option less all applicable withholding taxes.
The Merger Agreement provides that (i) after the Effective Time, the
Surviving Corporation in the Merger will maintain the Company's existing
directors' and officers' liability insurance for a period of six years after the
Effective Time, provided that there shall be no obligation to pay annual
premiums in excess of 150% of the last annual premium paid prior to the date of
the Merger Agreement (the "Current Premium"); provided, however, if the existing
directors' and officers' liability insurance expires, is terminated or is
cancelled during such six-year period, the Surviving Corporation will use its
best efforts to obtain as much directors' and officers' liability insurance as
can be obtained for the remainder of such period for a premium not in excess of
150% of the Current Premium, and (ii) that, from and after the Effective Time,
Parent will indemnify each former and present director and officer of the
Company, determined as of the Effective Time, for any claim, action, suit,
proceeding or investigation arising out of matters existing or occurring at or
prior to the Effective Time to the fullest extent permitted by applicable law.
Parent has agreed in the Merger Agreement that, during the period commencing
at the Effective Time and ending on December 31, 1997, Parent will cause the
Surviving Corporation to provide to employees of the Company and its
subsidiaries, who are employed by the Surviving Corporation or its subsidiaries
following the Effective Time, employee benefits which in the aggregate are
substantially comparable to those currently provided (other than stock option
plans, other equity-based plans and the Restated and Amended Longevity Incentive
Agreements (the "Longevity Agreements"), as amended) by the Company to such
employees, provided that employees covered by collective bargaining agreements
need not be provided such benefits.
Pursuant to the Merger Agreement, following the purchase of more than 50% of
the outstanding shares of Common Stock pursuant to the Offer, Parent has the
right to have persons designated by it become directors of the Company so that
the total number of such persons equals not less than a majority of the total
number of directors of the Company.
In the Merger Agreement, the Company has agreed that it will file with the
Commission contemporaneously with the commencement of the Offer, and mail to its
stockholders, this Schedule 14D-9 containing the recommendation of the Board
that the Company's stockholders accept the Offer and approve and adopt the
Merger Agreement.
The Merger Agreement also contains certain other restrictions as to the
conduct of business by the Company pending the Merger, as well as
representations and warranties of each of the parties customary in transactions
of this kind.
CERTAIN CONFLICTS
STOCK OPTIONS. Certain executive officers of the Company have previously
been granted Options pursuant to an Option Plan which is incorporated herein by
reference to Exhibit 5 hereto to purchase an aggregate of 657,935 shares of
Common Stock at an exercise price of $10.35 per share. The Merger Agreement
provides that Options which are outstanding at the time of the Merger, whether
or not exercisable, and whether or not vested, will be exchanged for, and the
holder of such Option will be entitled to receive upon surrender of such Option
for cancellation, cash equal to the excess of the price per share to be received
in the Offer over the exercise price of each such Option.
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THE SEVERANCE PROTECTION PLAN. The CasTech Aluminum Group Inc. Severance
Protection Plan (the "Severance Plan") was established for the benefit of 41
employees in the Company's Akron, Ohio office. Under the Severance Plan, which
is attached as Exhibit 6 hereto and is incorporated herein by reference,
benefits are payable in the event a participant's employment is terminated by
the Company, other than by reason of disability, mandatory retirement or cause
(as defined in the Severance Plan), within two years following a change in
control of the Company. Upon such a termination, all the participants receive
(i) accrued but unpaid salary and a PRO RATA portion of their annual bonus, and
31 of the covered 41 participants receive (ii) lump-sum severance pay in an
amount equal to three weeks of the participant's weekly base pay for each year
of service with the Company (subject to a minimum of 12 weeks and a maximum of
52 weeks pay) and (iii) continued welfare benefits for a number of weeks equal
to the number of weeks of base pay the participant receives as severance. The
other ten participants receive severance pay and continued welfare benefits for
52 weeks without regard to their number of years of service with the Company.
The Severance Plan generally terminates on the first anniversary of its adoption
if a change in control has not occurred prior to such date.
LONGEVITY INCENTIVE AGREEMENTS. The Company has entered into the Longevity
Agreements with key executive officers which provide a fixed monthly benefit for
the life of the executive and his spouse payable upon total disability or
retirement. The Longevity Agreements, a form of which is attached as Exhibit 7
hereto and is incorporated herein by reference, also provide for a death benefit
in the event of an officer's death prior to retirement. Upon certain
terminations of employment following a change in control, the Company is
required to pay into a trust for the benefit of the terminated executive an
amount sufficient to fully fund his retirement benefit assuming he continued to
work for the Company until age 65. The Company has obtained life insurance
policies to fund the benefits payable under the Longevity Agreements. The
Company will enter into an amendment (the "Longevity Agreement Amendments"), a
form of which is attached as Exhibit 8 hereto and is incorporated herein by
reference, to the Longevity Agreements of (i) Norman E. Wells, Jr., (ii) Terry
D. Smith, (iii) Joseph M. Byers, (iv) Stanley W. Platek, (v) James R. McKeithan
and (vi) Lawrence J. Sax as of August 18, 1996 to provide that upon termination
of the executive's employment within two years after a change in control of the
Company by the executive for good reason (as defined in the Longevity Agreement
Amendments) or by the Company other than by reason of disability, mandatory
retirement or for cause (as defined in the Longevity Agreement Amendments), the
executive would receive, at his election, either: (i) a lump-sum cash payment
equal to the amount which would have been required on the date of termination to
fully fund his retirement benefit assuming he continued to work for the Company
until age 65; or (ii) a pre-paid life insurance policy with a cash value as of
the date of termination sufficient to fully fund his retirement benefit assuming
he continued to work for the Company until age 65.
SEVERANCE AGREEMENTS. The Company will enter into severance agreements
effective as of August 18, 1996 (the "Severance Agreements") with (i) Norman E.
Wells, Jr., (ii) Terry D. Smith, (iii) Joseph M. Byers, (iv) Stanley W. Platek,
(v) James R. McKeithan, (vi) Lawrence J. Sax and (vii) Waheed Khan. Under the
Severance Agreements, a form of which is attached as Exhibit 9 hereto and is
incorporated herein by reference, benefits are payable upon termination of an
executive within two years after a change in control by the executive for good
reason (as defined in the Severance Agreements) or by the Company other than by
reason of disability, death, mandatory retirement or for cause (as defined in
the Severance Agreements). Benefits payable upon such a termination are: (i)
accrued but unpaid salary, a PRO RATA portion of annual bonus, any deferred
compensation and any accrued but unpaid vacation pay; (ii) a lump-sum cash
payment equal to three times the executive's annual base salary and bonus; and
(iii) continued welfare benefits for three years. Payments and benefits are
"grossed-up" to the extent they are subject to the excise tax under the Internal
Revenue Code of 1986, as amended, imposed on certain payments treated as
contingent on a change in control.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. The Board of Directors and the
stockholders have approved a compensation plan for the Company's non-employee
directors in order to further align their interests with the long-term interests
of the stockholders. Under this plan which is attached as
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Exhibit 10 and is incorporated herein by reference, instead of receiving an
annual cash retainer fee of $15,000 ($25,000 in the case of the Chairman of the
Company), non-employee directors would receive 1,000 shares of Common Stock each
year. No shares of Common Stock have been issued pursuant to this plan and, in
connection with the Merger Agreement and pursuant to an amendment to the non-
employee director stock option plan, which is attached as Exhibit 11 hereto and
is incorporated by reference herein, no shares of Common Stock will be issued
under the plan. In the event the Merger is abandoned and not consummated, Common
Stock shall be awarded pursuant to the plan. In the event the Merger is
consummated, in lieu of Common Stock awarded under the plan, eligible
participants shall be entitled to receive a cash fee, prorated for their time of
service as a director during the fiscal year commencing April 1, 1996, at an
annual rate of $15,000 for each participant other than the Chairman of the
Company and at an annual rate of $25,000 for the Chairman.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION. The Company's Board of Directors, acting unanimously,
has approved the Merger Agreement, approved the Offer and determined that the
Offer and Merger are fair to, and in the best interests of, the Company and its
stockholders.
The Board recommends that stockholders accept the Offer and tender their
shares of Common Stock into the Offer.
A copy of the letter to stockholders communicating the Board's
recommendation is filed as Exhibit 4 to this Schedule 14D-9 and is incorporated
herein by reference.
(b) BACKGROUND. Beginning in 1995, the Company's Board and management
commenced a detailed study of the Company's strategic alternatives, in large
part out of a recognition that because the Company's plants were approaching
capacity usage, its growth prospects could be constrained. The strategic review
continued through July 1996 and considered a number of potential options,
including the financing and construction of a major new continuous casting
facility, entering into one or more joint ventures for a similar purpose both
domestically and internationally and a variety of possible acquisitions. As of
the late Spring of 1996, none of the strategic options under consideration
seemed likely to occur within the near future, although several were being
actively pursued.
In early June of 1996, Mr. Paul Lego, Chairman of Parent, met a director of
the Company on an unrelated matter and each noted the increasing importance of
scale in the aluminum industry and the possibility that some business
arrangement between the Company and Parent might be mutually beneficial.
Thereafter, Mr. Norman Wells, the Chief Executive Officer of the Company, and
Mr. Mark Kaminski, the Chief Executive Officer of Parent, discussed a possible
meeting to be held in late July.
In early July, Messrs. Lego and Kaminski together telephoned Mr. Charles
Pilliod, Chairman of the Company, and requested a meeting prior to the Company's
July 18 Annual Meeting of Stockholders. Mr. Wells thereafter spoke with Mr.
Kaminski to schedule a meeting on July 16. On July 16, 1996, Messrs. Lego,
Kaminski, Pilliod and Wells met near the Cincinnati airport. At that meeting
Messrs. Lego and Kaminski indicated Parent's interest in acquiring the Company
in a negotiated transaction for $18.50 per share in cash. During the meeting Mr.
Pilliod indicated that the $18.50 per share price suggested seemed low, but
agreed to discuss Parent's proposal with the Company's Board of Directors at
their meeting on July 18 and requested that Parent submit its proposal in
writing, which Parent did on July 17.
At the meeting of the Company's Board of Directors on July 18, Messrs.
Pilliod and Wells reported on their meeting with Messrs. Lego and Kaminski and
presented Mr. Kaminski's letter of July 17 proposing the acquisition of the
Company by Parent at $18.50 per share. As part of its consideration of Parent's
proposal, the Board conducted an extensive review of the results and current
status of its review of the Company's strategic options summarized above. The
consensus of the Board at the conclusion of this discussion was that
accomplishing any of the strategic options under consideration that would be
inconsistent with a combination with Parent did not seem probable in the near
future.
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After concluding its deliberations, the Board requested that Messrs. Pilliod and
Wells continue the discussions with Parent. On July 19, 1996 Mr. Pilliod wrote
Mr. Kaminski and indicated that the Company's Board of Directors had concluded
that Parent's proposal was not a sufficient starting point for negotiation, but
that the Company's Board of Directors had authorized the Company's management to
provide Parent with a limited amount of focused due diligence with a view toward
quickly determining whether Parent would meaningfully improve its proposal. Mr.
Pilliod's letter also conditioned the Company's further participation on receipt
of an expression from Parent of its assurance that the Company's management and
employees would be treated fairly in any transaction.
Thereafter, Messrs. Wells and Kaminski scheduled a due diligence meeting
that was held on July 26. Prior to that meeting the Company and Parent executed
and delivered reciprocal confidentiality and standstill agreements. During that
meeting, representatives of the Company and Parent and their respective legal
and financial advisors met and the Company provided Parent with limited
additional financial and other information, together with the Company's ideas on
how cost savings and other transaction benefits might be achieved if the Company
and Parent were combined. Also during that meeting, Mr. Kaminski indicated that
Parent wished to assure representatives of the Company that Company employees
would be treated fairly in any combination and to that end Parent would have no
objection to the Company's adoption of severance arrangements for senior
executives similar to those arrangements in place for executives of Parent.
Following this meeting, the Company provided Parent with a summary of its
operating financial forecasts.
On July 30, 1996, representatives of Parent contacted representatives of the
Company and stated that Parent was prepared to offer $20.00 per share in cash in
a negotiated transaction and that this offer would expire at the close of
business on August 5. A representative of the Company indicated that the price
proposed was likely to be found insufficient, but no definitve response was
received by August 5. On August 8 the financial advisor for the Company
contacted the financial advisor for Parent and suggested a further due diligence
meeting to see if a higher price could be justified.
Representatives of the Company, Parent and their respective legal and
financial advisors met on August 9 and the Company provided Parent with
additional information concerning possible cost savings opportunities and other
transaction benefits. The financial advisor to Parent then advised the financial
advisor to the Company that Parent would increase its proposed consideration per
share to $20.50 but that no further increase was possible. After deliberation
with senior management of the Company and several members of the Board of
Directors of the Company, the Company's financial advisor indicated that the
Company would agree to consider favorably a transaction at that price so long as
it was subject only to confirmatory due diligence, was not subject to any
financing contingency, was otherwise largely unconditional and could be
reflected in a definitive agreement before the opening of the stock market on
August 19, 1996. Parent's representatives agreed to use their best efforts to
attempt to satisfy these conditions. Thereafter the parties discussed and
reached tentative agreement with respect to the adoption and/or modification of
certain severance and related employee benefit matters as described under the
heading "Certain Conflicts."
Beginning on August 13, 1996, Parent and its financial and legal advisors
and representatives of its financing source commenced detailed due diligence on
the Company and its subsidiary, and beginning on August 15, 1996, the
negotiation of the Merger Agreement. Due diligence was largely completed by
August 16, 1996. Parent obtained a financing commitment for the Offer and the
Merger on August 18, 1996. The Merger Agreement was negotiated into the morning
of August 19, 1996. The principal issues negotiated in connection with the
Merger Agreement included the scope of the representations and warranties, the
conditions to the Purchaser's obligation to complete the Offer, the conditions
to the Purchaser's obligations to complete the Merger, the circumstances under
which a termination fee would be payable to the Purchaser and the amount
thereof. On August 19, 1996, Parent, the Purchaser and the Company entered into
the Merger Agreement.
In reaching their conclusions and recommendations with respect to the Offer
and the Merger, the Board of Directors considered a number of factors, including
the following:
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(i)
The oral opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), which opinion was subsequently
confirmed in a written opinion dated as of August 19, 1996, to the Board of
Directors to the effect that, as of such date and based upon the assumptions
made, matters considered and limits of review as set forth in such opinion,
the cash consideration of $20.50 per share to be received by the holders of
shares of Common Stock (other than those held by Parent and its affiliates)
in the Offer and the Merger is fair to such stockholders from a financial
point of view. A copy of the written opinion dated August 19, 1996 delivered
by Merrill Lynch to the Board, which sets forth the assumptions made,
matters considered and certain limitations on the scope of review undertaken
by Merrill Lynch, is attached as Exhibit 3 hereto and is incorporated herein
by reference. STOCKHOLDERS ARE URGED TO READ SUCH OPINION IN ITS ENTIRETY.
(ii)
The fact that the Offer and Merger are not conditioned on the
availability of financing and that commitments for all necessary
financing had been obtained.
(iii)
The possible alternatives to the Offer and the Merger, including the
financing and construction of a major new continuous casting
facility, entering into one or more joint ventures for a similar purpose
both domestically and internationally and a variety of possible acquisitions
and the timing and feasibility of such alternatives and the possible values
to the Company's stockholders of such alternatives.
(iv)
The terms and conditions of the Merger Agreement, including (A) the
provision permitting the Board of Directors to terminate the Merger
Agreement, on payment of the termination fee, in order to accept an offer
from a third party to acquire the Company on terms that the Board of
Directors determines to be more favorable to the Company's stockholders than
the terms of the Offer, (B) the provision permitting the directors, if
required in the exercise of their fiduciary duties after consultation with
outside counsel, to participate in discussions or negotiations with, and
provide information to, potential competing bidders, although the Company
and its officers, directors and agents are prohibited by such provisions
from directly or indirectly encouraging, soliciting or initiating a
competing bid, (C) the amount of the termination fee and the circumstances
under which it would become payable and (D) the conditions to the Offer.
(v)
The Board of Directors' belief that it was unlikely other interested
parties would be prepared to pay an amount in excess of the Offer
Price.
(vi)
Recent market prices for shares of Common Stock, including the fact
that the Offer Price represents a substantial premium over such
prices.
(vii)
The Company's financial condition, results of operations, competitive
position, business and strategic objectives, as well as the risks
involved in achieving those objectives.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Merrill Lynch was retained, pursuant to the terms of a letter agreement,
dated as of July 23, 1996, as financial advisor to the Company in connection
with any proposed Business Combination (as defined in the letter agreement)
involving the Company and another party, including a merger of the Company, the
acquisition of 50% or more of the Company's outstanding capital stock, the
acquisition of all or a substantial portion of the assets of the Company or
similar transactions. If, during the period Merrill Lynch is retained by the
Company or within one year thereafter, (a) a Business Combination is consummated
or (b) the Company enters into an agreement which subsequently results in a
Business Combination, the Company has agreed to pay Merrill Lynch a fee of
$3,000,000 payable in cash upon the closing of such Business Combination or, in
the case of a tender offer or exchange offer, upon the first purchase or
exchange of shares pursuant to such tender offer or exchange offer, as the case
may be. Accordingly, if any shares of Common Stock are purchased under the
Offer, the Company will pay Merrill Lynch a fee of $3,000,000. The Company has
also agreed to
8
<PAGE>
reimburse Merrill Lynch for its reasonable out-of-pocket expenses, including the
reasonable fees and expenses of its counsel, and to indemnify Merrill Lynch for
certain liabilities arising out of the rendering of its opinion, including
liabilities arising under the federal securities laws.
Merrill Lynch has, in the past, provided financial advisory and financing
services to the Company and Parent and has received fees for the rendering of
such services. Merrill Lynch acted as lead manager in the Company's initial
public offering in October 1994. Merrill Lynch also acted both as lead manager
in Parent's initial public offering as well as lead agent in connection with a
bank loan transaction in March 1995. In addition, in the ordinary course of its
business, Merrill Lynch may actively trade shares of Common Stock, as well as
the shares of the Parent's common stock, for its own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities. In addition, as of August 16, 1996, Merrill Lynch
Asset Management, L.P. ("MLAM") and Fund Asset Management, L.P. ("FAM")
beneficially owned approximately 14% of the shares of Common Stock. MLAM and FAM
are investment advisors and beneficially own such shares of Common Stock on
behalf of certain investment companies and other investment advisory clients.
Princeton Services, Inc. ("PSI") is the general partner of MLAM and FAM, and PSI
is an affiliate of Merrill Lynch.
Except as disclosed herein, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to security holders on its behalf
concerning the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a)
There have been no transactions in shares of Common Stock during the past
60 days by the Company or, to the best of the Company's knowledge, by any
executive officer, director, affiliate or subsidiary of the Company.
(b)
To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, each executive officer,
director and affiliate of the Company currently intends to tender all shares of
Common Stock over which he or she has sole dispositive power to the Purchaser.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY.
(a)
Except as set forth in this Schedule 14D-9, the Company is not engaged in
any negotiation in response to the Offer which relates to or would result
in (i) an extraordinary transaction, such as a merger or reorganization,
involving the Company or any subsidiary of the Company; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary of the
Company; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) There are presently no transactions, board resolutions, agreements in
principle or signed contracts in response to the Offer, other than as described
in or incorporated by reference into Item 3(b), which relate to or would result
in one or more of the matters referred to in Item 7(a)(i), (ii), (iii) or (iv).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(a)
INFORMATION STATEMENT. The Information Statement attached as Schedule I
hereto is being furnished in connection with the possible designation by
the Purchaser, pursuant to the Merger Agreement, of certain persons to be
appointed to the Board of Directors of the Company other than at a meeting of
the Company's stockholders.
(b)
APPRAISAL RIGHTS. No appraisal rights are available to holders of shares
of Common Stock in connection with the Offer. However, if the Merger is
consummated, holders of shares of Common Stock will have cerain rights under
Section 262 of the Delaware General Corporation Law ("Delaware Law") to dissent
and demand appraisal of, and payment in cash for the fair value of, their shares
of Common Stock. Such rights, if the statutory procedures are complied with,
could lead to a judicial
9
<PAGE>
determination of the fair value (excluding any element of value arising from
accomplishment or expectation of the Merger) required to be paid in cash to such
dissenting holders for their shares of Common Stock. Any such judicial
determination of the fair value of shares of Common Stock could be based upon
considerations other than the Offer Price and the market value of shares of
Common Stock, including asset values and the investment value of shares of
Common Stock. The value so determined could be more or less than the Offer Price
or the Merger Consideration.
If any holder of shares of Common Stock who demands appraisal under Section
262 of the Delaware Law fails to perfect, or effectively withdraws or losses his
right to appraisal, as provided in the Delaware Law, the shares of Common Stock
of such holder will be converted into the Merger Consideration in accordance
with the Merger Agreement. A stockholder may withdraw his demand for appraisal
by delivery to Parent of a written withdrawal of his demand for appraisal and
acceptance of the Merger.
Failure to follow the steps required by Section 262 of the Delaware Law for
perfecting appraisal rights may result in the loss of such rights.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
Exhibit 1. Press Release Issued by Parent and the Company
Exhibit 2. Agreement and Plan of Merger, dated as of August 19, 1996 among the Parent, the
Purchaser and the Company
Exhibit 3. Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated*
Exhibit 4. Letter to Stockholders of the Company dated August 22, 1996*
Exhibit 5. Company Option Plan (incorporated herein by reference to the Company's
Registration Statement No. 33-77116 on Form S-1 filed September 15, 1994)
Exhibit 6. Company Severance Protection Plan
Exhibit 7. Form of Barmet Aluminum Corporation Amended and Restated Longevity Incentive
Agreement
Exhibit 8. Form of First Amendment to the Barmet Aluminum Corporation Restated and Amended
Longevity Incentive Agreement
Exhibit 9. Form of Severance Agreement
Exhibit 10. Non-Employee Director Stock Option Plan
Exhibit 11. Amendment to the Non-Employee Director Stock Option Plan
</TABLE>
- ------------------------
* Included in the Schedule 14D-9 mailed to the Company's stockholders.
10
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
CASTECH ALUMINUM GROUP INC.
By: /s/______NORMAN E. WELLS, JR._____
Name: Norman E. Wells, Jr.
Title: President and Chief
Executive Officer
Dated: August 22, 1996
<PAGE>
SCHEDULE I
CASTECH ALUMINUM GROUP INC.
2630 EL PRESIDIO GROUP INC.
LONG BEACH, CA 90810
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about August 22, 1996, as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"). You are receiving this Information Statement in connection
with the possible election of persons designated by Parent to a majority of
seats on the Company's Board of Directors (the "Parent Designees"). The Merger
Agreement requires the Company to take all action necessary to cause the Parent
Designees to be elected to the Board under the circumstances described therein.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended, and Rule 14f-1 thereunder. You are urged to
read this Information Statement carefully. You are not, however, required to
take any action.
The Offer commenced on August 22, 1996 and is scheduled to expire on
September 19, 1996.
The information contained in this Information Statement concerning Parent,
the Purchaser and the Parent Designees has been furnished to the Company by
Parent, and the Company assumes no responsibility for the accuracy or
completeness of such information. Certain capitalized terms used but not defined
in this Information Statement have the meanings ascribed to them in the Schedule
14D-9.
GENERAL INFORMATION REGARDING THE COMPANY
As of the close of business on August 16, 1996, there were 12,942,443 shares
of Common Stock issued and outstanding, which is the only class of securities
outstanding having the right to vote for the election of directors, each share
of which entitles its record holder to one vote. The Board is currently set at 9
members, with one vacant position. Each director holds office until such
director's successor is elected and qualified or until such director's earlier
resignation or removal.
DESIGNATION OF DIRECTORS
The Merger Agreement provides that, promptly upon the purchase of shares of
Common Stock pursuant to the Offer, the Company will, upon the request of the
Purchaser, take all actions necessary, subject to compliance with applicable
law, to cause persons designated by the Purchaser to become directors of the
Company, so that the total number of such persons equals a number, rounded up to
the next whole number equal to the product of (a) the total number of directors
on the Board and (b) the percentage that the number of shares of Common Stock
purchased by Parent plus any shares of Common Stock beneficially owned by the
Purchaser or its affiliates bears to the number of shares of Common Stock
outstanding at the time of the purchase.
It is expected that the Parent Designees may assume office at any time
following the purchase by the Purchaser of a majority of the outstanding shares
of Common Stock on a fully diluted basis pursuant to the terms of the Offer,
which purchase cannot be earlier than September 19, 1996, and that, upon
assuming office, the Parent Designees together with the continuing directors of
the Company will thereafter constitute the entire Board.
<PAGE>
PARENT DESIGNEES
As of the date of this Information Statement, Purchaser has not determined
who will be Parent Designees. However, Parent Designees will be selected from
among the following persons. Unless otherwise indicated, each person identified
below has been employed by Parent for the last five years, and each such
person's business address is 1200 Meidinger Tower, Louisville, Kentucky. All
persons listed below are citizens of the United States unless otherwise
indicated. Persons indicated by an asterisk are directors of Parent.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL
POSITIONS HELD DURING PAST FIVE YEARS, AND BUSINESS
NAME AND BUSINESS ADDRESS ADDRESS THEREOF
--------------------------------------------------------
<S> <C>
Mark V. Kaminski*....................................... Director, President and Chief Executive Officer of
Parent since 1991. Director, President and Chief
Executive Officer of Purchaser since August 1996.
Paul E. Lego*........................................... Chairman of the Board of Parent, Director since 1995;
Chairman and Chief Executive Officer of Westinghouse
Electric Corporation, 1990-93.
Catherine G. Burke*..................................... Director of Parent since 1995; Faculty of the School of
Public Administration at the University of Southern
California, Los Angeles, CA since 1973.
John E. Merow*.......................................... Director of Parent since 1995; Director of Purchaser
since August 1996; Chairman of Sullivan & Cromwell, 125
Broad Street, New York, NY, 1987-94.
Victor Torasso*......................................... Director of Parent since 1995; Management Consultant to
aluminum industry since 1990.
Donald L. Marsh, Jr..................................... Vice President Finance, Chief Financial Officer and
Secretary of Parent since March 1996; Senior Vice
President Development, Castle Energy Corporation,
1995-96; Chief Financial Officer, Castle Energy
Corporation, One Radnor Corporate Center, Suite 250,
Radnor, PA, 1993-95; President, Earned Interest Inc., 20
Leigh Street, Clinton, NJ, 1986-93; Vice President
Finance, Chief Financial Officer and Secretary of
Purchaser since August 1996.
Scott T. Davis ......................................... Vice President Operations of Parent since 1994;
1372 State Road 1957 Production Planning Manager of Parent, 1992-94; Casting
P.O. Box 480 Manager, 1989-92.
Lewisport, KY 42351
James K. O'Donnell...................................... Vice President Engineering and Technology of Parent
since 1992; Manager of Engineering Planning of Parent,
1985-92.
John J. Wasz............................................ Vice President Marketing and Sales of Parent since
December 1993; Distribution Marketing Manager of Parent,
1991-93.
Henry E. Ford III....................................... Manager, Business Analysis and Investor Relations of
Parent since February 1996; Manager and Principal
Consultant - Organizational Effectiveness, 1995-96;
Manager, Cold Rolling, 1992-95; Senior Industrial
Engineer, 1990-92.
</TABLE>
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<PAGE>
CURRENT DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE BUSINESS EXPERIENCE
- --------------------------------- --------- ------------------------------------------------------------------------
<S> <C> <C>
Charles J. Pilliod, Jr........... (77) Mr. Pilliod has been Chairman of the Board of Directors of the Company
since April 1989 and was the Chief Executive Officer from April 1989
through March 1993. From 1985 to 1989, Mr. Pilliod served as U.S.
Ambassador to Mexico. Prior to that, he was Chairman of the Board of
Directors and Chief Executive Officer of Goodyear Tire & Rubber Company.
Mr. Pilliod serves as Chairman of the Board of Directors of Dal-Tile
International Inc.
Norman E. Wells, Jr.............. (47) Mr. Wells has been President and Chief Executive Officer of the Company
since March 1993 and a director since 1992. He has been an employee of
the Company since 1989, holding various positions. From 1989 to 1991,
Mr. Wells was Vice President of Production of Barmet, and since March
1991 has been President and Chief Executive Officer of Barmet Aluminum
Corporation ("Barmet"). Prior to 1989, Mr. Wells held various positions
at Kaiser Aluminum Corporation.
Robert D. Lloyd.................. (62) Mr. Lloyd has been a director of the Company since June 1992. He has
been President of Alflex, a division of the Company, since June 1991.
Prior to joining the Company in 1991, Mr. Lloyd was Vice President,
Western Operations of Triangle PWC, Inc., a manufacturer of wire and
cable, from March 1984 to May 1991.
Philip Caldwell.................. (76) Mr. Caldwell has been a director of the Company since March 1994. Since
1985, Mr. Caldwell has been Senior Managing Director of Lehman Brothers
Inc. and its predecessor, Shearson Lehman Brothers Holdings Inc. Mr.
Caldwell spent 32 years at Ford Motor Company where he was Chairman of
the Board of Directors and Chief Executive Officer from 1980 to 1985 and
a director from 1973 through 1990. Mr. Caldwell is a director of Lehman
Brothers Inc., The Mexico Fund, Zurich Reinsurance Centre Holdings,
Inc., Waters Corporation, American Guarantee & Liability Insurance
Company, Zurich Holding Company of America, Inc. and Russell-Reynolds
Associates, Inc.
C. Fred Fetterolf................ (67) Mr. Fetterolf has been a director of the Company since March 1995. Mr.
Fetterolf was President and Chief Operating Officer of Aluminum Company
of America (Alcoa) from 1985 to 1991, and served as President of Alcoa
from 1983 to 1985. Mr. Fetterolf is a director of Allegheny Ludlum
Corporation, Mellon National Bank, Union Carbide Corporation, Quaker
State Corporation, Praxair, Dentsply International and Urethane
Technologies, Inc.
Ronald D. Glosser................ (63) Mr. Glosser has been a director of the Company since March 1994. From
February 1989 to December 1995, Mr. Glosser served as President and
Chief Executive Officer of Hershey Trust Company, as well as Chairman of
the Board of Directors and Chief Executive Officer of The M.S. Hershey
Foundation. From 1982 to 1989, he served as President of National City
Bank in Akron, Ohio.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
Robert S. Hatfield............... (80) Mr. Hatfield has been a director of the Company since March 1994. Mr.
Hatfield was Chairman of the Board of Directors and Chief Executive
Officer of The Continental Group, Inc. (Continental Can Company) from
1971 to 1981. Prior to that, he held various executive positions at The
Continental Group from 1936 to 1991. Mr. Hatfield is currently Chairman
of the Board of Directors and Chief Executive Officer of The National
Executive Service Corps., a nonprofit firm that provides management
assistance to social service, educational, health, cultural, religious
and governmental organizations. He also served as Chairman of the Board
of Governors of The Society of the New York Hospital from 1981 to 1988.
Reginald H. Jones................ (78) Mr. Jones has been a director of the Company since March 1994. Mr. Jones
retired as Chairman of the Board of Directors of General Electric
Company in April 1981. At General Electric, he served as Chairman of the
Board of Directors and Chief Executive Officer from December 1972
through April 1981, President from June 1972 to December 1972 and a
Director from August 1971 to April 1981. Mr. Jones is also a director of
ASA Limited and Birmingham Steel Corporation.
Thomas P. Salice................. (35) Mr. Salice has been a director of the Company since February 1991. Mr.
Salice is a Managing Director of AEA Investors Inc., a privately-held
investment firm, and has been associated with AEA since June 1989. Mr.
Salice is also a director of Waters Corporation.
Terry D. Smith................... (42) Mr. Smith has been Chief Financial Officer, Vice President and Treasurer
of the Company since April 1988. He joined Barmet in 1980 and is
currently a Director, Vice President, Chief Financial Officer and
Treasurer. Prior to such time, Mr. Smith was employed by Coopers &
Lybrand from 1977 to 1980.
Gerald L. Hadeen................. (54) Mr. Hadeen has been Senior Vice President of Alflex since 1993. From
1984 to 1993, Mr. Hadeen was Vice President of Production at Alflex.
Prior to such time, Mr. Hadeen was Plant Manager at Alflex.
Stanley W. Platek................ (57) Mr. Platek has been Vice President of Technology of Barmet since 1988.
From 1983 to 1988, Mr. Platek was Plant Manager at Barmet.
</TABLE>
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning the shares of Common
Stock beneficially owned as of August 16, 1996, by each current director and
executive officer, and by all directors and executive officers of the Company as
a group. Unless otherwise noted, each beneficial owner listed below has sole
investment and voting power with respect to the shares of Common Stock
indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OWNED (1) CLASS
- --------------------------------------------------------------------------------- ----------------- -------------
<S> <C> <C>
Charles J. Pilliod, Jr........................................................... 165,749 1.28
Norman E. Wells, Jr.............................................................. 107,000 .82
Robert D. Lloyd.................................................................. 70,143 .54
Philip Caldwell (2).............................................................. 6,242 .05
C. Fred Fetterolf................................................................ 1,500 .01
Ronald D. Glosser................................................................ 1,000 .01
Robert S. Hatfield............................................................... 5,684 .04
Reginald H. Jones................................................................ 5,684 .04
Thomas P. Salice (3)............................................................. 281,949 2.18
Terry D. Smith................................................................... 42,280 .32
Gerald L. Hadeen................................................................. 40,781 .31
Stanley W. Platek................................................................ 40,781 .31
All directors and executive officers as a group (12 persons) (4)................. 485,702 3.75
</TABLE>
- ------------------------
(1) The foregoing percentages and the share amounts shown in the table include
with respect to Messrs. Pilliod, Wells, Smith, Lloyd, Platek, Hadeen and all
directors and executive officers as a group (including those named) 163,125
shares, 104,400 shares, 40,781 shares, 70,143 shares, 40,781 shares, 40,781
shares and 460,011 shares, respectively, subject to options which are
exercisable within sixty days of August 16, 1996.
(2) All such shares are held by members of Mr. Caldwell's family. Mr. Caldwell
disclaims beneficial ownership of such shares.
(3) All such shares are held by AEA Investors Inc. Mr. Salice, a Managing
Director of AEA, disclaims beneficial ownership of all such shares.
(4) Excludes 288,191 shares as to which beneficial ownership is disclaimed.
5
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth as of August 16, 1996 (i) the name of each
person known to the Company, based upon filings made by such persons with the
Securities and Exchange Commission (the "SEC") or information provided by such
persons to the Company, to be the beneficial owner of more than five percent of
the outstanding shares of Common Stock, (ii) the total number of shares of
Common Stock beneficially owned by such person and (iii) the percentage of the
outstanding shares of Common Stock so owned.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OWNERSHIP(1)(2) OF CLASS
- ------------------------------------------------------------------------------ ------------------------ -----------
<S> <C> <C>
Neumeier Investment Counsel
26435 Carmel Rancho Boulevard
Carmel, CA 93923............................................................. 1,172,525(3) 9.06%
Pioneering Management Corporation
60 State Street
Boston, MA 02109............................................................. 1,295,300(4) 10.0%
Merrill Lynch & Co., Inc...................................................... 1,808,400(5) 14%
</TABLE>
- ------------------------
(1) Except as otherwise noted, the number of shares beneficially owned is deemed
to include shares of Common Stock in which the persons named have or share
either investment or voting power.
(2) Each of the above beneficial owners stated in its Schedule 13G that its
shares were acquired in the ordinary course of business and not for the
purpose of changing or influencing the control of the Company.
(3) Based solely on a Schedule 13G dated February 6, 1996 filed with the SEC by
Neumeier Investment Counsel ("Neumeier"). Neumeier, a registered investment
advisor, states in its Schedule 13G that it has sole dispositive power over
all of these shares and sole power to vote or direct the voting of 795,225
shares.
(4) Based solely on a Schedule 13G dated January 26, 1996 filed with the SEC by
Pioneering Management Corporation ("PMC"). PMC, a registered investment
advisor, states in its Schedule 13G that it has the sole power to vote or
direct the voting of all these shares. PMC has the sole dispositive power
over 720,300 shares and shared dispositive power over 575,000 shares.
(5) Based solely on a Schedule 13G dated August 9, 1996, filed with the SEC by
Merrill Lynch & Co., Inc. ("ML&Co."), Merrill Lynch Group, Inc. ("Group"),
Princeton Services, Inc. ("PSI"), Merrill Lynch Asset Management, L.P.
("MLAM") and Merrill Lynch Global Allocation Fund, Inc. (the "Fund"). ML&Co.
states in its 13G that it has shared voting and dispositive power over
1,808,400 shares held by or deemed to be beneficially owned by its
wholly-owned direct subsidiaries, Group and Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("MLPF&S"). PSI, a wholly-owned direct subsidiary of
Group, is the general partner of MLAM and Fund Asset Management, L.P.
("FAM"). PSI states in its 13G that it has shared voting and dispositive
power over 1,807,100 shares by virtue of its being the general partner of
MLAM and FAM. Group states in its 13G that it has shared voting and
dispositive power over 1,807,100 shares by virtue of its control of PSI.
MLAM and FAM are registered investment advisors and MLAM states in its 13G
that it has shared voting and dispositive power over 1,310,100 shares. The
Fund, a registered investment company advised by MLAM, states in its 13G
that it has shared voting and dispositive power over 1,232,000 shares.
MLPF&S may be deemed to be the beneficial owner of certain of the shares
held in customer accounts over which MLPF&S has discretionary power.
6
<PAGE>
To the best knowledge of the Company's management, there is no other
beneficial owner of more than 5% of the Company's Common Stock.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of five meetings during
the fiscal year ended March 31, 1996. The Board of Directors has two committees,
the Audit Committee and the Compensation Committee, which met two and three
times, respectively, during fiscal 1996. Each incumbent director serving during
the last fiscal year attended at least 75% of the aggregate of all meetings of
the Board of Directors and the committees of the Board upon which such director
served.
The Audit Committee of the Board of Directors consists of directors Jones
(Chairman), Caldwell and Glosser. The Audit Committee recommends engagement of
the Company's independent public accountants and is primarily responsible for
approving the services performed by the Company's independent public accountants
and for reviewing and evaluating the Company's principles and its system of
internal accounting controls.
The Compensation Committee of the Board of Directors consists of directors
Pilliod (Chairman), Hatfield, Salice and Fetterolf. The Compensation Committee
reviews and approves the Company's executive compensation policy and grants
stock options to employees of the Company, including officers, pursuant to the
Company's stock option plan.
DIRECTOR COMPENSATION
Members of the Board of Directors who are not full-time employees of the
Company presently receive an annual retainer fee of $15,000 (except for the
Chairman of the Board who receives $25,000), plus $1,000 for each board and
board committee meeting attended. All directors are reimbursed for their
traveling costs and other out-of-pocket expenses incurred in attending board and
board committee meetings. Directors who serve on either or both of the Audit
Committee and Compensation Committee receive no additional compensation.
The Board of Directors and the stockholders have approved a new compensation
plan for the Company's non-employee directors in order to further align their
interests with the long-term interests of the stockholders. Under this plan
which is effective commencing with the fiscal year ending March 31, 1997,
instead of receiving an annual cash retainer fee, non-employee directors would
receive 1,000 shares of the Company's Common Stock each year. No shares of
Common Stock have been issued pursuant to this plan and, in connection with the
Merger Agreement and pursuant to an amendment to the non-employee stock option
plan, the Company agreed that, pending consummation or abandonment of the Merger
Agreement, no shares of Common Stock will be issued under the plan. In the event
the Merger is abandoned and not consummated, Common Stock shall be awarded
pursuant to the plan. In the event the Merger is consummated, in lieu of Common
Stock awarded under the plan, eligible participants shall be entitled to receive
a cash fee, prorated for their time of service as a director during the fiscal
year commencing April 1, 1996, at an annual rate of $15,000 for each participant
other than the Chairman of the Company and at an annual rate of $25,000 for the
Chairman.
7
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
OVERVIEW AND PHILOSOPHY
The Compensation Committee of the Board of Directors is composed of four
independent non-employee directors. The Committee is responsible for the
evaluation and approval of compensation for the Company's executive officers.
The Committee's objective is to establish a compensation program for the
Company's executive officers that will attract and maintain quality management
talent while remaining consistent with the Company's overall business strategy
and compensation philosophy. The Committee's decisions relating to compensation
of the Company's executive officers are reviewed by the full Board of Directors
of the Company.
The Committee's compensation policies have been designed to reflect the
Company's commitment to a "pay-for-performance" philosophy. Towards that end,
executive officers are rewarded for their contributions to the enhancement of
shareholder value and the attainment of corporate goals through the award of
stock options and cash bonus incentives. In general, base pay is targeted at or
below a level that is competitive for similar executive positions in comparable
companies. As such, the Company believes that its compensation policies place
greater emphasis on annual and long-term performance incentives. The Committee
uses outside, independent benefits and compensation specialists and related
outside surveys to assist the Company in developing and assessing the
reasonableness of the Company's compensation program for its executive officers.
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
Compensation paid to the Company's executive officers is composed primarily
of base salary compensation, annual cash incentive compensation and long-term
incentive compensation in the form of stock options. In addition, certain key
executive officers have individual deferred compensation agreements which are
funded through life insurance policies and which are payable upon retirement.
BASE SALARY. The Company's base salary compensation for executive officers
is established after examining both objective and subjective criteria. In
determining base salary, the Committee considers the responsibility of the
individual's position, the individual's overall job performance, and the base
salaries of similar positions in comparable companies. Individual performance is
measured against the achievement of annual business goals and long-term
strategic objectives. These factors are considered subjectively in the aggregate
and neither of these factors is accorded a specific weight. In general, the
Committee establishes base salary for executive officers that is at or below the
average paid for comparable positions at other similarly sized companies as set
forth in national compensation surveys.
BONUS PLAN. Each of the Company's executives participates in a Management
Incentive Program which provides for the payment of annual cash bonuses. The
Management Incentive Program's purpose is to align a substantial portion of
executive compensation with the achievement of the Company's annual financial
goals. Bonus payments are established by the Committee and in such amounts such
that the Company's attainment of targeted levels of performance will provide
total annual cash compensation to the Company's executive officers that is at or
somewhat above the average paid for comparable positions at other similarly
sized companies. Under this program, the Company establishes earnings-based
performance targets for the Company as a whole and separately for each of the
Company's two operating units. (These confidential performance targets are not
disclosed in this Information Statement, in order to avoid compromising the
Company's competitive position.) It is the Committee's belief that
earnings-based targets are the best measure of the Company's performance,
although the Committee is vested with the discretion to change the standards
used to measure performance as appropriate in order to create proper incentives
for the Company's executives. The Committee establishes four tiers of
performance targets for each applicable business unit. The amount of an
executive's bonus is based upon which tier of the business unit's earnings
targets is reached. The higher the earnings target that is achieved, the higher
the amount of
8
<PAGE>
the bonus award. The minimum level at which an executive will earn any incentive
payment, and the levels at which the bonus payments increase, are established by
the Committee in the early part of the fiscal year.
STOCK OPTIONS. Stock options which, in the Committee's view, provide
additional incentive to executives to work towards maximizing shareholder value,
is one of the more important components of the Company's long-term
performance-based compensation philosophy. The Company grants stock options to
its executives at or near the date of hire and, in some instances, through
subsequent periodic grants. These options have exercise prices equal to the fair
market value at the time of grant, and generally vest over a four-year period.
Unless the Committee otherwise provides, options become exercisable as to 20% of
the shares covered thereby on the date of grant and as to an additional 20% of
such shares on each of the next four anniversaries of the date of grant. The
initial option grant is designed to be competitive with those made by comparable
companies for similar executive positions and is designed to motivate the
executive to make the kinds of decisions and implement strategies and programs
that will contribute to an increase in the Company's stock price over time. In
determining the persons to whom awards shall be granted and the number of shares
covered by each award, the Committee takes into account the duties of the
respective executive, the individual's present and potential contribution to the
financial success of the Company and such other factors as the Committee deems
relevant.
OTHER. In addition to the foregoing, the Company has entered into deferred
compensation agreements with certain key executive officers. These agreements
provide for a fixed benefit payable monthly upon the death or retirement of the
covered executive. The Company has obtained life insurance policies to fund the
benefits payable under these deferred compensation agreements. Participating
executives are not entitled to any payments if their employment is terminated
for reasons other than death, retirement or termination without cause.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The factors considered by the Committee in determining the compensation of
Mr. Wells, the Company's Chief Executive Officer, in addition to survey data,
include the Company's operating and financial performance, as well as the CEO's
leadership and establishment and implementation of strategic direction for the
Company. These factors are considered subjectively and none of these factors is
accorded specific weight. In determining Mr. Wells' compensation for fiscal
1996, the Committee considered the Company's outstanding financial results for
fiscal 1995, Mr. Wells' decisive management of operational issues, and the
improved overall competitive position of the Company. As a result, effective in
the second quarter of fiscal 1996, Mr. Wells' base salary was increased an
additional $25,000 so that his annual base salary would be $290,000. The
Committee believes that, even with this increase in base salary, Mr. Wells' base
salary is below the average for chief executive officers in comparable
companies. Mr. Wells' cash bonus for fiscal 1996 was paid in accordance with the
Company's Management Incentive Program.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors served on the Compensation Committee during fiscal
1996: Charles J. Pilliod, Jr. (Chairman), C. Fred Fetterolf, Robert S. Hatfield
and Thomas P. Salice. Mr. Pilliod served as an officer of the Company during the
past fiscal year.
9
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information concerning compensation paid by the
Company to the Chief Executive Officer of the Company and the other four most
highly compensated executive officers of the Company whose total annual salary
and bonus exceeded $100,000 (collectively with the Chief Executive Officer, the
"Named Executives") for each of the last three fiscal years.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION ------------------------------
------------------------------------------------------ SHARES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY $ BONUS $ COMPENSATION (A) OPTIONS (#) COMPENSATION ($)
- ------------------------------ --------- --------- --------- --------------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Norman E. Wells, Jr........... 1996 300,849 99,375 -- -- -- -- 76,327(b)
Chief Executive Officer 1995 255,816 150,000 -- 50,514(b)
1994 259,700 75,000 174,000 21,186(b)
Robert D. Lloyd............... 1996 225,385 40,000 -- -- -- -- 50,888(c)
Executive Vice President and 1995 206,668 90,000 -- 19,000(c)
President-Alflex Division 1994 190,000 90,000 116,906 18,600(c)
Terry D. Smith................ 1996 149,292 45,000 -- -- -- -- 28,815(d)
Chief Financial Officer 1995 143,076 75,000 -- 23,217(d)
and Secretary 1994 144,020 37,500 67,968 8,167(d)
Gerald L. Hadeen.............. 1996 146,877 18,000 -- -- -- -- 39,381(e)
Senior Vice President, 1995 138,000 60,000 -- 6,600(e)
Alflex Division 1994 138,000 60,000 67,968 6,600(e)
Stanley W. Platek............. 1996 145,698 45,000 -- -- -- -- 58,363(f)
Vice President - 1995 137,161 75,000 -- 46,558(f)
Technology, Barmet 1994 142,860 37,500 67,968 26,442(f)
</TABLE>
- ------------------------
(a) The dollar value of perquisites and other personal benefits was less than
the lesser of $50,000 and 10% of the total annual salary and bonus for each
Named Executive and therefore has been excluded.
(b) Includes Company contributions to a defined contribution retirement plan
totalling $38,619, $30,389 and $10,005 and accrued wages under a deferred
compensation agreement payable on retirement of $37,708, $20,125 and $11,181
for the years ended March 31, 1996, 1995 and 1994, respectively.
(c) Includes Company contributions to a defined contribution retirement plan
totalling $19,000 for each of the years ended March 31, 1996 and 1995 and
$18,600 for the year ended March 31, 1994 and accrued wages under a deferred
compensation agreement payable on retirement of $31,888 for the year ended
March 31, 1996.
(d) Includes Company contributions to a defined contribution retirement plan
totalling $19,440, $16,583 and $5,613 and accrued wages under a deferred
compensation agreement payable on retirement of $9,375, $6,634 and $2,554
for the years ended March 31, 1996, 1995 and 1994, respectively.
(e) Includes Company contributions to defined contribution retirement plan
totalling $6,600 for each of the years ended March 31, 1996, 1995 and 1994
and accrued wages under a deferred compensation agreement payable on
retirement of $32,781 for the year ended March 31, 1996.
(f) Includes Company contributions to a defined contribution retirement plan
totalling $19,045, $16,123 and $5,688 and accrued wages under a deferred
compensation agreement payable on retirement of $39,318, $30,435 and $20,754
for the years ended March 31, 1996, 1995 and 1994, respectively.
10
<PAGE>
OPTION EXERCISES AND VALUES
No stock options were exercised by the Named Executives in the year ended
March 31, 1996. The following table sets forth information with respect to the
aggregate number of unexercised options to purchase Common Stock granted in all
years to the Named Executives and held by them as of March 31, 1996, and the
value of unexercised in-the-money options (i.e., options that had a positive
spread between the exercise price and the fair market value of the Common Stock)
as of March 31, 1996:
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END(#) AT FISCAL YEAR-END($)(1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Norman E. Wells. Jr.................................... 104,400 69,600 $ 420,210 $ 280,140
Robert D. Lloyd........................................ 70,143 46,763 282,326 188,221
Terry D. Smith......................................... 40,781 27,187 164,144 109,428
Gerald L. Hadeen....................................... 40,781 27,187 164,144 109,428
Stanley W. Platek...................................... 40,781 27,187 164,144 109,428
</TABLE>
- ------------------------
(1) Based on the New York Stock Exchange closing price of the Company's Common
Stock on March 31, 1996 of $14.375.
STOCK OPTIONS
No stock options were granted under the Company's Stock Option Plan to the
Named Executives during the year ended March 31, 1996.
11
<PAGE> 1
EXHIBIT 1
FOR IMMEDIATE RELEASE:
Monday, August 19, 1996
COMMONWEALTH ALUMINUM CORPORATION TO ACQUIRE
CASTECH ALUMINUM GROUP INC. FOR $20.50 IN CASH
New York, N.Y. (August 19, 1996) -- Commonwealth Aluminum
Corporation ("Commonwealth")(Nasdaq/NM:CALC) and Castech Aluminum Group Inc.
("CasTech") (NYSE:CTA) today jointly announced that they have entered into an
agreement that provides for Commonwealth to acquire all of the outstanding
shares of CasTech for $20.50 per share in cash. The acquisition will create the
largest independent aluminum rolling operation in the United States. The
combined entity will have operations located in Louisville and Lewisport,
Kentucky, Akron, Bedford and Uhrichsville, Ohio, and Carson, Long Beach and
Torrance, California, and will have annual shipments in excess of 900 million
pounds of aluminum sheet and over 475 million feet of electrical wiring
products. Commonwealth, a low cost producer of common alloy sheet through the
traditional direct chill casting technology, will acquire the leading
manufacturer of continuous cast aluminum sheet. Commonwealth President and Chief
Executive Officer, Mark V. Kaminski, said, "CasTech is one of the technological
leaders in continuous casting. Its patents and proprietary know-how put the
combined entity in a unique position to create opportunities for international
growth."
Commonwealth will commence a cash tender offer for all shares
of CasTech common stock within five business days at a price of $20.50 a
share, the companies said. The offer will be conditioned on, among other
things, at least a majority of the fully diluted shares of CasTech common
stock being validly tendered. The merger agreement contemplates that
shares not purchased in the tender offer will receive $20.50 per share in a
subsequent merger. Commonwealth has obtained a financing commitment for
the acquisition from National Westminster Bank, Plc; the tender will not be
contingent on financing.
Kaminski said, "This transaction positions Commonwealth to
better and more efficiently serve our customers and to reduce our
production costs and earnings volatility. The acquisition of CasTech is
expected to be accretive to Commonwealth's earnings in the first full year
of combined operations and promises to provide significant
<PAGE> 2
value to our shareholders and expanded opportunities for the employees of
both CasTech and Commonwealth. Above all, this combination will provide
Commonwealth with a unique opportunity to accelerate and expand its growth
in new aluminum markets. Furthermore, the acquisition of CasTech's ALFLEX
Division provides additional growth opportunities in the flexible conduit,
cable and electrical products markets."
CasTech's President, Norman E. Wells, Jr., stated, "I am
extremely proud of CasTech's accomplishments over the past several years.
The combination of these two groups will make Commonwealth a technological
leader in the aluminum industry -- well positioned for strong future
growth."
Commonwealth, a leading manufacturer of aluminum sheet in the
transportation, construction and consumer durables end-user markets, is
headquartered in Kentucky, posted sales of $672 million in 1995 and employs
approximately 1,100 people.
CasTech and its subsidiaries are the nation's leading
manufacturer of continuous cast aluminum sheet. The Company manufactures
aluminum sheet from recycled aluminum utilizing low cost, scrap-based mini-
mill production technology. The Company is also a leading manufacturer of
electrical flexible conduit and prewired armored cable, which are made
principally from aluminum sheet manufactured by the Company. CasTech
posted sales of $418 million in calendar year 1995, has 825 employees and
is domiciled in California.
Commonwealth is being advised by Morgan Stanley & Co.
Incorporated, who will also act as dealer manager on this transaction.
CasTech is being advised by Merrill Lynch & Co.
For further information contact Henry E. Ford, Manager of
Investor Relations for Commonwealth at 502-295-5372.
<PAGE> 1
Exhibit 2
Execution Copy
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this
"Agreement"), dated as of August 19, 1996, among CASTECH ALUMINUM GROUP
INC., a Delaware corporation (the "Company"), COMMONWEALTH ALUMINUM
CORPORATION, a Delaware corporation ("Purchaser"), and CALC CORPORATION, a
Delaware corporation and a wholly-owned subsidiary of Purchaser ("Merger
Sub"), the Company and Merger Sub sometimes being hereinafter collectively
referred to as the "Constituent Corporations."
RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company
each have determined that it is in the best interests of their respective
shareholders for Purchaser to acquire the Company upon the terms and
subject to the conditions set forth herein; and
WHEREAS, the Company, Purchaser and Merger Sub desire to make
certain representations, warranties, covenants and agreements in connection
with this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein the
parties hereto hereby agree as follows:
ARTICLE I
The Tender Offer
1.1. Tender Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Article IX hereof and none of the
events set forth in Annex A hereto shall have occurred or be existing,
within five business days of the date hereof, Merger Sub will commence a
tender offer (the "Offer") for all of the outstanding common stock, par
value $0.01 per share (the "Shares"), of the Company at a price of $20.50
per Share in cash, net to the seller. The obligation of Merger Sub to
accept for payment and pay for Shares tendered pursuant to the Offer shall
be subject only to the satisfaction or waiver of the conditions to the
Offer set forth in Annex A hereto. Without the prior written consent of
the Company, Merger Sub shall not (i) change or waive the Minimum Condition
(as defined in Annex A), (ii) reduce the number of
<PAGE> 2
Shares subject to the Offer, (iii) reduce the price per Share to be paid
pursuant to the Offer, (iv) extend the Offer if all of the conditions to
the Offer are satisfied or waived, (v) change the form of consideration
payable in the Offer, or (vi) amend, modify, or add to the conditions of
the Offer in any manner adverse to the holders of Shares. So long as this
Agreement is in effect and the conditions to the Offer have not been
satisfied or waived, at the request of the Company, Merger Sub shall extend
the Offer for an aggregate period of not more than 10 business days beyond
the originally scheduled expiration date of the Offer. Subject to the
terms and conditions of the Offer, Purchaser will promptly pay for all
Shares tendered and not withdrawn pursuant to the Offer as soon as
practicable after the expiration of the Offer. The Company's Board of
Directors shall recommend acceptance of the Offer to its stockholders in a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-
9") to be filed with the Securities and Exchange Commission (the "SEC")
upon commencement of the Offer; provided, however, that if the Company's
Board of Directors determines consistent with its fiduciary duties to amend
or withdraw its recommendation, such amendment or withdrawal shall not
constitute a breach of this Agreement.
(b) Purchaser agrees, as to the Offer to Purchase and related
Letter of Transmittal (which together constitute the "Offer Documents") and
the Company agrees, as to the Schedule 14D-9, that such documents shall, in
all material respects, comply with the requirements of the Exchange Act and
the rules and regulations thereunder and other applicable laws. The
Company and its counsel, as to the Offer Documents, and Merger Sub and its
counsel, as to the Schedule 14D-9, shall be given an opportunity to review
such documents prior to their being filed with the SEC.
(c) In connection with the Offer, the Company will cause its
Transfer Agent to furnish promptly to Merger Sub a list, as of a recent
date, of the record holders of Shares and their addresses, as well as
mailing labels containing the names and addresses of all record holders of
Shares and lists of security positions of Shares held in stock deposito-
ries. The Company will furnish Merger Sub with such additional information
(including, but not limited to, updated lists of holders of Shares and
their addresses, mailing labels and lists of security positions) and such
other assistance as Purchaser or Merger Sub or their agents may reasonably
request in communicating the Offer to the record and beneficial holders of
Shares. All such information shall be held subject to the letter
agreement, dated July 26, 1996 (the "Confidentiality Agreement"),
<PAGE> 3
between Purchaser and the Company relating to confidential information.
ARTICLE II
The Merger; Closing; Effective Time
2.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 2.3) Merger Sub
shall be merged with and into the Company and the separate corporate
existence of Merger Sub shall thereupon cease (the "Merger"). The Company
shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation") and shall continue to be
governed by the laws of the State of Delaware, and the separate corporate
existence of the Company with all its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger, except as
set forth in Section 3.1. The Merger shall have the effects specified in
the Delaware General Corporation Law (the "DGCL").
2.2. Closing. The closing of the Merger (the "Closing") shall
take place (i) at the offices of Sullivan & Cromwell, 125 Broad Street,
New York, New York at 10:00 A.M. on the first business day on which the
last to be fulfilled or waived of the conditions set forth in Article VIII
hereof shall be fulfilled or waived in accordance with this Agreement or
(ii) at such other place and time and/or on such other date as the Company
and Purchaser may agree.
2.3. Effective Time. As soon as practicable following the
Closing, and provided that this Agreement has not been terminated or
abandoned pursuant to Article IX hereof, the Company and the Purchaser will
cause a Certificate of Merger (the "Delaware Certificate of Merger") to be
executed and filed with the Secretary of State of Delaware as provided in
Section 251 of the DGCL. The Merger shall become effective on the date on
which the Delaware Certificate of Merger has been duly filed with the
Secretary of State of Delaware, and such time is hereinafter referred to as
the "Effective Time."
<PAGE> 4
ARTICLE III
Certificate of Incorporation and By-Laws
of the Surviving Corporation
3.1. The Certificate of Incorporation. The Restated
Certificate of Incorporation of the Company (the "Certificate") in effect
at the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation, until duly amended in accordance with the terms
thereof, and the DGCL, except that Article Fourth of the Company's
Certificate shall be amended to read in its entirety as follows:
"The aggregate number of shares which the Corporation shall
have the authority to issue is 1,000 shares of Common Stock, par
value $0.01 per share."
3.2. The By-Laws. The By-Laws of Merger Sub in effect at the
Effective Time shall be the By-Laws of the Surviving Corporation, until
duly amended in accordance with the terms thereof and the DGCL.
ARTICLE IV
Officers and Directors
of the Surviving Corporation
4.1. Officers and Directors. The directors of Merger Sub and
the officers of the Company at the Effective Time shall, from and after the
Effective Time, be the directors and officers, respectively, of the
Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and By-Laws.
4.2. Actions by Directors. Following the election or
appointment of Purchaser's designees pursuant to Section 4.3 hereof, and
prior to the Effective Time, the approval of a majority of the directors of
the Company then in office who were not designated by Purchaser shall be
required to authorize (and such authorization shall constitute the
authorization of the Board of Directors of the Company and no other action
on the part of the Company, including any action by any other director of
the Company, shall be required to authorize) any termination of this
Agreement by the Company, any amendment of this Agreement requiring action
by the Board of Directors of the Company,
<PAGE> 5
any extension of time for the performance of any of the obligations or
other acts of Purchaser or Merger Sub, any waiver of compliance with any of
the agreements or conditions contained herein for the benefit of the
Company or any other rights of the Company hereunder, and any amendment or
withdrawal by the Board of Directors of its recommendation of the Merger
pursuant to Section 7.3 hereof.
4.3. Boards of Directors; Committees. (a) If requested by
Purchaser, the Company will, subject to compliance with applicable law and
immediately following the purchase by Merger Sub of more than 50 percent of
the outstanding Shares pursuant to the Offer, take all actions necessary to
cause persons designated by Purchaser to become directors of the Company so
that the total number of such persons equals that number of directors,
rounded up to the next whole number, which represents the product of
(x) the total number of directors on the Board of Directors multiplied by
(y) the percentage that the number of Shares so purchased plus any Shares
beneficially owned by Purchaser or its affiliates on the date hereof bears
to the number of Shares outstanding at the time of such purchase; provided,
however, that in no event shall Purchaser be entitled to designate a
majority of the Board of Directors unless it is the beneficial owner of
Shares entitling it to exercise at least a majority of the voting power of
the Company's outstanding shares entitled to vote generally in the election
of directors. In furtherance thereof, the Company will use its reasonable
best efforts to secure the resignation of all but three directors, or will
increase the size of the Board, or both, as is necessary to permit
Purchaser's designees to be elected to the Company's Board of Directors;
provided, however, that prior to the Effective Time, the Company's Board of
Directors shall always have at least three members who are neither officers
of Purchaser nor designees, shareholders or affiliates of Purchaser
("Purchaser Insiders"). At such time, the Company, if so requested, will
use its reasonable efforts to cause persons designated by Purchaser to
constitute the same percentage of each committee of such board, each board
of directors of each subsidiary of the Company and each committee of each
such board (in each case to the extent of the Company's ability to elect
such persons). The Company's obligations to appoint designees to the Board
of Directors shall be subject to Section 14(f) of the Securities Exchange
Act of 1934 (the "Exchange Act") and Rule 14f-1 thereunder. The Company
shall promptly take all actions required in order to fulfill its obliga-
tions under this Section 4.3 and shall include in the Schedule 14D-9 such
information as is required under such Section and Schedule. The Purchaser
will supply to the Company in writing and be solely respon-
<PAGE> 6
sible for any information with respect to the Purchaser and its
subsidiaries (collectively, the "Purchaser Companies") and the nominees,
directors and affiliates thereof required by Section 14(f) and Rule 14f-1
to be included in the Schedule 14D-9.
ARTICLE V
Conversion or Cancellation of Shares in the Merger
5.1. Conversion or Cancellation of Shares. The manner of
converting or canceling shares of the Company and Merger Sub in the Merger
shall be as follows:
(a) At the Effective Time, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by
Purchaser, Merger Sub or any other subsidiary of Purchaser (collectively,
the "Purchaser Companies") or Shares which are held by stockholders
("Dissenting Stockholders") exercising appraisal rights pursuant to
Section 262 of the DGCL) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive, without interest, an amount in cash equal to $20.50 or such
greater amount which may be paid pursuant to the Offer (the "Merger
Consideration"). All such Shares, by virtue of the Merger and without any
action on the part of the holders thereof, shall no longer be outstanding
and shall be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such Shares shall thereafter cease
to have any rights with respect to such Shares, except the right to receive
the Merger Consideration for such Shares upon the surrender of such
certificate in accordance with Section 5.2 or the right, if any, to receive
payment from the Surviving Corporation of the "fair value" of such Shares
as determined in accordance with Section 262 of the DGCL.
(b) At the Effective Time, each Share issued and outstanding
at the Effective Time and owned by any of the Purchaser Companies, and each
Share issued and held in the Company's treasury at the Effective Time,
shall, by virtue of the Merger and without any action on the part of the
holder thereof, cease to be outstanding, shall be canceled and retired
without payment of any consideration therefor and shall cease to exist.
(c) At the Effective Time, each share of Common Stock, par
value $0.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall,
<PAGE> 7
by virtue of the Merger and without any action on the part of Merger Sub or
the holders of such shares, be converted into one Share.
5.2. Payment for Shares. Purchaser shall make available or
cause to be made available to the paying agent appointed by Purchaser with
the Company's prior approval (the "Paying Agent") amounts sufficient in the
aggregate to provide all funds necessary for the Paying Agent to make
payments pursuant to Section 5.1(a) hereof to holders of Shares issued and
outstanding immediately prior to the Effective Time. Promptly after the
Effective Time, the Purchaser shall instruct the Paying Agent to mail to
each person who was, at the Effective Time, a holder of record (other than
any of the Purchaser Companies) of issued and outstanding Shares a form
(mutually agreed to by Purchaser and the Company) of letter of transmittal
and instructions for use in effecting the surrender of the certificates
which, immediately prior to the Effective Time, represented any of such
Shares in exchange for payment therefor. Upon surrender to the Paying
Agent of such certificates, together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, the
Surviving Corporation shall promptly cause to be paid to the persons
entitled thereto a check in the amount to which such persons are entitled,
after giving effect to any required tax withholdings. No interest will be
paid or will accrue on the amount payable upon the surrender of any such
certificate. If payment is to be made to a person other than the
registered holder of the certificate surrendered, it shall be a condition
of such payment that the certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
certificate surrendered or establish to the satisfaction of the Surviving
Corporation or the Paying Agent that such tax has been paid or is not
applicable. One hundred and eighty days following the Effective Time, the
Surviving Corporation shall be entitled to cause the Paying Agent to
deliver to it any funds (including any interest received with respect
thereto) made available to the Paying Agent which have not been disbursed
to holders of certificates formerly representing Shares outstanding on the
Effective Time, and thereafter such holders shall be entitled to look to
the Surviving Corporation only as general creditors thereof with respect to
the cash payable upon due surrender of their certificates. Notwithstanding
the foregoing, neither the Paying Agent nor any party hereto shall be
liable to any holder of certificates formerly representing Shares for any
amount paid to a public official
<PAGE> 8
pursuant to any applicable abandoned property, escheat or similar law. The
Surviving Corporation shall pay all charges and expenses, including those
of the Paying Agent, in connection with the exchange of cash for Shares and
Purchaser shall reimburse the Surviving Corporation for such charges and
expenses.
5.3. Dissenters' Rights. If any Dissenting Stockholder shall
be entitled to be paid the "fair value" of his or her Shares, as provided
in Section 262 of the DGCL, the Company shall give Purchaser notice thereof
and Purchaser shall have the right to participate in all negotiations and
proceedings with respect to any such demands. Neither the Company nor the
Surviving Corporation shall, except with the prior written consent of
Purchaser, voluntarily make any payment with respect to, or settle or offer
to settle, any such demand for payment. If any Dissenting Stockholder
shall fail to perfect or shall have effectively withdrawn or lost the right
to dissent, the Shares held by such Dissenting Stockholder shall thereupon
be treated as though such Shares had been converted into the Merger
Consideration pursuant to Section 5.1.
5.4. Transfer of Shares After the Effective Time. No
transfers of Shares shall be made on the stock transfer books of the
Surviving Corporation at or after the Effective Time.
ARTICLE VI
Representations and Warranties
6.1. Representations and Warranties of the Company. Except as
set forth in the corresponding sections of the disclosure letter, dated the
date hereof, delivered by the Company to Purchaser (the "Disclosure
Letter"), the Company hereby represents and warrants to Purchaser and
Merger Sub that:
(a) Corporate Organization and Qualification. Each of the
Company and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction
of incorporation and is in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification, except for such
failure to so qualify or be in such good standing, which, when taken
together with all other such failures, would not have a Material Adverse
Effect. Each of the Company and its subsidiaries has the requisite
corporate
<PAGE> 9
power and authority to carry on its respective businesses as they are now
being conducted except where the failure to have such power and authority
would not have a Material Adverse Effect. The Company has made available
to Purchaser a complete and correct copy of the Company's Certificate and
By-Laws, each as amended to date. The Company's Certificate and By-Laws so
delivered are in full force and effect.
(b) Authorized Capital. The authorized capital stock of the
Company consists of 25,000,000 Shares, of which 12,942,443 Shares were
outstanding on July 31, 1996. All of the outstanding Shares have been duly
authorized and are validly issued, fully paid and nonassessable. The
Company has no Shares reserved for issuance, except that, as of March 31,
1996, there were 1,450,000 Shares reserved for issuance pursuant to the
Stock Option Plan and, as of the date hereof, 100,000 Shares reserved for
issuance pursuant to the Non-Employee Directors Stock Plan (together, the
"Stock Plans") and, as of August 19, 1996, there were not more than
1,300,000 Shares subject to issuance under the Stock Option Plan. Each of
the outstanding shares of capital stock of each of the Company's
subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and owned, either directly or indirectly, by the Company free
and clear of all liens, pledges, security interests, claims or other
encumbrances. Except as set forth above, there are no shares of capital
stock of the Company authorized, issued or outstanding and except as set
forth above, there are no preemptive rights nor any outstanding subscrip-
tions, options, warrants, rights, convertible securities or other
agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of the Company or any of its
subsidiaries. After the Effective Time the Surviving Corporation will have
no obligation to issue, transfer or sell any Shares or common stock of the
Surviving Corporation pursuant to any Company Benefit Plan (as defined in
Section 6.1(h)).
(c) Corporate Authority. Subject only to approval of this
Agreement by the holders of a majority of the outstanding Shares, the
Company has the requisite corporate power and authority and has taken all
corporate action necessary in order to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. This Agreement is
a valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles of
equity.
<PAGE> 10
(d) Governmental Filings; No Violations. (i) Other than the
filings provided for in Section 2.3 and as required under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and the
Securities Exchange Act of 1934 (the "Exchange Act") (the "Regulatory
Filings"), no notices, reports or other filings are required to be made by
the Company with, nor are any consents, registrations, approvals, permits
or authorizations required to be obtained by the Company from, any
governmental or regulatory authority, agency, commission or other entity,
domestic or foreign ("Governmental Entity"), in connection with the
execution and delivery of this Agreement by the Company and the consumma-
tion by the Company of the transactions contemplated hereby, the failure to
make or obtain any or all of which would have a Material Adverse Effect.
(ii) The execution and delivery of this Agreement by the
Company does not, and the consummation by the Company of the transactions
contemplated by this Agreement will not, constitute or result in (i) a
breach or violation of, or a default under, the Certificate or By-Laws of
the Company or the comparable governing instruments of any of its
subsidiaries, (ii) a breach or violation of, a default under or the
triggering of any payment or other material obligations pursuant to, any of
the Company's existing Company Benefit Plans or any grant or award made
under any of the foregoing, (iii) a breach or violation of, or a default
under, the acceleration of or the creation of a lien, pledge, security
interest or other encumbrance on assets (with or without the giving of
notice or the lapse of time) pursuant to, any provision of any agreement,
lease, license, contract, note, mortgage, indenture, arrangement or other
obligation ("Contracts") of the Company or any of its subsidiaries or any
law, rule, ordinance or regulation or judgment, decree, order, award or
governmental or non-governmental permit or license to which the Company or
any of its subsidiaries is subject or (iv) any change in the rights or
obligations of any party under any of the Contracts, except, in the case of
clauses (iii) or (iv) above, for such breaches, violations, defaults,
accelerations or changes that, alone or in the aggregate, would not have a
Material Adverse Effect. The Disclosure Letter sets forth, to the
Knowledge of the Company, a list of any consents required under any
material Contracts to be obtained prior to consummation of the transactions
contemplated by this Agreement (whether or not subject to the exception set
forth with respect to clause (iii) above). The Company will use its
reasonable best efforts promptly to obtain the consents referred to in the
Disclosure Letter.
<PAGE> 11
(e) Company Reports; Financial Statements. The Company has
made available to Purchaser each document filed by it since March 31, 1996
with the Securities and Exchange Commission under the Securities Act or the
Exchange Act, including, without limitation, (i) the Company's Annual
Report on Form 10-K for the year ended March 31, 1996, and (ii) the
Company's Quarterly Report on Form 10-Q for the period ended June 30, 1996,
each in the form (including exhibits and any amendments thereto) filed with
SEC (collectively, the "Company Reports"). As of their respective dates,
each of the Company Reports did not, and each Company Report filed with the
SEC subsequent to the date hereof will not, contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, provided, that the
Company makes no representation with respect to information supplied by the
Purchaser Companies for use in Company Reports after the date hereof. Each
of the consolidated balance sheets included in or incorporated by reference
into the Company Reports (including the related notes and schedules) fairly
presents the consolidated financial position of the Company and its
subsidiaries as of its date and each of the consolidated statements of
income and of changes in financial position included in or incorporated by
reference into the Company Reports (including any related notes and
schedules) fairly presents the results of operations, retained earnings and
changes in financial position, as the case may be, of the Company and its
subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments which will not
be material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods
involved, except as may be noted therein. Other than the Company Reports,
the Company has not filed any other definitive reports or statements with
the SEC since March 31, 1996.
(f) Absence of Certain Changes. Except as disclosed in the
Company Reports filed with the SEC prior to the date hereof, since
March 31, 1996, the Company and its subsidiaries have conducted their
respective businesses only in, and have not engaged in any material
transaction other than according to, the ordinary and usual course of such
businesses and there has not been (i) any Material Adverse Effect or any
development or combination of developments of which the Company has
Knowledge which would result in a Material Adverse Effect; (ii) any
declaration, setting aside or payment of any dividend or other distribution
with respect to the capital stock of the Company; or (iii) any
<PAGE> 12
change by the Company in accounting principles, practices or methods.
Since March 31, 1996, except as provided for herein or as disclosed in the
Company Reports filed with the SEC prior to the date hereof and other than
in the ordinary course, there has not been any increase in the compensation
payable or which could become payable by the Company and its subsidiaries
to their officers or key employees, or any amendment of any Company Benefit
Plans.
(g) Litigation and Liabilities. Except as disclosed in the
Company Reports filed with the SEC prior to the date hereof, there are no
(i) civil, criminal or administrative actions, suits, claims, hearings,
investigations or proceedings pending or, to the Knowledge of the Company,
threatened against the Company or any of its subsidiaries or (ii)
obligations or liabilities, or any facts or circumstances of which the
Company has Knowledge that could reasonably be expected to result in any
claims against or obligations or liabilities of the Company or any of its
subsidiaries, that, alone or in the aggregate, would have a Material
Adverse Effect.
(h) Employee Benefits. The Disclosure Letter discloses each
written employee benefit plan, as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") other than
immaterial plans, and each other compensation or employee benefit plan,
program, policy, practice or arrangement providing cash or non-cash
compensation, including each retirement, bonus, welfare, severance,
relocation, salary continuation for sickness or other disability, vacation
or educational plan, program, practice, policy or arrangement and each
employment agreement, which the Company or its Subsidiaries maintain or
contribute to on behalf of their employees, former employees, directors or
former directors other than immaterial plans, policies, practices,
arrangements or agreements ("Company Benefit Plans"). Each Company Benefit
Plan has been maintained in all material respects in accordance with its
terms and with applicable provisions of ERISA, the Code and any other
applicable laws and collective bargaining agreements, including all
applicable reporting and disclosure requirements except for any failures to
so maintain which alone or in the aggregate would not have a Material
Adverse Effect, no events have occurred with respect to the Company Benefit
Plans which alone or in the aggregate would have a Material Adverse Effect,
and the withdrawal liability with respect to any "multiemployer plan"
(within the meaning of Section 3(37) of ERISA) contributed to by the
Company, its Subsidiaries and any entities which are considered one
employer with the Company or any of its Subsidiaries under Section 4001(b)
of ERISA or
<PAGE> 13
Sections 414(b) or (c) of the Code, determined as if a "complete
withdrawal" had occurred as of the date hereof, would not have a Material
Adverse Effect.
(i) Brokers and Finders. Neither the Company nor any of its
officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders, fees
in connection with the transactions contemplated herein, except that the
Company has employed Merrill Lynch & Co. as its financial advisors, the
compensation arrangements with which have been disclosed in writing to
Purchaser prior to the date hereof.
(j) Takeover Statutes. The Board of Directors of the Company
has taken all necessary action to approve the transactions contemplated by
this Agreement such that the restrictions on transactions with "interested
stockholders" set forth in Section 203 of the DGCL shall not apply to such
transactions. To the Company's knowledge, no other "fair price",
"moratorium", "control share acquisition" or other similar antitakeover
statute or regulation (each a "Takeover Statute") is applicable to the
Company, the Shares, the Offer, the Merger or the transactions contemplated
thereby or hereby.
(k) Environmental Matters. Except as disclosed in the Company
Reports filed with the SEC prior to the date hereof and except for such
matters that, alone or in the aggregate, would not have a Material Adverse
Effect, and to the Company's Knowledge (i) the Company and its subsidiaries
are in compliance with all applicable Environmental Laws; (ii) no Hazardous
Substances (as hereinafter defined) have been treated, stored, or disposed
of at, on, or under the properties presently or formerly owned or operated
by the Company or its subsidiaries (including, without limitation, soil,
groundwater or surface water on, under or adjacent to the properties, and
buildings thereon) (the "Properties"), other than such treatment, storage
or disposal which would not require remediation under currently applicable
Environmental Law, and the Properties have not been used as a sanitary
landfill, dump or hazardous waste disposal site (provided, however, that
with respect to Properties formerly owned or operated by the Company, the
representations set forth in this Section 6.1(k)(ii) are limited to the
period prior to the disposition of such Properties by the Company or one of
its subsidiaries); (iii) neither the Company nor any of its subsidiaries
has received any notices, demand letters or requests for information from
any Governmental Entity or any third party that the Company may be in
violation of, or liable under, any Environmental Law and none of the
Company, its subsidiaries or the Properties are
<PAGE> 14
subject to any court order, administrative order or decree arising under
any Environmental Law and (iv) no Hazardous Substance has been disposed of,
transferred, released or transported from any of the Properties during the
time such Property was owned or operated by the Company or one of its
subsidiaries, other than as permitted under and as would not reasonably be
expected to result in liability under, applicable Environmental Law.
"Environmental Law" means (i) any Federal, state, foreign or
local law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, common law, order, judgment, decree,
injunction, requirement or agreement with any Governmental Entity, relating
(x) to the protection, preservation or restoration of the environment,
(including, without limitation, air, surface water, groundwater, surface
land, subsurface land, or any other natural resource), or to human health
or (y) to the exposure to, or the use, presence, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Substances, in each case as
amended and as now in effect. "Hazardous Substance" means any substance
presently listed, defined, designated or classified as hazardous, toxic,
radioactive or otherwise regulated, under any Environmental Law.
6.2. Representations and Warranties of Purchaser and Merger
Sub. Except as set forth in the corresponding sections of the disclosure
letter, dated the date hereof delivered by the Purchaser to the Company
(the "Purchaser Disclosure Letter"), Purchaser and Merger Sub represent and
warrant to the Company that:
(a) Corporate Organization and Qualification. Each of
Purchaser and Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation and is in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification except for such
failure to so qualify or to be in such good standing, which, when taken
together with all other such failures, would not have a material adverse
effect on the financial condition, properties, business or results of
operations of Purchaser and its subsidiaries, taken as a whole.
(b) Corporate Authority. Purchaser and Merger Sub each has
the requisite corporate power and authority and has taken all corporate
action necessary in order to execute and deliver this Agreement and to
consummate the transac-
<PAGE> 15
tions contemplated hereby. This Agreement is a valid and binding agreement
of Purchaser and Merger Sub enforceable against Purchaser and Merger Sub in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and to general principles of equity.
(c) Governmental Filings; No Violations; Ownership of Shares.
(i) Other than the Regulatory Filings, no notices, reports or other filings
are required to be made by Purchaser and Merger Sub with, nor are any
consents, registrations, approvals, permits or authorizations required to
be obtained by Purchaser and Merger Sub from, any Governmental Entity in
connection with the execution and delivery of this Agreement by Purchaser
and Merger Sub and the consummation of the transactions contemplated hereby
by Purchaser and Merger Sub, the failure to make or obtain any or all of
which could prevent, materially delay or materially burden the transactions
contemplated by this Agreement.
(ii) The execution and delivery of this Agreement by Purchaser
and Merger Sub do not, and the consummation of the transactions
contemplated hereby by Purchaser and Merger Sub will not, constitute or
result in (i) a breach or violation of, or a default under, the Certificate
of Incorporation or By-Laws of Purchaser or Merger Sub or (ii) a breach or
violation of, a default under, the acceleration of or the creation of a
lien, pledge, security interest or other encumbrance on assets (with or
without the giving of notice or the lapse of time) pursuant to, any
provision of any Contract of Purchaser or Merger Sub or any law, ordinance,
rule or regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which Purchaser or Merger Sub is
subject, except, in the case of clause (ii) above, for such breaches,
violations, defaults or accelerations that, alone or in the aggregate,
could not prevent or materially delay the transactions contemplated by this
Agreement.
(iii) Purchaser does not, as of the date hereof, beneficially
own any Shares.
(d) Funds. Purchaser has received a written commitment (the
"Commitment") from a financial institution to provide an aggregate of up to
$425,000,000 in connection with the Offer and the Merger, a copy of which
has previously been delivered to the Company, subject to the execution of
definitive financing agreements and the fulfillment of conditions
thereunder. As of the date
<PAGE> 16
hereof, Purchaser knows of no facts or circumstances that are likely to
result in the conditions precedent referred to in such written commitments
not being satisfied.
ARTICLE VII
Covenants
7.1. Interim Operations of the Company. The Company covenants
and agrees that, prior to the Effective Time (unless Purchaser shall
otherwise agree in writing and except as otherwise contemplated by this
Agreement):
(a) the business of the Company and its subsidiaries shall be
conducted only in the ordinary and usual course and, to the extent
consistent therewith, each of the Company and its subsidiaries shall
use its reasonable best efforts to preserve its business organization
intact and maintain satisfactory relations with customers, suppliers,
employees and business associates, in each case in all material
respects;
(b) the Company shall not (i) sell, pledge, dispose of or
encumber or agree to sell or pledge any stock owned by it in any of
its subsidiaries; (ii) amend its Certificate or By-Laws; (iii) split,
combine or reclassify the outstanding Shares; or (iv) declare, set
aside or pay any dividend payable in cash, stock or property with
respect to the Shares;
(c) neither the Company nor any of its subsidiaries shall
(i) issue, sell, pledge, dispose of or encumber any additional shares
of, or securities convertible or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any
shares of its capital stock other than, in the case of the Company,
Shares issuable pursuant to options outstanding on the date hereof
under the Stock Plans; (ii) transfer, lease, license, guarantee,
sell, mortgage, pledge, dispose of or encumber any assets or incur or
modify any indebtedness or other liability other than in the ordinary
and usual course of business; (iii) acquire directly or indirectly by
redemption or otherwise any shares of the capital stock of the
Company (iv) increase its obligations under its existing credit
agreement which would cause such aggregate borrowings to exceed
$40,000,000 or amend or modify such credit agreement; or
(v) authorize capital expenditures in excess of the Company's fiscal
1997 capital budget as provided prior to the date hereof to
<PAGE> 17
Purchaser or make any acquisition of, or investment in, assets or
stock of any other person or entity.
(d) except as described in the Disclosure Letter, neither the
Company nor any of its subsidiaries shall (i) except as required by
applicable law, grant any severance or termination pay to, or enter
into any employment or severance agreement with any Director, officer
or other employee of the Company or such subsidiaries; (ii)
establish, adopt, enter into, make any new grants or awards (or
accelerate the vesting, or increase the value of any benefit) under
or amend, any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
employee stock ownership, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any Directors, officers or other
employees; or (iii) increase the compensation of any Director,
officer or other Employee or pay any benefit thereto not required by
any existing plan;
Notwithstanding the foregoing, it is expressly acknowledged
that the Company has adopted or will adopt the change in control
severance agreements (the "Severance Agreements"), and amendments to
the Restated and Amended Longevity Incentive Agreements (the
"Longevity Agreement Amendments"), in each case for the individuals
set forth in the Disclosure Letter as the recipients of such
agreements, a change in control severance plan (the "Severance Plan")
and an amendment to the 1996 Non-Employee Directors Stock Plan, each
in the forms attached to the Disclosure Letter, and that prior to the
Effective Time the Company shall be permitted to implement such
agreements, plan and amendments.
(e) except as described in the Disclosure Letter, neither the
Company nor any of its subsidiaries shall settle or compromise any
material claims or litigation or, except in the ordinary and usual
course of business, modify, amend or terminate any of its material
Contracts or waive, release or assign any material rights or claims;
(f) neither the Company nor any subsidiary shall make any tax
election or permit any insurance policy naming it as a beneficiary or
a loss payable payee to be canceled or terminated without notice to
Purchaser, except in the ordinary and usual course of business; and
<PAGE> 18
(g) neither the Company nor any of its subsidiaries will
authorize or enter into an agreement to do any of the foregoing.
7.2. Acquisition Proposals. The Company agrees that neither
the Company nor any of its subsidiaries nor any of the respective officers
and directors of the Company or its subsidiaries shall, and the Company
shall direct and use its best efforts to cause its employees, agents and
representatives (including, without limitation, any investment banker,
attorney or accountant retained by the Company or any of its subsidiaries)
not to, initiate, solicit or encourage, directly or indirectly, any
inquiries or the making of any proposal or offer (including, without
limitation, any proposal or offer to stockholders of the Company) with
respect to a merger, consolidation or similar transaction involving, or any
purchase of all or any significant portion of the assets or any equity
securities of, the Company or any of its subsidiaries (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal") or,
except as required to comply with the fiduciary duties of the Company's
Board of Directors under applicable law after consultation with outside
counsel, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating
to an Acquisition Proposal, or otherwise facilitate any effort or attempt
to make or implement an Acquisition Proposal. The Company will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of
the foregoing. The Company will take the necessary steps to inform the
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 7.2. The Company will as promptly
as reasonably practicable notify Purchaser if any such inquiries or
proposals are received by, any such information is requested from, or any
such negotiations or discussions are sought to be initiated with the
Company.
7.3. Meetings of the Company's Stockholders. If required
following consummation of the Offer, the Company will take, consistent with
applicable law and its Certificate and By-Laws, all action necessary to
convene a meeting of holders of Shares as promptly as practicable to
consider and vote upon the approval of this Agreement and the Merger.
Subject to fiduciary requirements of applicable law, the Board of Directors
of the Company shall recommend such approval and the Company shall take all
lawful action to solicit such approval. If the Board of Directors
determines after consultation with outside counsel that an
<PAGE> 19
amendment or withdrawal of its recommendation is required in accordance
with its fiduciary duties under applicable law, the Board of Directors may
so amend or withdraw its recommendation and such withdrawal or
recommendation shall not constitute a breach of this Agreement. At any
such meeting of the Company all of the Shares then owned by the Purchaser
Companies will be voted in favor of this Agreement. The Company's proxy or
information statement with respect to such meeting of shareholders (the
"Proxy Statement"), at the date thereof and at the date of such meeting,
will not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the foregoing shall not apply
to the extent that any such untrue statement of a material fact or omission
to state a material fact was made by the Company in reliance upon and in
conformity with written information concerning the Purchaser Companies and
nominees, directors and affiliates of such Purchaser Companies furnished to
the Company by Purchaser specifically for use in the Proxy Statement. The
Proxy Statement shall not be filed, and no amendment or supplement to the
Proxy Statement will be made by the Company, without consultation with
Purchaser and its counsel. None of the written information concerning the
Purchaser Companies and the nominees, directors and affiliates thereof
furnished to the Company by Purchaser specifically for use in the Proxy
Statement, at the date thereof and at the date of the stockholders'
meeting, will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
7.4. Filings; Other Action. Subject to the terms and
conditions herein provided, the Company and Purchaser shall: (a) promptly
make their respective filings and thereafter make any other required
submissions under the HSR Act with respect to the Offer and the Merger; and
(b) use their reasonable best efforts to promptly take, or cause to be
taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement and including, without limitation, in the case of Purchaser
obtaining the financing contemplated by the Commitment or otherwise, as
soon as practicable. The Company shall cooperate with Purchaser to assist
in obtaining such financing and shall take such action in connection
therewith as Purchaser may reasonably request.
<PAGE> 20
7.5. Access. Upon reasonable notice, the Company shall (and
shall cause each of its subsidiaries to) afford Purchaser's officers,
employees, counsel, accountants and other authorized representatives
("Representatives") access, during normal business hours throughout the
period prior to the Effective Time, to its properties, books, Contracts and
records and, during such period, the Company shall (and shall cause each of
its subsidiaries to) furnish promptly to Purchaser all information
concerning its business, properties and personnel as Purchaser or its
Representatives may reasonably request, provided that no investigation
pursuant to this Section 7.5 shall affect or be deemed to modify any
representation or warranty made by the Company and provided, further, that
the foregoing shall not require the Company to permit any inspection, or to
disclose any information, which in the reasonable judgment of the Company
would result in the disclosure of any trade secrets of third parties or
violate any obligation of the Company with respect to confidentiality if
the Company shall have used reasonable efforts to obtain the consent of
such third party to such inspection or disclosure. All requests for
information made pursuant to this Section shall be directed to an executive
officer of the Company or such person as may be designated by any such
officer. All information obtained by Purchaser and its Representatives
pursuant to this Section 7.5 shall be treated as "Information" for all
purposes of the Confidentiality Agreement.
7.6. Notification of Certain Matters. The Company shall give
prompt notice to Purchaser of: (a) any notice of, or other communication
relating to, any material environmental matter, a default or event that,
with notice or lapse of time or both, would become a default, received by
the Company or any of its subsidiaries subsequent to the date of this
Agreement and prior to the Effective Time, under any Contract material to
the financial condition, properties, businesses or results of operations of
the Company and its subsidiaries taken as a whole to which the Company or
any of its subsidiaries is a party or is subject; and (b) any Material
Adverse Effect. Each of the Company and Purchaser shall give prompt notice
to the other party of any notice or other communication from any third
party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement.
7.7. Publicity. The initial press release shall be a joint
press release and thereafter the Company and Purchaser shall consult with
each other prior to issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and prior
to
<PAGE> 21
making any filings with any Governmental Entity or with any national
securities exchange with respect thereto.
7.8. Benefits. (a) Stock Options. Prior to the Effective
Time, the Company shall use its best efforts to obtain any necessary
consents from optionees, and will amend the Stock Plans, to provide that at
the Effective Time each stock option outstanding pursuant to the Stock
Plans ("Option"), whether or not then exercisable, shall be canceled and
only entitle the holder thereof to receive an amount in cash equal to the
excess of the Merger Consideration over the exercise price per Share of
such Option multiplied by the number of Shares previously subject to such
Option, less all applicable withholding taxes.
(b) Employee Benefits. (i) Purchaser shall, during the period
commencing at the Effective Time and ending on December 31, 1997, cause the
Surviving Corporation to provide to employees of the Company and its
subsidiaries, who are employed by the Surviving Corporation or its
subsidiaries following the Effective Time ("Company Employees"), employee
benefits which in the aggregate are substantially comparable to those
currently provided (other than stock option plans, other equity-based plans
and the Restated and Amended Longevity Incentive Agreements, as amended) by
the Company to such employees, provided that employees covered by
collective bargaining agreements need not be provided such benefits;
provided, further that if during such period the Purchaser implements any
widespread decrease in benefits (or increase in costs to participants)
under compensation plans applicable generally to its employees and the
employees of its subsidiaries (other than the Surviving Corporation), the
Surviving Corporation and its subsidiaries may be required by the Purchaser
to adjust the benefits (or the costs thereof) provided to their employees.
Purchaser will, and will cause the Surviving Corporation to, honor pursuant
to their terms all Company Benefit Plans in existence on the date hereof
and set forth in the Disclosure Letter or adopted prior to the Effective
Time as set forth in the Disclosure Letter, including the Severance Agree-
ments, Severance Plan and Longevity Agreement Amendments. The Company
shall prior to the Effective Time amend the Stock Plans to provide that the
Stock Plans shall terminate as of the Effective Time and to state that no
Company Employee or Director shall have the right to receive grants of
Options or exercise Options following the Effective Time.
(ii) In the event that Company Employees are or become
eligible to participate in any plans maintained by the Purchaser or its
Subsidiaries ("Purchaser Benefit
<PAGE> 22
Plans"), Purchaser or its subsidiaries shall grant such employees credit
for purposes of eligibility and vesting only, for all service credited for
such purposes under comparable Company Benefit Plans, other than with
respect to new Purchaser Benefit Plans which do not grant past service
credit to Purchaser's employees generally.
(iii) Any pre-existing condition exclusion under any Purchaser
Benefit Plan providing medical or dental benefits shall be waived for any
Company Employee who, immediately prior to commencing participation in such
Purchaser Benefit Plan, was participating in a Company Benefit Plan
providing medical or dental benefits and had satisfied any pre-existing
condition provision under such Company Benefit Plan. Any expenses that
were taken into account under a Company Benefit Plan providing medical or
dental benefits in which the Company Employee participated immediately
prior to commencing participation in a Purchaser Benefit Plan providing
medical or dental benefits shall be taken into account to the same extent
under such Purchaser Benefit Plan, in accordance with the terms of such
Purchaser Benefit Plan, for purposes of satisfying applicable deductible,
coinsurance and maximum out-of-pocket provisions and life-time benefit
limits.
Section 7.9. Indemnification; Directors' and Officers'
Insurance. (a) From and after the Effective Time, Purchaser agrees that it
will indemnify and hold harmless each present and former director and
officer of the Company, determined as of the Effective Time (the "Indemn-
ified Parties"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of matters existing or occurring at or prior
to the Effective Time, whether asserted or claimed prior to, at or after
the Effective Time, to the fullest extent that the Company would have been
permitted under Delaware law and its Certificate of Incorporation or By-
Laws in effect on the date hereof to indemnify such person (and Purchaser
shall also advance expenses as incurred to the fullest extent permitted
under applicable law provided the person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification); Purchaser
shall cause the Surviving Corporation (and its successors) not to amend its
Certificate of Incorporation or Bylaws concerning the indemnification and
exoneration of the Company's present and
<PAGE> 23
former directors and officers in any respect that adversely affects any
rights of such directors and officers.
(b) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of Section 7.9, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify Purchaser
thereof. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time),
(i) Purchaser or the Surviving Corporation shall have the right to assume
the defense thereof and Purchaser shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the
defense thereof, except that if Purchaser or the Surviving Corporation
elects not to assume such defense or counsel for the Indemnified Parties
advises that there are issues which raise conflicts of interest between
Purchaser or the Surviving Corporation and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and Purchaser
or the Surviving Corporation shall pay all reasonable fees and expenses of
such counsel for the Indemnified Parties promptly as statements therefor
are received; provided, however, that Purchaser shall be obligated pursuant
to this paragraph (b) to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction unless the use of one counsel for
such Indemnified Parties would present such counsel with a conflict of
interest (ii) the Indemnified Parties will cooperate in the defense of any
such matter and (iii) Purchaser shall not be liable for any settlement
effected without its prior written consent which consent shall not be
unreasonably withheld; and provided further that Purchaser shall not have
any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final, that the indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable law.
(c) The Purchaser shall cause the Surviving Corporation to
maintain the Company's existing officers' and directors' liability
insurance ("D&O Insurance") for a period of six years after the Effective
Time so long as the annual premium therefor is not in excess of 150% of the
last annual premium paid prior to the date hereof (the "Current Premium");
provided, however, if the existing D&O Insurance expires, is terminated or
canceled during such six year period, the Surviving Corporation will use
its best efforts to obtain as much D&O Insurance as can be obtained for the
remainder of such period for a premium not in excess (on an annualized
basis) of 150% of the Current Premium.
<PAGE> 24
7.10. Takeover Statute. If any "fair price", "moratorium",
"control share acquisition" or other form of antitakeover statute or
regulation is or shall become applicable to the transactions contemplated
hereby, the Company and the members of the Board of Directors of the
Company 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 statute or regulation on the
transactions contemplated hereby.
ARTICLE VIII
Conditions to the Merger
8.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction or waiver, where permissible, prior to the
Effective Time, of the following conditions:
(a) Stockholder Approval. If approval of the Merger by the
holders of Shares is required by applicable law, the Merger shall have been
approved by the requisite vote of such holders, and
(b) No Injunctions; Laws. No injunction or other order shall
have been issued or any law enacted which prohibits the consummation of the
Merger or makes such consummation illegal; provided, however, that prior to
invoking this provision, each party shall use its reasonable best efforts
to have any such injunction lifted.
(c) Governmental and Regulatory Consents. The waiting period
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated and all consents, approvals and authorizations
required to be obtained prior to the Effective Time by the Company from any
Governmental Entity in connection with the execution and delivery of this
Agreement by the Company and the consummation of the transactions
contemplated hereby by the Company, Purchaser and Merger Sub shall have
been made or obtained (as the case may be);
8.2. Conditions to Obligations of Purchaser and Merger Sub to
Effect the Merger. The obligation of Purchaser and Merger Sub to effect
the Merger shall be further subject to the satisfaction or waiver, on or
prior to the Effective Time of the condition that Merger Sub shall
<PAGE> 25
have accepted for payment and paid for the Shares tendered pursuant to the
Offer; provided, that this condition shall be deemed satisfied if the
Merger Sub's failure to accept for payment and pay for such shares breaches
this Agreement or violates the terms and conditions of the Offer.
ARTICLE IX
Termination
9.1. Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, before or after the approval by holders of Shares, by the
mutual consent of Purchaser and the Company, by action of their respective
Boards of Directors.
9.2. Termination by either Purchaser or the Company. This
Agreement may be terminated and the Merger may be abandoned by action of
the Board of Directors of either Purchaser or the Company if (i) Merger
Sub, or any Purchaser Company, shall have terminated the Offer without
purchasing any Shares pursuant thereto; provided, in the case of
termination of this Agreement by Purchaser, such termination of the Offer
does not constitute a breach of this Agreement and is not in violation of
the terms and conditions of the Offer or (ii) without fault of the
terminating party, the Merger shall not have been consummated by March 31,
1997 whether or not such date is before or after the approval by holders of
Shares.
9.3. Termination by Purchaser. Unless the Offer shall have
been consummated and persons designated by Purchaser shall constitute at
least a majority of the members of the Board of Directors of the Company,
this Agreement may be terminated and the Merger may be abandoned prior to
the Effective Time, before or after the approval by holders of Shares, by
action of the Board of Directors of Purchaser, if (x) the Company shall
have failed to comply in any material respect with the covenants or
agreements contained in this Agreement to be complied with or performed by
the Company at or prior to such date of termination and, with respect to
any such failure that can be remedied, the failure is not remedied within
five business days after Purchaser has furnished the Company with written
notice of such failure, or (y) the Board of Directors of the Company shall
have withdrawn or modified in a manner adverse to Purchaser or Merger Sub
its approval or recommendation of the Offer, this Agreement or the Merger
or shall have resolved to do any of the foregoing.
<PAGE> 26
9.4. Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned prior to the Effective Time,
before or after the approval by holders of Shares by action of the Board of
Directors of the Company, (x) if Purchaser or Merger Sub (or another
Purchaser Company) (i) shall have failed to comply in any material respect
with the covenants or agreements contained in this Agreement to be complied
with or performed by Purchaser or Merger Sub at or prior to such date of
termination and, with respect to any such failure that can be remedied, the
failure is not remedied within five business days after the Company has
furnished Purchaser with written notice of such failure or (ii) shall have
failed to commence the Offer within the time required in Section 1.1 or (y)
if (i) the Company is not in material breach of any of the terms of this
Agreement, (ii) the Board of Directors of the Company receives an
unsolicited written offer with respect to a merger, consolidation or sale
of all or substantially all of the Company's assets or an unsolicited
tender or exchange offer for the Shares is commenced, which the Board of
Directors of the Company determines in good faith is more favorable to the
stockholders of the Company than the Offer and the transactions
contemplated hereby and the Board of Directors determines, after
consultation with its outside counsel that approval, acceptance or
recommendation of such transaction (an "Alternative Transaction") is
required in accordance with its fiduciary obligations under applicable law
and (iii) the Company prior to such termination pays to Purchaser in
immediately available funds all fees required to be paid pursuant to
Section 9.5.
9.5. Effect of Termination and Abandonment. (a) In the
event of termination of this Agreement and abandonment of the Merger
pursuant to this Article IX, no party hereto (or any of its directors,
officers or representatives) shall have any liability or further obligation
to any other party to this Agreement, except as provided in Section 9.5(b)
below and Section 10.2 and except that nothing herein will relieve any
party from liability for any breach of this Agreement.
(b) If (x) (i) the Offer shall have remained open for a minimum
of at least 20 business days, (ii) after the date hereof any corporation,
partnership, person, other entity or group (as defined in Section 13(d)(3)
of the Exchange Act) other than Purchaser or Merger Sub or any of their
respective subsidiaries or affiliates (collectively, a "Person") shall have
become the beneficial owner of 15% or more of the outstanding Shares or any
Person shall have commenced, or shall have publicly announced an intention
to commence, a tender offer or exchange offer for 40% or more
<PAGE> 27
of the outstanding Shares or made any other Acquisition Proposal, (iii) the
Minimum Condition (as defined in Annex A) shall not have been satisfied and
the Offer is terminated without the purchase of any Shares thereunder and
(iv) within six months following such termination, the Company enters into
an agreement with respect to an Acquisition Proposal with any person or
other entity other than Purchaser or any person or other entity becomes the
beneficial owner of 90% or more of the outstanding Shares in either case at
a price per Share of $20.50 or more, or (y) Purchaser shall have terminated
this Agreement pursuant to Section 9.3(x) at any time after any person
shall have made an Acquisition Proposal or the Company shall have taken any
action that would be proscribed by Section 7.2 but for the exception
therein allowing certain actions to be taken if required by fiduciary duty
or Section 9.3(y) and, in either such case, within six months following
such termination, the Company enters into an agreement with respect to an
Acquisition Proposal with any person other than Purchaser or any person or
other entity becomes the beneficial owner of 90% or more of the outstanding
Shares in either case at a price per Share of $20.50 or more, or (z) the
Company shall have terminated this Agreement pursuant to Section 9.4(y),
then the Company, if requested by Purchaser, shall promptly, but in no
event later than five business days after the date of such request (other
than a termination pursuant to Section 9.4(y), in which case payment shall
be concurrent with termination), pay Purchaser a fee of $7,000,000, which
amount shall be payable in same day funds, plus an amount equal to
Purchaser's out-of-pocket expenses, up to a maximum of $3,000,000,
including fees and expenses paid to investment bankers, lawyers and
financing sources, incurred in connection with the transaction contemplated
by this Agreement. The Company acknowledges that the agreements contained
in this Section 9.5(b) are an integral part of the transactions
contemplated in this Agreement, and that, without these agreements, Pur-
chaser and Merger Sub would not enter into this Agreement; accordingly, if
the Company fails to promptly pay the amount due pursuant to this Section
9.5(b), and, in order to obtain such payment, Purchaser or Merger Sub
commences a suit which results in a judgment against the Company for the
fee set forth in this paragraph (b), the Company shall pay to Purchaser or
Merger Sub its costs and expenses (including attorneys' fees) in connection
with such suit, together with interest on the amount of the fee at the
prime rate of Citibank N.A. on the date such payment was required to be
made.
<PAGE> 28
ARTICLE X
Miscellaneous and General
10.1. Payment of Expenses. Except as otherwise set forth in
Section 9.5, whether or not the Merger shall be consummated, each party
hereto shall pay its own expenses incident to preparing for, entering into
and carrying out this Agreement and the consummation of the Merger.
10.2. Survival. The agreements of the Company, Purchaser and
Merger Sub contained in Sections 5.2 (but only to the extent that such
Section expressly relates to actions to be taken after the Effective Time),
5.3, 5.4, 7.8, 7.9, 7.10 and 10.1 shall survive the consummation of the
Merger. The agreements of the Company, Purchaser and Merger Sub contained
in Sections 7.5, 9.5 and 10.1 shall survive the termination of this
Agreement. All other representations, warranties, agreements and covenants
in this Agreement shall not survive the consummation of the Merger or the
termination of this Agreement.
10.3. Modification or Amendment. Subject to the applicable
provisions of the DGCL, at any time prior to the Effective Time, the
parties hereto may modify or amend this Agreement, by written agreement
executed and delivered by duly authorized officers of the respective
parties.
10.4. Waiver of Conditions. The conditions to each of the
parties' obligations to consummate the Merger are for the sole benefit of
such party and may be waived by such party in whole or in part to the
extent permitted by applicable law.
10.5. Counterparts. For the convenience of the parties
hereto, this Agreement may be executed in any number of counterparts, each
such counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement.
10.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
10.7. Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in
writing and delivered personally or sent by registered or certified mail,
postage prepaid, if to Purchaser or Merger Sub, addressed to Purchaser or
Merger Sub, as the case may be, at 1200 Meidinger Tower, Louisville,
Kentucky 40202, Attention: President (with a
<PAGE> 29
copy to Joseph B. Frumkin, Esq., Sullivan & Cromwell, 125 Broad Street, New
York, New York 10004); and if to the Company, addressed to the Company at
2630 El Presidio Street, Long Beach, California 90810, Attention:
President (with a copy to Charles Nathan, Esq., Fried, Frank, Harris,
Shriver & Jacobson, One New York Plaza, New York, New York 10004) or to
such other persons or addresses as may be designated in writing by the
party to receive such notice.
10.8. Entire Agreement, etc. This Agreement (including the
Disclosure Letter and any exhibits or Annexes hereto) (a) constitutes the
entire agreement, and supersedes all other prior agreements,
understandings, representations and warranties both written and oral, among
the parties, with respect to the subject matter hereof, and (b) shall not
be assignable by operation of law or otherwise and is not intended to
create any obligations to, or rights in respect of, any persons other than
the parties hereto; provided, however, that Purchaser may designate, by
written notice to the Company, another wholly-owned direct or indirect
subsidiary to be a Constituent Corporation in lieu of Merger Sub, in the
event of which, all references herein to Merger Sub shall be deemed
references to such other subsidiary except that all representations and
warranties made herein with respect to Merger Sub as of the date of this
Agreement shall be deemed representations and warranties made with respect
to such other subsidiary as of the date of such designation.
10.9. Definition of "Subsidiary". When a reference is made in
this Agreement to a subsidiary of a party, the word "subsidiary" means any
corporation or other organization whether incorporated or unincorporated of
which at least a majority of the securities or interests having by the
terms thereof ordinary voting power to elect at least 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.
10.10. Definition of "Knowledge". For purposes of this
Agreement "Knowledge" of the Company shall mean the actual knowledge,
without any duty or obligation to make any independent investigation, of
Norman E. Wells, Jr. and Terry D. Smith and, with respect to Section 6.1(k)
shall mean the knowledge of Waheed Kahn.
10.11. Definition of "Material Adverse Effect". For purposes
of this Agreement, "Material Adverse Effect" shall mean any material
adverse effect on the financial
<PAGE> 30
condition, properties, businesses, results of operations or prospects of
the Company and its subsidiaries taken as a whole.
10.12. Obligation of Purchaser. Whenever this Agreement
requires Merger Sub to take any action, such requirement shall be deemed to
include an undertaking on the part of Purchaser to cause Merger Sub to take
such action.
10.13. Captions. The Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to limit or otherwise affect any of
the provisions hereof.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first hereinabove written.
CASTECH ALUMINUM GROUP INC.
By /s/ Norman E. Wells, Jr.
Name: Norman E. Wells, Jr.
Title: President & Chief Executive Officer
COMMONWEALTH ALUMINUM CORPORATION
By /s/ Mark V. Kaminski
Name: Mark V. Kaminski
Title: President & Chief Executive Officer
CALC CORPORATION
By /s/ Mark V. Kaminski
Name: Mark V. Kaminski
Title: President & Chief Executive Officer
<PAGE> 1
Annex A
Certain Conditions of the Offer. Notwithstanding any other
provision of the Offer and provided that Merger Sub shall not be obligated
to accept for payment any Shares until expiration of all applicable waiting
periods under the HSR Act, Merger Sub shall not be required to accept for
payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) promulgated under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, or
may delay the acceptance for payment of or payment for, any tendered
Shares, or may, in its sole discretion, terminate or amend the Offer as to
any Shares not then paid for if a majority of the total Shares outstanding
on a fully diluted basis and as will permit Merger Sub to effect the Merger
without the vote of any person other than Merger Sub shall not have been
properly and validly tendered pursuant to the Offer and not withdrawn prior
to the expiration of the Offer (the "Minimum Condition"), or, if on or
after August 19, 1996, and at or before the time of payment for any of such
Shares (whether or not any of such Shares have theretofore been accepted
for payment), any of the following events shall occur:
(a) there shall have occurred (i) any general suspension of,
or limitation on trading in securities on the NYSE or in the over-
the-counter market (other than a shortening of trading hours or any
coordinated trading halt triggered solely as a result of a specified
increase or decrease in a market index), (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks
in the United States, (iii) a commencement of a war or armed
hostilities involving the United States and continuing for at least
three business days, or (iv) any material limitation (whether or not
mandatory) by any governmental or regulatory authority, agency,
commission or other domestic entity ("Governmental Entity"), on the
extension of credit by banks or other lending institutions and
continuing for at least three business days;
(b) the Company shall have breached or failed to perform in
any material respect its obligations, covenants or agreements under
the Merger Agreement and, with respect to any such failure that can
be remedied, the failure is not remedied within five business days
after Purchaser has furnished the Company written
<PAGE> 2
notice of such failure, or any representation or warranty of the
Company set forth in the Merger Agreement shall have been inaccurate
or incomplete in any material respect when made or thereafter shall
become inaccurate or incomplete in any material respect;
(c) there shall be instituted or pending any action,
litigation, proceeding, investigation or other application
(hereinafter, an "Action") before any court of competent jurisdiction
or other Governmental Entity by any Governmental Entity: (i) chal-
lenging the acquisition by Purchaser or Merger Sub of Shares or
seeking to restrain or prohibit the consummation of the transactions
contemplated by the Offer or the Merger; (ii) seeking to prohibit, or
impose any material limitations on Purchaser's or Merger Sub's
ownership or operation of all or a material portion of their or the
Company's business or assets, or to compel Purchaser or Merger Sub to
dispose of or hold separate all or a material portion of Purchaser's
or Merger Sub's or the Company's business or assets; (iii) seeking to
make the acceptance for payment of, purchase of, or payment for, some
or all of the Shares illegal or rendering Purchaser or Merger Sub
unable to, or restricting or prohibiting, the ability of Purchaser or
Merger Sub to accept for payment, purchase or pay for some or all of
the Shares; or (iv) seeking to impose material limitations on the
ability of Purchaser or Merger Sub effectively to acquire or hold or
to exercise full rights of ownership of the Shares including, without
limitation, the right to vote the Shares purchased by them on an
equal basis with all other Shares on all matters properly presented
to the stockholders of the Company;
(d) any statute, rule, regulation, order or injunction shall
be enacted, promulgated, entered, enforced or deemed to or become ap-
plicable to the Offer or the Merger that results in any of the
consequences referred to in clauses (i) through (iv) of paragraph (c)
above;
(e) any person, entity or group shall have entered into a
definitive agreement or an
<PAGE> 3
agreement in principle with the Company with respect to a tender
offer or exchange offer for some portion or all of the Shares or a
merger, consolidation or other business combination with or involving
the Company;
(f) there shall be a Material Adverse Effect;
(g) the Board of Directors of the Company shall have
withdrawn or amended, or modified in a manner adverse to the
Purchaser or Merger Sub, its recommendation of the Offer or the
Merger, or shall have approved or recommended any other Acquisition
Proposal, or shall have resolved to do any of the foregoing;
(h) the Merger Agreement shall have been terminated by the
Company or Purchaser or Merger Sub in accordance with its terms or
Purchaser or Merger Sub shall have reached an agreement or
understanding in writing with the Company providing for termination
or amendment of the Offer or delay in payment for the Shares;
which, in the reasonable judgment of Purchaser and Merger Sub, in any such
case, makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment of or payment for Shares.
The foregoing conditions are for the sole benefit of Purchaser
and Merger Sub and may be asserted by Purchaser or Merger Sub regardless of
the circumstances giving rise to such condition or may be waived by
Purchaser or Merger Sub, by express and specific action to that effect, in
whole or in part at any time and from time to time in its sole discretion,
except as otherwise provided in the Merger Agreement. The failure of
Purchaser or Merger Sub at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each right shall be
deemed an ongoing right which may be asserted at any time and from time to
time.
<PAGE>
Exhibit 3
Investment Banking
Corporate and
Institutional
Client Group
World Financial Center
North Tower
New York, New York
10281-1330
August 19, 1996
Board of Directors
CasTech Aluminum Group Inc.
753 West Waterloo Road
P.O. Box 3740
Akron, OH 44314-0740
Gentlemen:
CasTech Aluminum Group Inc. (the "Company"), Commonwealth Aluminum Corp.
(the "Acquiror") and CALC Corporation (the "Acquisition Sub"), a wholly-owned
subsidiary of the Acquiror, have entered into an agreement and plan of merger
(the "Agreement") pursuant to which the Acquisition Sub will make a tender offer
(the "Offer") for all shares of the Company's common stock, par value $.01 per
share (the "Shares"), at $20.50 per Share in cash. The Offer is expected to
commence no later than Friday, August 23, 1996. The Agreement also provides
that, following consummation of the Offer, the Company will be merged with the
Acquisition Sub in a transaction (the "Merger") in which each remaining Share
will be converted into the right to receive $20.50 in cash.
You have asked us whether, in our opinion, the proposed cash consideration
to be received by the holders of the Shares in the Offer (other than the
Acquiror and its affiliates) and the Merger is fair to such shareholders from a
financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1)Reviewed the Company's Annual Reports, Forms 10-K and related financial
information for the three fiscal years ended March 31, 1996 and the
Company's Forms 10-Q and the related unaudited financial information for
the quarterly periods ending December 31, 1994, June 30, 1995, September
30, 1995, December 31, 1995, and June 30, 1996;
(2)Reviewed certain information, including financial forecasts, relating to
the business, earnings, cash flow, assets and prospects of the Company
furnished to us by the Company;
(3)Conducted discussions with members of senior management of the Company
concerning its respective businesses and prospects;
(4)Reviewed the historical market prices and trading activity for the Shares
and compared them with that of certain publicly traded companies which we
deemed to be reasonably similar to the Company;
(5)Compared the results of operations of the Company with that of certain
companies which we deemed to be reasonably similar to the Company;
<PAGE>
(6)Compared the proposed financial terms of the transactions contemplated by
the Agreement with the financial terms of certain other mergers and
acquisitions which we deemed to be relevant;
(7)Reviewed the Agreement dated August 19, 1996; and
(8)Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market
and monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness of
all information supplied or otherwise made available to us by the Company, and
we have not independently verified such information or undertaken an independent
appraisal of the assets of the Company. With respect to the financial forecasts
furnished by the Company, we have assumed that they have been reasonably
prepared and reflect the best currently available estimates and judgment of the
Company's management as to the expected future financial performance of the
Company.
In connection with the preparation of this opinion, we have not been
authorized by the Board of Directors of the Company to solicit, nor have we
solicited, third-party indications of interest for the acquisition of all or any
part of the Company.
We have, in the past, provided financial advisory and financing services to
CasTech and Commonwealth and have received fees for the rendering of such
services. We acted as lead manager in CasTech's initial public offering in
October 1994. We also acted both as lead manager in Commonwealth's initial
public offering as well as lead agent in connection with a bank loan transaction
in March 1995. In addition, in the ordinary course of our business, we may
actively trade the Shares, as well as the shares of the Acquiror's common stock,
for our own account and for the accounts of customers and, accordingly, may at
any time hold a long or short position in such securities.
In addition, as of August 16, 1996, Merrill Lynch Asset Management, L.P.
("MLAM") and Fund Asset Management, L.P. ("FAM") beneficially owned
approximately 14% of the Shares. MLAM and FAM are investment advisors and
beneficially own such Shares on behalf of certain investment companies and other
investment advisory clients. Princeton Services, Inc. ("PSI") is the general
partner of MLAM and FAM, and PSI is an affiliate of Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
On the basis of, and subject to the foregoing, we are of the opinion that
the proposed cash consideration to be received by the holders of the Shares
(other than the Acquiror and its affiliates) pursuant to the Offer and Merger is
fair to such shareholders from a financial point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /S/ Jeffrey C. Lightcap
--------------------------------------
Managing Director
Investment Banking Group
<PAGE>
Exhibit 4
[CasTech Letterhead]
August 22, 1996
To Our Stockholders:
I am pleased to inform you that on August 19, 1996 CasTech Aluminum Group
Inc. entered into an Agreement and Plan of Merger (the "Merger Agreement") with
Commonwealth Aluminum Corporation and CALC Corporation, a wholly owned
subsidiary of Commonwealth Aluminum Corporation, pursuant to which CALC
Corporation has commenced a cash tender offer (the "Offer") to purchase all of
the outstanding shares of CasTech Common Stock for $20.50 per share. Under the
Merger Agreement, the Offer will be followed by a merger (the "Merger") in which
any remaining shares of CasTech Common Stock will be converted into the right to
receive $20.50 per share in cash, without interest.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE
OFFER AND THE MERGER, HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, AND
UNANIMOUSLY RECOMMENDS THAT CASTECH'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES OF COMMON STOCK PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the Securities and Exchange Commission,
including, among other things, the opinion of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, CasTech's financial advisor, that the consideration to be
received by the holders of Common Stock in the Offer and the Merger is fair to
such holders from a financial point of view.
In addition to the attached Schedule 14D-9 relating to the Offer, also
enclosed is the Offer to Purchase, dated August 22, 1996, of CALC Corporation,
together with related materials, including a Letter of Transmittal, to be used
for tendering your shares of Common Stock. These documents set forth the terms
and conditions of the Offer and the Merger and provide instructions as to how to
tender your shares. I urge you to read the enclosed material carefully.
Sincerely,
/s/ Norman E. Wells, Jr.
----------------------------------------
Norman E. Wells, Jr.
President and Chief Executive Officer
<PAGE>
EXHIBIT 6
CASTECH ALUMINUM GROUP INC.
SEVERANCE PROTECTION PLAN
WHEREAS, the Company recognizes that the possibility of a sale of the
Company could result in significant distractions to its employees because of the
uncertainties inherent in such a situation; and
WHEREAS, it is essential and in the best interest of the Company to take
steps to retain the services of certain of its employees during the period
through the consummation of such a sale and thereafter for so long as the
Company may need their continued services, and to ensure their continued
dedication and efforts in such event without undue concern for their employment
and personal financial security;
NOW, THEREFORE, in order to fulfill these purposes, the following plan is
hereby adopted which shall supersede all prior severance plans, practices or
policies of the Company in respect of the employees covered hereunder.
ARTICLE I
ESTABLISHMENT OF PLAN
1.1 As of August 18, 1996 (the "Effective Date"), the Company hereby
establishes the CasTech Aluminum Group Inc. Severance Protection Plan (the
"Plan") as set forth in this document.
ARTICLE II
DEFINITIONS
As used herein the following words and phrases shall have the following
respective meanings for purposes of the Plan unless the context clearly
indicates otherwise.
2.1 BASE PAY. A week of "Base Pay" shall mean the number produced by
dividing (a) the Participant's annual base salary at the greater of the rate in
effect (i) on the Termination Date or (ii) immediately prior to the Transaction
by (b) fifty-two (52).
<PAGE>
2.2 CAUSE. A Participant's employment will be considered to have been
terminated for "Cause" if the Participant (a) has been convicted of a felony,
(b) has failed, continuously and substantially, to perform his or her reasonably
assigned duties with the Company (other than a failure resulting from his or her
physical or mental incapacity) which failure is not remedied within a reasonable
period of time after notice of such failure is delivered to the Participant by
the Company or (c) has intentionally engaged in conduct which is demonstrably
and materially injurious to the Company. No act, or failure to act, on the
Participant's part, shall be considered "intentional" unless the Participant has
acted, or failed to act, with a lack of good faith and with a lack of reasonable
belief that the Participant's act or failure to act was in the best interest of
the Company.
2.3 COMPANY. "Company" shall mean CasTech Aluminum Group Inc. and shall
include its predecessors, Successors and Assigns.
2.4 DISABILITY. "Disability" shall mean a physical or mental infirmity
which impairs the Participant's ability to substantially perform his or her
duties with the Company for a period of one hundred eighty (180) consecutive
days and the Participant has not returned to his or her full-time employment
prior to the Termination Date as stated in the Notice of Termination.
2.5 NOTICE OF TERMINATION. "Notice of Termination" shall mean a notice of
termination of the Participant's employment from the Company which indicates the
specific termination provision in the Plan, if any, relied upon and shall set
forth in reasonable detail the facts and circumstances, if any, claimed to
provide a basis for termination of the Participant's employment under the
provision so indicated.
2.6 PARTICIPANT. "Participant" shall mean an employee who is listed on
Exhibit A attached hereto and who has not ceased to be a Participant pursuant to
Section 3.1.
2.7 SUCCESSORS AND ASSIGNS. "Successors and Assigns" as used herein shall
mean a corporation or other entity acquiring all or substantially all the assets
and business of the Company at the time whether by operation of law or
otherwise.
2.8 TERM. "Term" shall mean the period of time the Plan remains effective
as provided in Section 7.1.
2.9 TERMINATION DATE. "Termination Date" shall mean the date of a
Participant's termination of employment as determined pursuant to Section 5.2.
2
<PAGE>
2.10 TRANSACTION. "Transaction" shall mean the change in ownership of a
majority of the outstanding voting stock of the Company, a sale of all or
substantially all of the ownership interest in or the assets of the Company, or
any transfer of ownership of the Company so as to vest control of the Company in
one single or commonly controlled shareholder.
ARTICLE III
ELIGIBILITY
3.1 PARTICIPATION. Each employee who is listed on Exhibit A attached
hereto shall become a Participant as of the Effective Date; PROVIDED, HOWEVER,
that a Participant shall cease to be a Participant if he or she ceases to be an
employee of the Company at any time prior to a Transaction. A Participant who
becomes entitled to receive any amounts provided for in this Plan shall remain a
Participant in the Plan until all amounts, if any, he or she is entitled to have
been paid to him or her.
ARTICLE IV
TERMINATION BENEFITS
4.1 PAYMENT IN EVENT OF CERTAIN TERMINATIONS OF EMPLOYMENT.
In the event that during the Term a Transaction occurs and within
two (2) years thereafter a Participant's employment with the Company is
terminated by the Company other than by reason of Disability, mandatory
retirement in accordance with the Company's retirement policy generally
applicable to its salaried employees as in effect immediately prior to the
Change in Corporate Control or for Cause, the Participant shall be entitled
to receive, in full satisfaction of any claims he may have against the
Company resulting from his termination of employment (other than claims
pursuant to writtten plans or policies in effect on the Termination Date),
the following payments and benefits under the Plan, as applicable:
(a) If the Participant is in Group I as indicated on Exhibit A:
(i) within ten (10) days after the Participant's Termination
Date the Company shall pay to the Participant a lump-sum cash
amount equal to the sum of (A) the Participant's salary through
the Termination Date, to the extent not theretofore paid, and (B)
a pro
3
<PAGE>
rata portion of the Participant's annual bonus in an amount at
least equal to the product of (X) the greater of (1)
Participant's target bonus for the fiscal year in which the
Transaction occurs and (2) Participant's target bonus for the
fiscal year in which Participant's Termination Date occurs,
multiplied by (Y) a fraction, the numerator of which is the
number of days in the fiscal year in which the Termination Date
occurs through the Termination Date and the denominator of which
is three hundred sixty-five (365);
(ii) within ten (10) days after the Participant's
Termination Date the Company shall pay to the Participant
severance pay in a lump-sum cash amount equal to three (3) weeks
of the Participant's Base Pay for each year of service the
Participant has completed with the Company; PROVIDED, HOWEVER,
that the Participant shall be entitled to receive severance pay
in an amount that is no less than twelve (12) weeks and no
greater than fifty-two (52) weeks of Base Pay; and
(iii) the Company shall continue on behalf on the
Participant and his or her dependents and beneficiaries
substantially the same medical, dental, accident, disability and
life insurance benefits provided to the Participant by the
Company immediately prior to his or her Termination Date (at the
same cost of coverage to the Participant) for a number of weeks
equal to the number of weeks of the Participant's Base Pay paid
pursuant to Section 4.1(a)(ii); PROVIDED, HOWEVER, that the
Participant shall be entitled to receive such insurance coverage
for a period that is no less than twelve (12) weeks and no
greater than fifty-two (52) weeks. Notwithstanding the
foregoing, in the event the Participant becomes reemployed with
another employer and becomes eligible to receive welfare benefits
from such employer, the welfare benefits described herein shall
be secondary to such benefits during the period of the
Participant's eligibility, but only to the extent that the
Company reimburses the Participant for any increased cost and
provides any additional benefits necessary to give the
Participant the benefits provided hereunder.
(b) If the Participant is in Group II as indicated on Exhibit A:
(i) within ten (10) days after the Participant's Termination
Date the Company shall pay to the Participant a lump-sum cash
4
<PAGE>
amount equal to the sum of (A) the Participant's salary through
the Termination Date, to the extent not theretofore paid, and (B)
a pro rata portion of the Participant's annual bonus in an amount
at least equal to the product of (X) the greater of (1)
Participant's target bonus for the fiscal year in which the
Transaction occurs and (2) Participant's target bonus for the
fiscal year in which Participant's Termination Date occurs,
multiplied by (Y) a fraction, the numerator of which is the
number of days in the fiscal year in which the Termination Date
occurs through the Termination Date and the denominator of which
is three hundred sixty-five (365);
(ii) within ten (10) days after the Participant's
Termination Date the Company shall pay to the Participant a lump-
sum cash amount equal to fifty-two (52) weeks of the
Participant's Base Pay; and
(iii) the Company shall continue on behalf of the
Participant and his or her beneficiaries substantially the same
medical, dental, accident, disability and life insurance benefits
provided to the Participant by the Company prior to his or her
Termination Date (at the same cost of coverage to the
Participant) for a period of fifty-two (52) weeks.
Notwithstanding the foregoing, in the event the Participant
becomes reemployed with another employer and becomes eligible to
receive welfare benefits from such employer, the welfare benefits
described herein shall be secondary to such benefits during the
period of the Participant's eligibility, but only to the extent
that the Company reimburses the Participant for any increased
cost and provides any additional benefits necessary to give the
Participant the benefits provided hereunder.
4.2 MITIGATION. The Participant shall not be required to mitigate the
amount of any payment provided for in the Plan by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Participant in any subsequent
employment, except to the extent set forth in Sections 4.1(a)(iii) and
4.1(b)(iii).
4.3 OTHER BENEFITS. The Participant's entitlement to any other
compensation or benefits shall be determined in accordance with the Company's
employee benefit plans and other applicable programs, policies and practices as
from time to time in effect. The Company may require, as a condition to the
Participant receiving payments or benefits hereunder, that he provide the
Company an enforceable
5
<PAGE>
release releasing the Company and its affiliates from any claims he may have
based upon his termination (other than claims pursuant to written plans or
policies in effect on the Termination Date), including, but not limited to the
Age Discrimination in Employment Act of 1967, to the extent permitted by
applicable law.
ARTICLE V
TERMINATION OF EMPLOYMENT
5.1 NOTICE OF TERMINATION REQUIRED. Following a Transaction, any
purported termination of the Participant's employment by the Participant or the
Company shall be communicated by Notice of Termination to the Company or the
Participant, as the case may be. For purposes of the Plan, no such purported
termination shall be effective without such Notice of Termination.
5.2 ESTABLISHMENT OF TERMINATION DATE. A Participant's Termination Date
shall be the date specified in the Notice of Termination; PROVIDED, HOWEVER,
that (a) if the Participant's employment is terminated by the Company without
Cause, the date specified in the Notice of Termination shall be at least
fourteen (14) days from the date the Notice of Termination is given to the
Participant; and (b) if the Participant's employment is terminated by the
Company due to Disability, the date specified in the Notice of Termination shall
be at least thirty (30) days from the date the Notice of Termination is given to
the Participant.
ARTICLE VI
SUCCESSORS AND ASSIGNS
6.1 SUCCESSORS AND ASSIGNS.
(a) The Plan shall be binding upon and shall inure to the benefit of
the Company and its Successors and Assigns. The Company shall use its best
efforts to require any Successor or Assign to expressly assume and agree to
perform the Plan in the same manner and to the same extent that the Company
would be required to perform it if no such succession or assignment had taken
place.
(b) Neither the Plan nor any right or interest hereunder shall be
assignable or transferable by the Participant, his or her beneficiaries or legal
representatives, except by will or by the laws of descent and distribution;
PROVIDED,
6
<PAGE>
HOWEVER, that the Plan shall inure to the benefit of and be enforceable by the
Participant's legal personal representative.
ARTICLE VII
TERM, AMENDMENT AND PLAN TERMINATION
7.1 TERM; TERMINATION. The Plan shall continue in effect until the first
anniversary of the Effective Date (unless extended by the Company) at which time
the Plan shall terminate; PROVIDED, HOWEVER, that (a) if a Transaction occurs,
the Plan shall not terminate until the later of (i) two (2) years following such
Transaction and (ii) such time as all compensation and benefits payable
hereunder have been paid to Participants; and (b) if a definitive agreement is
executed by the Company while the Plan is in effect and the transaction(s)
contemplated therein would, if consummated, constitute a Transaction, then, if
the Transaction occurs pursuant to that agreement it will be deemed to have
occurred while the Plan is in effect and the Plan shall not terminate until the
later of (i) two (2) years following such Transaction and (ii) such time as all
compensation and benefits payable hereunder have been paid to Participants.
Upon the termination of the Plan pursuant to this Section 7.1, no amount shall
be payable to or in respect of any Participant if either a Transaction shall not
have occurred or deemed to have occurred during the Term or the Participant's
Termination Date shall not have occurred on or prior to the date of the Plan
termination. The termination of the Plan shall have no effect on the Company's
obligations to or in respect of any Participant whose Termination Date occurred
on or prior to the date of the Plan termination under circumstances entitling
the Participant to benefits pursuant to Section 4.1.
7.2 AMENDMENT. Subject to Section 7.1, the Plan may be amended in any
respect by the Board; PROVIDED, HOWEVER, (a) that no such amendment of the Plan
during the Term may be made following a Transaction and (b) no such amendment
shall reduce the amount of severance pay or benefits payable pursuant to this
Plan.
ARTICLE VIII
MISCELLANEOUS
8.1 CONTRACTUAL RIGHT. Upon and after a Transaction, each Participant
shall have a fully vested, nonforfeitable contractual right, enforceable against
the
7
<PAGE>
Company, to the benefits provided for under Section 4.1 of the Plan upon
satisfaction of the applicable conditions specified in that Section.
8.2 EMPLOYMENT STATUS. Each Eligible Employee shall continue in his or
her status as an employee-at-will and the Plan does not constitute a contract of
employment.
8.3 NOTICE. For the purposes of the Plan, notices and all other
communications provided for in the Plan (including the Notice of Termination)
shall be in writing and shall be deemed to have been duly given when personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to the other.
All notices and communications shall be deemed to have been received on the
earlier of the date of delivery thereof or on the third business day after the
mailing thereof, except that notice of change of address shall be effective only
upon receipt.
8.4 NON-EXCLUSIVITY OF RIGHTS. Nothing in the Plan shall prevent or limit
the Participant's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company for which the
Participant may qualify, nor shall anything herein limit or reduce such rights
as the Participant may have under any other agreements with the Company;
PROVIDED, HOWEVER, that this Plan shall supersede all other severance plans,
practices or policies of the Company or its affiliates applicable to the
Participants. Amounts which are vested benefits or which the Participant is
otherwise entitled to receive under any plan, program, policy or practice of the
Company shall be payable in accordance with such plan, program, policy or
practice except as explicitly modified by the Plan. No additional compensation
provided under any benefit or compensation plans to the Participant shall be
deemed to modify or otherwise affect the terms of the Plan or any of the
Participant's entitlements hereunder.
8.5 LEGAL FEES. The Company shall pay all legal fees and related expenses
reasonably incurred by a Participant as a result of the Participant seeking to
obtain or enforce any right or benefit provided by this Plan.
8.6 NO FUNDING REQUIRED. All benefits under the Plan shall be paid by the
Company. The Plan shall be unfunded and the benefits hereunder shall be paid
only from the general assets of the Company.
8.7 GOVERNING LAW. The validity, interpretation, construction and
performance of the Plan shall, to the extent not preempted by federal law, in
all respects be governed by and construed and enforced in accordance with the
laws of the state of Ohio without giving effect to the conflict of law
principles thereof.
8
<PAGE>
8.8 VALIDITY AND SEVERABILITY. The invalidity or unenforceability of any
provision of the Plan shall not affect the validity or enforceability of any
other provision of the Plan, which shall remain in full force and effect, and
any prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9
<PAGE>
EXHIBIT A
CASTECH ALUMINUM GROUP INC.
SEVERANCE PROTECTION PLAN
PARTICIPANT'S LIST
------------------------------------------
GROUP I
Judi Adam Deborah Bozsik Jeffrey Byrd Steven Chapman
John Covey Debbie Davis Victor DiCola James Dockey
Bette Faller Jeff Fostyk Joyce Frase Jennifer Fraser
Harry Graham Beverly Kleptach Vickie McDaniel Carla Menhorn
Barbara Moore Jack O'Beirne Joseph O'Dowd Ronald Reeves
Lynn Rositer Alice Seamon Richard Sharnsky Ronald Smith
Daniel Steffey Joseph Trujillo Wendy Vanik Ann Wenger
Bryan Whittaker Monica Wilkinson Robin Young
GROUP II
Chris Cannon Dave Brackett
Dave Slagle Mike McGukin
Scott Emerick Tina Gregory
Bill Hetzler Keith Burlingame
Mike Vucelich Joy Lang
<PAGE>
EXHIBIT 7
BARMET ALUMINUM CORPORATION
RESTATED AND AMENDED
LONGEVITY INCENTIVE AGREEMENT
THIS AGREEMENT is entered into on 19 effective
, 19 , by and between Barmet Aluminum Corporation, with its
principal place of business located at 753 West Waterloo Road, Akron, Ohio
(hereinafter called the "Company") and (hereinafter
called the "Employee").
Because the Employee holds a key executive position in the Company
and possesses substantial knowledge of and experience in the business of the
Company, it is in the Company's best interest to encourage the Employee to
remain in his/her position until Normal Retirement Date.
Therefore, the Company and the Employee agree as follows:
1.0 TERM OF AGREEMENT
1.1 This Agreement shall be effective as of the date written above and shall
remain in effect until the earlier of the Employee's Normal Retirement
Date, the Employee's voluntary termination of employment prior to Normal
Retirement Date, or the Company's termination of the Employee's employment
for just cause prior to the Normal Retirement Date.
1.2 Normal Retirement Date shall be the Employee's 65th birthday.
2.0 RETIREMENT INCOME
2.1 Upon attaining Normal Retirement Date, if the Employee has remained
continuously in the employ of the Company, the Employee may elect at any
time to retire, whereupon the Company shall pay retirement income in the
monthly amount of $ to the Employee or to the Employee's spouse
(or other designated beneficiary), so long as either shall live.
"Employee's spouse" shall refer only to a person to whom the Employee
is legally married as of the date of execution of this Agreement.
2.2 If Employee's spouse at Normal Retirement Date is different than
Employee's spouse at the time of execution of this Agreement, then the
monthly income amount in Section 2.1 shall be actuarially adjusted to
reflect any difference in the age between the assumption made when this
Agreement was executed and the actual age of the then Employee's spouse.
Before the change, if any, is made effective, the new income amount will
be communicated to the Employee.
2.3 At Normal Retirement Date, the monthly income amount in Section 2.1, or the
monthly income amount, actuarially adjusted as outlined in 2.2, will be
paid as long as the Employee, or the Employee's spouse as of the date of
the first monthly income payment, shall live. Once monthly income payments
commence, there shall be no changes or adjustments to the amount paid.
<PAGE>
2.4 Should Employee desire to retire from the Company after attaining age
60, and should Company agree to such early retirement, the Company and
Employee shall determine the actuarially reduced benefit to be provided to
Employee under this Paragraph.
3.0 DISABILITY
3.1 In the event of total disability prior to the attainment of the Normal
Retirement Date, the projected benefits as of such event will be reduced.
This monthly benefit will commence to the Employee or to the Employee's
spouse (or other designated beneficiary) on the date the Employee attains
or would have attained age 65.
A. Total disability will be determined by one of the following
independent third parties:
1. If the Employee has not yet attained age 60 when disability commences,
and as a result of the disability the Employee qualifies for the
"Waiver of Group Life Insurance Premiums" as determined by the life
insurance company underwriting the Group Life Insurance Plan for
Barmet Aluminum Corporation, then the Employee will be considered
totally disabled for purposes of the Longevity Incentive Agreement.
2. If the Employee shall have attained age 60, but, shall not have
attained age 65 when disability commences, the Employee will be
considered totally disabled for purposes of the Longevity Incentive
Agreement, if the Employee qualifies for the Social Disability
Benefits under the Federal Social Security Act.
B. Failure to complete all required forms and supply all required information
to the insurance carrier if the Employee has not attained age 60, or
failure to complete all required forms and supply all required information
to the Social Security Administration, if the Employee has attained age 60
but not attained age 65, will result in the Employee not being considered
totally disabled for purposes of this Agreement.
C. The schedule of reduction factors listed below in this Paragraph 3C will
be effective from the beginning of the calendar year of determination of
total disability until Normal Retirement Date ("NRD") and will
determine the benefit payable:
SCHEDULE OF DISABILITY BENEFIT REDUCTION FACTORS
Calendar Year Reduction Factor (%) per Year from
of Disability Calendar Year of Disability to NRD
------------- ----------------------------------
1996 3.72
1997 3.56
1998 3.39
1999 3.25
2000 3.10
2001 2.95
2002 2.81
2003 2.68
<PAGE>
SCHEDULE OF DISABILITY BENEFIT REDUCTION FACTORS (cont'd)
Calendar Year Reduction Factor (%) per Year from
of Disability Calendar Year of Disability to NRD
------------- ----------------------------------
2004 2.55
2005 2.42
2006 2.29
2007 2.16
2008 2.01
2009 1.85
2010 1.65
2011 1.37
2012 1.00
D. In the event of the Employee's death while covered by this Section 3.0,
and prior to attaining age 65, then, as of the date which would have been
the Employee's Normal Retirement Date, the Employee's spouse (or other
designated beneficiary) will receive the reduced benefit the Employee
would have been entitled to under the appropriate subsection 3.1
Section 3.0.
4.0 DEATH
4.1 In the event of the Employee's death prior to reaching Normal Retirement
Date, when Employee is not covered under Section 3.0, and in lieu of any
other benefit contained in this Agreement, the Employer shall pay to the
Employee's spouse (or other designated beneficiary) within a reasonable
period of time after death of the Employee, a lump sum of $
subject to appropriate federal, state and local tax requirements.
4.2 In the event of the Employee's death prior to reaching Normal Retirement
Date, and in the event the Employee is covered under the provisions of
Section 3.0, and in lieu the reduced benefit at Normal Retirement Date
as outlined in Section 3.1C, the Employer, at the election of the
designated beneficiary, may pay a reduced death benefit the amount of
which would determined by the Employer at the time of Employees death
while disabled.
5.0 TERMINATION FOR JUST CAUSE
5.1 For purposes of this Agreement, the term "termination of employment for
just cause" shall mean the Employee's termination of employment with the
Company for:
(A) disclosing information of a proprietary nature to other companies
competing with the Company, either foreign or domestic, without the
authorization of the Company's Chief Executive Officer;
(B) intentional or habitual neglect of his duties to the Company; or
<PAGE>
(C) theft or misappropriation of Company funds or the commission of a
felony or crime of moral turpitude, whether or not related to his
duties to the Company.
6.0 SALE OF ASSETS
6.1 Upon termination of Employee's employment within three (3) years after a
Change in Corporate Control for any reason other than termination of
employment for just cause, the Company or its successor shall, make an
irrevocable single contribution or irrevocable equal annual contributions,
at the option of the Employee, to the trust to fund Employee's benefit as
if he worked for the Company until his Normal Retirement Date. For
purposes of this Section 6.0, a "Change in Corporate Control" shall be
deemed to include a change in ownership of a majority of the outstanding
voting stock of the Company, a sale of all or substantially all of the
Company's assets, or any transfer of ownership of sufficient shares of
the Company's assets, or any transfer of ownership of sufficient shares
of the Company's parent (CasTech Aluminum Group, Inc.) so as to vest
control of the Company in one single or commonly controlled shareholder.
7.0 DESIGNATED BENEFICIARY
7.1 Upon execution of this Agreement, Employee shall designate, in writing,
on the appropriate form provided by the Company, the person, persons or
entity to whom payments of the benefits and/or deferred compensation, as
set forth in this Agreement shall be made in the event of the Employee's
death.
8.0 ASSIGNMENT
8.1 Except as set forth herein, no rights of any kind under this Agreement
shall, without the written consent of the Company, be transferable or
assignable by the Employee, any beneficiary hereunder or any other person,
or be subject to alienation, encumbrance, garnishment, attachment,
execution or levy of any kind, either voluntary or involuntary. This
Agreement shall be binding upon and shall inure to the benefit of the
Company, its successors and assigns.
9.0 PROTECTIVE COVENANTS
9.1 The Employee shall not disclose to anyone outside the Company either
directly or indirectly any confidential matters of the Company including
without limitation, trade secrets, customer lists, pricing policies,
operating methods or any proprietary information of any nature, unless
such disclosure is properly made in the course of performing his duties
with the Company or with express written consent of the Chief
Executive Officer. The Employee shall not disclose to any information
relating to his personal compensation arrangement including but not
limited to the existence of or the terms and conditions of this Agreement
except to his or her personal financial advisor or as may be required
by law.
9.2 As further consideration for the agreements of the Company contained
herein and as a condition to the performance by the Company of its
obligations hereunder, throughout the entire time that the Company is
obligated to make payments to Employee as provided herein, Employee shall
not engage in, obtain an interest in, directly or indirectly, whether as a
sole proprietor, as a partner in a partnership, or as a shareholder in a
corporation, nor become associated with, whether in the capacity of an
employee, director, officer, principal, agent, trustee, or in any other
capacity, any enterprise that is a competitor in any product of the
Company in any
<PAGE>
geographic area without the express and written consent of
the Chief Executive Officer.
9.3 In the event of any breach by Employee of the agreements and covenants
contained in this Section 9.0, the Company may suspend the payments of
any unpaid balance to Employee and thereupon notify the Employee of such
suspension in writing. Thereafter, if the Company shall determine that
said breach by Employee has continued following notification of such
suspension, the Company may, in addition to any other rights it might have
under law, terminate all rights of the Employee and his beneficiaries
under this Agreement, including rights to further payments.
10.0 ERISA PROVISIONS AND ADMINISTRATION
10.1 CLAIM FOR BENEFITS
(a) Any claim for Benefits shall be made to the Company, which is the
Administrator for purposes of this Agreement. If the Administrator denies
a claim, the Administrator shall provide notice to the Employee or
beneficiary, in writing, within ninety (90) days after the claim is filed
unless special circumstances require an extension of time for processing
the claim. If the Administrator does not notify the Participant of the
denial of the claim within the ninety (90) day period specified above,
then the claim shall be deemed denied. The notice of a denial of a claim
shall be written in a manner calculated to be understood by the claimant
and shall set forth:
(1) specific references to the pertinent Agreement provisions on
which the denial is based;
(2) a description of any additional material or information
necessary for the claimants to perfect the claim and an
explanation as to why such information is necessary; and
(3) an explanation of the Agreement's claim procedure.
(b) Within sixty (60) days after receipt of the above material,
the claimant shall have a reasonable opportunity to appeal the claim
denial to the Administrator for a full and fair review. The claimant
or his duly authorized representative may:
(1) request a review upon written notice to the Administrator;
(2) review pertinent documents; and
(3) submit issues and comments in writing.
(c) A decision on the review by the Administrator will be made not later
than sixty (60) days after receipt of a request for review, unless special
circumstances require an extension of time for processing (such as the
need to hold a hearing), in which event a decision should be rendered as
soon as possible, but in no event later than one hundred twenty (120) days
after such receipt. The decision of the Administrator shall be written and
shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, with specific reference to
the pertinent Agreement provision upon which the decision is based.
<PAGE>
(d) The Administrator shall have full power and discretionary authority
to determine whether claims received or issues raised by a request for a
review have merit. The Administrator shall also have full power and
discretionary authority to construe, define, or interpret, any provisions
in this Agreement. Whenever the Administrator makes determination with
respect to the Agreement, such determination shall be binding on all
parties, and thereafter subject only to limited judicial review to
determine if that action, decision or determination was arbitrary or
capricious.
10.2 STATEMENT OF ERISA RIGHTS
The people who operate this Agreement, called fiduciaries of the
Agreement, have a duty to so prudently and in the interest of you and
your designated beneficiaries. No one, including your employer or any
other person, may fire you or otherwise discriminate against you in any
way to prevent you from exercising your rights under ERISA. If your
claims for a benefit are denied in whole or in part, you must receive
a written explanation of the reason for the denial. You have the right to
have your claim reviewed and reconsidered. If you have a claim for
benefits which is denied or ignored, in whole or in part, you may file
suit in a state or federal court. If it should happen that these named
fiduciaries misuse the money designated for this Agreement, or if you are
discriminated against for asserting your rights, you may seek assistance
from the U.S. Department of Labor, or you may file suit in a federal
court. The Court will decide who should pay court costs and legal fees.
If you are successful, the Court may order the person you have sued, to
pay those costs and legal fees. If you lose your suit, the Court may
order you to pay these costs and fees, if for example, if finds your
claims to be frivolous.
10.3 AGREEMENT ADMINISTRATION
The operation of the Agreement shall be under the supervision of the
Administrator. It shall be a principal duty of the Administrator to see
that the Agreement is carried out in accordance with its terms, and for
the exclusive benefit of the Employees entitled to participate in the
Agreement. The Administrator shall have full power to administer the
Agreement in all of its details subject, however, to the pertinent
provisions of governing law. The Administrator's powers shall include,
but shall not be limited to the following authority, in addition to all
other powers provided by this Agreement:
(a) to make and enforce such rules and regulations as the Administrator
deems necessary or proper for the efficient administration of this
Agreement; and
(b) to interpret the Agreement, the Administrator's interpretation
thereof in good faith to be final and conclusive on all persons
claiming benefits under this Agreement.
11.0 MISCELLANEOUS
11.1 TAXES
The Employee or his successor in interest shall be responsible for the
payment of all individual taxes resulting from the payment of benefits
under this Agreement.
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11.2 EMPLOYMENT RIGHTS
Neither this Agreement nor any action taken hereunder shall be construed
as giving the Employee the right to be retained in the employment of the
Company, nor shall it interfere with the right of the Company to
discharge or otherwise deal with the employee.
11.3 INDEPENDENCE OF BENEFITS
The benefits payable under this Agreement shall be independent of, and
in addition to, any other benefits or compensation, whether by salary,
bonus or otherwise, payable uder any other arrangements which now exist
or may hereafter exist between the Company and the Employee.
11.4 LEAVE OF ABSENCE
The Company may, in its sole discretion, permit the Employee to take a
leave of absence. During such leave, the Employee shall still be
considered to be in the continuous employment of the Company for purposes
of this Agreement.
11.5 AMENDMENT
During the lifetime of the Employee, this Agreement may be amended or
terminated at any time, in whole or in part, by the mutual written
consent of the parties hereto.
11.6 ENTIRE UNDERTAKING
This Agreement sets forth the entire understanding of the parties and
supersedes all prior Agreements, communications or representations,
whether oral or written by any officer, employee or representative of
any party and it is further agreed that any statements not incorporated
herein are of no force and effect.
11.7 GOVERNING LAW
This Agreement, to the extent not preempted by applicable federal law,
shall be construed, enforced, and administered according to the laws of
the State of Ohio.
IN WITNESS WHEREOF, this Agreement is entered into as of the date first
written above.
Company:
BARMET ALUMINUM CORPORATION
BY:
TITLE:
Employee:
---------------------------
---------------------------
(Print Name)
<PAGE>
EXHIBIT 8
FIRST AMENDMENT TO THE
BARMET ALUMINUM CORPORATION
RESTATED AND AMENDED
LONGEVITY INCENTIVE AGREEMENT
WHEREAS, Barmet Aluminum Corporation (the "Company") and [ ]
(the "Employee") entered into a Restated and Amended Longevity Incentive
Agreement, effective as of November 1, 1995 (the "Agreement");
WHEREAS, pursuant to the Agreement, upon the Employee's retirement from the
Company after attaining his Normal Retirement Date (as defined in the
Agreement), the Company is required to provide monthly retirement income to the
Employee;
WHEREAS, the Agreement provides that, upon termination of Employee's
employment within the three year period after a "Change in Corporate Control"
(as defined in the Agreement), the Company is required to make an irrevocable
contribution to a trust in order to fund the Employee's monthly retirement
benefit as if he worked until his Normal Retirement Date;
WHEREAS, the Company and the Employee desire to amend the Agreement (a) to
provide that, in the event of the termination of Employee's employment within
the two year period after a Change in Corporate Control, the Employee may
require the Company to pay to the Employee a lump sum cash payment equal to the
amount necessary to fund the Employee's monthly retirement benefit as if he
worked until his Normal Retirement Date and (b) to make certain other changes;
NOW, THEREFORE, the Agreement is amended as follows:
1. Section 1.1 is replaced in its entirety by the following:
"This Agreement shall be effective as of the date first written
above and shall remain in effect until the earlier of (A) the
Employee's voluntary termination of employment prior to Normal
Retirement Date (other than for Good Reason under the
circumstances described in Section 6.1 hereof), (B) the Company's
termination of the Employee's employment for Just Cause prior to
the Normal Retirement Date, or (C) the date on which the Company
makes the lump sum payment provided for under Section 6.1
hereof."
2. Section 5.1 is replaced in its entirety by the following:
"For purposes of this Agreement, "Just Cause" means (A) a
material breach by Employee of the duties and responsibilities of
Employee (other than as a result of incapacity due to physical or
mental illness) which is (1) demonstrably willful and deliberate
on Employee's part, (2) committed in bad faith or without
reasonable belief that such breach is in the best interests of
the Company and (3) not remedied in a
<PAGE>
reasonable period of time after receipt of written notice from the
Company specifying such breach or (B) the Employee's conviction of, or
plea of NOLO CONTENDERE to, a felony involving moral turpitude. Just
Cause shall not exist unless and until the Company has delivered to
Employee a copy of a resolution duly adopted by three-quarters (3/4)
of the entire Board of Directors of the Company (the "Company's
Board") at a meeting of the Company's Board called and held for such
purpose (after reasonable notice to Employee and an opportunity for
Employee, together with counsel, to be heard before the Company's
Board), finding that in the good faith opinion of the Company's Board
an event set forth in clauses (A) or (B) has occurred and specifying
the particulars thereof in detail. The Company must notify Employee
of any event constituting Just Cause within ninety (90) days following
the Company's knowledge of its existence or such event shall not
constitute Just Cause under this Agreement."
3. Section 6.1 is replaced in its entirety by the following:
"Upon termination of Employee's employment within two (2) years
after a Change in Corporate Control (as defined below) either (A)
by the Company other than a termination of employment for Just
Cause, physical or mental disability or mandatory retirement in
accordance with the Company's retirement policy generally
applicable to its salaried employees as in effect immediately
prior to the Change in Corporate Control or (B) by the Employee
for Good Reason (as defined below), the Company or its successors
and assigns shall, within ten (10) days after the Employee's
termination, pay in a lump sum an amount in cash equal to the
amount which would be required as of the Employee's date of
termination to fully fund Employee's retirement benefit hereunder
assuming he continued to work for the Company until his Normal
Retirement Date. The lump sum amount shall be paid to one of the
following, as selected by the Employee: (i) the pre-paid premium
account established in respect of the life insurance policy
(policy #_________ or any successor policy) used to fund
Employee's benefit under this Agreement or (ii) to the Employee
directly. In addition, if option (i) is selected, the Company
shall, prior to the payment of the amount set forth in Section
6.1(i), immediately assign to the Employee the life insurance
policy (policy #_________ or any successor policy) used to fund
Employee's benefit under this Agreement. The amount of the lump
sum payment shall be determined based on reasonable assumptions
by Ernst & Young LLP in conjunction with the relevant insurance
company.
For purposes of this Section 6.1, a "Change in Corporate Control"
means the occurrence of any one of the following events:
(i) any "person" (as such term is defined in section
3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange
Act") and as used in Sections 13(d)(3) and 14(d)(2) of the
Exchange Act) is or becomes a "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of CasTech Aluminum Group, Inc. (the "Corporation")
representing 20% or more of the
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<PAGE>
combined voting power of the Corporation's then outstanding securities
eligible to vote for the election of the Corporation's Board of
Directors (the "Corporation Voting Securities"); PROVIDED, HOWEVER,
that the event described in this paragraph (i) shall not be deemed to
be a Change in Corporate Control by virtue of any of the following
acquisitions: (A) by the Corporation or any Subsidiary, (B) by any
employee benefit plan sponsored or maintained by the Corporation or
any Subsidiary, (C) by any underwriter temporarily holding securities
pursuant to an offering of such securities, (D) pursuant to a Non-
Control Transaction (as defined in paragraph (iii)), (E) pursuant to
any acquisition by Employee or any group of persons including Employee;
or (F) a transaction (other than one described in (iii) below) in which
Corporation Voting Securities are acquired from the Corporation, if a
majority of the Incumbent Board (as defined below) approves a
resolution providing expressly that the acquisition pursuant to this
clause (F) does not constitute a Change in Corporate Control under this
paragraph (i);
(ii) individuals who, on August 18, 1996, constitute the
Corporation's Board of Directors (the "Incumbent Board") cease
for any reason to constitute at least a majority thereof,
PROVIDED that any person becoming a director subsequent to August
18, 1996, whose election or nomination for election was approved
by a vote of at least two-thirds of the directors comprising the
Incumbent Board (either by a specific vote or by approval of the
proxy statement of the Corporation in which such person is named
as a nominee for director, without objection to such nomination)
shall be considered a member of the Incumbent Board; PROVIDED,
HOWEVER, that no individual initially elected or nominated as a
director of the Corporation as a result of an actual or
threatened election contest with respect to directors or any
other actual or threatened solicitation of proxies or consents by
or on behalf of any person other than the Corporation's Board of
Directors shall be deemed to be a member of the Incumbent Board;
(iii) the consummation of a merger, consolidation, share
exchange or similar form of corporate reorganization of the
Corporation or any such type of transaction involving the
Corporation or any of its Subsidiaries that requires the approval
of the Corporation's stockholders (whether for such transaction
or the issuance of securities in the transaction or otherwise),
or the consummation of the direct or indirect sale or other
disposition of all or substantially all of the assets, of the
Corporation and its Subsidiaries (a "Business Combination"),
unless immediately following such Business Combination: (A) more
than 60% of the total voting power of the publicly traded
corporation resulting from such Business Combination (including,
without limitation, any corporation which directly or indirectly
has beneficial ownership of 100% of the Corporation Voting
Securities or all or substantially all of the assets of the
Corporation and its Subsidiaries) eligible to elect directors of
such corporation is represented by shares that were Corporation
Voting Securities immediately prior to such Business Combination
(either by remaining outstanding or being converted), and such
voting power is in substantially the same proportion as the voting
power of such Corporation Voting Securities immediately
3
<PAGE>
prior to the Business Combination, (B) no person (other
than any publicly traded holding company resulting from such Business
Combination, any employee benefit plan sponsored or maintained by the
Corporation (or the corporation resulting from such Business
Combination), or any person which beneficially owned, immediately
prior to such Business Combination, directly or indirectly, 20% or
more of the Corporation Voting Securities (a "Corporation 20%
Stockholder")) becomes the beneficial owner, directly or indirectly,
of 20% or more of the total voting power of the outstanding voting
securities eligible to elect directors of the corporation resulting
from such Business Combination and no Corporation 20% Stockholder
increases its percentage of such total voting power, and (C) at least
a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the Corporation's Board of Director's approval of
the execution of the initial agreement providing for such Business
Combination (a "Non-Control Transaction"); or
(iv) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation.
Notwithstanding the foregoing, a Change in Corporate Control
of the Corporation shall not be deemed to occur solely because
any person acquires beneficial ownership of more than 20% of the
Corporation Voting Securities as a result of the acquisition of
Corporation Voting Securities by the Corporation which, by
reducing the number of Corporation Voting Securities outstanding,
increases the percentage of shares beneficially owned by such
person; PROVIDED, that if a Change in Corporate Control the
Company would occur as a result of such an acquisition by the
Corporation (if not for the operation of this sentence), and
after the Corporation's acquisition such person comes the
beneficial owner of additional Corporation Voting Securities that
increases the percentage of outstanding Corporation Voting
Securities beneficially owned by such person, then a Change in
Corporate Control of the Corporation shall occur.
Notwithstanding anything in this Agreement to the contrary, if
Employee's employment is terminated prior to a Change in
Corporate Control, and Employee reasonably demonstrates that such
termination was at the request of a third party who has indicated
an intention or taken steps reasonably calculated to effect a
Change in Corporate Control (a "Third Party") and who effectuates
a Change in Corporate Control, then for all purposes of this
Agreement, the date of a Change in Corporate Control shall mean
the date immediately prior to the date of such termination of
employment.
For purposes of this Section 6.1, "Good Reason" shall mean, without
Employee's express written consent, the occurrence of any of the
following events after a Change in Corporate Control:
4
<PAGE>
(1) (i) the assignment to Employee of any duties or
responsibilities inconsistent in any adverse respect with
Employee's position(s), duties, responsibilities or status with
the Company immediately prior to such Change in Corporate Control
(including any diminution of such duties or responsibilities) or
(ii) an adverse change in Employee's reporting responsibilities,
titles or offices with the Company as in effect immediately prior
to such Change in Corporate Control;
(2) a reduction by the Company in Employee's rate of annual base
salary or annual target bonus opportunity (including any adverse
change in the formula for such annual bonus target) as in effect
immediately prior to such Change in Corporate Control or as the
same may be increased from time to time thereafter;
(3) any requirement of the Company that Employee (i) be based
anywhere more than fifty (50) miles from the facility where
Employee is located at the time of the Change in Corporate
Control or (ii) travel on Company business to an extent
substantially greater than the travel obligations of Employee
immediately prior to such Change in Corporate Control; or
(4) the failure of the Company to (i) continue in effect any
employee benefit plan or compensation plan in which Employee is
participating immediately prior to such Change in Corporate
Control, unless Employee is permitted to participate in other
plans providing Employee with substantially comparable benefits,
or the taking of any action by the Company which would adversely
affect Employee's participation in or reduce Employee's benefits
under any such plan, (ii) provide Employee and Employee's
dependents with welfare benefits in accordance with the most
favorable plans, practices, programs and policies of the Company
and its affiliated companies in effect for Employee and
Employee's dependents immediately prior to such Change in
Corporate Control or provide substantially comparable benefits at
a substantially comparable cost to Employee, (iii) provide fringe
benefits in accordance with the most favorable plans, practices,
programs and policies of the Company and its affiliated companies
in effect for Employee immediately prior to such Change in
Corporate Control, or provide substantially comparable fringe
benefits, or (iv) provide Employee with paid vacation in
accordance with the most favorable plans, policies, programs and
practices of the Company and its affiliated companies as in
effect for Employee immediately prior to such Change in Corporate
Control.
Any event described in paragraphs (1) through (4) of this
definition of Good Reason which occurs prior to a Change in
Corporate Control, but was at the request of a Third Party, shall
constitute Good Reason following a Change in Corporate Control
for purposes of this Agreement (treating the date of such event
as the date of the Change in Corporate Control) notwithstanding
that it occurred prior to the Change in Corporate Control. For
purposes of this Agreement, any good faith determination of Good
Reason made by Executive shall be conclusive; PROVIDED, HOWEVER,
that an isolated, insubstantial and inadvertent action taken in
good faith and which is
5
<PAGE>
remedied by the Company promptly after receipt of notice thereof given
by Employee shall not constitute Good Reason. Employee must provide
notice of termination of employment within ninety (90) days of
Employee's knowledge of an event constituting Good Reason or such
event shall not constitute Good Reason under this Agreement."
4. The following language is hereby added to the end of Section 9.2:
; PROVIDED; HOWEVER, that this Section 9.2 shall be of no force or
effect in the event of a termination of Employee to which Section 6.1
applies.
IN WITNESS WHEREOF, this Amendment is adopted and approved by the
Company and the Employee, effective as of August 18, 1996.
Company:
BARMET ALUMINUM CORPORATION
BY: _______________________________
TITLE: ___________________________
Employee:
__________________________________
__________________________________
(Print Name)
6
<PAGE>
EXHIBIT 9
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the 18th day of August, 1996 by
and between CasTech Aluminum Group, Inc., a Delaware corporation (the
"Company"), and _____________________ ("Executive").
W I T N E S S E T H
WHEREAS, Executive currently serves as a key employee of the Company
and his services and knowledge are valuable to the Company in connection with
the management of one or more of the Company's principal operating facilities,
divisions, departments or Subsidiaries (as defined in Section 1); and
WHEREAS, the Board (as defined in Section 1) has determined that it is
in the best interests of the Company and its stockholders to secure Executive's
continued services and to ensure Executive's continued and undivided dedication
in the event of any threat or occurrence of, or negotiation or other action that
could lead to, or create the possibility of, a Change in Control (as defined in
Section 1) of the Company, the Board has authorized the Company to enter into
this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, the Company and Executive
hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause" means (1) a material breach by Executive of the duties
and responsibilities of Executive (other than as a result of incapacity due to
physical or mental illness) which is (x) demonstrably willful and deliberate on
Executive's part, (y) committed in bad faith or without reasonable belief that
such breach is in the best interests of the Company and (z) not remedied in a
reasonable period of time after receipt of written notice from the Company
specifying such breach or (2) the Executive's conviction of, or plea of NOLO
CONTENDERE to, a felony involving moral turpitude. Cause shall not exist unless
and until the Company has delivered to Executive a copy of a resolution duly
adopted by three-quarters (3/4) of the entire Board at a meeting of the Board
called and held for such purpose (after reasonable notice to Executive and an
opportunity for Executive, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board an event set forth in
clauses (1) or (2) has
<PAGE>
occurred and specifying the particulars thereof in detail. The Company must
notify Executive of any event constituting Cause within ninety (90) days
following the Company's knowledge of its existence or such event shall not
constitute Cause under this Agreement.
(c) "Change in Control" means the occurrence of any one of the
following events:
(i) any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding
securities eligible to vote for the election of the Board (the "Company
Voting Securities"); PROVIDED, HOWEVER, that the event described in this
paragraph (i) shall not be deemed to be a Change in Control by virtue of
any of the following acquisitions: (A) by the Company or any Subsidiary,
(B) by any employee benefit plan sponsored or maintained by the Company or
any Subsidiary, (C) by any underwriter temporarily holding securities
pursuant to an offering of such securities, (D) pursuant to a Non-Control
Transaction (as defined in paragraph (iii)), (E) pursuant to any
acquisition by Executive or any group of persons including Executive; or
(F) a transaction (other than one described in (iii) below) in which
Company Voting Securities are acquired from the Company, if a majority of
the Incumbent Board (as defined below) approves a resolution providing
expressly that the acquisition pursuant to this clause (F) does not
constitute a Change in Control under this paragraph (i);
(ii) individuals who, on August 18, 1996, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, PROVIDED that any person becoming a director subsequent to August
18, 1996, whose election or nomination for election was approved by a vote
of at least two-thirds of the directors comprising the Incumbent Board
(either by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for director, without
objection to such nomination) shall be considered a member of the Incumbent
Board; PROVIDED, HOWEVER, that no individual initially elected or nominated
as a director of the Company as a result of an actual or threatened
election contest with respect to directors or any other actual or
threatened solicitation of proxies or consents by or on behalf of any
person other than the Board of Directors shall be deemed to be a member of
the Incumbent Board;
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<PAGE>
(iii) the consummation of a merger, consolidation, share exchange
or similar form of corporate reorganization of the Company or any such type
of transaction involving the Company or any of its Subsidiaries that
requires the approval of the Company's stockholders (whether for such
transaction or the issuance of securities in the transaction or otherwise),
or the consummation of the direct or indirect sale or other disposition of
all or substantially all of the assets, of the Company and its Subsidiaries
(a "Business Combination"), unless immediately following such Business
Combination: (A) more than 60% of the total voting power of the publicly
traded corporation resulting from such Business Combination (including,
without limitation, any corporation which directly or indirectly has
beneficial ownership of 100% of the Company Voting Securities or all or
substantially all of the assets of the Company and its Subsidiaries)
eligible to elect directors of such corporation is represented by shares
that were Company Voting Securities immediately prior to such Business
Combination (either by remaining outstanding or being converted) , and such
voting power is in substantially the same proportion as the voting power of
such Company Voting Securities immediately prior to the Business
Combination, (B) no person (other than any publicly traded holding company
resulting from such Business Combination, any employee benefit plan
sponsored or maintained by the Company (or the corporation resulting from
such Business Combination), or any person which beneficially owned,
immediately prior to such Business Combination, directly or indirectly, 20%
or more of the Company Voting Securities (a "Company 20% Stockholder"))
becomes the beneficial owner, directly or indirectly, of 20% or more of the
total voting power of the outstanding voting securities eligible to elect
directors of the corporation resulting from such Business Combination and
no Company 20% Stockholder increases its percentage of such total voting
power, and (C) at least a majority of the members of the board of directors
of the corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the Board's approval of the execution of
the initial agreement providing for such Business Combination (a "Non-
Control Transaction"); or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control of the Company
shall not be deemed to occur solely because any person acquires beneficial
ownership of more than 20% of the Company Voting Securities as a result of the
acquisition of Company Voting Securities by the Company which, by reducing the
number of Company Voting Securities outstanding, increases the percentage of
shares beneficially owned by such person; PROVIDED, THAT if a Change in Control
of the Company would occur as a result of such an acquisition by the Company (if
not for the operation of this sentence), and after
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<PAGE>
the Company's acquisition such person becomes the beneficial owner of additional
Company Voting Securities that increases the percentage of outstanding Company
Voting Securities beneficially owned by such person, then a Change in Control of
the Company shall occur.
Notwithstanding anything in this Agreement to the contrary, if
Executive's employment is terminated prior to a Change in Control, and Executive
reasonably demonstrates that such termination was at the request of a third
party who has indicated an intention or taken steps reasonably calculated to
effect a Change in Control (a "Third Party") and who effectuates a Change in
Control, then for all purposes of this Agreement, the date of a Change in
Control shall mean the date immediately prior to the date of such termination of
employment.
(d) "Date of Termination" means (1) the effective date on which
Executive's employment by the Company terminates as specified in a prior written
notice by the Company or Executive, as the case may be, to the other, delivered
pursuant to Section 10 or (2) if Executive's employment by the Company
terminates by reason of death, the date of death of Executive.
(e) "Good Reason" means, without Executive's express written consent,
the occurrence of any of the following events after a Change in Control:
(1) (i) the assignment to Executive of any duties or responsibilities
inconsistent in any adverse respect with Executive's position(s), duties,
responsibilities or status with the Company immediately prior to such Change in
Control (including any diminution of such duties or responsibilities) or (ii) an
adverse change in Executive's reporting responsibilities, titles or offices with
the Company as in effect immediately prior to such Change in Control;
(2) a reduction by the Company in Executive's rate of annual base
salary or annual target bonus opportunity (including any adverse change in the
formula for such annual bonus target) as in effect immediately prior to such
Change in Control or as the same may be increased from time to time thereafter;
(3) any requirement of the Company that Executive (i) be based
anywhere more than fifty (50) miles from the facility where Executive is located
at the time of the Change in Control or (ii) travel on Company business to an
extent substantially greater than the travel obligations of Executive
immediately prior to such Change in Control;
(4) the failure of the Company to (i) continue in effect any employee
benefit plan or compensation plan in which Executive is participating
immediately prior to such Change in Control, unless Executive is permitted to
participate in other plans
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<PAGE>
providing Executive with substantially comparable benefits, or the taking of any
action by the Company which would adversely affect Executive's participation in
or reduce Executive's benefits under any such plan, (ii) provide Executive and
Executive's dependents with welfare benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for Executive and Executive's dependents
immediately prior to such Change in Control or provide substantially comparable
benefits at a substantially comparable cost to Executive, (iii) provide fringe
benefits in accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for Executive
immediately prior to such Change in Control, or provide substantially comparable
fringe benefits, or (iv) provide Executive with paid vacation in accordance with
the most favorable plans, policies, programs and practices of the Company and
its affiliated companies as in effect for Executive immediately prior to such
Change in Control; or
(5) the failure of the Company to obtain the assumption agreement
from any successor as contemplated in Section 9(b).
Any event described in this Section l(e)(1) through (4) which occurs
prior to a Change in Control, but was at the request of a Third Party who
effectuates a Change in Control, shall constitute Good Reason following a Change
in Control for purposes of this Agreement (treating the date of such event as
the date of the Change in Control) notwithstanding that it occurred prior to the
Change in Control. For purposes of this Agreement, any good faith determination
of Good Reason made by Executive shall be conclusive; PROVIDED, HOWEVER, that an
isolated, insubstantial and inadvertent action taken in good faith and which is
remedied by the Company promptly after receipt of notice thereof given by
Executive shall not constitute Good Reason. Executive must provide notice of
termination of employment within ninety (90) days of Executive's knowledge of an
event constituting Good Reason or such event shall not constitute Good Reason
under this Agreement.
(f) "Nonqualifying Termination" means a termination of Executive's
employment (1) by the Company for Cause, (2) by Executive for any reason other
than Good Reason, (3) as a result of Executive's death, (4) by the Company due
to Executive's absence from Executive's duties with the Company on a full-time
basis for at least one hundred eighty (180) consecutive days as a result of
Executive's incapacity due to physical or mental illness or (5) as a result of
Executive's mandatory retirement (not including any mandatory early retirement)
in accordance with the Company's retirement policy generally applicable to its
salaried employees, as in effect immediately prior to the Change in Control, or
in accordance with any retirement arrangement established with respect to
Executive with Executive's written consent.
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<PAGE>
(g) "Subsidiary" means any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the total
combined voting power of the then outstanding securities of such corporation or
other entity entitled to vote generally in the election of directors or in which
the Company has the right to receive 50% or more of the distribution of profits
or 50% of the assets or liquidation or dissolution.
(h) "Termination Period" means the period of time beginning with a
Change in Control and ending two (2) years following such Change in Control.
2. OBLIGATIONS OF EXECUTIVE. Executive agrees that if a Change in
Control shall occur, Executive shall not voluntarily leave the employ of the
Company without Good Reason until ninety (90) days following such Change in
Control.
3. PAYMENTS UPON TERMINATION OF EMPLOYMENT.
(a) If during the Termination Period the employment of Executive
shall terminate, other than by reason of a Nonqualifying Termination, then the
Company shall pay to Executive (or Executive's beneficiary or estate) within
thirty (30) days following the Date of Termination, as compensation for services
rendered to the Company:
(1) a lump-sum cash amount equal to the sum of (i) Executive's base
salary through the Date of Termination, to the extent not theretofore paid, (ii)
a pro rata portion of Executive's annual bonus in an amount at least equal to
(A) the greater of (i) Executive's target bonus for the fiscal year in which the
Change in Control occurs and (ii) Executive's target bonus for the fiscal year
in which Executive's Date of Termination occurs, multiplied by (B) a fraction,
the numerator of which is the number of days in the fiscal year in which the
Date of Termination occurs through the Date of Termination and the denominator
of which is three hundred sixty-five (365), and (iii) any compensation
previously deferred by Executive other than pursuant to a tax-qualified plan
(together with any interest and earnings thereon) and any accrued vacation pay,
in each case to the extent not theretofore paid; plus
(2) a lump-sum cash amount equal to (i) three (3) times Executive's
highest annual rate of base salary during the 12-month period prior to the Date
of Termination, plus (ii) three (3) times the greatest of (A) the highest bonus
earned by Executive in respect of the three (3) fiscal years of the Company
immediately preceding the fiscal year in which the Change in Control occurs or
(B) Executive's target bonus for the fiscal year in which the Change in Control
occurs or (C) Executive's target bonus for the fiscal year in which Executive's
Date of Termination occurs. Any amount paid pursuant to this Section 3(a)(2)
shall reduce any other amount of severance relating to salary or bonus
continuation to be received by Executive upon termination of
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<PAGE>
employment of Executive under any other severance plan or policy or employment
agreement of the Company.
(b) If during the Termination Period the employment of Executive
shall terminate, other than by reason of a Nonqualifying Termination, the
Company shall continue to provide, for a period of three (3) years following the
Date of Termination, Executive (and Executive's dependents if applicable) with
the same level of medical, dental, accident, disability and life insurance
benefits upon substantially the same terms and conditions (including cost of
coverage to Executive) as existed immediately prior to Executive's Date of
Termination (or, if more favorable to Executive, as such benefits and terms and
conditions existed immediately prior to the Change in Control); PROVIDED, THAT,
if Executive cannot continue to participate in the Company plans providing such
benefits, the Company shall otherwise provide such benefits on the same after-
tax basis as if continued participation had been permitted. Notwithstanding the
foregoing, in the event Executive becomes reemployed with another employer and
becomes eligible to receive welfare benefits from such employer, the welfare
benefits described herein shall be secondary to such benefits during the period
of Executive's eligibility, but only to the extent that the Company reimburses
Executive for any increased cost and provides any additional benefits necessary
to give Executive the benefits provided hereunder.
(c) If during the Termination Period the employment of Executive
shall terminate by reason of a Nonqualifying Termination, then the Company shall
pay to Executive within thirty (30) days following the Date of Termination, a
cash amount equal to the sum of (1) Executive's base salary through the Date of
Termination, to the extent not theretofore paid, and (2) any compensation
previously deferred by Executive other than pursuant to a tax-qualified plan
(together with any interest and earnings thereon) and any accrued vacation pay,
in each case to the extent not theretofore paid. The Company may make such
additional payments, and provide such additional benefits, to Executive as the
Company and Executive may agree in writing.
4. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that all or any portion of any payment or
distribution by the Company or its affiliated companies to or for the benefit of
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (including, without limitation, amounts
paid or payable in respect of any stock options held by the Executive and
amounts paid or payable in respect of the Restated and Amended Longevity
Incentive Agreement between Barmet Aluminum Corporation and the Executive), but
determined without regard to any additional payments required under this Section
4) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), or any interest or
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<PAGE>
penalties are incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income and employment
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax, imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments. For
purposes of determining the amount of the Gross-Up Payment, the Executive shall
be deemed to pay federal income taxes at the highest marginal rates of federal
income taxation for the calendar year in which the Gross-Up Payment is to be
made and applicable state and local income taxes at the highest marginal rate of
taxation for the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes.
(b) Subject to the provisions of Section 4(a), all determinations
required to be made under this Section 4, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by the public
accounting firm that is retained by the Company as of the date immediately prior
to the Change in Control (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and Executive within fifteen (15)
business days of the receipt of notice from the Company or the Executive that
there has been a Payment, or such earlier time as is requested by the Company
(collectively, the "Determination"). In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change in Control, Executive may appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder).
All fees and expenses of the Accounting Firm shall be borne solely by the
Company and the Company shall enter into any agreement requested by the
Accounting Firm in connection with the performance of the services hereunder.
The Gross-Up Payment under this Section 4 with respect to any Payments shall be
made no later than thirty (30) days following such Payment. If the Accounting
Firm determines that no Excise Tax is payable by Executive, it shall furnish
Executive with a written opinion to such effect, and to the effect that failure
to report the Excise Tax, if any, on Executive's applicable federal income tax
return will not result in the imposition of a negligence or similar penalty.
The Determination by the Accounting Firm shall be binding upon the Company and
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the Determination, it is possible that Gross-Up Payments
which will not have been made by the Company should have been made
("Underpayment") or Gross-Up
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<PAGE>
Payments are made by the Company which should not have been made
("Overpayment"), consistent with the calculations required to be made hereunder.
In the event that the Executive thereafter is required to make payment of any
additional Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly
paid by the Company to or for the benefit of Executive. In the event the amount
of the Gross-Up Payment exceeds the amount necessary to reimburse the Executive
for his Excise Tax, the Accounting Firm shall determine the amount of the
Overpayment that has been made and any such Overpayment (together with interest
at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid
by Executive to or for the benefit of the Company. Executive shall cooperate,
to the extent his expenses are reimbursed by the Company, with any reasonable
requests by the Company in connection with any contests or disputes with the
Internal Revenue Service in connection with the Excise Tax.
5. WITHHOLDING TAXES. The Company may withhold from all payments
due to Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
6. REIMBURSEMENT OF EXPENSES. If any contest or dispute shall arise
under this Agreement involving termination of Executive's employment with the
Company or involving the failure or refusal of the Company to perform fully in
accordance with the terms hereof, the Company shall reimburse Executive, on a
current basis, for all legal fees and expenses, if any, incurred by Executive in
connection with such contest or dispute (regardless of the result thereof),
together with interest in an amount equal to the prime rate of Citibank N.A.
from time to time in effect, but in no event higher than the maximum legal rate
permissible under applicable law, such interest to accrue from the date the
Company receives Executive's statement for such fees and expenses through the
date of payment thereof.
7. TERMINATION OF AGREEMENT. This Agreement shall be effective on
the date hereof and shall terminate upon the later of (i) March 1, 1999 and (ii)
one year after the date of any written notification from the Company to
Executive terminating this Agreement; PROVIDED, HOWEVER, that this Agreement
shall continue in effect following any Change in Control which occurs prior to
such termination with respect to all rights and obligations accruing as a result
of such Change in Control.
8. SCOPE OF AGREEMENT. Nothing in this Agreement shall be deemed to
entitle Executive to continued employment with the Company or its Subsidiaries,
and, subject to Section 1(c), Section 1(e) and Section 9(b), if Executive's
employment with the Company shall terminate prior to a Change in Control or
following the end of the Termination Period, Executive shall have no further
rights under this Agreement.
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<PAGE>
9. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by any Business
Combination. In the event of any Business Combination, the provisions of this
Agreement shall be binding upon the surviving or resulting corporation or the
person or entity to which such assets are transferred.
(b) The Company agrees that concurrently with any Business
Combination that does not constitute a Non-Control Transaction, it will cause
any successor or transferee unconditionally to assume, by written instrument
delivered to Executive (or his beneficiary or estate), all of the obligations of
the Company hereunder. Failure of the Company to obtain such assumption prior
to the effectiveness of any such Business Combination, shall be a breach of this
Agreement and shall constitute Good Reason hereunder and shall entitle Executive
to compensation and other benefits from the Company in the same amount and on
the same terms as Executive would be entitled hereunder if Executive's
employment were terminated following a Change in Control other than by reason of
a Nonqualifying Termination. For purposes of implementing the foregoing, the
date on which any such Business Combination becomes effective shall be deemed
the date Good Reason occurs, and shall be the Date of Termination if requested
by Executive.
(c) This Agreement shall inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive shall die
while any amounts would be payable to Executive hereunder had Executive
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to such person or persons
appointed in writing by Executive to receive such amounts or, if no person is so
appointed, to Executive's estate.
10. NOTICE. (a) For purposes of this Agreement, all notices and
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered or five (5) days after
deposit in the United States mail, certified and return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
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<PAGE>
If to the Company:
Commonwealth Aluminum Corporation
1200 Meidinger Tower
Louisville, KY 40202
Attn: Corporate Secretary
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
(b) A written notice of Executive's Date of Termination by the
Company or Executive, as the case may be, to the other, shall (i) indicate the
specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's employment under the provision
so indicated and (iii) specify the termination date (which date shall be not
less than fifteen (15) nor more than sixty (60) days after the giving of such
notice). The failure by Executive or the Company to set forth in such notice
any fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of Executive or the Company hereunder or preclude
Executive or the Company from asserting such fact or circumstance in enforcing
Executive's or the Company's rights hereunder.
11. FULL SETTLEMENT; RESOLUTION OF DISPUTES. The Company's
obligation to make any payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against Executive or others. In no event shall Executive be
obligated to seek other employment or take other action by way of mitigation of
the amounts payable to Executive under any of the provisions of this Agreement
and, except as provided in Section 3(b), such amounts shall not be reduced
whether or not Executive obtains other employment.
12. EMPLOYMENT WITH SUBSIDIARIES. Employment with the Company for
purposes of this Agreement shall include employment with any Subsidiary.
13. GOVERNING LAW; VALIDITY. THE INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE
PRINCIPLE OF CONFLICTS OF LAWS. THE INVALIDITY OR UNENFORCEABILITY OF ANY
PROVISION OF THIS AGREEMENT SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF
ANY OTHER PROVISION OF
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<PAGE>
THIS AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.
14. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
15. MISCELLANEOUS. No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and signed by
Executive and by a duly authorized officer of the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Failure by Executive
or the Company to insist upon strict compliance with any provision of this
Agreement or to assert any right Executive or the Company may have hereunder,
including without limitation, the right of Executive to terminate employment for
Good Reason, shall not be deemed to be a waiver of such provision or right or
any other provision or right of this Agreement. Except as otherwise
specifically provided herein, the rights of, and benefits payable to, Executive,
his estate or his beneficiaries pursuant to this Agreement are in addition to
any rights of, or benefits payable to, Executive, his estate or his
beneficiaries under any other employee benefit plan or compensation program of
the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer of the Company and Executive has executed
this Agreement as of the day and year first above written.
CASTECH ALUMINUM GROUP, INC.
______________________________
[NAME]
[TITLE]
______________________________
[EXECUTIVE]
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<PAGE>
EXHIBIT 10
1996 NON-EMPLOYEE DIRECTORS STOCK PLAN
OF
CASTECH ALUMINUM GROUP INC.
1. PURPOSE OF THE PLAN.
The purpose of the 1996 Non-Employee Directors Stock Plan (the "Plan") is to
attract, retain and motivate the best qualified directors and to enhance a
long-term mutuality of interest between the directors and stockholders of
the Company by providing the participating directors with stock ownership
under the Plan.
2. PARTICIPANTS.
Participants in the Plan shall consist of directors of the Company who are
not employees of the Company or any of its subsidiaries. The term
"subsidiary" as used in the Plan means a corporation more than 50% of the
voting stock of which shall at the time be owned directly or indirectly by
the Company.
3. SHARES RESERVED UNDER THE PLAN.
Subject to certain adjustments as set forth in Section 8 hereof, there shall
be reserved for issuance under the Plan an aggregate of 100,000 shares of
Common Stock of the Company ("Common Stock"). Shares of Common Stock to be
issued under the Plan may be authorized and unissued shares of Common Stock,
Common Stock held in treasury, or any combination thereof.
4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Compensation Committee of the Board of
Directors or such other committee as may be appointed by the Board
consisting of not less than three members of the Board of Directors (the
"Committee"). The Committee shall have authority to interpret the Plan and
to prescribe, amend and rescind the rules and regulations relating to the
administration of the Plan. All such interpretations, rules and regulations
shall be conclusive and binding on all persons. The Board or the Committee
may appoint agents (who may be employees of the Company) to assist in the
administration of the Plan, and may grant authority to such persons to
execute agreements or other documents on its behalf. The board or the
Committee may employ such legal counsel, consultants and agents as it may
deem desirable for the administration of the Plan. All expenses incurred in
the administration of the Plan, including, without limitation, for the
engagement of any counsel, consultant or agent, shall be paid by the
Company.
5. EFFECTIVE DATE OF THE PLAN.
The Plan shall be submitted to the Company stockholders for approval at the
Annual Meeting of Stockholders to be held on July 18, 1996, or any
adjournment thereof, and, if approved by the stockholders, shall be deemed
to have become effective on the date of such approval.
6. AWARD OF SHARES.
For each fiscal year beginning with the fiscal year commencing April 1,
1996, each non-employee director of the Company who is elected a director at
the Annual Meeting of Stockholders for such year or at any time thereafter
during such year and continues to be a director as of September 30 of such
year shall receive an award of 1,000 shares of Common Stock effective as of
such September 30. A participant shall not be required to make any payment
for any shares of Common Stock issued under the Plan. Upon the issuance of
shares of Common Stock under the Plan, the recipient shall have the entire
beneficial ownership interest in , and all rights and privileges of the
stockholder as to, such shares, including the right to vote such shares and
the right to receive dividends. Participants may elect to defer receipt of
the shares of Common Stock to which they are entitled under the Plan on the
condition that the Company receive such notices and agreements as it may
deem reasonably appropriate.
<PAGE>
7. RESTRICTION ON TRANSFER OF SHARES.
Common Stock acquired under the Plan shall not be subject to sale, transfer,
assignment, pledge, mortgage or other disposition by a director for a period
of six months and one day after the date of award. The restriction imposed
under this Section 7 shall be evidenced by a written agreement between the
Company and each director.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
In the event of changes in the outstanding Common Stock of the Company by
reason of stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, separations,
reorganizations or liquidations, the number and class of shares to be issued
under the Plan shall be appropriately adjusted by the Committee.
9. GOVERNMENTAL AND OTHER REGULATIONS.
The Company's obligation to deliver shares of Common Stock under the Plan
shall be subject to all applicable laws, rules and regulations and such
approvals by any governmental agencies as may be required.
10. AMENDMENT AND TERMINATION OF THE PLAN.
The Plan may be amended by the Company's Board of Directors in any respect,
provided that, without stockholder approval, no amendment shall (i)
materially increase the maximum number of shares of Common Stock available
for issuance under the Plan, (ii) materially increase the benefits accruing
to participants under the Plan, or (iii) materially modify the requirements
as to eligibility for participation in the Plan, and provided further, that
the Plan may not be amended more than once every six months except to
comport with changes in the Internal Revenue Code of 1986, as amended, or
the regulations thereunder. The Plan may also be terminated at any time by
the Board of Directors.
11. MISCELLANEOUS.
(a) Investment Representation and Registration
Requirements. Notwithstanding any provision of the Plan to the contrary:
(i)
The Company may, at the time of the issuance of the shares of Common
Stock, require a participant to deliver to the Company a written
representation of present intent to hold or acquire shares of Common
Stock solely for the account of the participant for investment
purposes and not for distribution, and that any subsequent offer for
sale or sale of any such shares of Common Stock shall be made either
pursuant to (1) a registration statement on an appropriate form under
the Securities Act of 1933, as amended ("Securities Act"), which
registration statement shall have become effective and shall be
current with respect to the shares of Commoon Stock being offered and
sold, or (2) a specific exemption from the registration requirements
of the Securities Act (e.g., Section 4(2) of the Securities Act or
Rule 144 promulgated thereunder) and that in claiming such exemption
the holder will, prior to any offer for sale or sale of such shares
of Common Stock, obtain a favorable written opinion from counsel
approved by the Company as to the availability of such exemption; and
(ii)
If at any time the Company determines, in its sole discretion that
the lisitng, registration or qualification (or any updating of any
such document) of shares of Common Stock is necessary on any stock
exchange or under any federal or state securities or blue sky law, or
the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with,
issuance of shares of Common Stock, such shares shall not be issued
unless such listing, registration, qualification, consent or approval
is effected or obtained free of any conditions not acceptable to the
Company.
(b) No Right to Continue as Director. Nothing contained in this Plan shall
be deemed to confer upon any person any right to continue as a director of
or to be associated in any other way with the Company.
<PAGE>
11. MISCELLANEOUS. (CONTINUED)
(c) Governing Law. To the extent that federal laws do not otherwise
control, the Plan and all determinations made and actions taken pursuant
hereto shall be governed by the law of the State of Delaware.
(d) Inurement. This Plan shall be binding upon and shall inure to the
benefit of the Company and each director hereto and their respective heirs,
executors, administrators, successors and assigns.
(e) Transfer of Rights. No interest or expectancy in the Plan shall be
subject to transfer, pledge or assignment, other than by will or the laws of
dissent and distribution in accordance with the terms of the Plan, and the
Company shall not recognize any such assignment, pledge or transfer.
(f) Withholding Taxes. The Company shall have the right to make such
provisions as it deems necessary or appropriate to satisfy any obligations
it may have to withhold federal, state or local income or other taxes
incurred by reason of the issuance of shares of Common Stock under the Plan,
including requiring a participant to reimburse the Company for any taxes
required to be withheld or otherwise deducted and paid by the Company in
respect of the issuance of shares of Common Stock. In lieu thereof, the
Company shall have the right to withhold the amount of such taxes from any
other sums due or to become due from the Company to the participating
director upon such terms and conditions as the Board may prescribe.
(g) Nonexclusively. Neither the adoption of the Plan by the Board nor the
submission of the Plan to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt
such other incentive arrangements as it may deem desirable, including,
without limitation, the granting or issuance of stock options, shares and/or
other incentives otherwise than under the Plan, and such arrangements may be
either generally applicable or applicable only in specific instances.
(h) No Right to Specific Assets. Nothing contained in the Plan and no
action taken pursuant to the Plan shall create or be construed to create a
trust of any kind or any fiduciary relationship between the Company and any
participant, the executor, administrator or other personal representative or
designated beneficiary of such participant, or any other persons. To the
extent that any participant or his executor, administrator, or other
personal representative, as the case may be, acquires a right to receive any
payment from the Company pursuant to the Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company.
(i) Severability of Provisions. If any provision of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
effect any other provisions hereof, and the Plan shall be construed and
enforced as if such provision had not been included.
<PAGE>
Exhibit 11
CasTech Aluminum Group Inc.
1996 NON-EMPLOYEE DIRECTORS STOCK PLAN
AS AMENDED AS OF AUGUST 19, 1996
The CasTech Aluminum Group Inc. 1996 Non-Employee Directors Stock Plan
("Plan") was adopted by the Board of Directors of CasTech Aluminum Group Inc.
(the "Company") on July 18, 1996, and approved by the shareholders of the
Company on the same date. On August 19, 1996, the Board of Directors of the
Company approved a proposal to enter into that certain Agreement and Plan of
Merger (the "Merger Agreement"), dated as of August 19, 1996, among Commonwealth
Aluminum Corporation, a Delaware corporation (the "Purchaser"), the Company, and
CALC Corporation, a wholly-owned subsidiary of Purchaser. In order to
effectuate the terms of the Merger Agreement the Plan is hereby amended,
effective as of July 18, 1996, as follows:
1. A new Section 12 has been inserted to read as follows:
12. EFFECT OF MERGER AGREEMENT.
Pending consummation or abandonment of the Merger (the "Merger")
authorized under the Agreement and Plan of Merger (the "Merger Agreement"),
dated as of August 19, 1996, among the Company, Commonwealth Aluminum
Corporation, a Delaware corporation, and CALC Corporation, a wholly-owned
subsidiary of Commonwealth Aluminum Corporation, no shares of Common Stock of
the Company shall be issued hereunder. In the event the Merger is abandoned and
not consummated, Common Stock shall be awarded pursuant to the Plan. In the
event the Merger is consummated, in lieu of Common Stock awarded under the Plan,
eligible participants shall be entitled to receive a cash fee, prorated for
their time of service as a director during the fiscal year commending April 1,
1996, at an annual rate of $15,000 for each participant other than the Chairman
of the Company and at an annual rate of $25,000 for the Chairman."
2. All other terms and conditions as set forth in the Plan that are
not inconsistent with this Amendment shall remain in full force and effect.
