SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: December 9, 1996
(Date of Earliest Event Reported): (December 8, 1996)
SANTA FE PACIFIC GOLD CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-13096 85-0307713
(State of (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
6200 Uptown Blvd, NE, Suite 400
Albuquerque, New Mexico 871110
(Address of Principal Executive Offices) (Zip Code)
(505) 880-5300
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, If Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On December 8, 1996, Santa Fe Pacific Gold
Corporation ("Santa Fe"), Homestake Mining Company
("Homestake") and HMGLD Corp., a wholly owned subsidiary
of Homestake ("Sub"), entered into an Agreement and Plan
of Merger (the "Merger Agreement") which provides, among
other things, that Sub will merge with and into Santa Fe
(the "Merger") and each outstanding share of common stock
of Santa Fe will be converted into the right to receive
1.115 shares of common stock of Homestake, subject to the
terms and conditions of the Merger Agreement. The
Merger Agreement is filed as Exhibit 10.1 hereto and is
incorporated herein by reference.
In connection with the Merger Agreement, on
December 8, 1996, Santa Fe amended its Rights Agreement
(the "Rights Agreement"), dated as of January 26, 1995,
between Santa Fe and Harris Trust and Savings Bank in
order to render the Rights inapplicable to the Merger and
the other transactions contemplated by the Merger
Agreement. A copy of Amendment No. 1 to the Rights
Agreement is attached hereto as Exhibit 4.1
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
4.1 Amendment No. 1, dated as of December 8, 1996,
to Rights Agreement, dated as of January 26,
1995, between Santa Fe Pacific Gold Corporation
and Harris Trust and Savings Bank.
10.1 Agreement and Plan of Merger, dated as of
December 8, 1996, by and among Santa Fe Pacific
Gold Corporation, Homestake Mining Company and
HMGLD. Corp.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
SANTA FE PACIFIC GOLD
CORPORATION
Date: December 9, 1996 By: /s/ Wayne Jarke
Name: Wayne Jarke
Title: Secretary
EXHIBIT INDEX
Number Description Page
4.1 Amendment No. 1, dated as of December 8,
1996, to Rights Agreement, dated as of
January 26, 1995, between Santa Fe Pacific
Gold Corporation and Harris Trust and
Savings Bank.
10.1 Agreement and Plan of Merger, dated as
of December 8, 1996, by and among
Santa Fe Pacific Gold Corporation,
Homestake Mining Company and HMGLD.
Corp.
EXHIBIT 4.1
AMENDMENT TO RIGHTS AGREEMENT
Amendment No. 1 (this "Amendment"), dated as of
December 8, 1996, to the Rights Agreement (the "Rights
Agreement"), dated as of January 26, 1995, between Santa
Fe Pacific Gold Corporation, a Delaware corporation (the
"Company"), and Harris Trust and Savings Bank, an
Illinois banking corporation (the "Rights Agent").
WHEREAS, the Company, Homestake Mining Company,
a Delaware corporation ("Parent"), and HMGLD Corp., a
Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), have proposed to enter into an Agreement
and Plan of Merger (the "Merger Agreement") pursuant to
which, among other things, Sub will merge into the
Company (the "Merger") and each outstanding share of
common stock of the Company will be converted into the
right to receive 1.115 shares of common stock of Parent,
subject ot the terms and conditions of the Merger
Agreement;
WHEREAS, the Company and the Rights Agent
desire to amend the Rights Agreement to render the Rights
inapplicable to the Merger and the other transactions
contemplated by the Merger Agreement;
WHEREAS, Section 27 of the Rights Agreement
permits the Company from time to time to supplement and
amend the Rights Agreement;
NOW, THEREFORE, in consideration of the
foregoing and the agreements, provisions and covenants
herein contained, the parties agree as follows:
1. Section 1 of the Rights Agreement is hereby
amended by adding the following new paragraph at the end
of Section 1:
"Notwithstanding anything in this Agreement
that might otherwise be deemed to the contrary,
neither Homestake Mining Company ("Parent") nor any
of its Affiliates or Associates shall be deemed an
Acquiring Person and none of a Distribution Date,
Shares Acquisition Date or Triggering Event shall be
deemed to occur, in each such case, by reason of the
approval, execution or delivery of the Agreement and
Plan of Merger, dated as of December 8, 1996,
including any amendment or supplement thereto (the
"Merger Agreement") among Parent, HMGLD Corp. and
the Company, the announcement or consummation of the
Merger (as defined in the Merger Agreement) or the
consummation of the other transactions contemplated
by the Merger Agreement."
2. Clause (i) of Section 7(a) of the Rights
Agreement is hereby amended to read in its entirety as
follows:
"(i) the earlier of the close of business on
February 13, 2005 and immediately prior to the
Effective Time of the Merger (as defined in the
Merger Agreement) (the "Final Expiration Date") or".
3. The Rights Agreement shall not otherwise be
supplemented or amended by virtue of this Amendment, but
shall remain in full force and effect. This Amendment
may be executed in one or more counterparts, all of which
shall be considered one and the same amendment and each
of which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed and attested, all as
of the day and year first above written.
Attest: SANTA FE PACIFIC GOLD
CORPORATION
By /s/ Wayne Jarke
Name: Wayne Jarke By /s/ Patrick M. James
Title: Secretary Name: Patrick M. James
Title: Chairman, President
and CEO
Attest: HARRIS TRUST AND SAVINGS
BANK
By /s/ Brenda J. Gussick
Name: Brenda J. Gussick By /s/ Susan M. Shadel
Title: Vice President Name: Susan M. Shadel
Title: Assistant Vice President
=================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of December 8, 1996,
Among
HOMESTAKE MINING COMPANY
HMGLD CORP.
and
SANTA FE PACIFIC GOLD CORPORATION
=================================================================
TABLE OF CONTENTS
Page
Parties and Recitals . . . . . . . . . . . . . . . 1
ARTICLE I
The Merger
SECTION 1.01. The Merger . . . . . . . . . . . 2
SECTION 1.02. Closing . . . . . . . . . . . . . 2
SECTION 1.03. Effective Time of the Merger . . 2
SECTION 1.04. Effects of the Merger . . . . . . 3
SECTION 1.05. Certificate of Incorporation and
By-laws . . . . . . . . . . . . . 3
SECTION 1.06. Directors . . . . . . . . . . . . 3
SECTION 1.07. Officers . . . . . . . . . . . . 4
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates . 4
SECTION 2.01. Effect on Capital Stock . . . . . 4
SECTION 2.02. Exchange of Certificates. . . . 5
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties
of the Company . . . . . . . . . 10
SECTION 3.02. Representations and Warranties
of Parent and Sub . . . . . . . . 27
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. . . . . . . 44
SECTION 4.02. No Solicitation by the Company . 51
SECTION 4.03. No Solicitation by Parent. . . . 53
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4 and the
Proxy Statement; Company's
Stockholders' Meeting and
Parent's Stockholders' Meeting . 56
SECTION 5.03. Letter of Parent's Accountants. . 58
SECTION 5.04. Access to Information;
Confidentiality. . . . . . . . . 58
SECTION 5.05. Reasonable Efforts;
Notification. . . . . . . . . . . 59
SECTION 5.06. Rights Agreements; Consequences
if Rights Triggered . . . . . . . 60
SECTION 5.07. Company Employee Stock Options. . 61
SECTION 5.08. Benefit Plans . . . . . . . . . . 64
SECTION 5.09. Indemnification . . . . . . . . . 65
SECTION 5.10. Fees and Expenses . . . . . . . . 66
SECTION 5.11. Public Announcements . . . . . . 66
SECTION 5.12. Tax and Accounting Treatment . . 66
SECTION 5.13. Affiliates . . . . . . . . . . . 66
SECTION 5.14. Stock Exchange Listing . . . . . 67
SECTION 5.15. Parent Board of Directors . . . . 67
SECTION 5.16. Parent Officers . . . . . . . . . 68
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligation To Effect The Merger . 69
SECTION 6.02. Conditions to Obligations of
Parent and Sub . . . . . . . . . 71
SECTION 6.03. Conditions to Obligation of the
Company. . . . . . . . . . . . . 72
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination . . . . . . . . . . . 73
SECTION 7.02. Effect of Termination . . . . . . 75
SECTION 7.03. Amendment . . . . . . . . . . . . 78
SECTION 7.04. Extension; Waiver . . . . . . . . 78
SECTION 7.05. Procedure for Termination,
Amendment, Extension or Waiver . 78
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations
and Warranties . . . . . . . . . 78
SECTION 8.02. Notices . . . . . . . . . . . . . 79
SECTION 8.03. Definitions . . . . . . . . . . . 80
SECTION 8.04. Interpretation . . . . . . . . . 80
SECTION 8.05. Severability . . . . . . . . . . 81
SECTION 8.06. Counterparts . . . . . . . . . . 81
SECTION 8.07. Entire Agreement; No Third-Party
Beneficiaries . . . . . . . . . . 81
SECTION 8.08. Governing Law . . . . . . . . . . 81
SECTION 8.09. Assignment . . . . . . . . . . . 82
SECTION 8.10. Enforcement . . . . . . . . . . . 82
Location of Defined Terms in Agreement
Term Location in Agreement
"affiliate" SECTION 8.03
"Amendment to Parent's
Certificate of Designation" SECTION 3.02(d)
"Amendment to Parent's Restated
Certificate of Incorporation" SECTION 3.02(d)
"Certificate of Merger SECTION 1.03
"Certificates" SECTION 2.02(b)
"Closing Date" SECTION 1.02
"Common Shares Trust" SECTION 2.02(e)
"Company Benefit Plans" SECTION 3.01(i)
"Company Capital Stock" SECTION 3.01(c)
"Company Common Stock" Recitals
"Company Disclosure Letter" SECTION 3.01(b)
"Company Employee Stock
Options" SECTION 3.01(c)
"Company Employee Stock
Plans SECTION 3.01(c)
"Company Material Adverse
Effect" SECTION 3.01(a)
"Company Property" SECTION 3.01(u)
"Company Rights" SECTION 3.01(c)
"Company Rights Agreement" SECTION 3.01(c)
"Company SEC Documents" SECTION 3.01(e)
"Company Series A Preferred
Stock" SECTION 3.01(c)
"Company Significant
Subsidiary" SECTION 3.01(a)
"Company Stock Plans" SECTION 5.08(a)
"Company Stockholder
Approval" SECTION 3.01(k)
"Company Subsidiary" SECTION 3.01(a)
"Company Takeover Proposal" SECTION 4.02(a)
"Company's Stockholders'
Meeting" SECTION 5.01(b)
"Confidentiality Agreement" SECTION 5.04
"Conversion Number" Recitals
"Contract" SECTION 3.01(d)
"DGCL" SECTION 1.01
"D&O Insurance" SECTION 5.09
"Effective Time of the
Merger" SECTION 1.03
"Environmental Law" SECTION 3.01(r)
"ERISA" SECTION 3.01(j)
"Excess Shares" SECTION 2.2(e)
"Exchange Act" SECTION 3.01(d)
"Exchange Agent" SECTION 2.02(a)
"Filed Company SEC
Documents" SECTION 3.01(g)
"Filed Parent SEC
Documents" SECTION 3.02(g)
"Form S-4" SECTION 3.01(f)
"Governmental Entity" SECTION 3.01(d)
"Hazardous Substances" SECTION 3.01(r)
"HSR Act" SECTION 3.01(d)
"LSARs" SECTION 4.01(a)
"Liens" SECTION 3.01(b)
"Material Breach" SECTION 7.02(e)
"Maximum Period" SECTION 5.09
"NYSE" SECTION 2.02(e)
"Options" SECTION 3.01(c)
"Parent Benefit Plans" SECTION 3.02(i)
"Parent Common Stock" Recitals
"Parent Convertible Notes" SECTION 3.02(c)
"Parent Disclosure Letter" SECTION 3.02(b)
"Parent Employee Stock
Plans" SECTION 3.02(c)
"Parent Employee Stock
Options" SECTION 3.02(c)
"Parent LSARs" SECTION 5.01(a)
"Parent Material Adverse
Effect" SECTION 3.02(a)
"Parent Phantom Stock Options" SECTION 5.07(a)
"Parent Property" SECTION 3.02(v)
"Parent Rights" SECTION 3.02(c)
"Parent Rights Agreement" SECTION 3.02(c)
"Parent SARs" SECTION 5.01(a)
"Parent SEC Documents" SECTION 3.02(e)
"Parent Series A Preferred
Stock" SECTION 3.02(c)
"Parent Significant
Subsidiary SECTION 3.02(a)
"Parent Stockholder
Approval" SECTION 3.02(k)
"Parent Subsidiary" SECTION 3.02(a)
"Parent Takeover Proposal" SECTION 4.03(a)
"Parent's Stockholders'
Meeting" SECTION 5.01(c)
"Permits" SECTION 3.01(d)
"person" SECTION 8.03
"Phantom Stock Options" SECTION 5.07(a)
"Primary Company Executives" SECTION 3.01(p)
"Prime" SECTION 3.02(c)
"Primary Parent Executives" SECTION 3.02(p)
"Proxy Statement" SECTION 3.01(d)
"qualified stock options" SECTION 5.07(a)
"SARs" SECTION 4.01(a)
"SEC" SECTION 3.01(a)
"Securities Act" SECTION 3.01(e)
"SMCRA" SECTION 3.01(r)
"subsidiary" SECTION 8.03
"Surviving Corporation" Recitals
"Tax Returns" SECTION 3.01(n)
"Taxes" SECTION 3.01(n)
AGREEMENT AND PLAN OF MERGER dated as
of December 8, 1996, among HOMESTAKE
MINING COMPANY, a Delaware corporation
("Parent"), HMGLD CORP., a Delaware
corporation and a wholly owned subsidiary
of Parent ("Sub"), and SANTA FE PACIFIC
GOLD CORPORATION, a Delaware corporation
(the "Company").
WHEREAS the respective Boards of Directors of
Parent, Sub and the Company have approved the merger of
Sub into the Company (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement,
whereby each issued and outstanding share of common
stock, par value $0.01 per share, of the Company (the
"Company Common Stock"), not owned directly or indirectly
by Parent or the Company, will be converted into the
right to receive 1.115 (as adjusted pursuant to
Sections 2.01(d) and 5.06, the "Conversion Number") fully
paid and nonassessable shares of common stock, par value
$1.00 per share, of Parent (the "Parent Common Stock");
WHEREAS Parent, Sub and the Company desire to
make certain representations, warranties, covenants and
agreements in connection with the Merger and also to
prescribe various conditions to the Merger;
WHEREAS for Federal income tax purposes it is
intended that the Merger qualify as a reorganization
within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"); and
WHEREAS for accounting purposes, it is intended
that the Merger be accounted for as a pooling of
interests under United States generally accepted
accounting principles ("GAAP").
NOW, THEREFORE, in consideration of the
representations, warranties, covenants and agreements
contained in this Agreement, the parties agree as
follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and
subject to the conditions set forth in this Agreement,
and in accordance with the Delaware General Corporation
Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time of the Merger (as defined
in Section 1.03). Following the Merger, the separate
corporate existence of Sub shall cease and the Company
shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume
all the rights, properties, liabilities and obligations
of Sub in accordance with the DGCL. At the election of
Parent, any direct or indirect wholly owned subsidiary of
Parent may be substituted for Sub as a constituent
corporation in the Merger; provided, however, that such
substitution has no impact on the satisfaction of the
conditions set forth in Sections 6.02(d) and 6.03(d). In
such event, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect such
substitution.
SECTION 1.02. Closing. Upon the terms and
subject to the conditions of this Agreement, the closing
of the Merger (the "Closing") shall take place at
10:00 a.m. on a date to be specified by the parties (the
"Closing Date"), which shall be no later than the second
business day after satisfaction of the conditions set
forth in Section 6.01 (other than the condition set forth
in Sections 6.01(d) and 6.01(e)), at the offices of
Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth
Avenue, New York, NY 10019, unless another time, date or
place is agreed to in writing by the parties hereto.
SECTION 1.03. Effective Time of the Merger.
Upon the Closing, the parties shall file with the
Secretary of State of the State of Delaware a certificate
of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance
with the relevant provisions of the DGCL and shall make
all other filings, recordings or publications required
under the DGCL in connection with the Merger. The Merger
shall become effective at such time as the Certificate of
Merger is duly filed with the Delaware Secretary of
State, or at such other time as the parties may agree and
specify in the Certificate of Merger (the time the Merger
becomes effective being the "Effective Time of the
Merger").
SECTION 1.04. Effects of the Merger. (a) The
Merger shall have the effects set forth in Section 259 of
the DGCL.
(b) The Merger shall not result in any
acceleration of vesting of the outstanding non-employee
Director share rights of Parent granted under the Parent
Employee Stock Plans (as defined in Section 3.02(c)) that
are held by directors of Parent who continue as members
of the Board of Directors of Parent after the Effective
Time of the Merger.
(c) The Merger shall not result in any change
in the terms of the outstanding Parent Employee Stock
Options (as defined in Section 3.02(c)) granted under the
Parent Employee Stock Plans.
SECTION 1.05. Certificate of Incorporation and
By-laws. (a) The Amended and Restated Certificate of
Incorporation of the Company, as in effect immediately
prior to the Effective Time of the Merger, shall be the
Certificate of Incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein
or by applicable law.
(b) The By-laws of the Company as in effect
immediately prior to the Effective Time of the Merger
shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by
applicable law.
SECTION 1.06. Directors. The individuals who
are the directors of Sub immediately prior to the
Effective Time of the Merger shall be the directors of
the Surviving Corporation until thereafter they cease to
be directors in accordance with the DGCL and the
Certificate of Incorporation and By-laws of the Surviving
Corporation.
SECTION 1.07. Officers. The individuals who
are the officers of the Company immediately prior to the
Effective Time of the Merger shall be the officers of the
Surviving Corporation until thereafter they cease to be
officers in accordance with the DGCL and the Certificate
of Incorporation and By-laws of the Surviving
Corporation.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. As of
the Effective Time of the Merger, by virtue of the Merger
and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital
stock of Sub:
(a) Capital Stock of Sub. Each issued and
outstanding share of capital stock of Sub shall be
converted into and become one fully paid and
nonassessable share of Common Stock, par value $0.01
per share, of the Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent-
Owned Stock. Each share of Company Common Stock
that is owned by the Company or by any wholly owned
subsidiary of the Company and each share of Company
Common Stock that is owned by Parent, Sub or any
other wholly owned subsidiary of Parent shall
automatically be canceled and retired and shall
cease to exist, and no Parent Common Stock or other
consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Common Stock.
Subject to Section 2.02(e), each issued and
outstanding share of Company Common Stock (other
than shares to be canceled in accordance with
Section 2.01(b)) shall be converted into the right
to receive the Conversion Number of fully paid
and nonassessable shares of Parent Common Stock. As
of the Effective Time of the Merger, all such shares
of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of
a certificate representing any such shares of
Company Common Stock shall cease to have any rights
with respect thereto, except the right to receive
upon the surrender of such certificates,
certificates representing the shares of Parent
Common Stock, any cash in lieu of fractional shares
of Parent Common Stock and any dividends to the
extent provided in Section 2.02(c) to be issued or
paid in consideration therefor upon surrender of
such certificate in accordance with Section 2.02,
without interest.
(d) Adjustment of Conversion Number. In
addition to any adjustment in the Conversion Number
pursuant to Section 5.06(a), in the event of any
split, combination or reclassification of any Parent
Capital Stock or any issuance or the authorization
of any issuance of any other securities in exchange
or in substitution for shares of Parent Capital
Stock at any time during the period from the date of
this Agreement to the Effective Time of the Merger,
the Company and Parent shall make such adjustment to
the Conversion Number as the Company and Parent
shall mutually agree so as to preserve the economic
benefits that the Company and Parent each reasonably
expected on the date of this Agreement to receive as
a result of the consummation of the Merger and the
other transactions contemplated by this Agreement.
SECTION 2.02. Exchange of Certificates.
(a) Exchange Agent. Immediately following the Effective
Time of the Merger, Parent shall deposit with The First
National Bank of Boston or such other bank or trust
company as may be designated by Parent and the Company
(the "Exchange Agent"), for the benefit of the holders of
shares of Company Common Stock, for exchange in
accordance with this Article II, through the Exchange
Agent, certificates representing the shares of Parent
Common Stock (such shares of Parent Common Stock,
together with any dividends or distributions with respect
thereto with a record date after the Effective Time of
the Merger, being hereinafter referred to as the
"Exchange Fund") issuable pursuant to Section 2.01 in
exchange for outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as
reasonably practicable after the Effective Time of the
Merger, the Exchange Agent shall mail to each holder of
record of a certificate or certificates (the
"Certificates") which immediately prior to the Effective
Time of the Merger represented outstanding shares of
Company Common Stock, other than shares to be canceled or
retired in accordance with Section 2.01(b), (i) a letter
of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such
form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common
Stock. Upon surrender of a Certificate for cancelation
to the Exchange Agent or to such other agent or agents as
may be appointed by Parent, together with such letter of
transmittal, duly executed, and such other documents as
may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive
in exchange therefor a certificate representing that
number of whole shares of Parent Common Stock which such
holder has the right to receive pursuant to the
provisions of this Article II, and the Certificate so
surrendered shall forthwith be canceled. In the event of
a transfer of ownership of Company Common Stock which is
not registered in the transfer records of the Company, a
certificate representing the proper number of shares of
Parent Common Stock may be issued to a person other than
the person in whose name the Certificate so surrendered
is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and
the person requesting such payment shall pay any transfer
or other taxes required by reason of the issuance of
shares of Parent Common Stock to a person other than the
registered holder of such Certificate or establish to the
satisfaction of Parent that such tax has been paid or is
not applicable. Until surrendered as contemplated by
this Section 2.02, each Certificate shall be deemed at
any time after the Effective Time of the Merger to
represent only the right to receive upon such surrender
the certificate representing the appropriate number of
whole shares of Parent Common Stock, cash in lieu of any
fractional shares of Parent Common Stock and any
dividends to the extent provided in Section 2.02(c) as
contemplated by this Section 2.02. No interest will be
paid or will accrue on any cash payable in lieu of any
fractional shares of Parent Common Stock.
(c) Distributions with Respect to Unexchanged
Shares. No dividends or other distributions with respect
to Parent Common Stock with a record date after the
Effective Time of the Merger shall be paid to the holder
of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby, and no
cash payment in lieu of fractional shares shall be paid
to any such holder pursuant to Section 2.02(e) until the
surrender of such Certificate in accordance with this
Article II. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall
be paid to the holder of the certificate representing
whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a
fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 2.02(e) and the
amount of dividends or other distributions with a record
date after the Effective Time of the Merger theretofore
paid with respect to such whole shares of Parent Common
Stock, and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record
date after the Effective Time of the Merger but prior to
such surrender and a payment date subsequent to such
surrender payable with respect to such whole shares of
Parent Common Stock.
(d) No Further Ownership Rights in Company
Common Stock. All shares of Parent Common Stock issued
upon the surrender for exchange of Certificates in
accordance with the terms of this Article II (including
any cash paid pursuant to Section 2.02(c) or 2.02(e))
shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the shares of
Company Common Stock theretofore represented by such
Certificates, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any
other distributions with a record date prior to the
Effective Time of the Merger which may have been declared
or made by the Company on such shares of Company Common
Stock in accordance with the terms of this Agreement or
prior to the date of this Agreement and which remain
unpaid at the Effective Time of the Merger, and there
shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the
shares of Company Common Stock which were outstanding
immediately prior to the Effective Time of the Merger.
If, after the Effective Time of the Merger, Certificates
are presented to the Surviving Corporation or the
Exchange Agent for any reason, they shall be canceled and
exchanged as provided in this Article II, except as
otherwise provided by law.
(e) No Fractional Shares. (i) No
certificates or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender
for exchange of Certificates, and such fractional share
interests shall not entitle the owner thereof to vote or
to any rights of a stockholder of Parent.
(ii) As promptly as practicable following the
Effective Time of the Merger, the Exchange Agent shall
determine the excess of (x) the number of shares of
Parent Common Stock delivered to the Exchange Agent by
Parent pursuant to Section 2.02(a) over (y) the aggregate
number of whole shares of Parent Common Stock to be
distributed to holders of the Certificates pursuant to
Section 2.02(b) (such excess being herein called the
"Excess Shares"). As soon as practicable after the
Effective Time of the Merger, the Exchange Agent, as
agent for the holders of the Certificates, shall sell the
Excess Shares at then prevailing prices on the New York
Stock Exchange (the "NYSE") all in the manner provided in
paragraph (iii) of this Section 2.02(e).
(iii) The sale of the Excess Shares by the
Exchange Agent shall be executed on the NYSE through one
or more member firms of the NYSE and shall be executed in
round lots to the extent practicable. The proceeds from
such sale or sales available for distribution to the
holders of Certificates shall be reduced by the
compensation payable to the Exchange Agent and the
expenses incurred by the Exchange Agent, in each case, in
connection with such sale or sales of the Excess Shares,
including all related commissions, transfer taxes and
other out-of-pocket transaction costs. Until the net
proceeds of such sale or sales have been distributed to
the holders of the Certificates, the Exchange Agent shall
hold such proceeds in trust for the holders of the
Certificates (the "Common Shares Trust"). The Exchange
Agent shall determine the portion of the Common Shares
Trust to which each holder of a Certificate shall be
entitled, if any, by multiplying the amount of the
aggregate net proceeds comprising the Common Shares Trust
by a fraction, the numerator of which is the amount of
the fractional share interest to which such holder of a
Certificate is entitled and the denominator of which is
the aggregate amount of fractional share interests to
which all holders of the Certificates are entitled.
(iv) As soon as practicable after the
determination of the amount of cash, if any, to be paid
to holders of Certificates in lieu of any fractional
share interests, the Exchange Agent shall make available
such amounts, without interest, to such holders of
Certificates who have surrendered their Certificates in
accordance with this Article II.
(f) Termination of Exchange Fund and Common
Shares Trust. Any portion of the Exchange Fund and
Common Shares Trust which remains undistributed to the
holders of Certificates for six months after the
Effective Time of the Merger shall be delivered to
Parent, upon demand, and any holders of Certificates who
have not theretofore complied with this Article II shall
thereafter look only to Parent for payment of their claim
for Parent Common Stock, any cash in lieu of fractional
shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock.
(g) No Liability. None of Parent, Sub, the
Company or the Exchange Agent shall be liable to any
person in respect of any shares of Parent Common Stock
(or dividends or distributions with respect thereto) or
cash from the Exchange Fund or the Common Shares Trust
delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to
seven years after the Effective Time of the Merger (or
immediately prior to such earlier date on which any
shares of Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock or any dividends
or distributions with respect to Parent Common Stock in
respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity (as
defined in Section 3.01(d)), any such shares, cash,
dividends or distributions in respect of such Certificate
shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously
entitled thereto.
(h) Investment of Exchange Fund and Common
Shares Trust. The Exchange Agent shall invest any cash
included in the Exchange Fund and Common Shares Trust, as
directed by Parent, on a daily basis. Any interest and
other income resulting from such investments shall be
paid to Parent.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties
of the Company. The Company represents and warrants to
Parent and Sub as follows:
(a) Organization, Standing and Corporate
Power. Each of the Company and each Company
Significant Subsidiary (as hereinafter defined) is a
corporation, partnership or other legal entity duly
organized, validly existing and in good standing
under the laws of the jurisdiction in which it is
organized and has the requisite power and authority
to carry on its business as now being conducted.
Each of the Company and each of its subsidiaries
(each a "Company Subsidiary") is duly qualified or
licensed to do business and is in good standing in
each jurisdiction in which the nature of its
business or the ownership or leasing of its
properties makes such qualification or licensing
necessary, other than in such jurisdictions where
the failure to be so qualified or licensed
(individually or in the aggregate) would not (i)
have a material adverse effect on the business,
properties, financial condition or results of
operations of the Company and the Company
Subsidiaries, taken as a whole (other than effects
relating to the gold mining industry in general), or
(ii) prevent the Company from performing its
obligations under this Agreement (a "Company
Material Adverse Effect"). The Company has made
available to Parent complete and correct copies of
its Amended and Restated Certificate of
Incorporation and By-laws and the certificates of
incorporation and by-laws or comparable organization
documents of the Company Significant Subsidiaries,
in each case as amended to the date of this
Agreement. For purposes of this Agreement, a
"Company Significant Subsidiary" means any Company
Subsidiary that constitutes a significant subsidiary
of the Company within the meaning of Rule 1-02 of
Regulation S-X of the Securities and Exchange
Commission (the "SEC"). The Company is not in
violation of any provision of its Amended and
Restated Certificate of Incorporation or By-laws,
and no Company Subsidiary is in violation of any
provisions of its certificate of incorporation,
by-laws or comparable organizational documents,
except to the extent that such violations would not,
individually or in the aggregate, have a Company
Material Adverse Effect.
(b) Company Subsidiaries. Section 3.01(b) of
the letter from the Company, dated the date of this
Agreement, addressed to Parent (the "Company
Disclosure Letter") lists each Company Significant
Subsidiary and the ownership or interest therein of
the Company. All the outstanding shares of capital
stock of each Company Significant Subsidiary have
been validly issued and are fully paid and
nonassessable and, except as set forth in
Section 3.01(b) of the Company Disclosure Letter,
are owned by the Company, by another subsidiary of
the Company or by the Company and another Company
Subsidiary, free and clear of all pledges, claims,
liens, charges, encumbrances and security interests
of any kind or nature whatsoever (collectively,
"Liens"). Except for the capital stock of the
Company Subsidiaries and except for the ownership
interests set forth in Section 3.01(b) of the
Company Disclosure Letter, the Company does not own,
directly or indirectly, any capital stock or other
ownership interest, with a fair market value as of
the date of this Agreement greater than $25,000,000,
in any person.
(c) Capital Structure. The authorized capital
stock of the Company (the "Company Capital Stock")
consists of 500,000,000 shares of Company Common
Stock and 50,000,000 shares of preferred stock, par
value $0.01 per share. Pursuant to a Certificate of
Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock, on January 26,
1995, the Board of Directors of the Company created
a series of 1,500,000 shares of preferred stock
designated as the "Series A Junior Participating
Preferred Stock", par value $0.01 per share (the
"Company Series A Preferred Stock"), which shares
are issuable in connection with the rights to
purchase shares of Company Series A Preferred Stock
(the "Company Rights") that were issued pursuant to
the Rights Agreement dated February 13, 1995 (as
amended from time to time, the "Company Rights
Agreement"), between the Company and Harris Trust
and Savings Bank, as Rights Agent. At the close of
business on December 5, 1996: (i) 131,459,422 shares
of Company Common Stock were outstanding, all of
which were validly issued, fully paid and
nonassessable, and no shares of Company Series A
Preferred Stock, or of any other series of preferred
stock of the Company, were outstanding; (ii) no
shares of Company Common Stock were held by the
Company in its treasury; (iii) 1,521,912 shares of
Company Common Stock were issuable upon the exercise
of outstanding employee or outside director stock
options (the "Company Employee Stock Options") that
were granted pursuant to the Company's employee
stock plans set forth in Section 3.01(c) of the
Company Disclosure Letter (the "Company Employee
Stock Plans"); and (iv) 1,500,000 shares of Company
Series A Preferred Stock were reserved for issuance
in connection with the Company Rights. Except as
set forth above, at the close of business on
December 5, 1996, no shares of capital stock or
other voting securities of the Company were issued,
reserved for issuance or outstanding. There are not
any bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or
convertible into, or exchangeable for, securities
having the right to vote) on any matters on which
stockholders of the Company must vote. Except as
set forth above and except as set forth in
Section 3.01(c) of the Company Disclosure Letter, as
of the date of this Agreement, there are not any
options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind
(collectively, "Options") to which the Company or
any Company Subsidiary is a party or by which any of
them is bound relating to the issued or unissued
capital stock of the Company or any Company
Subsidiary, or obligating the Company or any Company
Subsidiary to issue, transfer, grant or sell any
shares of capital stock or other equity interests
in, or securities convertible or exchangeable for
any capital stock or other equity interests in, the
Company or any Company Subsidiary or obligating the
Company or any Company Subsidiary to issue, grant,
extend or enter into any such Options. All shares
of Company Common Stock that are subject to issuance
as aforesaid, upon issuance on the terms and
conditions specified in the instrument pursuant to
which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable.
Except as set forth in Section 3.01(c) of the
Company Disclosure Letter, as of the date of this
Agreement, there are not any outstanding contractual
obligations of the Company or any Company Subsidiary
to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or any
Company Subsidiary, or make any material investment
(in the form of a loan, capital contribution or
otherwise) in, any Company Subsidiary or any other
person.
(d) Authority; Noncontravention. The Company
has all requisite corporate power and authority to
enter into this Agreement and, subject to the
Company Stockholder Approval (as defined in Section
3.01(k)), to consummate the transactions
contemplated by this Agreement. The Board of
Directors of the Company has unanimously approved
this Agreement and the transactions contemplated by
this Agreement, and has resolved to recommend to the
Company's stockholders that they give the Company
Stockholder Approval. The execution and delivery of
this Agreement by the Company and the consummation
by the Company of the transactions contemplated by
this Agreement have been duly authorized by all
necessary corporate action on the part of the
Company, subject to the Company Stockholder
Approval. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable
against the Company in accordance with its terms.
Except as set forth in Section 3.01(d) of the
Company Disclosure Letter, the execution and
delivery of this Agreement does not, and the
consummation of the transactions contemplated by
this Agreement and compliance with the provisions of
this Agreement will not, conflict with, or result in
any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a
right of consent, termination, purchase, cancelation
or acceleration of any obligation or to loss of any
property, rights or benefits under, or result in the
imposition of any additional obligation under, or
result in the creation of any Lien upon any of the
properties or assets of the Company or any Company
Subsidiary under, (i) the Amended and Restated
Certificate of Incorporation or By-laws of the
Company or the comparable organizational documents
of any Company Subsidiary, (ii) any contract,
instrument, permit, concession, franchise, license,
loan or credit agreement, note, bond, mortgage,
indenture, lease or other property agreement,
partnership or joint venture agreement or other
legally binding agreement, whether oral or written
(a "Contract"), applicable to the Company or any
Company Subsidiary or their respective properties or
assets or (iii) subject to the governmental filings
and other matters referred to in the following
sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the
Company or any Company Subsidiary or their
respective properties or assets, other than, in the
case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights or Liens that
individually or in the aggregate would not have a
Company Material Adverse Effect. No consent,
approval, order or authorization of, or
registration, declaration or filing with, any
Federal, state or local government or any court,
administrative agency or commission or other
governmental authority or agency, domestic or
foreign, including the European Community
(a "Governmental Entity"), is required by or with
respect to the Company or any Company Subsidiary in
connection with the execution and delivery of this
Agreement by the Company or the consummation by the
Company of the transactions contemplated by this
Agreement, except for (i) the filing of a premerger
notification and report form by the Company under
the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR Act"), (ii) the filing with the SEC
of (A) a joint proxy statement relating to the
meetings of the Company's stockholders and the
Parent's stockholders to be held in connection with
the Merger and the transactions contemplated by this
Agreement (as amended or supplemented from time to
time, the "Proxy Statement"), and (B) such reports
under Section 12 or 13(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as may
be required in connection with this Agreement and
the transactions contemplated by this Agreement,
(iii) the filing of the Certificate of Merger with
the Delaware Secretary of State and appropriate
documents with the relevant authorities of other
states in which the Company is qualified to do
business, (iv) those that may be required solely by
reason of Parent's or Sub's (as opposed to any other
third party's) participation in the Merger and the
other transactions contemplated by this Agreement
and (v) such other consents, approvals, orders,
authorizations, registrations, declarations and
filings, including under applicable Environmental
Laws (as defined in Section 3.01(r)), (x) as may be
required under the laws of any foreign country in
which the Company or any Company Subsidiary conducts
any business or owns any property or assets, (y) as
are set forth in Section 3.01(d) of the Company
Disclosure Letter or (z) that, if not obtained or
made, would not, individually or in the aggregate,
have a Company Material Adverse Effect. Except as
set forth in Section 3.01(d) of the Company
Disclosure Letter, the Company and the Company
Subsidiaries possess all certificates, franchises,
licenses, permits, authorizations and approvals
issued to or granted by Governmental Entities
(collectively, "Permits"), including pursuant to any
Environmental Law, necessary to conduct their
business as such business is currently conducted or
is expected to be conducted, except for such
Permits, the lack of possession of which has not,
and is not reasonably expected to have, a Company
Material Adverse Effect. Except as set forth in
Section 3.01(d) of the Company Disclosure Letter,
(i) all such Permits are validly held by the Company
or the Company Subsidiaries, and the Company and the
Company Subsidiaries have complied in all respects
with all terms and conditions thereof, except for
such instances where the failure to validly hold
such Permits or the failure to have complied with
such Permits has not, and is not reasonably expected
to have, a Company Material Adverse Effect,
(ii) none of such Permits will be subject to
suspension, modification, revocation or nonrenewal
as a result of the execution and delivery of this
Agreement or the consummation of the Merger, other
than such Permits the suspension, modification or
nonrenewal of which, individually or in the
aggregate, have not had and could not reasonably be
expected to have a Company Material Adverse Effect
and (iii) since December 31, 1995, neither the
Company nor any Company Subsidiary has received any
written warning, notice, notice of violation or
probable violation, notice of revocation, or other
written communication from or on behalf of any
Governmental Entity, alleging (A) any violation of
any such Permit or (B) that the Company or any
Company Subsidiary requires any Permit required for
its business, as such business is currently
conducted, that is not currently held by it.
(e) SEC Documents; Undisclosed Liabilities.
The Company has filed all required reports,
schedules, forms, statements and other documents
with the SEC since January 1, 1995 (the "Company SEC
Documents"). As of its date, each Company SEC
Document complied in all material respects with the
requirements of the Securities Act of 1933 (the
"Securities Act"), or the Exchange Act, as the case
may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Company
SEC Documents. None of the Company SEC Documents
contains any untrue statement of a material fact or
omits to state a material fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which
they were made, not misleading, except to the extent
that such statements have been modified or
superseded by a later filed Company SEC Document.
The consolidated financial statements of the Company
included in the Company SEC Documents comply as to
form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted
accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of
the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated
financial position of the Company as of the dates
thereof and the consolidated results of its
operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set
forth in the Filed Company SEC Documents (as defined
in Section 3.01(g)), neither the Company nor any
Company Subsidiary has any liabilities or
obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by
generally accepted accounting principles to be set
forth on a consolidated balance sheet of the Company
and the consolidated Company Subsidiaries or in the
notes thereto and which, individually or in the
aggregate, could reasonably be expected to have a
Company Material Adverse Effect, other than any such
liabilities or obligations that were required to be
set forth in the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996.
None of the Company Subsidiaries is subject to the
informational reporting requirements of Section 13
of the Exchange Act.
(f) Information Supplied. None of the
information supplied or to be supplied by the
Company for inclusion or incorporation by reference
in (i) the registration statement on Form S-4 to be
filed with the SEC by Parent in connection with the
issuance of Parent Common Stock in the Merger (the
"Form S-4") will, at the time the Form S-4 is filed
with the SEC, at any time it is amended or
supplemented or at the time it becomes effective
under the Securities Act, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein not
misleading, or (ii) the Proxy Statement will, at the
date the Proxy Statement is first mailed to the
Company's stockholders or Parent's stockholders or
at the time of the Company's Stockholders' Meeting
(as defined in Section 5.01(b)) or the Parent's
Stockholders' Meeting (as defined in Section
5.01(c)), contain any untrue statement of a material
fact or omit to state any material fact required to
be stated therein or necessary in order to make the
statements therein, in light of the circumstances
under which they are made, not misleading. The
Proxy Statement will comply as to form in all
material respects with the requirements of the
Exchange Act and the rules and regulations
promulgated thereunder, except that no
representation or warranty is made by the Company
with respect to statements made or incorporated by
reference therein based on information supplied by
Parent or Sub for inclusion or incorporation by
reference in the Proxy Statement.
(g) Absence of Certain Changes or Events.
Except as disclosed in the Company SEC Documents
filed and publicly available prior to the date of
this Agreement (the "Filed Company SEC Documents"),
from December 31, 1995, to the date of this
Agreement, the Company has conducted its business
only in the ordinary course, and:
(i) during the period from September 30,
1996, to the date of this Agreement, there has
not been any event, change, effect or
development which, individually or in the
aggregate, has had or is, so far as reasonably
can be foreseen, likely to have, a Company
Material Adverse Effect;
(ii) during the period from December 31,
1995, to the date of this Agreement, there has
not been except for regular annual dividends
not in excess of $0.05 per share of Company
Common Stock, with customary record and payment
dates, any declaration, setting aside or
payment of any dividend or other distribution
(whether in cash, stock or property) with
respect to any shares of Company Capital
Stock;
(iii) during the period from December 31,
1995, to the date of this Agreement, there has
not been any split, combination or
reclassification of any Company Capital Stock
or any issuance or the authorization of any
issuance of any other securities in exchange or
in substitution for shares of Company Capital
Stock;
(iv) during the period from December 31,
1995, to the date of this Agreement, there has
not been except as disclosed in Section 3.01(g)
of the Company Disclosure Letter, (A) any
granting by the Company or any Company
Subsidiary to any executive officer of the
Company or any Company Subsidiary of any
increase in compensation, except in the
ordinary course of business consistent with
prior practice or as was required under
employment agreements in effect as of the date
of the most recent audited financial statements
included in the Filed Company SEC Documents,
(B) any granting by the Company or any Company
Subsidiary to any such executive officer of any
increase in severance or termination pay,
except as was required under any employment,
severance or termination agreements in effect
as of the date of the most recent audited
financial statements included in the Filed
Company SEC Documents or (C) any entry by the
Company or any Company Subsidiary into any
employment, severance or termination agreement
with any such executive officer; and
(v) during the period from December 31,
1995, to the date of this Agreement, there has
not been any change in accounting methods,
principles or practices by the Company or any
Company Significant Subsidiary materially
affecting its assets, liabilities or business,
except insofar as may have been required by a
change in generally accepted accounting
principles.
(h) Litigation. Except as disclosed in the
Filed Company SEC Documents or in Section 3.01(h) of
the Company Disclosure Letter, there is no suit,
action or proceeding pending or, to the knowledge of
the Company, threatened against the Company or any
Company Subsidiary (and the Company does not have
any reasonable basis to expect any such suit, action
or proceeding to be commenced) that, individually or
in the aggregate, could reasonably be expected to
have a Company Material Adverse Effect, and there is
not any judgment, decree, injunction, rule or order
of any Governmental Entity or arbitrator outstanding
against the Company or any Company Subsidiary
having, or which, insofar as reasonably can be
foreseen, in the future would have, any Company
Material Adverse Effect. As of the date of this
Agreement, except as disclosed in the Filed Company
SEC Documents or in Section 3.01(h) of the Company
Disclosure Letter, there is no suit, action or
proceeding pending, or, to the knowledge of the
Company, threatened, against the Company or any
Company Subsidiary (and the Company does not have
any reasonable basis to expect any such suit, action
or proceeding to be commenced) that, individually or
in the aggregate, could reasonably be expected to
prevent or delay in any material respect the
consummation of the Merger or the transactions
contemplated by this Agreement.
(i) Absence of Changes in Benefit Plans.
Except as disclosed in the Filed Company SEC
Documents or in Section 3.01(i) of the Company
Disclosure Letter, since the date of the most recent
audited financial statements included in the Filed
Company SEC Documents and prior to the date of this
Agreement, there has not been any adoption or
amendment in any material respect by the Company or
any Company Subsidiary of any collective bargaining
agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other
plan, arrangement or understanding (whether or not
legally binding) providing benefits to any current
or former employee, officer or director of the
Company or any Company Subsidiary (collectively,
"Company Benefit Plans").
(j) ERISA Compliance. Except as described in
the Filed Company SEC Documents or in
Section 3.01(j) of the Company Disclosure Letter or
as would not have a Company Material Adverse Effect,
(i) all employee benefit plans or programs
maintained for the benefit of the current or former
employees or directors of the Company or any Company
Subsidiary that are sponsored, maintained or
contributed to by the Company or any Company
Subsidiary, or with respect to which the Company or
any Company Subsidiary has any liability, including
any such plan that is an "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974 ("ERISA"), are in
compliance with all applicable requirements of law,
including ERISA and the Code, and (ii) neither the
Company nor any Company Subsidiary has any
liabilities or obligations with respect to any such
employee benefit plans or programs, whether accrued,
contingent or otherwise, nor to the knowledge of the
Company are any such liabilities or obligations
expected to be incurred. Except as set forth in
Section 3.01(j) of the Company Disclosure Letter,
the execution of, and performance of the
transactions contemplated by, this Agreement will
not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event
under any benefit plan, policy, arrangement or
agreement or any trust or loan that will or may
result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect
to any employee. The only severance agreements or
severance policies applicable to the Company or the
Company Subsidiaries are the agreements and policies
specifically set forth in Section 3.01(j) of the
Company Disclosure Letter.
(k) Voting Requirements. The approval and
adoption of this Agreement by the holders of a
majority of the outstanding shares of Company Common
Stock (the "Company Stockholder Approval") is the
only vote of the holders of any class or series of
Company Capital Stock necessary to approve this
Agreement and the transactions contemplated by this
Agreement.
(l) Brokers; Schedule of Fees and Expenses.
Except as set forth in Section 3.01(l) of the
Company Disclosure Letter, no broker, investment
banker, financial advisor or other person is
entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in
connection with the transactions contemplated by
this Agreement based upon arrangements made by or on
behalf of the Company. The Company has made
available to Parent true and complete copies of all
agreements that are referred to in Section 3.01(l)
of the Company Disclosure Letter and all
indemnification and other agreements related to the
engagement of the persons so listed.
(m) Opinion of Financial Advisor. The Company
has received the opinion of SBC Warburg Inc., dated
the date of this Agreement, to the effect that, as
of such date, the consideration to be received in
the Merger by the Company's stockholders is fair to
the Company's stockholders from a financial point of
view, a signed copy of which opinion has been
delivered to Parent.
(n) Taxes. (i) The Company and each Company
Subsidiary have timely filed (or have had timely
filed on their behalf) or will file or cause to be
timely filed, all material Tax Returns required by
applicable law to be filed by any of them prior to
or as of the Effective Time of the Merger. All such
material Tax Returns are, or will be at the time of
filing, true, complete and correct in all material
respects.
(ii) The Company and each Company Subsidiary
have paid (or have had paid on their behalf) or,
where payment is not yet due, have established (or
have had established on their behalf and for their
sole benefit and recourse) or will establish or
cause to be established on or before the Effective
Time of the Merger an adequate accrual for the
payment of all Taxes due with respect to any period
ending prior to or as of the Effective Time of the
Merger, except where the failure to pay or establish
adequate reserves has not had and would not
reasonably be expected to have a Company Material
Adverse Effect.
(iii) Except as set forth in Section 3.01(n) of
the Company Disclosure Letter, no deficiencies for
any material Taxes have been proposed, asserted or
assessed against the Company or any Company
Subsidiary, and no requests for waivers of the time
to assess any such material Taxes are pending. The
Federal income Tax Returns of the Company and each
Company Subsidiary consolidated in such Tax Returns
have been examined by and settled with the United
States Internal Revenue Service for all years
through 1985.
(iv) The Company has no reason to believe that
any conditions exist that could reasonably be
expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a)
of the Code.
(v) For purposes of this Agreement, the
following terms shall have the following meanings:
(A) "Taxes" shall mean all Federal,
state, local and foreign taxes, and other
assessments of a similar nature (whether
imposed directly or through withholding),
including any interest, additions to tax, or
penalties applicable thereto.
(B) "Tax Returns" shall mean all Federal,
state, local and foreign tax returns,
declarations, statements, reports, schedules,
forms and information returns and any amended
tax return relating to Taxes.
(o) Compliance with Laws. Neither the Company
nor any Company Subsidiary has violated or failed to
comply with any statute, law, ordinance, regulation,
rule, judgment, decree or order of any Governmental
Entity applicable to its business or operations,
except for violations and failures to comply that
could not, individually or in the aggregate,
reasonably be expected to result in a Company
Material Adverse Effect.
(p) No Excess Parachute Payments. Other than
payments that may be made to the persons listed in
Section 3.01(p) of the Company Disclosure Letter
(the "Primary Company Executives"), any amount that
could be received (whether in cash or property or
the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any
employee, officer or director of the Company or any
of its affiliates who is a "disqualified individual"
(as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment,
severance or termination agreement, other
compensation arrangement or Company Benefit Plan
currently in effect would not be characterized as an
"excess parachute payment" (as such term is defined
in Section 280G(b)(1) of the Code). Set forth in
Section 3.01(p) of the Company Disclosure Letter is
(i) the estimated maximum amount that could be paid
to each Primary Company Executive as a result of the
transactions contemplated by this Agreement under
all employment, severance and termination
agreements, other compensation arrangements and
Company Benefit Plans currently in effect and
(ii) the "base amount" (as such term is defined in
Section 280G(b)(3) of the Code) for each Primary
Company Executive calculated as of the date of this
Agreement.
(q) Accounting Matters. Neither the Company
nor, to its best knowledge, any of its affiliates,
has taken or agreed to take any action that (without
giving effect to any action taken or agreed to be
taken by Parent or any of its affiliates) would
prevent Parent from accounting for the business
combination to be effected by the Merger as a
pooling of interests.
(r) Environmental Matters. (i) Except as set
forth in Section 3.01(r) of the Company Disclosure
Letter and except for items that could not, in all
such cases taken individually or in the aggregate,
reasonably be expected to result in a Company
Material Adverse Effect, neither the Company nor any
Company Subsidiary has (x) placed, held, located,
released, transported or disposed of any Hazardous
Substances (as defined below) on, under, from or at
any of the Company's or any Company Subsidiary's
current or former properties or any other properties
or (y) any knowledge or reason to know of the
presence of any Hazardous Substances on, under or at
any of the Company's or any Company Subsidiary's
current or former properties or any other property
but arising from the Company's or any Company
Subsidiary's current or former properties. For
purposes of this Agreement, the term "Hazardous
Substance" shall mean any materials or substances
(including asbestos, buried contaminants, chemicals,
flammable explosives, radioactive materials,
petroleum and petroleum products) defined as, or
included in the definition of, "hazardous
substances", "hazardous wastes", "hazardous
materials" or "toxic substances" under any
Environmental Law. For purposes of this Agreement,
the term "Environmental Law" shall mean any federal,
state, provincial, regional, territorial, municipal,
local or foreign statute, code, ordinance, rule,
regulation, policy, permit, consent, approval,
license, judgment, order, writ, decree, injunction
or other authorization, relating to: (A) emissions,
discharges, releases or threatened releases of
Hazardous Substances into the natural or workplace
environment, including, without limitation, ambient
air, soil, sediments, land surface, subsurface,
surface water, groundwater, tailings ponds or
settling lagoons; (B) the generation, treatment,
storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Substances;
or (C) protection of health or safety or the
environment, handling, treatment or disposal of
solid waste, or operation or reclamation of mines.
(ii) Except for items that individually or in
the aggregate could not reasonably be expected to
result in a Company Material Adverse Effect or as
disclosed in Section 3.01(r) of the Company
Disclosure Letter, the Company and the Company
Subsidiaries are in compliance with the Surface
Mining Control and Reclamation Act, 30 U.S.C. SECTION 1201
et seq. (the "SMCRA") and any state law comparable
to SMCRA under 30 U.S.C. SECTION 1253, and neither the
Company nor any Company Subsidiary is subject to any
reclamation obligation or other site restoration
obligation under any Environmental Law.
(iii) Except for items that individually or in
the aggregate could not reasonably be expected to
result in a Company Material Adverse Effect or as
set forth in Section 3.01(r) of the Company
Disclosure Letter, no Environmental Law imposes any
obligation upon the Company or any Company
Subsidiary arising out of or as a condition to any
transaction contemplated by this Agreement,
including any requirement to modify or to transfer
any permit or license, any requirement to file any
notice or other submission with any Governmental
Entity, the filing of any notice, acknowledgement or
covenant in any land records, or the modification of
or provision of notice under any agreement, consent
order or consent decree.
(s) State Takeover Statutes. The Board of
Directors of the Company has approved the Merger and
this Agreement, and such approval is sufficient to
render inapplicable to the Merger, this Agreement
and the transactions contemplated by this Agreement,
the provisions of Section 203 of the DGCL. To the
best of the Company's knowledge, no other state
takeover statute or similar statute or regulation
applies or purports to apply to the Merger, this
Agreement or any of the transactions contemplated by
this Agreement.
(t) Rights Agreement. The Company has taken
all necessary action to (i) render the Company
Rights inapplicable to the Merger and the other
transactions contemplated by this Agreement and
(ii) ensure that (x) neither Parent nor any of its
affiliates is an Acquiring Person (as defined in the
Company Rights Agreement), (y) none of a
Distribution Date, Shares Acquisition Date or
Triggering Event (each as defined in the Company
Rights Agreement) shall occur by reason of the
approval, execution or delivery of this Agreement,
the announcement or consummation of the Merger or
the consummation of any of the other transactions
contemplated by this Agreement and (z) the Company
Rights shall expire immediately prior to the
Effective Time of the Merger.
(u) Dispositions of Company Property. Except
as described in the Filed Company SEC Documents or
in Section 3.01(u) of the Company Disclosure Letter,
since December 31, 1995, neither the Company nor any
Company Subsidiary has sold or disposed of or ceased
to hold or own any personal property, real property,
any interest or rights with respect to real property
(including exploration or production rights), any
interest in a joint venture or other assets or
properties of the Company or any Company Subsidiary
("Company Property"), other than sales and
dispositions of raw materials, obsolete equipment,
mine output and other inventories, and any interests
or rights with respect to real property having an
individual fair market value of less than
$10,000,000 of the Company or any Company
Subsidiary, in each case in the ordinary course of
business, consistent with past practice. Except as
set forth in Section 3.01(u) of the Company
Disclosure Letter, no Company Property whose fair
market value on the date of this Agreement is
greater than $10,000,000 is subject to any pending
sale or disposition transaction.
(v) Absence of Reduction in Reserves and
Mineralized Material. There has been no material
reduction in the aggregate amount of reserves or in
the aggregate amount of mineralized material of the
Company and the Company Subsidiaries, taken as a
whole, from the amounts set forth in the Company's
1995 annual report to shareholders except for (i)
such reductions in reserves that have resulted from
production in the ordinary course of business and
(ii) such reductions in mineralized material that
have resulted from reclassifications of mineralized
material as reserves.
(w) Development Projects. The Company has no
reason to believe that (i) the estimated production
capacity for each of the time periods set forth in
Section 3.01(w) of the Company Disclosure Letter
with respect to the four development projects
described in the Company's Annual Report on Form 10-
K for the fiscal year ended December 31, 1995 will
not be reached during such time periods, or (ii) the
estimated costs set forth in Section 3.01(w) of the
Company Disclosure Letter with respect to each such
development project will be exceeded.
SECTION 3.02. Representations and Warranties
of Parent and Sub. Parent and Sub represent and warrant
to the Company as follows:
(a) Organization, Standing and Corporate
Power. Each of Parent, Sub and each Parent
Significant Subsidiary (as hereinafter defined) is a
corporation, partnership or other legal entity duly
organized, validly existing and in good standing
under the laws of the jurisdiction in which it is
organized and has the requisite power and authority
to carry on its business as now being conducted.
Each of Parent, Sub and each of Parent's
subsidiaries (each a "Parent Subsidiary") is duly
qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its
properties makes such qualification or licensing
necessary, other than in such jurisdictions where
the failure to be so qualified or licensed
(individually or in the aggregate) would not
(i) have a material adverse effect on the business,
properties, financial condition or results of
operations of Parent and the Parent Subsidiaries,
taken as a whole (other than effects relating to the
gold mining industry in general), or (ii) prevent
Parent from performing its obligations under this
Agreement (a "Parent Material Adverse Effect").
Parent has made available to the Company complete
and correct copies of its Restated Certificate of
Incorporation and By-laws, the Certificate of
Incorporation and By-Laws of Sub and the
certificates of incorporation and by-laws or
comparable organizational documents of the Parent
Significant Subsidiaries, in each case as amended to
the date of this Agreement. For purposes of this
Agreement, a "Parent Significant Subsidiary" means
any Parent Subsidiary that constitutes a significant
subsidiary of Parent within the meaning of Rule 1-02
of Regulation S-X of the SEC. Neither Parent nor
Sub is in violation of any provision of its
certificate of incorporation or by-laws, and no
Parent Subsidiary is in violation of any provisions
of its certificate of incorporation, by-laws or
comparable organizational documents, except to the
extent that such violations would not, individually
or in the aggregate, have a Parent Material Adverse
Effect.
(b) Parent Subsidiaries. Section 3.02(b) of
the letter from Parent, dated the date of this
Agreement, addressed to the Company (the "Parent
Disclosure Letter") lists each Parent Significant
Subsidiary and the ownership or interest therein of
Parent. All the outstanding shares of capital stock
of each Parent Significant Subsidiary have been
validly issued and are fully paid and nonassessable
and, except as set forth in Section 3.02(b) of the
Parent Disclosure Letter, are owned by Parent, by
another subsidiary of Parent or by Parent and
another Parent Subsidiary, free and clear of all
Liens. Except for the capital stock of the Parent
Subsidiaries and except for the ownership interests
set forth in Section 3.02(b) of the Parent
Disclosure Letter, Parent does not own, directly or
indirectly, any capital stock or other ownership
interest, with a fair market value as of the date of
this Agreement greater than $25,000,000, in any
person.
(c) Capital Structure. Except as otherwise
contemplated by this Agreement, the authorized
capital stock of Parent (the "Parent Capital Stock")
consists of 250,000,000 shares of Parent Common
Stock and 10,000,000 shares of preferred stock, par
value $1.00 per share. Pursuant to a Certificate of
Designation of Series A Participating Cumulative
Preferred Stock, on October 16, 1987, the Board of
Directors of Parent created a series of 1,250,000
shares of preferred stock designated as the "Series
A Participating Cumulative Preferred Stock", par
value $1.00 per share, which series was increased to
2,500,000 shares by an amendment to such Certificate
of Designation filed with the Secretary of State of
the State of Delaware on June 4, 1993 (the "Parent
Series A Preferred Stock"). The shares of Parent
Series A Preferred Stock are issuable in connection
with the rights to purchase shares of Parent Series
A Preferred Stock (the "Parent Rights") that were
issued pursuant to the Rights Agreement dated
October 16, 1987 (as amended from time to time, the
"Parent Rights Agreement"), between Parent and The
First National Bank of Boston. At the close of
business on December 4 ,1996: (i) 146,672,452 shares
of Parent Common Stock were outstanding, all of
which were validly issued, fully paid and
nonassessable, and no shares of Parent Series A
Preferred Stock, or of any other series of preferred
stock of Parent, were outstanding;
(ii) 12,250 shares of Parent Common Stock were held
by Parent in its treasury; (iii) 8,602,526 shares of
Parent Common Stock were reserved for issuance in
connection with the granting of Directors share
rights and upon the exercise of outstanding employee
stock options (the "Parent Employee Stock Options")
that were granted pursuant to the Parent's employee
stock plans set forth in Section 3.02(c) of the
Parent Disclosure Letter (the "Parent Employee Stock
Plans"); (iv) 2,500,000 shares of Parent Series A
Preferred Stock were reserved for issuance in
connection with the Parent Rights; and (v) 6,504,000
shares of Parent Common Stock were reserved for
issuance upon the conversion of Parent's 5.5%
Convertible Subordinated Notes due June 23, 2000
(the "Parent Convertible Notes"). Except as set
forth above, at the close of business on December 4,
1996, no shares of capital stock or other voting
securities of Parent were issued, reserved for
issuance or outstanding. Except as set forth above,
there are not any bonds, debentures, notes or other
indebtedness of Parent having the right to vote (or
convertible into, or exchangeable for, securities
having the right to vote) on any matters on which
stockholders of the Company must vote. Except as
set forth above and except as set forth in
Section 3.02(c) of the Parent Disclosure Letter, as
of the date of this Agreement, there are not any
Options to which Parent or any Parent Subsidiary is
a party or by which any of them is bound relating to
the issued or unissued capital stock of Parent or
any Parent Subsidiary, or obligating Parent or any
Parent Subsidiary to issue, transfer, grant or sell
any shares of capital stock or other equity
interests in, or securities convertible or
exchangeable for any capital stock or other equity
interests in, Parent or any Parent Subsidiary or
obligating Parent or any Parent Subsidiary to issue,
grant, extend or enter into any such Options. All
shares of Parent Common Stock that are subject to
issuance as aforesaid, upon issuance on the terms
and conditions specified in the instrument pursuant
to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. All
shares of Parent Common Stock that are subject to
issuance pursuant to the Merger, upon issuance
pursuant to this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable.
Except as set forth in Section 3.02(c) of the Parent
Disclosure Letter, as of the date of this Agreement,
there are not any outstanding contractual
obligations of Parent or any Parent Subsidiary to
repurchase, redeem or otherwise acquire any shares
of capital stock of Parent or any Parent Subsidiary,
or make any material investment (in the form of a
loan, capital contribution or otherwise) in, any
Parent Subsidiary or any other person. As of the
date of this Agreement, the authorized capital stock
of Sub consists of 100 shares of common stock, par
value $0.01 per share, all of which have been
validly issued, are fully paid and nonassessable and
are owned by Parent free and clear of any Lien.
(d) Authority; Noncontravention. Parent and
Sub have all requisite corporate power and authority
to enter into this Agreement and, subject to the
Parent Stockholder Approval (as defined in
Section 3.02(k)) and the filing of an amendment to
Parent's Restated Certificate of Incorporation to
increase the authorized Parent Capital Stock (the
"Amendment to Parent's Restated Certificate of
Incorporation") and of an amendment to Parent's
Certificate of Designation of Series A Participating
Cumulative Preferred Stock to increase the number of
shares of Parent's preferred stock constituting
Parent Series A Preferred Stock (the "Amendment to
Parent's Certificate of Designation"), to consummate
the transactions contemplated by this Agreement.
The Board of Directors of Parent has approved this
Agreement and the transactions contemplated by this
Agreement, and has resolved to recommend to Parent's
stockholders that they give the Parent Stockholder
Approval. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated by this Agreement, in each case by
Parent or by Parent and Sub, as the case may be,
have been duly authorized by all necessary corporate
action on the part of Parent and Sub, subject to the
Parent Stockholder Approval and the filing of the
Amendment to Parent's Restated Certificate of
Incorporation and the Amendment to Parent's Restated
Certificate of Designation. This Agreement has been
duly executed and delivered by Parent and Sub,
respectively, and constitutes a valid and binding
obligation of Parent and Sub, respectively,
enforceable against each such party in accordance
with its terms. Except as set forth in
Section 3.02(d) of the Parent Disclosure Letter, the
execution and delivery of this Agreement does not,
and the consummation of the transactions
contemplated by this Agreement and compliance with
the provisions of this Agreement will not, conflict
with, or result in any violation of, or default
(with or without notice or lapse of time, or both)
under, or give rise to a right of consent,
termination, purchase, cancelation or acceleration
of any obligation or to loss of any property, rights
or benefits under, or result in the imposition of
any additional obligation under, or result in the
creation of any Lien upon any of the properties or
assets of Parent, Sub or any other Parent Subsidiary
under, (i) the Restated Certificate of Incorporation
or By-laws of Parent, the certificate of
incorporation and by-laws of Sub, or the comparable
organizational documents of any Parent Subsidiary,
(ii) any Contract applicable to Parent, Sub or any
other Parent Subsidiary or their respective
properties or assets or (iii) subject to the
governmental filings and other matters referred to
in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule or regulation
applicable to Parent, Sub or any other Parent
Subsidiary or their respective properties or assets,
other than, in the case of clauses (ii) and (iii),
any such conflicts, violations, defaults, rights or
Liens that individually or in the aggregate would
not have a Parent Material Adverse Effect. No
consent, approval, order or authorization of, or
registration, declaration or filing with, any
Governmental Entity is required by or with respect
to Parent, Sub or any other Parent Subsidiary in
connection with the execution and delivery of this
Agreement by Parent or Sub, as the case may be, or
the consummation by Parent or Sub, as the case may
be, of the transactions contemplated by this
Agreement, except for (i) the filing of a premerger
notification and report form by Parent under the HSR
Act, (ii) the filing with the SEC of (A) the Proxy
Statement, and (B) such reports under Section 13(a)
of the Exchange Act, as may be required in
connection with this Agreement and the transactions
contemplated by this Agreement, (iii) the filing of
the Certificate of Merger, the Amendment to Parent's
Restated Certificate of Incorporation and the
Amendment to Parent's Restated Certificate of
Designation with the Delaware Secretary of State and
appropriate documents with the relevant authorities
of other states in which Parent is qualified to do
business, (iv) those that may be required solely by
reason of the Company's (as opposed to any other
third party's) participation in the Merger and the
other transactions contemplated by this Agreement
and (v) such other consents, approvals, orders,
authorizations, registrations, declarations and
filings, including under applicable Environmental
Laws, (x) as may be required under the laws of any
foreign country in which Parent or any Parent
Subsidiary conducts any business or owns any
property or assets, (y) as are set forth in
Section 3.02(d) of the Parent Disclosure Letter or
(z) that, if not obtained or made, would not,
individually or in the aggregate, have a Parent
Material Adverse Effect. Except as set forth in
Section 3.02(d) of the Parent Disclosure Letter,
Parent and the Parent Subsidiaries possess all
Permits, including pursuant to any Environmental
Law, necessary to conduct their business as such
business is currently conducted or is expected to be
conducted, except for such Permits, the lack of
possession of which has not, and is not reasonably
expected to have, a Parent Material Adverse Effect.
Except as set forth in Section 3.02(d) of the Parent
Disclosure Letter, (i) all such Permits are validly
held by Parent or the Parent Subsidiaries, and
Parent and the Parent Subsidiaries have complied in
all respects with all terms and conditions thereof,
except for such instances where the failure to
validly hold such Permits or the failure to have
complied with such Permits has not, and is not
reasonably expected to have, a Parent Material
Adverse Effect, (ii) none of such Permits will be
subject to suspension, modification, revocation or
nonrenewal as a result of the execution and delivery
of this Agreement or the consummation of the Merger,
other than such Permits the suspension, modification
or nonrenewal of which, individually or in the
aggregate, have not had and could not reasonably be
expected to have a Parent Material Adverse Effect
and (iii) since December 31, 1995, neither Parent
nor any Parent Subsidiary has received any written
warning, notice, notice of violation or probable
violation, notice of revocation, or other written
communication from or on behalf of any Governmental
Entity, alleging (A) any violation of such Permit or
(B) that Parent or any Parent Subsidiary requires
any Permit required for its business, as such
business is currently conducted that is not
currently held by it.
(e) SEC Documents; Undisclosed Liabilities.
Parent has filed all required reports, schedules,
forms, statements and other documents with the SEC
since January 1, 1995 (the "Parent SEC Documents").
As of its date, each Parent SEC Document complied in
all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Parent SEC
Documents. None of the Parent SEC Documents
contains any untrue statement of a material fact or
omits to state a material fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which
they were made, not misleading, except to the extent
that such statements have been modified or
superseded by a later filed Parent SEC Document.
The consolidated financial statements of Parent
included in the Parent SEC Documents comply as to
form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted
accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of
the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated
financial position of Parent as of the dates thereof
and the consolidated results of its operations and
cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end
audit adjustments). Except as set forth in the
Filed Parent SEC Documents (as defined in
Section 3.02(g)), neither Parent nor any Parent
Subsidiary has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or
otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance
sheet of Parent and the consolidated Parent
Subsidiaries or in the notes thereto and which,
individually or in the aggregate, could reasonably
be expected to have a Parent Material Adverse
Effect, other than any such liabilities or
obligations that were required to be set forth in
Parents' Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996. None of the
Parent Subsidiaries is subject to the informational
reporting requirements of Section 13 of the Exchange
Act.
(f) Information Supplied. None of the
information supplied or to be supplied by Parent or
Sub for inclusion or incorporation by reference in
(i) the Form S-4 will, at the time the Form S-4 is
filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective
under the Securities Act, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein not
misleading, or (ii) the Proxy Statement will, at the
date the Proxy Statement is first mailed to the
Company's stockholders or Parent's stockholders or
at the time of the Company's Stockholders' Meeting
or the Parent's Stockholders' Meeting, contain any
untrue statement of a material fact or omit to state
any material fact required to be stated therein or
necessary in order to make the statements therein,
in light of the circumstances under which they are
made, not misleading. The Form S-4 will comply as
to form in all material respects with the
requirements of the Exchange Act and the rules and
regulations promulgated thereunder, except that no
representation or warranty is made by Parent or Sub
with respect to statements made or incorporated by
reference therein based on information supplied by
the Company for inclusion or incorporation by
reference in the Form S-4.
(g) Absence of Certain Changes or Events.
Except as disclosed in the Parent SEC Documents
filed and publicly available prior to the date of
this Agreement (the "Filed Parent SEC Documents"),
from December 31, 1995, to the date of this
Agreement, Parent has conducted its business only in
the ordinary course, and:
(i) during the period from September 30,
1996, to the date of this Agreement, there has
not been any event, change, effect or
development which, individually or in the
aggregate, has had or, so far as reasonably can
be foreseen, is likely to have, a Parent
Material Adverse Effect;
(ii) during the period from December 31,
1995, to the date of this Agreement, there has
not been except for regular quarterly dividends
not in excess of $0.05 per share of Parent
Common Stock, with customary record and payment
dates, any declaration, setting aside or
payment of any dividend or other distribution
(whether in cash, stock or property) with
respect to any shares of Parent Capital Stock;
(iii) during the period from December 31,
1995, to the date of this Agreement, there has
not been any split, combination or
reclassification of any Parent Capital Stock or
any issuance or the authorization of any
issuance of any other securities in exchange or
in substitution for shares of Parent Capital
Stock;
(iv) during the period from December 31,
1995, to the date of this Agreement, there has
not been except as disclosed in Section 3.02(g)
of the Parent Disclosure Letter, (A) any
granting by Parent or any Parent Subsidiary to
any executive officer of Parent or any Parent
Subsidiary of any increase in compensation,
except in the ordinary course of business
consistent with prior practice or as was
required under employment agreements in effect
as of the date of the most recent audited
financial statements included in the Filed
Parent SEC Documents, (B) any granting by
Parent or any Parent Subsidiary to any such
executive officer of any increase in severance
or termination pay, except as was required
under any employment, severance or termination
agreements in effect as of the date of the most
recent audited financial statements included in
the Filed Parent SEC Documents or (C) any entry
by Parent or any Parent Subsidiary into any
employment, severance or termination agreement
with any such executive officer; and
(v) during the period from December 31,
1995, to the date of this Agreement, there has
not been any change in accounting methods,
principles or practices by Parent or any Parent
Significant Subsidiary materially affecting its
assets, liabilities or business, except insofar
as may have been required by a change in
generally accepted accounting principles.
(h) Litigation. Except as disclosed in the
Filed Parent SEC Documents or in Section 3.02(h) of
the Parent Disclosure Letter, there is no suit,
action or proceeding pending or, to the knowledge of
Parent, threatened against Parent or any Parent
Subsidiary (and Parent does not have any reasonable
basis to expect any such suit, action or proceeding
to be commenced) that, individually or in the
aggregate, could reasonably be expected to have a
Parent Material Adverse Effect, and there is not any
judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding
against Parent or any Parent Subsidiary having, or
which, insofar as reasonably can be foreseen, in the
future would have, any Parent Material Adverse
Effect. As of the date of this Agreement, except as
disclosed in the Filed Parent SEC Documents or in
Section 3.02(h) of the Parent Disclosure Letter,
there is no suit, action or proceeding pending, or,
to the knowledge of Parent, threatened, against
Parent or any Parent Subsidiary (and Parent does not
have any reasonable basis to expect any such suit,
action or proceeding to be commenced) that,
individually or in the aggregate, could reasonably
be expected to prevent or delay in any material
respect the consummation of the Merger or the
transactions contemplated by this Agreement.
(i) Absence of Changes in Benefit Plans.
Except as disclosed in the Filed Parent SEC
Documents or in Section 3.02(i) of the Parent
Disclosure Letter, since the date of the most recent
audited financial statements included in the Filed
Parent SEC Documents and prior to the date of this
Agreement, there has not been any adoption or
amendment in any material respect by Parent or any
Parent Subsidiary of any collective bargaining
agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other
plan, arrangement or understanding (whether or not
legally binding) providing benefits to any current
or former employee, officer or director of Parent or
any Parent Subsidiary (collectively, "Parent Benefit
Plans").
(j) ERISA Compliance. Except as described in
the Filed Parent SEC Documents or in Section 3.02(j)
of the Parent Disclosure Letter or as would not have
a Parent Material Adverse Effect, (i) all employee
benefit plans or programs maintained for the benefit
of the current or former employees or directors of
Parent or any Parent Subsidiary that are sponsored,
maintained or contributed to by Parent or any Parent
Subsidiary, or with respect to which Parent or any
Parent Subsidiary has any liability, including any
such plan that is an "employee benefit plan" as
defined in Section 3(3) of ERISA, are in compliance
with all applicable requirements of law, including
ERISA and the Code, and (ii) neither Parent nor any
Parent Subsidiary has any liabilities or obligations
with respect to any such employee benefit plans or
programs, whether accrued, contingent or otherwise,
nor to the knowledge of Parent are any such
liabilities or obligations expected to be incurred.
Except as set forth in Section 3.02(j) of the Parent
Disclosure Letter, the execution of, and performance
of the transactions contemplated by, this Agreement
will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event
under any benefit plan, policy, arrangement or
agreement or any trust or loan that will or may
result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect
to any employee. The only severance agreements or
severance policies applicable to Parent or the
Parent Subsidiaries are the agreements and policies
specifically set forth in Section 3.02(j) of the
Parent Disclosure Letter.
(k) Voting Requirements. The (A) approval and
adoption by Parent's stockholders of the issuance of
shares of Parent Common Stock pursuant to the Merger
as required by Rule 312 of the New York Stock
Exchange and (B) approval by the holders of a
majority of the outstanding shares of Parent Common
Stock of an amendment to the Restated Certificate of
Incorporation of Parent to increase the number of
authorized shares of Parent Common Stock
(collectively, the "Parent Stockholder Approval")
are the only votes of the holders of any class or
series of Parent Capital Stock necessary to approve
this Agreement and the transactions contemplated by
this Agreement.
(l) Brokers; Schedule of Fees and Expenses.
Except as set forth in Section 3.02(l) of the Parent
Disclosure Letter, no broker, investment banker,
financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other
similar fee or commission in connection with the
transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Parent or
Sub. Parent has made available to the Company true
and complete copies of all agreements that are
referred to in Section 3.02(l) of the Parent
Disclosure Letter and all indemnification and other
agreements related to the engagement of the persons
so listed.
(m) Opinion of Financial Advisor. Parent has
received the opinion of Dillon, Read & Co. Inc.,
dated the date of this Agreement, to the effect
that, as of such date, the Conversion Number is fair
to Parent's stockholders from a financial point of
view, a signed copy of which opinion has been
delivered to the Company.
(n) Taxes. (i) Parent and each Parent
Subsidiary have timely filed (or have had timely
filed on their behalf) or will file or cause to be
timely filed, all material Tax Returns required by
applicable law to be filed by any of them prior to
or as of the Effective Time of the Merger. All such
material Tax Returns are, or will be at the time of
filing, true, complete and correct in all material
respects.
(ii) Parent and each Parent Subsidiary have
paid (or have had paid on their behalf) or, where
payment is not yet due, have established (or have
had established on their behalf and for their sole
benefit and recourse) or will establish or cause to
be established on or before the Effective Time of
the Merger an adequate accrual for the payment of
all Taxes due with respect to any period ending
prior to or as of the Effective Time of the Merger,
except where the failure to pay or establish
adequate reserves has not had and would not
reasonably be expected to have a Parent Material
Adverse Effect.
(iii) Except as set forth in Section 3.02(n) of
the Parent Disclosure Letter, no deficiencies for
any material Taxes have been proposed, asserted or
assessed against Parent or any Parent Subsidiary,
and no requests for waivers of the time to assess
any such material Taxes are pending. The Federal
income Tax Returns of Parent and each Parent
Subsidiary consolidated in such Tax Returns have
been examined by and settled with the United States
Internal Revenue Service for all years through 1991.
(iv) Parent has no reason to believe that any
conditions exist that could reasonably be expected
to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a)
of the Code.
(o) Compliance with Laws. Neither Parent nor
any Parent Subsidiary has violated or failed to
comply with any statute, law, ordinance, regulation,
rule, judgment, decree or order of any Governmental
Entity applicable to its business or operations,
except for violations and failures to comply that
could not, individually or in the aggregate,
reasonably be expected to result in a Parent
Material Adverse Effect.
(p) No Excess Parachute Payments. Other than
payments that may be made to the persons listed in
Section 3.02(p) of the Parent Disclosure Letter (the
"Primary Parent Executives"), any amount that could
be received (whether in cash or property or the
vesting of property) as a result of any of the
transactions contemplated by this Agreement by any
employee, officer or director of Parent or any of
its affiliates who is a "disqualified individual"
(as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment,
severance or termination agreement, other
compensation arrangement or Parent Benefit Plan
currently in effect would not be characterized as an
"excess parachute payment" (as such term is defined
in Section 280G(b)(1) of the Code). Set forth in
Section 3.02(p) of the Parent Disclosure Letter is
(i) the estimated maximum amount that could be paid
to each Primary Parent Executive as a result of the
transactions contemplated by this Agreement under
all employment, severance and termination
agreements, other compensation arrangements and
Parent Benefit Plans currently in effect and
(ii) the "base amount" (as such term is defined in
Section 280G(b)(3) of the Code) for each Primary
Parent Executive calculated as of the date of this
Agreement.
(q) Accounting Matters. Neither Parent nor,
to its best knowledge, any of its affiliates, has
taken or agreed to take any action that (without
giving effect to any action taken or agreed to be
taken by the Company or any of its affiliates) would
prevent Parent from accounting for the business
combination to be effected by the Merger as a
pooling of interests.
(r) Environmental Matters. (i) Except as set
forth in Section 3.02(r) of the Parent Disclosure
Letter and except for items that could not, in all
such cases taken individually or in the aggregate,
reasonably be expected to result in a Parent
Material Adverse Effect, neither Parent nor any
Parent Subsidiary has (x) placed, held, located,
released, transported or disposed of any Hazardous
Substances on, under, from or at any of Parent's or
any Parent Subsidiary's current or former properties
or any other properties or (y) any knowledge or
reason to know of the presence of any Hazardous
Substances on, under or at any of Parent's or any
Parent Subsidiary's current or former properties or
any other property but arising from Parent's or any
Parent Subsidiary's current or former properties.
(ii) Except for items that individually or in
the aggregate could not reasonably be expected to
result in a Parent Material Adverse Effect or as
disclosed in Section 3.02(r) of the Parent
Disclosure Letter, Parent and the Parent
Subsidiaries are in compliance with the SMCRA and
any state law comparable to SMCRA under 30 U.S.C.
SECTION 1253, and neither Parent nor any Parent Subsidiary
is subject to any reclamation obligation or other
site restoration obligation under any Environmental
Law.
(iii) Except for items that individually or in
the aggregate could not reasonably be expected to
result in a Parent Material Adverse Effect or as set
forth in Section 3.02(r) of the Parent Disclosure
Letter, no Environmental Law imposes any obligation
upon Parent or any Parent Subsidiary arising out of
or as a condition to any transaction contemplated by
this Agreement, including any requirement to modify
or to transfer any permit or license, any
requirement to file any notice or other submission
with any Governmental Entity, the filing of any
notice, acknowledgement or covenant in any land
records, or the modification of or provision of
notice under any agreement, consent order or consent
decree.
(s) State Takeover Statutes. To the best of
the Parent's knowledge, no state takeover statute or
similar statute or regulation applies or purports to
apply to the Merger, this Agreement or any of the
transactions contemplated by this Agreement.
(t) Rights Agreement. Parent has taken all
necessary action to (i) render the Parent Rights
inapplicable to the Merger and the other
transactions contemplated by this Agreement and
(ii) ensure that (x) neither the Company nor any of
its affiliates is an Acquiring Person (as defined in
the Parent Rights Agreement) and (y) none of a
Distribution Date, Share Acquisition Date,
Triggering Event or Business Combination (each as
defined in the Parent Rights Agreement) shall occur
by reason of the approval, execution or delivery of
this Agreement, the announcement or consummation of
the Merger or the consummation of any of the other
transactions contemplated by this Agreement.
(u) Dispositions of Parent Property. Except
as described in the Filed Parent SEC Documents or in
Section 3.02(u) of the Parent Disclosure Letter,
since December 31, 1995, neither Parent nor any
Parent Subsidiary has sold or disposed of or ceased
to hold or own any personal property, real property,
any interest in or rights with respect to real
property (including exploration or production
rights), any interest in a joint venture or other
assets or properties of Parent or any Parent
Subsidiary ("Parent Property"), other than sales and
dispositions of raw materials, obsolete equipment,
mine output and other inventories, and any interests
or rights with respect to real property having an
individual fair market value of less than
$10,000,000 of Parent or any Parent Subsidiary, in
each case in the ordinary course of business,
consistent with past practice. Except as set forth
in Section 3.02(u) of the Parent Disclosure Letter,
no Parent Property whose fair market value on the
date of this Agreement is greater than $10,000,000
is subject to any pending sale or disposition
transaction.
(v) Absence of Reduction in Reserves and
Mineralized Material. There has been no material
reduction in the aggregate amount of reserves or in
the aggregate amount of mineralized material of
Parent and the Parent Subsidiaries, taken as a
whole, from the amounts set forth in Parent's 1995
annual report to shareholders except for (i) such
reductions in reserves that have resulted from
production in the ordinary course of business and
(ii) such reductions in mineralized material that
have resulted from reclassifications of mineralized
material as reserves.
(w) Development Projects. Parent has no
reason to believe that (i) the estimated production
capacity for each of the time periods set forth in
Section 3.02(w) of the Parent Disclosure Letter with
respect to the development project described in
Parent's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 will not be reached
during such time periods, or (ii) the estimated
costs set forth in Section 3.02(w) of the Parent
Disclosure Letter with respect to each such
development project will be exceeded.
(x) Interim Operations of Sub. Sub was formed
solely for the purpose of engaging in the
transactions contemplated by this Agreement and has
not engaged in any business activities or conducted
any operations other than in connection with the
transactions contemplated by this Agreement.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business.
(a) Conduct of Business by the Company. During the
period from the date of this Agreement to the Effective
Time of the Merger, the Company shall, and shall cause
the Company Subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and
in compliance in all material respects with all
applicable laws and regulations and, to the extent
consistent therewith, use reasonable efforts to preserve
intact their current business organizations, keep
available the services of their current officers and
employees and preserve their relationships with
customers, suppliers, licensors, licensees, distributors
and others having business dealings with them. Without
limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective
Time of the Merger, except as expressly contemplated by
this Agreement or as set forth in Section 4.01(a) of the
Company Disclosure Letter, or otherwise approved in
writing by Parent, the Company shall not, and shall not
permit any Company Subsidiary to:
(i) (x) declare, set aside or pay any dividends
on, or make any other distributions in respect of,
any of its capital stock, other than dividends and
distributions by a direct or indirect wholly owned
Company Subsidiary to its parent and regular annual
cash dividends on the Company Common Stock in an
amount not in excess of $0.05 per share per annum,
(y) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or
(z) purchase, redeem or otherwise acquire any shares
of capital stock of the Company or any Company
Subsidiary or any other securities thereof or any
rights, warrants or options to acquire any such
shares or other securities;
(ii) issue, deliver, sell, grant, pledge or
otherwise encumber any shares of its capital stock,
any other voting securities or any securities
convertible into, any rights, warrants or options to
acquire, any such shares, voting securities or
convertible securities, any phantom stock options
("Phantom Stock Options") under the Company's
Phantom Stock Option Plan, or any restricted stock,
performance units, performance shares, stock
appreciation rights ("SARs") or limited stock
appreciation rights ("LSARs") under the Company's
Long Term Incentive Stock Plan (other than (x) the
issuance of shares of Company Common Stock (and
associated Company Rights) upon the exercise of
Company Employee Stock Options outstanding on the
date of this Agreement and in accordance with their
present terms, (y) the issuance of Company Capital
Stock pursuant to the Company Rights Agreement) and
(z) the grant of additional Company Employee Stock
Options, Phantom Stock Options, SARs and LSARs in
the ordinary course of business consistent with past
practice to employees of the Company and the Company
Subsidiaries covering not more than an aggregate of
600,000 shares of Company Common Stock and
equivalents and, in the case of Company Employee
Stock Options, the issuance of Company Common Stock
(and associated Company Rights) upon the exercise
thereof, but only if and to the extent that the
terms of such Company Employee Stock Options,
Phantom Stock Options, SARs and LSARs provide that
the consummation by the Company of the transactions
contemplated by this Agreement will not result in
the acceleration of vesting or the exercisability of
such Company Employee Stock Options, Phantom Stock
Options, SARs and LSARs;
(iii) amend its certificate of incorporation,
by-laws or other comparable charter or
organizational documents, except for such amendments
to its certificate of incorporation, by-laws and
other comparable charter or organizational documents
that do not have an adverse affect on the
transactions contemplated by this Agreement;
(iv) acquire or agree to acquire (x) by merging
or consolidating with, or by purchasing a
substantial portion of the assets of, or by any
other manner, any business or any corporation,
partnership, limited liability company, joint
venture, association or other business organization
or division thereof or (y) any assets that are
material, individually or in the aggregate, to the
Company and the Company Subsidiaries taken as a
whole;
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose
of any Company Property other than (A) sales and
dispositions of interests or rights with respect to
real property having an aggregate fair market value
on the date of this Agreement of less than
$20,000,000, raw materials, obsolete equipment, mine
output and other inventories, in each case only if
in the ordinary course of business consistent with
past practice, and (B) encumbrances and Liens that
are incurred in the ordinary course of business
consistent with past practice;
(vi) (y) incur any indebtedness for borrowed
money or guarantee any such indebtedness of another
person, issue or sell any debt securities or
warrants or other rights to acquire any debt
securities of the Company or any Company Subsidiary,
guarantee any debt securities of another person,
enter into any "keep well" or other agreement to
maintain any financial statement condition of
another person or enter into any arrangement having
the economic effect of any of the foregoing, except
for short-term borrowings incurred in the ordinary
course of business consistent with past practice, or
(z) make any loans, advances (other than any
advances to employees in the ordinary course of
business consistent with prior practice) or capital
contributions to, or investments in, any other
person, other than to the Company or any direct or
indirect wholly owned Company Subsidiary;
(vii) make or agree to make any new capital
expenditure or expenditures that, in the aggregate,
are in excess of $25,000,000 above the aggregate
amount currently budgeted by the Company, as
disclosed in Section 4.01(a) of the Company
Disclosure Letter;
(viii) make any material Tax election or settle or
compromise any material Tax liability or refund,
except to the extent already provided for in the
Filed Company SEC Documents;
(ix) except pursuant to existing employment
agreements or as required by applicable laws,
(A) increase the compensation payable or to become
payable to its executive officers or employees,
(B) grant any severance or termination pay to, or
enter into any employment or severance agreement
with, any director, executive officer or employee of
the Company or any Company Subsidiary (other than in
accordance with Company Benefit Plans as in effect
on the date of this Agreement) or (C) establish,
adopt, enter into or amend in any material respect
or take any action to accelerate any rights or
benefits under any collective bargaining agreement
or Company Benefit Plan;
(x) without limiting the generality of clause
(ix) above, make any amendment to any Company
Employee Stock Plan as a result of this Agreement or
in contemplation of the Merger;
(xi) terminate or amend on terms less favorable
to the Company any agreement filed as an exhibit to
any Company SEC Document; or
(xii) authorize any of, or commit or agree to
take any of, the foregoing actions.
(b) Conduct of Business by Parent. During the
period from the date of this Agreement to the Effective
Time of the Merger, Parent shall, and shall cause the
Parent Subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and
in compliance in all material respects with all
applicable laws and regulations and, to the extent
consistent therewith, use reasonable efforts to preserve
intact their current business organizations, keep
available the services of their current officers and
employees and preserve their relationships with
customers, suppliers, licensors, licensees, distributors
and others having business dealings with them. Without
limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective
Time of the Merger, except as expressly contemplated by
this Agreement or as set forth in Section 4.01(b) of the
Parent Disclosure Letter, or otherwise approved in
writing by the Company, Parent shall not, and shall not
permit any Parent Subsidiary to:
(i) (x) declare, set aside or pay any dividends
on, or make any other distributions in respect of,
any of its capital stock, other than dividends and
distributions by a direct or indirect wholly owned
Parent Subsidiary to its parent and regular
quarterly cash dividends on the Parent Common Stock
in an amount not in excess of $0.05 per share per
quarter, (y) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or
(z) purchase, redeem or otherwise acquire any shares
of capital stock of Parent or any Parent Subsidiary
or any other securities thereof or any rights,
warrants or options to acquire any such shares or
other securities;
(ii) issue, deliver, sell, grant, pledge or
otherwise encumber any shares of its capital stock,
any other voting securities or any securities
convertible into, any rights, warrants or options to
acquire, any such shares, voting securities or
convertible securities or any share appreciation
rights or share rights under Parent's 1996 Stock
Option and Share Rights Plan (other than (w) the
issuance of shares of Parent Common Stock (and
associated Parent Rights) in connection with
Directors share rights and upon the exercise of
Parent Employee Stock Options outstanding on the
date of this Agreement and in accordance with their
present terms, (x) the issuance of shares of Parent
Common Stock (and associated Parent Rights) upon
conversion of the Parent Convertible Notes, (y) the
issuance of Parent Capital Stock pursuant to the
Parent Rights Agreement) and (z) the grant of
additional Parent Employee Stock Options in the
ordinary course of business consistent with past
practice to employees of Parent and the Parent
Subsidiaries covering not more than 600,000 shares
of Parent Common Stock and the issuance of Parent
Common Stock (and associated Parent Rights) upon the
exercise thereof, but only if and to the extent that
the terms of such Parent Employee Stock Options
provide that the consummation by Parent of the
transactions contemplated by this Agreement will not
result in the acceleration of vesting or the
exercisability of such Parent Employee Stock
Options;
(iii) amend its certificate of incorporation,
by-laws or other comparable charter or
organizational documents, except for such amendments
to its certificate of incorporation, by-laws and
other comparable charter or organizational documents
that do not have an adverse affect on the
transactions contemplated by this Agreement;
(iv) acquire or agree to acquire (x) by merging
or consolidating with, or by purchasing a
substantial portion of the assets of, or by any
other manner, any business or any corporation,
partnership, limited liability company, joint
venture, association or other business organization
or division thereof or (y) any assets that are
material, individually or in the aggregate, to the
Parent and the Parent Subsidiaries taken as a whole;
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose
of any Parent Property other than (A) sales and
dispositions of interests or rights with respect to
real property having an aggregate fair market value
on the date of this Agreement of less than
$20,000,000, raw materials, obsolete equipment, mine
output and other inventories, in each case only if
in the ordinary course of business consistent with
past practice, and (B) encumbrances and Liens that
are incurred in the ordinary course of business
consistent with past practice;
(vi) (y) incur any indebtedness for borrowed
money or guarantee any such indebtedness of another
person, issue or sell any debt securities or
warrants or other rights to acquire any debt
securities of Parent or any Parent Subsidiary,
guarantee any debt securities of another person,
enter into any "keep well" or other agreement to
maintain any financial statement condition of
another person or enter into any arrangement having
the economic effect of any of the foregoing, except
for short-term borrowings incurred in the ordinary
course of business consistent with past practice, or
(z) make any loans, advances (other than advances
to employees in the ordinary course of business
consistent with prior practice) or capital
contributions to, or investments in, any other
person, other than to Parent or any direct or
indirect wholly owned Parent Subsidiary;
(vii) make or agree to make any new capital
expenditure or expenditures that, in the aggregate,
are in excess of $25,000,000 above the aggregate
amount currently budgeted by Parent, as disclosed in
Section 4.01(b) of the Parent Disclosure Letter;
(viii) make any material Tax election or settle or
compromise any material Tax liability or refund,
except to the extent already provided for in the
Filed Parent SEC Documents;
(ix) except pursuant to existing employment
agreements or as required by applicable laws,
(A) increase the compensation payable or to become
payable to its executive officers or employees,
(B) grant any severance or termination pay to, or
enter into any employment or severance agreement
with, any director, executive officer or employee of
Parent or any Parent Subsidiary (other than in
accordance with Parent Benefit Plans as in effect on
the date of this Agreement) or (C) establish, adopt,
enter into or amend in any material respect or take
any action to accelerate any rights or benefits
under any collective bargaining agreement or Parent
Benefit Plan;
(x) without limiting the generality of
clause (ix) above, make any amendment to any Parent
Employee Stock Plan as a result of this Agreement or
in contemplation of the Merger;
(xi) terminate or amend on terms less favorable
to Parent any agreement filed as an exhibit to any
Parent SEC Document; or
(xii) authorize any of, or commit or agree to
take any of, the foregoing actions.
(c) Other Actions. Except as expressly
permitted by Sections 4.02, 4.03, 5.01(d) or 5.01(e), the
Company and Parent shall not, and shall not permit any of
their respective subsidiaries to, take any action that
would, or that could reasonably be expected to, result in
(i) any of the representations and warranties of such
party set forth in this Agreement that are qualified as
to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified
becoming untrue in any material respect or (iii) any of
the conditions to the Merger set forth in Article VI not
being satisfied.
(d) Advice of Changes. The Company and Parent
shall promptly advise the other party orally and in
writing of any change or event having, or which, insofar
as can reasonably be foreseen, would have, a Company
Material Adverse Effect or a Parent Material Adverse
Effect, as applicable.
SECTION 4.02. No Solicitation by the Company.
(a) The Company shall not, nor shall it permit any
Company Subsidiary to, nor shall it authorize or permit
any officer, director or employee of or any investment
banker, attorney, accountant or other advisor or
representative of, the Company or any Company Subsidiary
to, (i) solicit, initiate or encourage the submission of
any Company Takeover Proposal (as defined below),
(ii) enter into any agreement with respect to any Company
Takeover Proposal or (iii) provide any non-public
information regarding the Company to any third party or
engage in any negotiations or substantive discussions in
connection with any Company Takeover Proposal; provided,
however, that (A) prior to receipt of the Company
Stockholder Approval, the Company may, in response to a
Company Takeover Proposal that was not solicited by the
Company and that did not otherwise result from a breach
of this Section 4.02(a), provide any non-public
information regarding itself to any third party or engage
in any negotiations or substantive discussions with such
person regarding any Company Takeover Proposal, in each
case only if the Company's Board of Directors determines
in good faith, after consultation with counsel and its
financial advisors, that failing to take such action
would create a reasonable possibility of a breach of the
fiduciary duties of the Company's Board of Directors, and
(B) nothing contained in this Agreement shall prevent the
Company or its Board of Directors from complying with
Rule 14e-2 promulgated under the Exchange Act with regard
to a Company Takeover Proposal or prevent the Company's
Board of Directors from taking any action permitted by
Section 5.01(d). Without limiting the foregoing, it is
understood that any violation of the restrictions set
forth in the preceding sentence by any executive officer
of the Company or any Company Subsidiary or any
investment banker, attorney, accountant or other advisor
or representative of the Company or any Company
Subsidiary, whether or not such person is purporting to
act on behalf of the Company or any Company Subsidiary or
otherwise, shall be deemed to be a breach of this
Section 4.02(a) by the Company. For purposes of this
Agreement, "Company Takeover Proposal" means any proposal
for a merger, consolidation or other business combination
involving the Company or a Company Significant Subsidiary
or any proposal or offer to acquire in any manner,
directly or indirectly, more than 30% of any class of
voting securities of the Company or of a Company
Significant Subsidiary (other than where such Company
Significant Subsidiary's securities directly or
indirectly represent an economic interest in less than
30% of the assets of the Company and the Company
Subsidiaries, taken as a whole), including any proposal
or offer relating to the acquisition by the Company or a
Company Significant Subsidiary in any manner, directly or
indirectly, of any securities or assets of another person
in consideration for the issuance of more than 30% of any
class of voting securities of the Company or of a Company
Significant Subsidiary (other than where such Company
Significant Subsidiary's securities directly or
indirectly represent an economic interest in less than
30% of the assets of the Company and the Company
Subsidiaries, taken as a whole), or assets representing a
substantial portion of the assets of the Company and the
Company Subsidiaries, taken as a whole, other than the
transactions contemplated by this Agreement. The Company
shall, and shall cause each Company Subsidiary to,
immediately cease and cause to be terminated any existing
activities, discussions or negotiations by the Company,
any Company Subsidiary or any officer, director or
employee of or investment banker, attorney, accountant or
other advisor or representative of, the Company or any
Company Subsidiary, with any parties conducted heretofore
with respect to any of the foregoing. Any action taken
by the Company, any Company Subsidiary or any officer,
director or employee of or any investment banker,
attorney, accountant or other advisor or representative
of, the Company or any Company Subsidiary with or with
respect to any such party on or prior to November 28,
1996, shall be deemed not to constitute a violation of
this Section 4.02(a) and shall not in and of itself
constitute the solicitation of a Company Takeover
Proposal even if such actions result in any such party
making a Company Takeover Proposal after the date of this
Agreement.
(b) Subject to Section 5.01(d), neither the
Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Sub,
the adoption and approval by such Board of Directors or
any such committee of this Agreement or the Merger or
(ii) approve or recommend, or propose to approve or
recommend, any Company Takeover Proposal.
(c) The Company promptly shall advise Parent
orally and in writing of the receipt of any Company
Takeover Proposal and of the receipt of any inquiry with
respect to or which the Company reasonably believes could
lead to any Company Takeover Proposal. The Company
promptly shall advise Parent orally and in writing of the
identity of the person making any such Company Takeover
Proposal or inquiry and of the material terms of any such
Company Takeover Proposal and of any changes thereto;
provided, however, that the Company's Board of Directors
shall have determined in good faith, after consultation
with counsel, that taking such action would not create a
reasonable possibility of a breach of the fiduciary
duties of the Company's Board of Directors, except that
in all events prior to exercising its right of
termination pursuant to Section 7.01(d) the Company shall
endeavor to provide Parent with a reasonable opportunity
to respond to any Company Takeover Proposal which the
Company otherwise may wish to accept.
SECTION 4.03. No Solicitation by Parent.
(a) Parent shall not, nor shall it permit any Parent
Subsidiary to, nor shall it authorize or permit any
officer, director or employee of or any investment
banker, attorney, accountant or other advisor or
representative of, Parent or any Parent Subsidiary to,
(i) solicit, initiate or encourage the submission of any
Parent Takeover Proposal (as defined below), (ii) enter
into any agreement with respect to any Parent Takeover
Proposal or (iii) provide any non-public information
regarding Parent to any third party or engage in any
negotiations or substantive discussions in connection
with any Parent Takeover Proposal; provided, however,
that (A) prior to receipt of the Parent Stockholder
Approval, Parent may, in response to a Parent Takeover
Proposal that was not solicited by Parent and that did
not otherwise result from a breach of this Section
4.03(a), provide any non-public information regarding
itself to any third party or engage in any negotiations
or substantive discussions with such person regarding any
Parent Takeover Proposal, in each case only if Parent's
Board of Directors determines in good faith, after
consultation with counsel and its financial advisors,
that failing to take such action would create a
reasonable possibility of a breach of the fiduciary
duties of Parent's Board of Directors, and (B) nothing
contained in this Agreement shall prevent Parent or its
Board of Directors from complying with Rule 14e-2
promulgated under the Exchange Act with regard to a
Parent Takeover Proposal or prevent Parent's Board of
Directors from taking any action permitted by
Section 5.01(e). Without limiting the foregoing, it is
understood that any violation of the restrictions set
forth in the preceding sentence by any executive officer
of Parent or any Parent Subsidiary or any investment
banker, attorney, accountant or other advisor or
representative of Parent or any Parent Subsidiary,
whether or not such person is purporting to act on behalf
of Parent or any Parent Subsidiary or otherwise, shall be
deemed to be a breach of this Section 4.03(a) by Parent.
For purposes of this Agreement, "Parent Takeover
Proposal" means any proposal for a merger, consolidation
or other business combination involving Parent or a
Parent Significant Subsidiary or any proposal or offer to
acquire in any manner, directly or indirectly, more than
30% of any class of voting securities of Parent or of a
Parent Significant Subsidiary (other than where such
Parent Significant Subsidiary's securities directly or
indirectly represent an economic interest in less than
30% of the assets of Parent and the Parent Subsidiaries,
taken as a whole), including any proposal or offer
relating to the acquisition by Parent or a Parent
Significant Subsidiary in any manner, directly or
indirectly, of any securities or assets of another person
in consideration for the issuance of more than 30% of any
class of voting securities of Parent or of a Parent
Significant Subsidiary (other than where such Parent
Significant Subsidiary's securities directly or
indirectly represent an economic interest in less than
30% of the assets of Parent and the Parent Subsidiaries,
taken as a whole), or assets representing a substantial
portion of the assets of Parent and the Parent
Subsidiaries, taken as a whole, other than the
transactions contemplated by this Agreement.
Notwithstanding the foregoing, any proposal or offer to
acquire in any manner, directly or indirectly, any of the
voting securities of Prime not owned by Parent or any
Parent Subsidiary shall not constitute a Parent Takeover
Proposal. Parent shall, and shall cause each Parent
Subsidiary to, immediately cease and cause to be
terminated any existing activities, discussions or
negotiations by Parent, any Parent Subsidiary, or any
officer, director or employee of or investment banker,
attorney, accountant or other advisor or representative
of, Parent or any Parent Subsidiary, with any parties
conducted heretofore with respect to any of the
foregoing.
(b) Subject to Section 5.01(e), neither the
Board of Directors of Parent nor any committee thereof
shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to the Company, the adoption
and approval by such Board of Directors or any such
committee of this Agreement or the Merger or (ii) approve
or recommend, or propose to approve or recommend, any
Parent Takeover Proposal.
(c) Parent promptly shall advise the Company
orally and in writing of the receipt of any Parent
Takeover Proposal and of the receipt of any inquiry with
respect to or which Parent reasonably believes could lead
to any Parent Takeover Proposal. Parent promptly shall
advise the Company orally and in writing of the identity
of the person making any such Parent Takeover Proposal or
inquiry and of the material terms of any such Parent
Takeover Proposal and of any changes thereto; provided,
however, that Parent's Board of Directors shall have
determined in good faith, after consultation with
counsel, that taking such action would not create a
reasonable possibility of a breach of the fiduciary
duties of Parent's Board of Directors, except that in all
events prior to exercising its right of termination
pursuant to Section 7.01(e) Parent shall endeavor to
provide the Company with a reasonable opportunity to
respond to any Parent Takeover Proposal which Parent
otherwise may wish to accept.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4 and the
Proxy Statement; Company's Stockholders' Meeting and
Parent's Stockholders' Meeting. (a) As soon as
practicable following the date of this Agreement, the
Company and Parent shall prepare and file with the SEC
the Proxy Statement and Parent shall prepare and file
with the SEC the Form S-4, in which the Proxy Statement
shall be included as a prospectus. Each of the Company
and Parent shall use reasonable efforts to have the
Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. Each of the
Company and Parent shall use reasonable efforts to cause
the Proxy Statement to be mailed to the Company's
stockholders and Parent's stockholders, respectively, as
promptly as practicable after the Form S-4 is declared
effective under the Securities Act. Parent shall also
take any action (other than qualifying to do business in
any jurisdiction in which it is not now so qualified)
required to be taken under any applicable state
securities or "blue sky" laws in connection with the
issuance of Parent Common Stock pursuant to the Merger,
and the Company shall furnish all information concerning
the Company and the holders of the Company Common Stock
and rights to acquire Company Common Stock pursuant to
the Company Employee Stock Plans as may be reasonably
requested in connection with any such action.
(b) Unless the Board of Directors of the
Company shall take any action permitted by Section
5.01(d), the Company shall, as soon as practicable
following the date of this Agreement, duly call, give
notice of, convene and hold a meeting of its stockholders
(the "Company's Stockholders' Meeting") for the purpose
of obtaining the Company Stockholder Approval. Subject
to Section 5.01(d), the Company shall, through its Board
of Directors, recommend to its stockholders that they
give the Company Stockholder Approval. Parent shall vote
or cause to be voted all the shares of Company Capital
Stock owned of record by Parent or any Parent Subsidiary
in favor of the Company Stockholder Approval.
(c) Unless the Board of Directors of Parent
shall take any action permitted by Section 5.01(e),
Parent shall, as soon as practicable following the date
of this Agreement, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Parent's
Stockholders' Meeting") for the purpose of obtaining the
Parent Stockholder Approval. Subject to Section 5.01(e),
Parent shall, through its Board of Directors, recommend
to its stockholders that they give the Parent Stockholder
Approval. The Company shall vote or cause to be voted
all the shares of Parent Capital Stock owned of record by
the Company or any Company Subsidiary in favor of the
Parent Stockholder Approval.
(d) The Board of Directors of the Company
shall be permitted to (i) not recommend to the Company's
stockholders that they give the Company Stockholder
Approval or (ii) withdraw or modify in a manner adverse
to Parent its recommendation to the Company's
stockholders that they give the Company Stockholder
Approval, but only if and to the extent that (x) a
Company Takeover Proposal is pending at the time the
Company's Board of Directors determines to take any such
action or inaction and such Company Takeover Proposal was
not the result of an intentional breach of
Section 4.02(a) by the Company's Board of Directors and
(y) the Company's Board of Directors determines in good
faith, after consultation with counsel and its financial
advisors, and after considering among other things
whether such Company Takeover Proposal is more favorable
to the stockholders of the Company than the transactions
contemplated by this Agreement (taking into account all
relevant material terms of such Company Takeover Proposal
and this Agreement, including all such conditions, and
any changes to this Agreement proposed by Parent in
response to such Company Takeover Proposal) that failing
to take any such action would create a reasonable
possibility of a breach of the fiduciary duties of the
Company's Board of Directors.
(e) The Board of Directors of Parent shall be
permitted to (i) not recommend to Parent's stockholders
that they give the Parent Stockholder Approval or (ii)
withdraw or modify in a manner adverse to the Company its
recommendation to Parent's stockholders that they give
the Parent Stockholder Approval, but only if and to the
extent that (x) a Parent Takeover Proposal is pending at
the time Parent's Board of Directors determines to take
any such action or inaction and such Parent Takeover
Proposal was not the result of an intentional breach of
Section 4.03(a) by Parent's Board of Directors and
(y) Parent's Board of Directors determines in good faith,
after consultation with counsel and its financial
advisors, and after considering among other things
whether such Parent Takeover Proposal is more favorable
to the stockholders of Parent than the transactions
contemplated by this Agreement (taking into account all
relevant material terms of such Parent Takeover Proposal
and this Agreement, including all such conditions, and
any changes to this Agreement proposed by the Company in
response to such Parent Takeover Proposal) that failing
to take any such action would create a reasonable
possibility of a breach of the fiduciary duties of
Parent's Board of Directors.
SECTION 5.02. Letter of the Company's
Accountants. The Company shall use reasonable efforts to
cause to be delivered to Parent a letter of Price
Waterhouse LLP, the Company's independent public
accountants, dated a date within two business days before
the date on which the Form S-4 shall become effective and
addressed to Parent, in form and substance reasonably
satisfactory to Parent and customary in scope and
substance for letters delivered by independent public
accountants in connection with registration statements
similar to the Form S-4.
SECTION 5.03. Letter of Parent's Accountants.
Parent shall use reasonable efforts to cause to be
delivered to the Company a letter of Coopers & Lybrand
LLP, Parent's independent public accountants, dated a
date within two business days before the date on which
the Form S-4 shall become effective and addressed to the
Company, in form and substance reasonably satisfactory to
the Company and customary in scope and substance for
letters delivered by independent public accountants in
connection with registration statements similar to the
Form S-4.
SECTION 5.04. Access to Information;
Confidentiality. Each of the Company and Parent shall,
and shall cause each of its respective subsidiaries to,
afford to the other party and to the officers, directors,
employees, accountants, counsel, financial advisors and
other representatives of such other party, reasonable
access during normal business hours during the period
prior to the Effective Time of the Merger to all their
respective properties, books, contracts, commitments,
personnel and records and, during such period, each of
the Company and Parent shall, and shall cause each of its
respective subsidiaries to, furnish promptly to the other
party (i) a copy of each report, schedule, registration
statement and other document filed by it during such
period pursuant to the requirements of Federal or state
securities laws and (ii) all other information concerning
its business, properties and personnel as such other
party may reasonably request. Such information shall be
held in confidence to the extent required by, and in
accordance with, the provisions of the letter dated
November 17, 1996, between the Company and Parent (the
"Confidentiality Agreement").
SECTION 5.05. Reasonable Efforts;
Notification. (a) Upon the terms and subject to the
conditions set forth in this Agreement, each of the
parties shall use reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions
contemplated by this Agreement, including (i) the
obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations
and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps
as may be necessary to obtain an approval or waiver from,
or to avoid an action or proceeding by, any Governmental
Entity, (ii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this
Agreement or the consummation of the transactions
contemplated by this Agreement including seeking to have
any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed,
and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of,
this Agreement; provided, however, that a party shall not
be obligated to take any action pursuant to the foregoing
if the taking of such action or the obtaining of any
waiver, consent, approval or exemption is reasonably
likely to result in the imposition of a condition or
restriction of the type referred to in clause (ii), (iii)
or (iv) of Section 6.01(g). In connection with and
without limiting the foregoing, Parent, the Company and
their respective Boards of Directors shall (i) take all
action necessary so that no state takeover statute or
similar statute or regulation is or becomes applicable to
the Merger, this Agreement or any other transaction
contemplated by this Agreement and (ii) if any state
takeover statute or similar statute or regulation becomes
applicable to the Merger, this Agreement or any other
transaction contemplated by this Agreement, take all
action necessary so that the Merger and the other
transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize
the effect of such statute or regulation on the Merger
and the other transactions contemplated by this
Agreement.
(b) The Company shall give prompt notice to
Parent, and Parent or Sub shall give prompt notice to the
Company, of (i) any representation or warranty made by it
or contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect
or any such representation or warranty that is not so
qualified becoming untrue or inaccurate in any material
respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it under
this Agreement ; provided, however, that no such
notification shall affect the representations,
warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this
Agreement.
SECTION 5.06. Rights Agreements; Consequences
if Rights Triggered. (a) The Board of Directors of the
Company shall take all further action (in addition to
that referred to in Section 3.01(t)) requested in writing
by Parent in order to render the Company Rights
inapplicable to the Merger and the other transactions
contemplated by this Agreement. Except as provided in
Section 3.01(t) or as requested in writing by Parent,
prior to the Company's Stockholders' Meeting, the Board
of Directors of the Company shall not (i) amend the
Company Rights Agreement or (ii) take any action with
respect to, or make any determination under, the Company
Rights Agreement. In the event that notwithstanding
Section 3.01(t) and this Section 5.06(a), a Distribution
Date, Shares Acquisition Date or Triggering Event occurs
under the Company Rights Agreement at any time during the
period from the date of this Agreement to the Effective
Time of the Merger when the Company Rights are
outstanding, the Company and Parent shall make such
adjustment to the Conversion Number as the Company and
Parent shall mutually agree so as to preserve the
economic benefits that the Company and Parent each
reasonably expected on the date of this Agreement to
receive as a result of the consummation of the Merger and
the other transactions contemplated by this Agreement.
(b) The Board of Directors of Parent shall
take all further action (in addition to that referred to
in Section 3.02(t)) requested in writing by the Company
in order to render the Parent Rights inapplicable to the
Merger and the other transactions contemplated by this
Agreement. In the event that, notwithstanding Section
3.02(t) and this Section 5.06(b), a Distribution Date,
Share Acquisition Date, Triggering Event or Business
Combination occurs under the Parent Rights Agreement at
any time during the period from the date of this
Agreement to the Effective Time of the Merger and Rights
Certificates (as such term is defined in the Parent
Rights Agreement) are issued to Parent's stockholders,
Parent's Board of Directors shall take such actions as
are necessary and permitted under the Parent Rights
Agreement to provide that Rights Certificates
representing an appropriate number of Rights are issued
to the Company's stockholders and employees who receive
Parent Common Stock pursuant to the Merger. In the event
that Parent is not permitted under the Parent's Rights
Agreement to provide Rights Certificates to such Company
stockholders and employees following the occurrence of a
Distribution Date, Triggering Event or Business
Combination during such time period, the Company and
Parent shall make such adjustment to the Conversion
Number as the Company and Parent shall mutually agree so
as to preserve the economic benefits that the Company and
Parent each reasonably expected on the date of this
Agreement to receive as a result of the consummation of
the Merger and the other transactions contemplated by
this Agreement.
SECTION 5.07. Company Employee Stock Options.
(a) As soon as practicable following the date of this
Agreement, the Board of Directors of the Company (or, if
appropriate, any committee administering the Company
Employee Stock Plans) shall adopt such resolutions or
take such other actions as may be required to effect the
following:
(i) adjust the terms of all outstanding Company
Employee Stock Options granted under the Company
Employee Stock Plans and the terms of the Company
Employee Stock Plans, to provide that at the
Effective Time of the Merger, each Company Employee
Stock Option outstanding immediately prior to the
Effective Time of the Merger shall be deemed to
constitute an option to acquire, on the same terms
and conditions as were applicable under such Company
Employee Stock Option, the same number of shares of
Parent Common Stock as the holder of such Company
Employee Stock Option would have been entitled to
receive pursuant to the Merger had such holder
exercised such Company Employee Stock Option in full
immediately prior to the Effective Time of the
Merger, at a price per share equal to (y) the
aggregate exercise price for the shares of Company
Common Stock otherwise purchasable pursuant to such
Company Employee Stock option divided by (z) the
number of shares of Parent Common Stock deemed
purchasable pursuant to such Company Employee Stock
Option; provided, however, that in the case of any
option to which Section 421 of the Code applies by
reason of its qualification under either Section 422
or 423 of the Code ("qualified stock options"), the
option price, the number of shares purchasable
pursuant to such option and the terms and conditions
of exercise of such option shall be determined in
order to comply with Section 424(a) of the Code;
(ii) adjust the terms of all outstanding Phantom
Stock Options, SARs and LSARs granted under the
Company Stock Plans to provide that, at the
Effective Time of the Merger, (y) each holder of a
Phantom Stock Right, SAR or LSAR shall be entitled
to that number of phantom stock rights, stock
appreciation rights or limited stock appreciation
rights with respect to Parent Common Stock ("Parent
Phantom Stock Options", "Parent SARs" or "Parent
LSARs") equal to the number of Phantom Stock
Options, SARs or LSARs, as the case may be, held by
such holder immediately prior to the Effective Time
of the Merger multiplied by the Conversion Number,
and (z) the share value on the grant date with
respect to each Parent Phantom Stock Option, Parent
SAR or Parent LSAR, as the case may be, shall be
equal to the share value on the grant date in effect
with respect to the corresponding Phantom Stock
Option, SAR or LSAR, as the case may be, immediately
prior to the Effective Time of the Merger, divided
by the Conversion Number; and
(iii) make such other changes to the Company
Employee Stock Plans as it deems appropriate to give
effect to the Merger (subject to the approval of
Parent, which shall not be unreasonably withheld).
(b) As soon as practicable after the Effective
Time of the Merger, Parent shall deliver to the holders
of Company Employee Stock Options, Phantom Stock Options,
SARs and LSARs appropriate notices setting forth such
holders' rights pursuant to the respective Company
Employee Stock Plans and the agreements evidencing the
grants of such Company Employee Stock Options, Phantom
Stock Options, SARs and LSARs shall continue in effect on
the same terms and conditions (subject to the adjustments
required by this Section 5.07 after giving effect to the
Merger). Parent shall comply with the terms of the
Company Employee Stock Plans and ensure, to the extent
required by, and subject to the provisions of, such
Company Employee Stock Plans, that the Company Employee
Stock Options which qualified as qualified stock options
prior to the Effective Time of the Merger continue to
qualify as qualified stock options after the Effective
Time of the Merger.
(c) Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of
shares of Parent Common Stock for delivery upon exercise
of the Company Employee Stock Options assumed in
accordance with this Section 5.07. As soon as reasonably
practicable after the Effective Time of the Merger,
Parent shall file a registration statement on Form S-8
(or any successor or other appropriate form) with respect
to the shares of Parent Common Stock subject to such
Company Employee Stock Options and shall use reasonable
efforts to maintain the effectiveness of such
registration statement or registration statements (and
maintain the current status of the prospectus or
prospectuses contained therein) for so long as such
Company Employee Stock Options remain outstanding. With
respect to those individuals who subsequent to the Merger
are subject to the reporting requirements under
Section 16(a) of the Exchange Act, where applicable,
Parent shall administer the Company Employee Stock Plans
assumed pursuant to this Section 5.07 in a manner that
complies with Rule 16b-3 promulgated under the Exchange
Act to the extent the applicable Company Stock Plan
complied with such rule prior to the Merger.
SECTION 5.08. Benefit Plans. (a) Maintenance
of Benefits. For a period of one year after the
Effective Time of the Merger, Parent shall (i) either
(A) maintain or cause the Surviving Corporation (or in
the case of a transfer of all or substantially all the
assets and business of the Surviving Corporation, its
successors and assigns) to maintain the Company Benefit
Plans (other than medical plans and plans providing for
the issuance of Company Capital Stock or based on the
value of Company Capital Stock) at the benefit levels in
effect on the date of this Agreement or (B) provide or
cause the Surviving Corporation (or, in such case, its
successors or assigns) to provide benefits (other than
medical benefits) to employees of the Company and the
Company Subsidiaries that, taken as a whole, are not
materially less favorable in the aggregate to such
employees than those provided to similarly situated
employees of Parent and (ii) make available plans
providing for the issuance of Parent Capital Stock or
based on the value of Parent Capital Stock, and provide
or cause to be provided medical benefits, to employees of
the Company and the Company Subsidiaries that are
substantially equivalent to those provided to similarly
situated employees of Parent. From and after the
Effective Time of the Merger, Parent shall, and shall
cause the Surviving Corporation to honor in accordance
with their respective terms (as in effect on the date of
this Agreement), all of the Company's employment,
severance and termination agreements set forth in the
Company Disclosure Letter.
(b) Service. With respect to any "employee
benefit plan", as defined in Section 3(3) of ERISA,
maintained by Parent or any Parent Subsidiary (including
any severance plan), for all purposes, including
determining eligibility to participate, level of benefits
and vesting, service with the Company or any Company
Subsidiary shall be treated as service with Parent or the
Parent Subsidiaries; provided, however, that such service
need not be recognized to the extent that such
recognition would result in any duplication of benefits.
SECTION 5.09. Indemnification. (a) Parent
shall, to the fullest extent permitted by law, cause the
Surviving Corporation to honor all the Company's
obligations to indemnify (including any obligations to
advance funds for expenses) the current or former
directors or officers of the Company for acts or
omissions by such directors and officers occurring prior
to the Effective Time of the Merger to the extent that
such obligations of the Company exist on the date of this
Agreement, whether pursuant to the Company's Amended and
Restated Certificate of Incorporation, By-laws,
individual indemnity agreements or otherwise, and such
obligations shall survive the Merger and shall continue
in full force and effect in accordance with the terms of
such Amended and Restated Certificate of Incorporation,
By-laws and individual indemnity agreements from the
Effective Time of the Merger until the expiration of the
applicable statute of limitations with respect to any
claims against such directors or officers arising out of
such acts or omissions.
(b) For a period of five years after the
Effective Time, Parent shall cause to be maintained in
effect the current policies of directors' and officers'
liability insurance maintained by the Company (provided
that Parent may substitute therefor policies with
reputable and financially sound carriers of at least the
same coverage and amounts containing terms and conditions
which are no less advantageous) with respect to claims
arising from or related to facts or events which occurred
at or before the Effective Time; provided, however, that
Parent shall not be obligated to make annual premium
payments for such insurance to the extent such premiums
exceed 200% of the annual premiums paid as of the date
hereof by the Company for such insurance (such
200% amount, the "Maximum Premium"). If such insurance
coverage cannot be obtained at all, or can only be
obtained at an annual premium in excess of the Maximum
Premium, Parent shall maintain the most advantageous
policies of directors' and officers' insurance obtainable
for an annual premium equal to the Maximum Premium. The
Company represents to Parent that the Maximum Premium is
$625,000.
SECTION 5.10. Fees and Expenses. Except as
provided in Section 7.02, all fees and expenses,
including any fees payable to any broker, investment
banker or financial advisor, incurred in connection with
the Merger, this Agreement and the transactions
contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the
Merger is consummated, except that expenses incurred in
connection with printing and mailing the Proxy Statement
and the Form S-4 shall be shared equally by Parent and
the Company.
SECTION 5.11. Public Announcements. Parent
and Sub, on the one hand, and the Company, on the other
hand, shall consult with each other before issuing, and
provide each other the opportunity to review and comment
upon, any press release or other public statements with
respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any
such press release or make any such public statement
prior to such consultation, except as may be required by
applicable law, court process or by obligations pursuant
to any listing agreement with any national securities
exchange.
SECTION 5.12. Tax and Accounting Treatment.
Each of Parent and the Company shall not take any action
and shall not fail to take any action which action or
failure to act would prevent, or would be likely to
prevent, the Merger from qualifying (A) for pooling of
interests accounting treatment or (B) as a reorganization
within the meaning of Section 368(a) of the Code and
shall use reasonable efforts to obtain the opinions of
counsel and the letters of accountants referred to in
Sections 6.02(d), 6.03(d) and 6.01(f).
SECTION 5.13. Affiliates. (a) Prior to the
Closing Date, the Company shall deliver to Parent a
letter identifying all persons who are, at the time this
Agreement is submitted for approval to the stockholders
of the Company, "affiliates" of the Company (including
all directors of the Company) for purposes of Rule 145
under the Securities Act. The Company shall use
reasonable efforts to cause each such person to deliver
to Parent on or prior to the Closing Date a written
agreement substantially in the form attached hereto as
Exhibit A.
(b) Prior to the Closing Date, Parent shall
deliver to the Company a letter identifying all persons
who are, at the time of the Parent's Stockholders'
Meeting, "affiliates" of Parent. Parent shall use
reasonable efforts to cause each such person to deliver
to Parent on or prior to the Closing Date a written
agreement substantially in the form attached hereto as
Exhibit B.
SECTION 5.14. Stock Exchange Listing. Parent
shall use reasonable efforts to cause the shares of
Parent Common Stock to be issued in the Merger and
pursuant to the Company Employee Stock Plans to be
approved for listing on the NYSE, subject to official
notice of issuance, prior to the Closing Date.
SECTION 5.15. Parent Board of Directors.
(a) The Board of Directors of Parent shall take such
corporate actions as are necessary to provide that,
effective at the Effective Time of the Merger, (i) the
number of directors of Parent shall be reduced from 13 to
12 and (ii) the Board of Directors of Parent shall
consist of (a) five individuals who are members of the
Board of Directors of Parent immediately prior to the
Effective Time of the Merger (subject to Section 5.15(b),
such five individuals to be selected by the Board of
Directors of Parent at least 10 business days' prior to
the Effective Time of the Merger), with Mr. Jack E.
Thompson to be the Chairman of the Board of Directors of
Parent, (b) five individuals who are members of the Board
of Directors of the Company immediately prior to the
Effective Time of the Merger (subject to Section 5.15(b),
such five individuals to be selected by the Board of
Directors of the Company at least 10 business days' prior
to the Effective Time of the Merger) and (c) two
individuals selected by the 10 individuals who are
selected as directors of Parent pursuant to
subclauses (a) and (b) above (such two individuals to be
selected by such 10 individuals at such time before or
after the Effective Time of the Merger as such
10 individuals shall agree). The Board of Directors of
Parent shall use its reasonable efforts to provide that
the five individuals to be selected by the Board of
Directors of Parent and the five individuals to be
selected by the Board of Directors of the Company are
allocated as evenly as possible among the three classes
of Parent's directors.
(b) Parent shall promptly notify the Company
in writing once Parent's Board of Directors has selected
its five individuals pursuant to Section 5.15(a), or any
replacement individual(s) pursuant to this Section
5.15(b). The Board of Directors of the Company shall be
permitted to reject up to two of such five individuals
(other than Jack E. Thompson) by sending Parent a written
notice to such effect within two business days after its
receipt of such notice, in which case the Board of
Directors of Parent shall within two business days
thereafter select another individual or individuals, as
applicable (subject to the limitations set forth in
Section 5.15(a)) in lieu of such rejected individual(s).
If the Board of Directors of the Company shall have only
rejected one individual in the first instance, it shall
be permitted to reject the replacement individual, in
which case the Board of Directors of Parent shall select
another individual (subject to the limitations set forth
in Section 5.15(a)) in lieu of such rejected replacement
individual. The Company shall promptly notify Parent in
writing once the Company's Board of Directors has
selected its five individuals pursuant to Section
5.15(a), or any replacement individual pursuant
to this Section 5.15(b). The Board of Directors Parent
shall be permitted to reject up to two of such five
individuals by sending the Company a written notice to
such effect within two business days after its receipt of
such notice, in which case the Board of Directors of the
Company shall within two business days thereafter select
another individual or individuals (subject to the
limitations set forth in Section 5.15(a)) in lieu of such
rejected individual(s). If the Board of Directors of
Parent shall have only rejected one individual in the
first instance, it shall be permitted to reject the
replacement individual, in which case the Board of
Directors of the Company shall select another individual
(subject to the limitations set forth in Section 5.15(a))
in lieu of such rejected replacement individual.
SECTION 5.16. Parent Officers. The Board of
Directors of Parent shall take such corporate actions as
are necessary to provide that, effective at the Effective
Time of the Merger, Jack E. Thompson shall be appointed
the Chief Executive Officer of Parent and Patrick M.
James shall be appointed the President and Chief
Operating Officer of Parent.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligation To Effect The Merger. The respective
obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing
Date of the following conditions:
(a) Company Stockholder Approval and Parent
Stockholder Approval. The Company shall have obtained
the Company Stockholder Approval and Parent shall have
obtained the Parent Stockholder Approval.
(b) NYSE Listing. The shares of Parent
Company Stock issuable to the Company's stockholders and
employees pursuant to this Agreement shall have been
approved for listing on the NYSE, subject to official
notice of issuance.
(c) Antitrust. The waiting periods (and any
extensions thereof) applicable to the transactions
contemplated by this Agreement under the HSR Act shall
have been terminated or shall have expired. Any
consents, approvals and filings under any foreign
antitrust law, the absence of which would prohibit the
consummation of the Merger, shall have been obtained or
made.
(d) No Injunctions or Restraints. No
temporary restraining order, preliminary or permanent
injunction or other order issued by any court of
competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger
shall be in effect; provided, however, that subject to
the proviso in Section 5.05(a) each of the parties shall
have used reasonable efforts to prevent the entry of any
such injunction or other order and to appeal as promptly
as possible any such injunction or other order that may
be entered.
(e) Form S-4. The Form S-4 shall have become
effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop
order, and Parent shall have received all state
securities or "blue sky" authorizations necessary to
issue the Parent Common Stock pursuant to this Agreement.
(f) Pooling Letters. Parent shall have
received a letter from Coopers & Lybrand LLP dated as of
the Closing Date and addressed to Parent, and the Company
shall have received a letter from Price Waterhouse LLP
dated as of the Closing Date and addressed to the
Company, in each case stating that the Merger will
qualify as a pooling of interests transaction under
Opinion 16 of the Accounting Principles Board.
(g) No Litigation. There shall not be pending
any suit, action or proceeding by any Governmental Entity
(i) challenging the acquisition by Parent or Sub of any
shares of Company Common Stock, seeking to restrain or
prohibit the consummation of the Merger or any of the
other transactions contemplated by this Agreement or
seeking to obtain from the Company, Parent or Sub any
damages that are material in relation to the Company and
its subsidiaries taken as a whole, (ii) seeking to
prohibit or limit the ownership or operation by the
Company, any Company Significant Subsidiary, Parent or
any Parent Significant Subsidiary of any material portion
of the business or assets of the Company, any Company
Significant Subsidiary, Parent or any Parent Significant
Subsidiary or to compel the Company, any Company
Significant Subsidiary, Parent or any Parent Significant
Subsidiary to dispose of or hold separate any material
portion of the business or assets of the Company, any
Company Significant Subsidiary, Parent or any Parent
Significant Subsidiary, as a result of the Merger or any
of the other transactions contemplated by this Agreement,
(iii) seeking to impose limitations on the ability of
Parent or Sub to acquire or hold, or exercise full rights
of ownership of, any shares of capital stock of the
Surviving Corporation, including the right to vote such
capital stock on all matters properly presented to the
stockholders of the Surviving Corporation, (iv) seeking
to prohibit Parent or any Parent Subsidiary from
effectively controlling in any material respect the
business or operations of the Company or the Company
Significant Subsidiaries or (v) which otherwise is
reasonably likely to have a Company Material Adverse
Effect or a Parent Material Adverse Effect.
SECTION 6.02. Conditions to Obligations of
Parent and Sub. The obligations of Parent and Sub to
effect the Merger are further subject to the satisfaction
or waiver by Parent on or prior to the Closing Date of
the following conditions:
(a) Representations and Warranties. The
representations and warranties of the Company set forth
in this Agreement that are qualified as to materiality
shall be true and correct, and the representations and
warranties of the Company set forth in this Agreement
that are not so qualified shall be true and correct in
all material respects, in each case as of the date of
this Agreement and as of the Closing Date as though made
on and as of the Closing Date, except to the extent any
such representation or warranty expressly relates to an
earlier date (in which case as of such date), and Parent
shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer and the Chief
Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company.
The Company shall have performed in all material
respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf
of the Company by the Chief Executive Officer and the
Chief Financial Officer of the Company to such effect.
(c) Letters from Company Affiliates. Parent
shall have received from each person named in the letter
referred to in Section 5.13(a) an executed copy of an
agreement substantially in the form attached hereto as
Exhibit A.
(d) Tax Opinion. Parent shall have received
an opinion dated the Closing Date from Cravath, Swaine &
Moore, counsel to Parent and Sub, in form and substance
reasonably satisfactory to Parent, substantially to the
effect that, on the basis of facts, representations and
assumptions set forth in such opinion which are
consistent with the state of facts existing on the
Closing Date, the Merger will be treated for Federal
income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. In rendering such
opinion, Cravath, Swaine & Moore may require and rely
upon (and may incorporate by reference) representations
and covenants, including those contained in certificates
of officers of Parent, the Company, Sub and others.
(e) Absence of Company Material Adverse
Effect. There shall not have occurred since the date of
this Agreement any event, change, effect or development
which, individually or in the aggregate, has had or is
reasonably likely to have, a Company Material Adverse
Effect.
SECTION 6.03. Conditions to Obligation of the
Company. The obligation of the Company to effect the
Merger is further subject to the satisfaction or waiver
by the Company on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. The
representations and warranties of Parent and Sub set
forth in this Agreement that are qualified as to
materiality shall be true and correct, and the
representations and warranties of Parent and Sub set
forth in this Agreement that are not so qualified shall
be true and correct in all material respects, in each
case as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing
Date, except to the extent any such representation or
warranty expressly relates to an earlier date (in which
case as of such date), and the Company shall have
received a certificate signed on behalf of Parent by the
Chief Executive Officer and the Chief Financial Officer
of Parent to such effect.
(b) Performance of Obligations of Parent and
Sub. Parent and Sub shall have performed in all material
respects all obligations required to be performed by them
under this Agreement at or prior to the Closing Date, and
the Company shall have received a certificate signed on
behalf of Parent by the Chief Executive Officer and the
Chief Financial Officer of Parent to such effect.
(c) Letters from Parent Affiliates. Parent
shall have received from each person named in the letter
referred to in Section 5.13(b) an executed copy of an
agreement substantially in the form attached hereto as
Exhibit B.
(d) Tax Opinion. The Company shall have
received an opinion dated the Closing Date from Skadden,
Arps, Slate, Meagher & Flom, LLP, counsel to the Company,
in form and substance reasonably satisfactory to the
Company, substantially to the effect that, on the basis
of facts, representations and assumptions set forth in
such opinion which are consistent with the state of facts
existing on the Closing Date, the Merger will be treated
for Federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code. In
rendering such opinion, Skadden, Arps, Slate, Meagher &
Flom, LLP may require and rely upon (and may incorporate
by reference) representations and covenants, including
those contained in certificates of officers of Parent,
the Company, Sub and others.
(e) Absence of Parent Material Adverse Effect.
There shall not have occurred since the date of this
Agreement any event, change, effect or development which,
individually or in the aggregate, has had or is
reasonably likely to have, a Parent Material Adverse
Effect.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may
be terminated at any time prior to the Effective Time of
the Merger, whether before or after the Company
Stockholder Approval or the Parent Stockholder Approval:
(a) by mutual written consent of Parent, Sub
and the Company;
(b) by either Parent or the Company:
(i) if, at a duly held stockholders meeting of
the Company or any adjournment thereof at which the
Company Stockholder Approval is voted upon, the
Company Stockholder Approval shall not have been
obtained;
(ii) if, at a duly held stockholders meeting of
Parent or any adjournment thereof at which the
Parent Stockholder Approval is voted upon, the
Parent Stockholder Approval shall not have been
obtained;
(iii) if the Merger shall not have been
consummated on or before June 30, 1997 (the "Outside
Date"), unless the failure to consummate the Merger
is the result of a wilful, Material Breach (as
defined in Section 7.02(e)) of this Agreement by the
party seeking to terminate this Agreement;
(iv) if any court of competent jurisdiction or
other Governmental Entity shall have issued an
order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise
prohibiting the Merger and such order, decree,
ruling or other action shall have become final and
non-appealable; or
(v) in the event of a breach by the other
party of any representation, warranty, covenant or
other agreement contained in this Agreement which
(A) would give rise to the failure of a condition
set forth in Section 6.02(a) or 6.02(b) or
Section 6.03(a) or 6.03(b), as applicable, and
(B) cannot be or has not been cured within 30 days
after the giving of written notice to the breaching
party of such breach (provided that the terminating
party is not then in breach of any representation,
warranty, covenant or other agreement that would
give rise to a failure of a condition as described
in clause (A) above);
(c) by either Parent or the Company in the
event that any condition to the obligation of such party
to effect the Merger set forth in Section 6.01(f) or 6.02
(in the case of Parent) or Section 6.01(f) or 6.03 (in
the case of the Company) is not capable of being
satisfied prior to the Outside Date;
(d) by the Company, if the Board of Directors
of the Company shall have approved, and the Company shall
concurrently with such termination enter into, a
definitive agreement providing for the implementation of
the transactions contemplated by a Company Takeover
Proposal; provided, however, that (i) such Company
Takeover Proposal was not solicited by the Company and
did not otherwise result from a breach of Section
4.02(a), (ii) the Board of Directors of the
Company shall have complied with the exception to the
proviso contained in Section 4.02(c) in connection with
such Company Takeover Proposal and (iii) no termination
pursuant to this Section 7.01(d) shall be effective
unless the Company shall simultaneously make the payment
required by Section 7.02(a);
(e) by Parent, if the Board of Directors of
Parent shall have approved, and Parent shall concurrently
with such termination enter into, a definitive agreement
providing for the implementation of the transactions
contemplated by a Parent Takeover Proposal; provided,
however, that (i) such Parent Takeover Proposal was not
solicited by Parent and did not otherwise result from a
breach of Section 4.03(a), (ii) the Board of Directors of
Parent shall have complied with the exception to the
proviso contained in Section 4.03(c) in connection with
such Parent Takeover Proposal and (iii) no termination
pursuant to this Section 7.01(e) shall be effective
unless Parent shall simultaneously make the payment
required by Section 7.02(b);
(f) by the Company, if Parent's Board of
Directors shall have (i) failed to recommend to Parent's
stockholders that they give the Parent Stockholder
Approval, (ii) withdrawn or modified in a manner adverse
to the Company its recommendation to Parent's
stockholders that they give the Parent Stockholder
Approval, or (iii) failed to reaffirm its recommendation
to Parent's stockholders that they give the Parent
Stockholder Approval within fourteen days after the
Company has made a written request to Parent to do so
(which written request may be made by the Company at any
time after the public disclosure of a Parent Takeover
Proposal); and
(g) by Parent, if the Company's Board of
Directors shall have (i) failed to recommend to the
Company's stockholders that they give the Company
Stockholder Approval, (ii) withdrawn or modified in a
manner adverse to Parent its recommendation to the
Company's stockholders that they give the Company
Stockholder Approval, or (iii) failed to reaffirm its
recommendation to the Company's' stockholders that they
give the Company Stockholder Approval within fourteen
days after Parent has made a written request to the
Company to do so (which written request may be made by
Parent at any time after the public disclosure of a
Company Takeover Proposal).
SECTION 7.02. Effect of Termination. (a) In
the event that (i) any person shall make a Company
Takeover Proposal that shall not have been withdrawn on
the date of the Company's Stockholders' Meeting and
thereafter this Agreement is terminated pursuant to
Section 7.01(b)(i), (ii) this Agreement is terminated by
the Company pursuant to Section 7.01(d) or (iii) this
Agreement is terminated by Parent pursuant to
Section 7.01(g), then the Company shall pay to Parent a
fee of $65,000,000, which amount shall be payable by wire
transfer of same day funds, on the date of termination of
this Agreement. The Company acknowledges that the
agreements contained in this Section 7.02(a) are an
integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent
would not enter into this Agreement. Notwithstanding the
foregoing, no payment need be made by the Company
pursuant to this Section 7.02(a) if Parent shall be in
Material Breach of its representations, warranties or
covenants under this Agreement.
(b) In the event that (i) any person shall
make a Parent Takeover Proposal that shall not have been
withdrawn on the date of the Parent's Stockholders'
Meeting and thereafter this Agreement is terminated
pursuant to Section 7.01(b)(ii), (ii) this Agreement is
terminated by Parent pursuant to Section 7.01(e) or
(iii) this Agreement is terminated by the Company
pursuant to Section 7.01(f), then Parent shall pay to the
Company a fee of $65,000,000, which amount shall be
payable by wire transfer of same day funds, on the date
of termination of this Agreement. Parent acknowledges
that the agreements contained in this Section 7.02(b) are
an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the
Company would not enter into this Agreement.
Notwithstanding the foregoing, no payment need be made by
Parent pursuant to this Section 7.02(b) if the Company
shall be in Material Breach of its representations,
warranties or covenants under this Agreement.
(c) In the event of termination of this
Agreement by either Parent or the Company pursuant to
Section 7.01(b)(i) or by Parent pursuant to
Section 7.01(b)(v), then (unless Section 7.02(a) is
applicable) the Company shall reimburse Parent for all
its reasonable out-of-pocket expenses (up to $5,000,000)
actually incurred in connection with this Agreement and
the transactions contemplated hereby, which amount shall
be payable by wire transfer of same day funds within
three business days of written demand, accompanied by a
reasonably detailed statement of such expenses and
appropriate supporting documentation, therefor.
Notwithstanding the foregoing, no payment need be made by
the Company pursuant to this Section 7.02(c) if Parent
shall be in Material Breach of its representations,
warranties or covenants under this Agreement.
(d) In the event of termination of this
Agreement by either Parent or the Company pursuant to
Section 7.01(b)(ii) or by the Company pursuant to
Section 7.01(b)(v), then (unless Section 7.02(b) is
applicable) Parent shall reimburse the Company for all
its reasonable out-of-pocket expenses (up to $5,000,000)
actually incurred in connection with this Agreement and
the transactions contemplated hereby, which amount shall
be payable by wire transfer of same day funds within
three business days of written demand, accompanied by a
reasonably detailed statement of such expenses and
appropriate supporting documentation, therefor.
Notwithstanding the foregoing, no payment need be made by
Parent pursuant to this Section 7.02(d) if the Company
shall be in Material Breach of its representations,
warranties or covenants under this Agreement.
(e) In the event of termination of this
Agreement by either the Company or Parent as provided in
Section 7.01, this Agreement shall forthwith become void
and have no effect, without any liability or obligation
on the part of Parent, Sub or the Company, other than the
provisions of Sections 3.01(l) and 3.02(l), the second
sentence of Section 5.04, Section 5.10, this Section 7.02
and Article VIII and except to the extent that such
termination results from a wilful, Material Breach by a
party of any of its representations, warranties,
covenants or other agreements set forth in this Agreement
which has not been cured prior to the time of such
termination. For purposes of this Agreement, a "Material
Breach" shall mean a breach that is material by reference
to (i) the breaching party and its subsidiaries, taken as
a whole, (ii) the ability of the parties to consummate
the Merger and the other transactions contemplated by
this Agreement in the manner contemplated by this
Agreement or (iii) the benefits expected to be received
by the non-breaching party and its stockholders as a
result of the consummation of the Merger and the other
transactions contemplated by this Agreement.
SECTION 7.03. Amendment. This Agreement may
be amended by the parties at any time before or after the
Company Stockholder Approval or the Parent Stockholder
Approval; provided, however, that after the Company
Stockholder Approval or the Parent Stockholder Approval,
there shall be made no amendment that by law requires
further approval by such stockholders without the further
approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on
behalf of each of the parties.
SECTION 7.04. Extension; Waiver. At any time
prior to the Effective Time of the Merger, the parties
may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive
any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered
pursuant to this Agreement or (c) subject to the proviso
of Section 7.03, waive compliance with any of the
covenants or conditions contained in this Agreement. Any
agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure
of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not
constitute a waiver of such rights.
SECTION 7.05. Procedure for Termination,
Amendment, Extension or Waiver. A termination of this
Agreement pursuant to Section 7.01, an amendment of this
Agreement pursuant to Section 7.03 or an extension or
waiver pursuant to Section 7.04 shall, in order to be
effective, require, in the case of Parent, Sub or the
Company, action by its Board of Directors or, in the case
of an extension or waiver pursuant to Section 7.04, the
duly authorized designee of its Board of Directors.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations
and Warranties. None of the representations and
warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the
Effective Time of the Merger. This Section 8.01 shall
not limit any covenant or agreement of the parties which
by its terms contemplates performance after the Effective
Time of the Merger.
SECTION 8.02. Notices. All notices, requests,
claims, demands and other communications under this
Agreement shall be in writing (including by facsimile)
and shall be deemed given upon receipt by the parties at
the following addresses (or at such other address for a
party as shall be specified by like notice):
(a) if to Parent or Sub, to
Homestake Mining Company
650 California Street
San Francisco, CA 94108-2788
Phone: (415) 981-8150
Fax: (415) 397-0952
Attention: Wayne Kirk, Esq.
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Phone: (212) 474-1000
Fax: (212) 474-3700
Attention: Richard Hall, Esq.
(b) if to the Company, to
Santa Fe Pacific Gold Corporation
6200 Uptown Boulevard NE
Suite 400
Albuquerque, NM 87110
Phone: (505) 880-5300
Fax: (505) 880-5435
Attention: Wayne Jarke, Esq.
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Phone: (212) 735-3000
Fax: (212) 735-2000
Attention: Peter Allan Atkins, Esq.
SECTION 8.03. Definitions. For purposes of
this Agreement:
An "affiliate" of any person means another
person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or
is under common control with, such first person.
A "person" means an individual, corporation,
partnership, company, limited liability company,
joint venture, association, trust, unincorporated
organization or other entity.
A "subsidiary" of any person means another
person, an amount of the voting securities, other
voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of
its Board of Directors or other governing body (or,
if there are no such voting interests, 50% or more
of the equity interests of which) is owned directly
or indirectly by such first person.
SECTION 8.04. Interpretation. When a
reference is made in this Agreement to a Section or
Exhibit, such reference shall be to a Section of, or an
Exhibit to, this Agreement unless otherwise indicated.
The table of contents and headings contained in this
Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
SECTION 8.05. Severability. If any term or
other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public
policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such
determination that any term or other provision is
invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 8.06. Counterparts. This Agreement
may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall
become effective when one or more counterparts have been
signed by each of the parties and delivered to the other
parties.
SECTION 8.07. Entire Agreement; No Third-Party
Beneficiaries. This Agreement (including the documents
referred to herein) (a) constitute the entire agreement,
and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to
the subject matter of this Agreement and (b) except for
the provisions of Article II and Sections 5.07(b),
5.07(c), 5.08 and 5.09, are not intended to confer upon
any person other than the parties any rights or remedies.
SECTION 8.08. Governing Law. This Agreement
shall be governed by, and construed in accordance with,
the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 8.09. Assignment. Neither this
Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the
parties without the prior written consent of the other
parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any
direct or indirect wholly owned Parent Subsidiary, but no
such assignment shall relieve Sub of any of its
obligations under this Agreement. Subject to the
preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
Parent shall cause Sub to perform its obligations
hereunder.
SECTION 8.10. Enforcement. The parties agree
that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement
in any court of the United States located in the State of
Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled
at law or in equity. In addition, each of the parties
hereto (a) consents to submit itself to the personal
jurisdiction of any Federal court located in the State of
Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from
any such court and (c) agrees that it will not initiate
any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court
other than a Federal court sitting in the State of
Delaware or a Delaware state court.
IN WITNESS WHEREOF, Parent, Sub and the Company
have caused this Agreement to be signed by their
respective officers thereunto duly authorized, all as of
the date first written above.
HOMESTAKE MINING COMPANY,
by /s/ Jack E. Thompson
Name: Jack E. Thompson
Title: President and CEO
HMGLD CORP.,
by /s/ Jack E. Thompson
Name: Jack E. Thompson
Title: President and CEO
SANTA FE PACIFIC GOLD
CORPORATION,
by /s/ Patrick M. James
Name: Patrick M. James
Title: Chairman,
President and CEO
