EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
among
ALUMINUM COMPANY OF AMERICA,
AMX ACQUISITION CORP.
and
ALUMAX INC.
Dated as of March 8, 1998
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AGREEMENT AND PLAN OF MERGER, dated as of March 8, 1998 (the
"Agreement"), among ALUMINUM COMPANY OF AMERICA, a Pennsylvania corporation (the
"Parent"), AMX ACQUISITION CORP., a Delaware corporation (the "Purchaser"), and
ALUMAX INC., a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of the Parent, the Purchaser and the
Company deem it advisable and in the best interests of their respective
stockholders that the Parent acquire the Company upon the terms and subject to
the conditions provided for in this Agreement;
WHEREAS, in furtherance thereof it is proposed that the acquisition be
accomplished by the Purchaser commencing a cash tender offer (as it may be
amended from time to time as permitted by this Agreement, the "Offer") to
acquire 27,000,000 shares of common stock, par value $0.01 per share, of the
Company (the "Company Common Stock," and together with the rights issued
pursuant to the Rights Agreement (as hereinafter defined) associated with such
shares, the "Shares"), or such other number of Shares as represents an absolute
majority of the excess of (i) all shares of Company Common Stock outstanding on
the Expiration Date on a fully-diluted basis, minus (ii) the total number of
Shares issuable upon exercise of all outstanding employee stock options, for
$50.00 per Share (such amount or any greater amount per Share paid pursuant to
the Offer being hereinafter referred to as the "Per Share Cash Amount"), subject
to applicable withholding taxes, net to the seller in cash, to be followed by a
merger of the Company with and into the Purchaser (the "Merger") pursuant to
which outstanding shares of Company Common Stock will be converted into the
right to receive shares of common stock, par value $1.00 per share, of the
Parent (the "Parent Common Stock"), and cash under certain circumstances, in
each case upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the Board of Directors of the Company has unanimously
approved the making of the Offer and the Merger and resolved and agreed to
recommend that holders of Shares tender their Shares pursuant to the Offer and
approve and adopt this Agreement and the Merger;
WHEREAS, for U.S. federal income tax purposes, it is intended that the
Merger contemplated hereby qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and that this Agreement shall be, and is hereby, adopted as a plan of
reorganization
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for purposes of Section 368 of the Code; and
WHEREAS, the Boards of Directors of the Parent (on its own behalf and
as the sole stockholder of the Purchaser), the Purchaser and the Company have
each approved this Agreement and the Merger in accordance with the General
Corporation Law of the State of Delaware (the "DGCL") and upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, the Parent, the Purchaser and the Company agree as
follows:
ARTICLE I
Section 1.1 The Offer.
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(a) Provided that this Agreement shall not have been terminated in
accordance with Section 7.1 and none of the events set forth in Annex A hereto
shall have occurred or be existing (and shall not have been waived by the
Purchaser), the Purchaser shall commence the Offer as promptly as reasonably
practicable after the date hereof, but in no event later than five business days
after the public announcement of the execution of this Agreement. The Purchaser
shall, on the terms of and subject to the prior satisfaction or waiver of the
conditions of the Offer, accept for payment and pay for up to 27,000,000 Shares
validly tendered and not withdrawn pursuant to the Offer (or such other number
of Shares as represents an absolute majority of the excess of (i) all shares of
Company Common Stock outstanding on the Expiration Date on a fully-diluted
basis, minus (ii) the total number of Shares issuable upon exercise of all
outstanding employee stock options, with 27,000,000 Shares or such other number
being herein referred to as the "50% Share Number") as soon as practicable after
the later of the satisfaction of the conditions of the Offer and the expiration
of the Offer; provided, however, that no such payment shall be made until after
the calculation of the applicable proration factor in the Offer. The obligation
of the Purchaser to purchase and pay for shares tendered pursuant to the Offer
shall be subject to the conditions set forth in Annex A hereto. The Company
agrees that no Shares held by the Company or any of its Subsidiaries will be
tendered to the Purchaser pursuant to the Offer. The Purchaser expressly
reserves the right to waive any of such conditions, to increase
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the price per Share payable in the Offer and to make any other changes in the
terms and conditions of the Offer; provided, however, that no change may be made
which decreases the price per Share payable in the Offer, reduces the number of
Shares to be purchased in the Offer, changes the form of consideration to be
paid in the Offer, modifies any of the conditions set forth in Annex A hereto in
any manner adverse to the holders of Shares or, except as provided in the next
two sentences, extends the Offer. Notwithstanding the foregoing, the Purchaser
may, without the consent of the Company, (i) extend the Offer beyond the
scheduled expiration date, which shall be 20 business days following the date of
commencement of the Offer, if, at the scheduled expiration of the Offer, any of
the conditions to the Purchaser's obligation to accept for payment and to pay
for the Shares shall not be satisfied or waived, or (ii) extend the Offer for
any period required by any rule, regulation or interpretation of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the
Offer. So long as this Agreement is in effect and the condition to the Offer set
forth in clause (i) of the first paragraph of Annex A has not been satisfied or
waived, the Purchaser shall extend the Offer from time to time for a period or
successive periods not to exceed 10 business days each after the previously
scheduled expiration date of the Offer. The Per Share Cash Amount shall, subject
to applicable withholding of taxes, be net to the seller in cash, upon the terms
and subject to the conditions of the Offer.
(b) As promptly as practicable on the date of commencement of the
Offer, the Purchaser shall file with the SEC a Tender Offer Statement on
Schedule 14D-1 (together with all amendments and supplements thereto, the
"Schedule 14D-1") with respect to the Offer. The Schedule 14D-1 shall contain
or incorporate by reference an offer to purchase (the "Offer to Purchase") and
forms of the related letter of transmittal and all other ancillary Offer
documents (collectively, together with all amendments and supplements thereto,
the "Offer Documents"). The Parent and the Purchaser shall cause the Offer
Documents to be disseminated to the holders of the Shares as and to the extent
required by applicable federal securities laws. The Parent and the Purchaser,
on the one hand, and the Company, on the other hand, will promptly correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect, and the
Purchaser will cause the Offer Documents as so corrected to be filed with the
SEC and to be disseminated to holders of the Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given a reasonable opportunity to review and comment upon the
Schedule 14D-1 before it is filed with the SEC.
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Section 1.2 Company Actions.
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(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Company's Board of Directors, at a meeting duly
called and held, has (i) unanimously (with one director absent) determined that
the terms of the Offer and the Merger are fair to and in the best interests of
the stockholders of the Company, (ii) approved this Agreement and approved the
transactions contemplated hereby and thereby, including the Offer and the Merger
and (iii) resolved to recommend that the stockholders of the Company accept the
Offer, tender their Shares to the Purchaser thereunder and approve and adopt
this Agreement and the Merger. The Company hereby consents to the inclusion in
the Offer Documents of the recommendation of the Board described in the
immediately preceding sentence.
(b) As promptly as practicable on the date of commencement of the
Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") which shall contain the recommendation referred
to in clause (iii) of Section 1.2(a) hereof. The Company further agrees to take
all steps necessary to cause the Schedule 14D-9 to be disseminated to holders of
the Shares as and to the extent required by applicable federal securities laws.
The Company, on the one hand, and each of the Parent and the Purchaser, on the
other hand, will promptly correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect, and the Company will cause the Schedule 14D-
9 as so corrected to be filed with the SEC and to be disseminated to holders of
the Shares, in each case as and to the extent required by applicable federal
securities laws. The Parent and its counsel shall be given a reasonable
opportunity to review and comment upon the Schedule 14D-9 before it is filed
with the SEC. In addition, the Company agrees to provide the Parent, the
Purchaser and their counsel with any comments, whether written or oral, that the
Company or its counsel may receive from time to time from the SEC or its staff
with respect to the Schedule 14D-9 promptly after the receipt of such comments.
(c) The Company shall promptly furnish the Purchaser with mailing
labels containing the names and addresses of all record holders of Shares and
with security position listings of Shares held in stock depositories, each as of
a recent date, together with all other available listings and computer files
containing names,
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addresses and security position listings of record holders and beneficial owners
of Shares. The Company shall furnish the Purchaser with such additional
information, including, without limitation, updated listings and computer files
of stockholders, mailing labels and security position listings, and such other
assistance as the Parent, the Purchaser or their agents may reasonably request.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer or the Merger, the Parent and the Purchaser shall hold
in confidence the information contained in such labels, listings and files,
shall use such information solely in connection with the Offer and the Merger,
and, if this Agreement is terminated in accordance with Section 7.1 or if the
Offer is otherwise terminated, shall promptly deliver or cause to be delivered
to the Company all copies of such information, labels, listings and files then
in their possession or in the possession of their agents or representatives.
Section 1.3 Directors of the Company.
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(a) Promptly upon the purchase of and payment for any Shares by the
Purchaser or any of its affiliates pursuant to the Offer, the Parent shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board of Directors of the Company as is equal to the product
obtained by multiplying the total number of directors on such Board (giving
effect to the directors designated by the Parent pursuant to this sentence) by
the percentage that the number of Shares so accepted for payment bears to the
total number of Shares then outstanding. In furtherance thereof, the Company
shall, upon request of the Purchaser, promptly increase the size of its Board of
Directors or exercise its best efforts to secure the resignations of such number
of directors, or both, as is necessary to enable the Parent's designees to be so
elected to the Company's Board and shall cause the Parent's designees to be so
elected. At such time, the Company shall, if requested by the Parent, also
cause directors designated by the Parent to constitute at least the same
percentage (rounded up to the next whole number) as is on the Company's Board of
Directors of (i) each committee of the Company's Board of Directors, (ii) each
board of directors (or similar body) of each Significant Subsidiary (as
hereinafter defined) of the Company, and (iii) each committee (or similar body)
of each such board. Notwithstanding the foregoing, if Shares are purchased
pursuant to the Offer, there shall be until the Effective Time at least one
member of the Company's Board of Directors who is a director on the date hereof
and is not an employee of the Company.
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(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and Rule 14f-1 promulgated thereunder in order to fulfill its obligations
under Section 1.3(a), including mailing to stockholders together with the
Schedule 14D-9 the information required by such Section 14(f) and Rule 14f-1 as
is necessary to enable the Parent's designees to be elected to the Company's
Board of Directors. The Parent and the Purchaser will supply the Company and be
solely responsible for any information with respect to them and their nominees,
officers, directors and affiliates required by such Section 14(f) and Rule 14f-
1. The provisions of this Section 1.3 are in addition to and shall not limit
any rights which the Purchaser, the Parent or any of their affiliates may have
as a holder or beneficial owner of Shares as a matter of law with respect to the
election of directors or otherwise.
(c) Following the election of the Parent's designees to the Company's
Board of Directors pursuant to this Section 1.3, prior to the Effective Time (as
hereinafter defined) (i) any amendment or termination of this Agreement by the
Company, (ii) any extension or waiver by the Company of the time for the
performance of any of the obligations or other acts of the Parent or the
Purchaser, or (iii) any waiver of any of the Company's rights hereunder shall,
in any such case, require the concurrence of a majority of the directors of the
Company then in office who neither were designated by the Purchaser nor are
employees of the Company (the "Independent Director Approval").
ARTICLE II
The Merger
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Section 2.1 The Merger. Upon the terms and subject to the conditions
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set forth in this Agreement, and in accordance with the DGCL, the Company shall
merge with and into the Purchaser (the "Merger"), and the separate corporate
existence of the Company shall thereupon cease, and the Purchaser shall be the
surviving corporation in the Merger (the "Surviving Corporation"). The Surviving
Corporation shall possess all the rights, privileges, powers and franchises as
well of a public as of a private nature and shall be subject to all of the
restrictions, disabilities, duties, debts and obligations of the Company and the
Purchaser, all as provided in the DGCL.
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Section 2.2 Closing. The closing of the Merger (the "Closing") will
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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 Article VI, unless another time or date is agreed
to in writing by the parties hereto. The Closing will be held at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York,
unless another place is agreed to in writing by the parties hereto.
Section 2.3 Effective Time. Subject to the provisions of this
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Agreement, on the Closing Date the parties shall file with the Secretary of
State of the State of Delaware a certificate of merger (the "Certificate of
Merger") executed in accordance with the relevant provisions of the DGCL and
shall make all other filings or recordings required under the DGCL in order to
effect the Merger. The Merger shall become effective upon the filing of the
Certificate of Merger or at such other time as is specified in the Certificate
of Merger (the time at which the Merger becomes fully effective being
hereinafter referred to as the "Effective Time").
Section 2.4 Effects of the Merger. The Merger shall have the
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effects set forth in Section 259 of the DGCL.
Section 2.5 Certificate of Incorporation; By-laws.
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(a) At the Effective Time, the Certificate of Incorporation of the
Purchaser, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation; provided, however,
that Article FIRST of the Certificate of Incorporation of the Surviving
Corporation shall be amended to read in its entirety as follows: "FIRST: The
name of the corporation is Alumax Inc." and, as so amended shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by the DGCL and such Certificate of Incorporation.
(b) At the Effective Time, the By-laws of the Purchaser, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by the DGCL, the Certificate of
Incorporation of the Surviving Corporation and such By-laws.
Section 2.6 Directors; Officers of Surviving Corporation.
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(a) The directors of the Purchaser at the Effective Time shall be the
directors of the Surviving Corporation until their respective successors are
duly elected and qualified or their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and By-laws of the Surviving
Corporation.
(b) The officers of the Purchaser at the Effective Time shall be the
officers of the Surviving Corporation until their respective successors are duly
elected and qualified or their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and By-laws of the Surviving
Corporation.
Section 2.7 Conversion of Securities. At the Effective Time, by
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virtue of the Merger and without any action on the part of the holders of any
securities of the Purchaser or the Company:
(a) Each Share that is owned by the Parent, the Purchaser, any of
their respective Subsidiaries, the Company or any Subsidiary of the Company
shall automatically be cancelled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(b) Each issued and outstanding Share, other than Excluded Shares and
Dissenting Shares, shall be converted into, and become exchangeable for the
right to receive:
(A) 0.6975 (the "Exchange Ratio") of a share of Parent Common
Stock; provided that the Purchaser shall have purchased no fewer than the
50% Share Number of Shares in the Offer; or
(B) that fraction of a share of Parent Common Stock equal to the
Adjusted Exchange Ratio, plus an amount in cash equal to the Merger Cash
Prorate Amount, if the Purchaser shall have purchased fewer than the 50%
Number of Shares in the Offer.
As used herein: (i) the term "Excluded Shares" shall mean that number of Shares
owned by the Parent and its Subsidiaries immediately prior to the Effective Time
(excluding Shares held by the Company and its Subsidiaries); (ii) the term
"Adjusted Exchange Ratio" shall mean that quotient (rounded to the nearest cent)
determined by dividing (1) the product of the 50% Share Number times 0.6975 by
(2) the Final Outstanding Number; (iii) the term "Merger Cash Prorate Amount"
shall mean that U.S. dollar cash amount (rounded to the nearest cent) equal to
the
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quotient determined by dividing (3) the product of the Per Share Cash Amount
times the excess of (a) the 50% Share Number over (b) the Purchased Share Number
by (4) the Final Outstanding Number; (iv) the term "Final Outstanding Number"
shall mean that number of Shares equal to the total number of Shares outstanding
immediately prior to the Effective Time minus the Excluded Shares; and (v) the
term "Purchased Share Number" shall mean that number of Shares actually
purchased by the Purchaser in the Offer. The per Share consideration referred to
in clause (A) or clause (B) of this Section 2.7(b), as the case may be, is
referred to herein as the "Merger Consideration." All such Shares, when so
converted, shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and the certificates representing such
Shares shall thereafter represent only the right to receive (i) Merger
Consideration, (ii) certain dividends and other distributions in accordance with
Section 2.8(g), and (iii) cash in lieu of fractional shares of Parent Common
Stock in accordance with Section 2.8(h), without interest.
(c) Each issued and outstanding share of common stock, par value $.01
per share, of the Purchaser shall be converted into one validly issued, fully
paid and nonassessable share of common stock of the Surviving Corporation.
Section 2.8 Exchange of Certificates.
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(a) Exchange Agent. The Parent shall designate a bank or trust
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company reasonably acceptable to the Company to act as agent for the holders of
the Shares (other than Excluded Shares) in connection with the Merger (the
"Exchange Agent") to receive in trust from the Parent as of the Effective Time
for the benefit of such holders (i) certificates ("Parent Certificates")
representing the number of whole shares of Parent Common Stock and (ii) the
aggregate amount of cash (if any) issuable pursuant to Section 2.7(b) in
exchange for outstanding Shares (such shares of Parent Common Stock and cash (if
any), together with any dividends or distributions with respect thereto with a
record date after the Effective Time and any cash payable in lieu of any
fractional shares of Parent Common Stock being hereinafter referred to as the
"Exchange Fund").
(b) Exchange Procedures. As soon as reasonably practicable after the
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Effective Time, the Exchange Agent shall mail to each holder of record, as of
the Effective Time, of a certificate or certificates, which immediately prior to
the Effective Time represented outstanding Shares (the "Certificates"), whose
Shares were converted pursuant to Section 2.7(b) into the right to receive the
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Merger Consideration, 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 proper delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as the Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by the Parent, together with such letter of
transmittal, properly completed and duly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor (i) a Parent Certificate representing that number
of whole shares of Parent Common Stock which such holder has the right to
receive pursuant to Section 2.7(b), (ii) any cash included in the Merger
Consideration, (iii) certain dividends or other distributions in accordance
with Section 2.8(g) and (iv) cash in lieu of any fractional share in accordance
with Section 2.8(h) for each Share formerly represented by such Certificate, and
the Certificate so surrendered shall forthwith be cancelled. No interest will
be paid or accrued on the cash payable upon the surrender of the Certificates.
If the issuance of the Merger Consideration is to be made to a Person (as
hereinafter defined) other than the Person in whose name the surrendered
Certificate is registered, it shall be a condition of exchange that the
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the Person requesting such exchange shall have
paid all transfer and other Taxes (as hereinafter defined) required by reason of
the issuance to a Person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such Tax either has been paid or is not applicable.
(c) Transfer Books; No Further Ownership Rights in the Shares. At the
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Effective Time, the stock transfer books of the Company shall be closed, and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following six
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months after the Effective Time, the Surviving Corporation shall be entitled to
require the Exchange Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying
Agent, and holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Exchange Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(e) Lost, Stolen or Destroyed Certificates. In the event any
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Certificates for Shares shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate(s)
to be lost, stolen or destroyed and, if required by the Parent, the posting by
such Person of a bond in such sum as the Parent may reasonably direct as
indemnity against any claim that may be made against it or the Surviving
Corporation with respect to such Certificate(s), the Exchange Agent will issue
the Merger Consideration pursuant to Section 2.8(b) deliverable in respect of
the Shares represented by such lost, stolen or destroyed Certificates.
(f) Withholding Taxes. The Parent and the Purchaser shall be entitled
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to deduct and withhold, or cause the Exchange Agent to deduct and withhold from
the Per Share Cash Amount or the Merger Consideration payable to a holder of
Shares pursuant to the Offer or the Merger any stock transfer Taxes and such
amounts as are required under the Code, or any applicable provision of state,
local or foreign Tax law, as specified in the Offer Documents. To the extent
that amounts are so withheld by the Parent or the Purchaser, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Shares in respect of which such deduction and withholding
was made by the Parent or the Purchaser, in the circumstances described in the
Offer Documents.
(g) Dividends; Distributions. No dividends or other distributions
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with respect to Parent Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby, and no cash payment in lieu
of fractional shares shall be paid to any such holder pursuant to Section
2.8(h), and all such dividends, other distributions and cash in lieu of
fractional shares of Parent Common Stock shall be paid by Parent to the Exchange
Agent and shall be included in the Exchange Fund, in each case until the
surrender
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of such Certificate in accordance with this Article II. Subject to the effect of
applicable escheat or similar laws, following surrender of any such Certificate
there shall be paid to the holder of the Parent Certificate representing whole
shares of Parent Common Stock issued in exchange therefor, without interest, (i)
at the time of such surrender, the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of Parent Common Stock and the amount of any cash payable in
lieu of a fractional share of Parent Common Stock to which such holder is
entitled pursuant to Section 2.8(h) and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and with a payment date subsequent to
such surrender payable with respect to such whole shares of Parent Common Stock.
The Parent shall make available to the Exchange Agent cash for these purposes.
(h) No Fractional Shares. No Parent Certificates or scrip
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representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution of Parent
shall relate to such fractional share interests and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Parent. In lieu of any such fractional shares, each holder of a
Certificate who would otherwise have been entitled to receive a fractional share
interest in exchange for such Certificate pursuant to this Section shall receive
from the Exchange Agent an amount in cash equal to the product obtained by
multiplying (A) the fractional share interest to which such holder (after taking
into account all Shares held at the Effective Time by such holder) would
otherwise be entitled by (B) the closing price for a share of Parent Common
Stock as reported on the New York Stock Exchange (the "NYSE") Composite
Transactions Tape (as reported in The Wall Street Journal, or, if not reported
thereby, any other authoritative source) on the Closing Date.
(i) Investment of Exchange Fund. The Exchange Agent shall invest any
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cash included in the Exchange Fund, as directed by the Parent, on a daily basis.
Any interest and other income resulting from such investments shall be paid to
the Parent.
Section 2.9 Appraisal Rights. Notwithstanding anything in this
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Agreement to the contrary, if by reason of the composition of the Merger
Consideration Section 262 of the DGCL affords appraisal rights in the Merger,
then Shares (the "Dissenting Shares") that are issued and outstanding
immediately prior to
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the Effective Time and which are held by stockholders who did not vote in favor
of the Merger and who comply with all of the relevant provisions of Section 262
of the DGCL (the "Dissenting Stockholders") shall not be converted into or be
exchangeable for the right to receive the Merger Consideration, unless and until
such holders shall have failed to perfect or shall have effectively withdrawn or
lost their rights to appraisal under the DGCL. If any Dissenting Stockholder
shall have failed to perfect or shall have effectively withdrawn or lost such
right, such holder's Shares shall thereupon be converted into and become
exchangeable for the right to receive, as of the Effective Time, the Merger
Consideration without any interest thereon. The Company shall give the Parent
(i) prompt notice of any written demands for appraisal of any Shares, attempted
withdrawals of such demands and any other instruments served pursuant to the
DGCL and received by the Company relating to stockholders' rights of appraisal,
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the DGCL. Neither the Company nor the Surviving
Corporation shall, except with the prior written consent of the Parent,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment. If any Dissenting Stockholder shall fail to perfect or
shall have effectively withdrawn or lost the right to dissent, the Shares held
by such Dissenting Stockholder shall thereupon be treated as though such Shares
had been converted into the right to receive the Merger Consideration pursuant
to Section 2.7(b).
Section 2.10 Adjustments to Prevent Dilution. In the event that the
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Parent changes the number of shares of Parent Common Stock or securities
convertible or exchangeable into or exercisable for shares of Parent Common
Stock, issued and outstanding prior to the Effective Time as a result of a
reclassification, stock split (including a reverse split), stock dividend or
distribution, recapitalization, merger, subdivision, issuer tender or exchange
offer, or other similar transaction, the Merger Consideration shall be equitably
adjusted.
ARTICLE III
Representations and Warranties of the Company
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Except as set forth on the schedule delivered by the Company to the
Parent simultaneously and in connection with the execution and delivery of this
Agreement (the "Company Disclosure Schedule") or disclosed in the Company SEC
Reports, the Company represents and warrants to the Parent and the Purchaser as
set forth below:
13
Section 3.1 Organization, Qualification, Etc . The Company is a
--------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has the corporate power and authority and all
governmental approvals required for it to own its properties and assets and to
carry on its business as it is now being conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the ownership of
its properties or the conduct of its business requires such qualification,
except for jurisdictions in which the failure to be so organized, existing and
in good standing or to have such power, authority and governmental approvals
would not, individually or in the aggregate, have a Material Adverse Effect (as
hereinafter defined) on the Company or delay consummation of the transactions
contemplated by this Agreement or otherwise prevent the Company from performing
its obligations hereunder. As used in this Agreement, any reference to any
state of facts, event, change or effect having a "Material Adverse Effect" on or
with respect to the Company or the Parent, as the case may be, means such state
of facts, event, change or effect that has had, or would reasonably be expected
to have, a material adverse effect on the business, results of operations,
assets, liabilities or financial condition of the Company and its Subsidiaries,
taken as a whole, or the Parent and its Subsidiaries, taken as a whole, as the
case may be. The Company has delivered or made available to the Parent copies
of the certificate of incorporation and by-laws or other similar organizational
documents for the Company and each of its Significant Subsidiaries. Such
certificates of incorporation and by-laws or other organizational documents are
complete and correct and in full force and effect, and neither the Company nor
any of its Significant Subsidiaries is in violation of any of the provisions of
their respective certificates of incorporation, by-laws or similar
organizational documents. Each of the Company's Significant Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has the corporate power
and authority and all governmental approvals required for it to own its
properties and assets and to carry on its business as it is now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so organized, existing and in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. All the outstanding
shares of capital stock of, or other ownership interests in, the Company's
Subsidiaries are duly authorized, validly issued, fully paid and non-assessable
and are owned by the Company, directly or indirectly, free and clear of all
liens,
14
claims, mortgages, encumbrances, pledges, security interests, equities or
charges of any kind (each, a "Lien"). Other than the Subsidiaries, there are no
other Persons in which the Company owns, of record or beneficially, any direct
or indirect equity or similar interest or any right (contingent or otherwise) to
acquire the same.
Section 3.2 Capital Stock. The authorized capital stock of the
-------------
Company consists of 200,000,000 shares of Company Common Stock and 50,000,000
shares of preferred stock, par value $1.00 per share ("Company Preferred
Stock"). As of March 8, 1998, (i) 53,458,062 shares of Company Common Stock are
issued and outstanding; (ii) 3,161,525 shares of Company Common Stock are
subject to outstanding options issued and 319,610 shares of Company Common Stock
are subject to other stock-based awards, including 113,580 awarded on March 5,
1998, pursuant to The Alumax Inc. 1993 Long Term Incentive Plan (the "1993
Plan"), and 4,784,929 shares of Company Common Stock are reserved for issuance
under the 1993 Plan; (iii) 571,475 shares of Company Common Stock are subject to
outstanding options, and an additional 190,564 shares are issuable if the holder
retains the shares acquired for two years after the date of exercise, issued
pursuant to The Alumax Inc. 1995 Employee Equity Ownership Plan (the "1995
Plan"), and 997,000 shares of Company Common Stock are reserved for issuance
under the 1995 Plan; (iv) 80,000 shares of Company Common Stock are subject to
outstanding options, 20,750 deferred shares of Company Common Stock and 730,301
shares of Company Common Stock are reserved for issuance under The Alumax Inc.
Non-Employee Directors' Stock Compensation Plan and 74,148 shares are deferred
and 192,009 shares of Company Common Stock are reserved for issuance under The
Alumax Inc. Non-Employee Directors' Deferred Compensation Plan; (v) 794,624
shares of Company Common Stock are reserved for issuance under the Alumax Inc.
Thrift Plan for Salaried Employees, Alumax Inc. Thrift Plan for Hourly
Employees, and Alumax Inc. Thrift Plan for Collectively Bargained Employees;
(vi) 695,567 shares of Company Common Stock are reserved for issuance pursuant
to employee deferred compensation arrangements, of which 623,350 shares of
Company Common Stock are subject to outstanding options and 26,603 shares of
Company Common Stock are subject to deferred stock units; (vii) 112 shares of
Company Common Stock are reserved for conversion of the Company's Series A
Preferred Stock; (viii) 1,812,900 shares of Company Common Stock are issued and
held in the treasury of the Company; and (ix) no shares of Company Preferred
Stock are issued, outstanding or reserved for issuance. Section 3.2 of the
Company Disclosure Schedule sets forth a complete and correct list of all
holders of options to acquire
15
Shares, including such person's name, the number of options (vested, unvested
and total) held by such person and the exercise price for each such option. All
the outstanding Shares are and the exercise of outstanding options described in
the second sentence of this Section 3.2 will be, when issued in accordance with
the terms thereof, duly authorized, validly issued, fully paid and non-
assessable. Except as set forth above, except for the Company's obligations
under the Rights Agreement, dated as of February 22, 1996 (the "Rights
Agreement"), between the Company and Chemical Mellon Shareholder Services,
L.L.C., as rights agent, and except for the transactions contemplated by this
Agreement, (1) there are no shares of capital stock of the Company authorized,
issued or outstanding, (2) there are no authorized or outstanding options,
warrants, calls, preemptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any of its Subsidiaries, obligating the Company
or any of its Subsidiaries to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock or other equity interest in the
Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment, or (3)
there are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Shares or other
capital stock of the Company or any Subsidiary or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Subsidiary or any other entity other than loans to Subsidiaries in the ordinary
course of business.
Section 3.3 Corporate Authority Relative to this Agreement; No
--------------------------------------------------
Violation.
- ---------
(a) The Company has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of the
Company and, except for obtaining the Company Stockholder Approval (as
hereinafter defined) as contemplated by Section 5.3 hereof and the filing of the
Certificate of Merger, no other corporate proceedings on the part of the Company
are necessary to authorize the consummation of the transactions contemplated
hereby. The Board of Directors of the Company has taken all appropriate action
so that neither the Parent nor the Purchaser will be an "interested stockholder"
within
16
the meaning of Section 203 of the DGCL by virtue of the Parent, the Purchaser
and the Company entering into this Agreement and consummating the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and, assuming this Agreement constitutes a valid and
binding agreement of the Parent and the Purchaser, constitutes a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms.
(b) Except for the filings, permits, authorizations, consents and
approvals set forth in Section 3.3(b) of the Company Disclosure Schedule or as
may be required under, and other applicable requirements of, the Securities Act
of 1933, as amended (the "Securities Act"), the Exchange Act, the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), state
securities or blue sky laws, and the DGCL (the "Company Required Approvals"),
none of the execution, delivery or performance of this Agreement by the Company,
the consummation by the Company of the transactions contemplated hereby or
compliance by the Company with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the certificate of
incorporation, by-laws or similar organizational documents of the Company or any
of its Significant Subsidiaries, (ii) require any filing with, or permit,
authorization, consent or approval of, any federal, regional, state or local
court, arbitrator, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, whether U.S. or foreign (a
"Governmental Entity"), (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which any of them or any
of their properties or assets may be bound (the "Company Agreements"), or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of its Subsidiaries or any of their properties or
assets, excluding from the foregoing clauses (ii), (iii) and (iv) such
violations, breaches or defaults which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or prevent or
substantially delay the consummation of the transactions contemplated hereby.
Section 3.3(b) of the Company Disclosure Schedule sets forth a list of all third
party consents and approvals required to be obtained under the Company
Agreements prior to the consummation of the transactions contemplated by this
Agreement the failure of which to obtain would have, individually or in the
aggregate, a Material Adverse Effect on the Company.
17
Section 3.4 Reports and Financial Statements. The Company has
--------------------------------
previously furnished or otherwise made available to the Parent true and complete
copies of:
(a) the Company's Annual Reports on Form 10-K filed with the SEC for
each of the years ended December 31, 1996 and 1997;
(b) the Company's Quarterly Report on Form 10-Q filed with the SEC
for the quarters ended March 31, 1997, June 30, 1997 and September 30, 1997;
(c) each definitive proxy statement filed by the Company with the SEC
since December 31, 1996;
(d) each final prospectus filed by the Company with the SEC since
December 31, 1996, except any final prospectus on Form S-8; and
(e) all Current Reports on Form 8-K filed by the Company with the SEC
since January 1, 1997.
As of their respective dates, such reports, proxy statements and
prospectuses (collectively with any amendments, supplements and exhibits
thereto, the "Company SEC Reports") (i) complied as to form in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act and the rules and regulations promulgated thereunder, and (ii) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Except to the extent that information contained in any Company SEC Report was
amended or was superseded by a later filed Company SEC Report, none of the
Company SEC Reports contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. None of the Company's Subsidiaries is required to
file any forms, reports or other documents with the SEC. The audited
consolidated financial statements and unaudited consolidated interim financial
statements included in the Company SEC Reports (including any related notes and
schedules) fairly present the financial position of the Company and its
consolidated Subsidiaries as of the
18
dates thereof and the results of operations and cash flows for the periods or as
of the dates then ended (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments), in each case in accordance with
past practice and generally accepted accounting principles in the United States
("GAAP") consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto). Since January 1, 1996, the Company has timely
filed all reports, registration statements and other filings required to be
filed by it with the SEC under the rules and regulations of the SEC.
Section 3.5 No Undisclosed Liabilities. Neither the Company nor any
--------------------------
of its Subsidiaries has any liabilities or obligations of any nature, whether or
not accrued, contingent or otherwise, and there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such a liability or obligation, except (a) liabilities or obligations
reflected in the Company SEC Reports and (b) liabilities or obligations which
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
Section 3.6 No Violation of Law. The businesses of the Company and
-------------------
its Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity (provided that no representation or
warranty is made in this Section 3.6 with respect to Environmental Laws (as
hereinafter defined)) except (a) as described in the Company SEC Reports filed
prior to the date hereof and (b) for violations or possible violations which
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
Section 3.7 Environmental Matters.
---------------------
(a) Each of the Company and its Subsidiaries has obtained all
licenses, permits, authorizations, approvals and consents from Governmental
Entities which are required under any applicable Environmental Law in respect of
its business or operations ("Environmental Permits"), except for such failures
to have Environmental Permits which, individually or in the aggregate, are not
reasonably expected to have a Material Adverse Effect on the Company. Each of
such Environmental Permits is in full force and effect, and each of the Company
and its Subsidiaries is in compliance with the terms and conditions of all such
Environmental Permits and with all applicable Environmental Laws, except for
such exceptions as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
19
(b) There is no Environmental Claim (as hereinafter defined) pending,
or to the best knowledge of the Company threatened, against the Company or any
of its Subsidiaries, or to the best knowledge of the Company against any Person
whose liability for such Environmental Claim the Company or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law, that would, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(c) Except as set forth in Section 3.7(c) of the Company Disclosure
Schedule, to the best knowledge of the Company, there are no past or present
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the release, threatened release or presence of any Hazardous
Material (as hereinafter defined), that have resulted in any Environmental Claim
against the Company or any of its Subsidiaries, or to the best knowledge of the
Company against any Person whose liability for any Environmental Claim the
Company or any of its Subsidiaries has or may have retained or assumed either
contractually or by operation of law, except for such liabilities which would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
(d) To the best knowledge of the Company, no site or facility now or
previously owned, operated or leased by the Company or any of its Subsidiaries
is listed or proposed for listing on the National Priorities List promulgated
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, and the rules and regulations thereunder ("CERCLA").
(e) No Liens have arisen under or pursuant to any Environmental Law on
any site or facility owned, operated or leased by the Company or any of its
Subsidiaries, except for such Liens which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, and no action of any
Governmental Entity has been taken or, to the best knowledge of the Company, is
in process which could subject any of such properties to such Liens except for
any such action which would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
(f) As used in this Agreement:
20
(i) "Environmental Claim" means any claim, action, cause of
action, investigation or notice (written or oral) by any Person alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties)
arising out of, based on or resulting from (a) the presence, or release or
threatened release, of any Hazardous Materials at any location, whether or
not owned or operated by the Company or any of its Subsidiaries or Parent
or any of its Subsidiaries, as the case may be, or (b) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law.
(ii) "Environmental Law" means any law or order of any
Governmental Entity relating to the regulation or protection of human
health or safety as it relates to Hazardous Materials or the environment or
to emissions, discharges, releases or threatened releases of Hazardous
Material, pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes into the environment.
(iii) "Hazardous Materials" means (A) any petroleum or petroleum
products, flammable materials, radioactive materials, friable asbestos,
urea formaldehyde foam insulation and transformers or other equipment that
contain dielectric fluid containing regulated levels of polychlorinated
biphenyls; (B) any chemicals or other materials or substances which are
become defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants" or
words of similar import under any Environmental Law; and (C) any other
chemical or other material or substance, exposure to which is prohibited,
limited or regulated by any Governmental Entity under any Environmental
Law.
Section 3.8 Employee Benefit Plans; ERISA.
-----------------------------
(a) Except as described in the Company SEC Reports or as would not
have a Material Adverse Effect on the Company, (i) all Company Employee Benefit
Plans (as hereinafter defined) are in compliance with all applicable
requirements of law, including ERISA (as hereinafter defined) and the Code, and
(ii) neither the Company nor any of its Subsidiaries nor any ERISA Affiliate (as
hereinafter defined) has any liabilities or obligations with respect to any such
21
Company Employee Benefit Plans, whether accrued, contingent or otherwise, nor to
the best knowledge of the Company, are any such liabilities or obligations
expected to be incurred. Except as described in the Company SEC Reports or as
set forth in Section 3.8(a) of the Company Disclosure Schedule, the execution
of, and performance of the transactions contemplated in, this Agreement will
not (either alone or upon the occurrence of any additional or subsequent events)
constitute an event under any Company Employee Benefit Plan that will or may
result in any payment or any continuation benefit under COBRA (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 any of its Subsidiaries are the agreements and policies
specifically described in Section 3.8(a) of the Company Disclosure Schedule.
(b) With respect to each of its Plans (as hereinafter defined), the
Company has heretofore delivered to the Parent complete and correct copies of
each of the following documents, as applicable: (i) a copy of the Plan; (ii) a
copy of the most recent annual report; (iii) a copy of the most recent actuarial
report; (iv) a copy of the most recent Summary Plan Description and all material
modifications; (v) a copy of the trust or other funding agreement; and (vi) the
most recent determination letter received from the Internal Revenue Service (the
"IRS") with respect to each Plan that is intended to be qualified under Section
401 of the Code and all notices of reportable events received following receipt
of such letter.
(c) Section 3.8(c) of the Company Disclosure Schedule sets forth a
list of each employee of the Company (or any Subsidiary) who is a party to any
agreement (whether written or oral) with respect to such person's employment by
the Company or a Subsidiary, other than offer letters which do not have
guaranteed periods of employment and statutory employment agreements under
foreign laws, and which provide for annual compensation in excess of $100,000.
The Company has provided to the Parent a complete and correct copy of each such
written employment agreement and a complete and correct summary of each such
oral agreement.
(d) No liability under Title IV of ERISA has been incurred by the
Company or any ERISA Affiliate within the past twelve years that has not been
satisfied in full. To the best knowledge of the Company, no condition exists
that presents a material risk to the Company, any of its Subsidiaries or any
ERISA Affiliate of incurring a liability under such Title. The Pension Benefit
Guaranty
22
Corporation established under ERISA ("PBGC") has not instituted proceedings to
terminate any of the Plans, and no condition exists that presents a material
risk that such proceedings will be instituted. With respect to each of the Plans
that is subject to Title IV of ERISA, the present value of accrued benefits
under such Plan, based upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by such Plan's actuary with respect
to such Plan, did not, as of its latest valuation date, exceed the then current
value of the assets of such Plan allocable to such accrued benefits, and there
have been no changes since such latest valuation date which would cause the
present value of such accrued benefits to exceed the current value of such
assets. None of the Plans or any trust established thereunder has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each of the Plans ended prior to the date of this Agreement. None
of the Plans is a "multiemployer plan," as such term is defined in Section 3(37)
of ERISA. Each of the Plans that is intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified and the trusts maintained
thereunder are exempt from taxation under Section 501(a) of the Code. Except as
set forth in Section 3.8(d) of the Company Disclosure Schedule, no Plan provides
benefits, including without limitation death or medical benefits (whether or not
insured), with respect to current or former employees after retirement or other
termination of service (other than coverage mandated by applicable law or
benefits, the full cost of which is borne by the current or former employee).
There are no pending or threatened claims by or on behalf of any Plan, by any
employee or beneficiary covered under any such Plan, or otherwise involving any
such Plan (other than routine claims for benefits).
(e) As used in this Agreement:
(i) "Company Employee Benefit Plan" means any Plan entered into,
established, maintained, sponsored, contributed to or required to be
contributed to by the Company, any of its Subsidiaries or ERISA Affiliates
for the benefit of the current or former employees or directors of the
Company or any of its Subsidiaries and existing on the date of this
Agreement or at any time subsequent thereto and on or prior to the
Effective Time and, in the case of a Plan which is subject to the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations thereunder ("ERISA"), Section 412 of the Code or Title IV of
ERISA, at any time during the twelve-year period preceding the date of this
Agreement;
23
(ii) "Plan" means any employment, bonus, incentive compensation,
deferred compensation, pension, profit sharing, retirement, stock purchase,
stock option, stock ownership, stock appreciation rights, phantom stock,
leave of absence, layoff, vacation, day or dependent care, legal services,
cafeteria, life, health, medical, accident, disability, worker's
compensation or other insurance, severance, separation, termination, change
of control or other benefit plan, agreement, practice, policy, program or
arrangement of any kind, whether written or oral, including, but not
limited to any "employee benefit plan" within the meaning of Section 3(3)
of ERISA; and
(iii) "ERISA Affiliate" means, with respect to any Person, any
Person in the same controlled group as such Person (within the meaning of
Sections 414(b) and (c) of the Code).
Section 3.9. Absence of Certain Changes or Events. Except as
------------------------------------
disclosed in the Company SEC Reports, (a) since December 31, 1997 the businesses
of the Company and its Subsidiaries have been conducted in the ordinary course
consistent with past practice, and (b) there has not been any event, occurrence,
development or state of circumstances or facts that has had, individually or in
the aggregate, a Material Adverse Effect on the Company.
Section 3.10. Litigation. Except as disclosed in the Company SEC
----------
Reports, there are no actions, suits or proceedings pending (or, to the best
knowledge of the Company, threatened) against or affecting the Company or its
Subsidiaries, or any of their respective properties at law or in equity, by or
before any Governmental Entity which, individually or in the aggregate, have a
Material Adverse Effect on the Company or would prevent or substantially delay
any of the transactions contemplated by this Agreement or otherwise prevent the
Company from performing its obligations hereunder.
Section 3.11. Schedule 14D-9; Offer Documents; Registration Statement
-------------------------------------------------------
and Proxy Statement. Neither the Schedule 14D-9 nor any information supplied
- -------------------
by the Company for inclusion in the Offer Documents shall, at the respective
times the Schedule 14D-9, the Offer Documents or any amendments or supplements
thereto are filed with the SEC or are first published, sent or given to
stockholders of the Company, as the case may be, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or
24
necessary in order to make the statements made therein, in the light of the
circumstances under which they are made, not misleading. The Proxy Statement
(as hereinafter defined) will not, on the date the Proxy Statement (or any
amendment or supplement thereto) is first mailed to stockholders of the Company,
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
made therein, in the light of the circumstances under which they are made, not
misleading or shall, at the time of the Special Meeting (as hereinafter defined)
or at the Effective Time, omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Special Meeting which shall have become false or misleading in
any material respect. None of the information supplied by the Company for
inclusion or incorporation by reference in the Registration Statement will, at
the date it becomes effective and at the time of the Special Meeting (as
hereinafter defined) 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 Schedule 14D-9 and the Proxy Statement will, when
filed by the Company with the SEC, comply as to form in all material respects
with the applicable provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to the statements made in any of the foregoing
documents based on and in conformity with information supplied by or on behalf
of the Parent or the Purchaser specifically for inclusion therein.
Section 3.12. Intellectual Property.
---------------------
(a) The Company and its Subsidiaries own or have valid rights to use
all items of Intellectual Property (as hereinafter defined) utilized in the
conduct of the business of the Company and its Subsidiaries as presently
conducted, free and clear of all Liens with such exceptions as would not have,
individually or in the aggregate, a Material Adverse Effect on the Company.
(b) To the best knowledge of the Company, (i) neither the Company nor
any Subsidiary is in default (or with the giving of notice or lapse of time or
both, would be in default) under any license to use such Intellectual Property,
(ii) the Intellectual Property is not being infringed by any third party, (iii)
neither the Company nor any Subsidiary is infringing any Intellectual Property
of any third party with such exceptions as would not have, individually or in
the
25
aggregate, a Material Adverse Effect on the Company and (iv) in the last
three years neither the Company nor any Subsidiary has received any claim or
notice of infringement by any third party.
(c) As used in this Agreement, "Intellectual Property" means all of
the following: (i) U.S. and foreign registered and unregistered trademarks and
pending trademark applications, trade dress, service marks, logos, trade names,
corporate names, assumed names, business names and logos and all registrations
and applications to register the same (the "Trademarks"), (ii) issued U.S. and
foreign patents and pending patent applications, invention disclosures, and any
and all divisions, continuations, continuations-in-part, reissues, continuing
patent applications, reexaminations, and extensions thereof, any counterparts
claiming priority therefrom, utility models, patents of
importation/confirmation, certificates of invention, certificates of
registration and like statutory rights (the "Patents"), (iii) U.S. and foreign
registered and unregistered copyrights (including, but not limited to, those in
computer software and databases), rights of publicity and all registrations and
applications to register the same (the "Copyrights"), (iv) all categories of
trade secrets as defined in the Uniform Trade Secrets Act and under
corresponding foreign statutory and common law, including, but not limited to,
business, technical and know-how information, (v) all licenses and agreements
pursuant to which the Company or any Subsidiary has acquired rights in or to any
Trademarks, Patents, trade secrets, technology, know-how, Computer Software (as
defined below), rights of publicity or Copyrights, or licenses and agreements
pursuant to which the Company has licensed or transferred the right to use any
of the foregoing ("Licenses"), and (vi) all computer software, data files,
source and object codes, user interfaces, manuals and other specifications and
documentation and all know-how relating thereto (collectively, "Computer
Software").
Section 3.13. Tax Matters.
-----------
(a) All federal, state, local and foreign Tax Returns (as hereinafter
defined) required to be filed by or on behalf of the Company, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which the Company or any of its Subsidiaries (i) is a member (a "Current Company
Group") or (ii) was a member during any years not closed with the IRS for U.S.
federal income Tax purposes but is not currently a member, but only insofar as
any such Tax Return relates to a taxable period or portion thereof ending on a
date within the last six years during which the Company or such Subsidiary was a
member of such affiliated, combined, consolidated or unitary group for purposes
of
26
the relevant Tax (a "Past Company Group," and together with Current Company
Groups, a "Company Affiliated Group") have been timely filed or requests for
extensions have been timely filed and any such extension has been granted and
has not expired, and all such filed Tax Returns are complete and accurate except
to the extent any failure to file or any inaccuracies in filed Tax Returns would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company (it being understood that the representations made in this Section 3.13,
to the extent that they relate to Past Company Groups, are made to the best
knowledge of the Company and only with respect to taxable periods or portions
thereof ending on a date within the last six years during which the Company or
any of its Subsidiaries was a member of such affiliated, combined, consolidated
or unitary group for purposes of the relevant Tax). All Taxes due and owing by
the Company, any Subsidiary of the Company or any Company Affiliated Group have
been paid, or adequately reserved for, except to the extent any failure to pay
or reserve would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. There is no audit, examination, deficiency, refund
litigation, proposed adjustment or matter in controversy with respect to any
Taxes due and owing by the Company, any Subsidiary of the Company or any Company
Affiliated Group which if determined adversely would have a Material Adverse
Effect on the Company. All assessments for Taxes due and owing by the Company,
any Subsidiary of the Company or any Company Affiliated Group with respect to
completed and settled examinations or concluded litigation have been paid.
Section 3.13(a) of the Company Disclosure Schedule sets forth (i) the taxable
years of the Company for which the statutes of limitations with respect to U.S.
federal income Taxes have not expired and (ii) with respect to federal income
Taxes for such years, those years for which examinations have been completed,
those years for which examinations are presently being conducted, and those
years for which examinations have not yet been initiated. Neither the Company
nor any of its Subsidiaries has any liability under Treasury Regulation Section
1.1502-6 for U.S. federal income Taxes of any Person other than the Company and
its Subsidiaries. The Company and each of its Subsidiaries have complied in all
material respects with all rules and regulations relating to the withholding of
Taxes, except to the extent any such failure to comply would not, individually
or in the aggregate, have a Material Adverse Effect on the Company.
(b) Neither the Company nor any Subsidiary of the Company has (i)
entered into a closing agreement or other similar agreement with a taxing
authority relating to Taxes of the Company or any Subsidiary of the Company with
respect to a taxable period for which the statute of limitations is still open,
or (ii) with
27
respect to U.S. federal income Taxes, granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any income Tax, in either case, that is still outstanding. There are no Liens
relating to Taxes upon the assets of the Company or any Subsidiary other than
Liens relating to Taxes not yet due. Neither the Company nor any Subsidiary is a
party to any agreement relating to allocating or sharing of Taxes which has not
been disclosed in its Tax Returns. No consent under Section 341(f) of the Code
has been filed with respect to the Company or any Subsidiary.
(c) Any amount or other entitlement that could be received (whether
in cash or property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee, officer or director
of the 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
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).
(d) For purposes of this Agreement: (i) "Taxes" means any and all
federal, state, local, foreign or other taxes of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation or
net worth, and taxes or other charges in the nature of excise, withholding, ad
valorem or value added, and (ii) "Tax Return" means any return, report or
similar statement (including the attached schedules) required to be filed with
respect to any Tax, including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
Section 3.14. Opinion of Financial Advisor. The Board of Directors
----------------------------
of the Company has received the opinion of BT Wolfensohn, dated the date of this
Agreement, substantially to the effect that each of the Per Share Cash Amount
and the Merger Consideration, taken as a whole, to be received by the
stockholders of the Company in the Offer and the Merger is fair to such holders
from a financial point of view.
Section 3.15. Required Vote of the Company Stockholders. The
-----------------------------------------
affirmative vote of the holders of a majority of the outstanding shares of
Company
28
Common Stock (the "Company Stockholder Approval") is the only vote of the
holders of any class or series of the Company's capital stock which is necessary
to approve this Agreement and the transactions contemplated hereby.
Section 3.16. Employment Matters. Neither the Company nor any of
-------------------
its Subsidiaries has experienced any work stoppages, strikes, collective labor
grievances, other collective bargaining disputes or claims of unfair labor
practices in the last five years which would, individually or in the aggregate,
have a Material Adverse Effect on the Company. To the best knowledge of the
Company, there is no organizational effort presently being made or threatened by
or on behalf of any labor union with respect to employees of the Company or any
of its Subsidiaries.
ARTICLE IV
Representations and Warranties of the Parent and the Purchaser
--------------------------------------------------------------
Except as set forth on the schedule delivered by the Parent to the
Company simultaneously and in connection with the execution of this Agreement
(the "Parent Disclosure Schedule," and together with the Company Disclosure
Schedule, the "Disclosure Schedule") or disclosed in the Parent SEC Reports, the
Parent and the Purchaser represent and warrant to the Company as set forth
below:
Section 4.1. Organization, Qualification, Etc. Each of the Parent and
--------------------------------
the Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority and all governmental approvals required for it to
own its properties and assets and to carry on its business as it is now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so organized, existing and in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect on the Parent or delay consummation of
the transactions contemplated by this Agreement or otherwise prevent the Parent
or the Purchaser from performing its obligations hereunder. The Parent has
delivered or made available to the Company copies of the articles of
incorporation and by-laws for the Parent and the certificate of incorporation
and by-laws for the Purchaser. Such organizational documents are complete and
correct and in full force and effect, and neither the
29
Parent nor the Purchaser is in violation of any of the provisions of their
respective certificates of incorporation or by-laws. Each of the Parent's
Significant Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization, has the corporate power and authority and all governmental
approvals required for it to own its properties and assets and to carry on its
business as it is now being conducted and is duly qualified to do business and
is in good standing in each jurisdiction in which the ownership of its
properties or the conduct of its business requires such qualification, except
for jurisdictions in which the failure to be so organized, existing and in good
standing or to have such power, authority and governmental approvals would not,
individually or in the aggregate, have a Material Adverse Effect on the Parent.
Section 4.2. Capital Stock. The authorized capital stock of the
-------------
Parent consists of 300,000,000 shares of Parent Common Stock, 557,740 shares of
serial preferred stock, par value $100.00 per share ("Parent Serial Preferred
Stock") and 10,000,000 shares of Class B serial preferred stock, par value $1.00
per share ("Parent Class B Serial Preferred Stock"). As of February 28, 1998,
(i) 168,125,229 shares of Parent Common Stock were issued and outstanding; (ii)
14,050,000 shares of Parent Common Stock were subject to outstanding options
issued pursuant to Parent's long term stock incentive plan (the "Long Term
Incentive Plan"), and 19,300,152 shares of Parent Common Stock were reserved for
issuance under the Long Term Incentive Plan; (iii) 4,097,532 shares of Parent
Common Stock were reserved for issuance under the Parent's employees savings
plans; (iv) 169,228 shares of Parent Common Stock were reserved for issuance
under the Parent's incentive compensation plan; (v) 10,797,354 shares of Parent
Common Stock were issued and held in the treasury of the Parent; (vi) 557,649
shares of Parent Serial Preferred Stock were issued and outstanding; and (vii)
no shares of Parent Class B Serial Preferred Stock are issued and outstanding.
All the outstanding shares of Parent Common Stock and Parent Serial Preferred
Stock are, and all shares to be issued as part of the Merger Consideration will
be, when issued in accordance with the terms hereof, duly authorized, validly
issued, fully paid and non-assessable. Except as set forth above, and except for
the transactions contemplated by this Agreement, (1) there are no shares of
capital stock of the Parent authorized, issued or outstanding, (2) there are no
authorized or outstanding options, warrants, calls, preemptive rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Parent,
obligating the Parent to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock or other
30
equity interest in the Parent or securities convertible into or exchangeable for
such shares or equity interests, or obligating the Parent to grant, extend or
enter into any such option, warrant, call, subscription or other right,
agreement, arrangement or commitment, (3) there are no outstanding contractual
obligations of the Parent to repurchase, redeem or otherwise acquire any capital
stock of the Parent.
Section 4.3. Corporate Authority Relative to this Agreement; No
--------------------------------------------------
Violation.
- ---------
(a) Each of the Parent and the Purchaser has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Boards of Directors of the Parent and the Purchaser and by the Parent as the
sole stockholder of the Purchaser, and other than the filing of the Certificate
of Merger no other corporate proceedings on the part of the Parent or the
Purchaser are necessary to authorize the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Parent and the Purchaser and, assuming this Agreement
constitutes a valid and binding agreement of the Company, constitutes a valid
and binding agreement of each of the Parent and the Purchaser, enforceable
against each of the Parent and the Purchaser in accordance with its terms.
(b) Except for the filings, permits, authorizations, consents and
approvals set forth in Section 4.3(b) of the Parent Disclosure Schedule or as
may be required under, and other applicable requirements of, the NYSE, the
Securities Act, the Exchange Act, the HSR Act, state securities or blue sky
laws, and the DGCL (the "Parent Required Approvals"), none of the execution,
delivery or performance of this Agreement by the Parent or the Purchaser, the
consummation by the Parent or the Purchaser of the transactions contemplated
hereby or compliance by the Parent or the Purchaser with any of the provisions
hereof or thereof will (i) conflict with or result in any breach of any
provision of the articles or by-laws of the Parent or the certificate of
incorporation or by-laws of the Purchaser, (ii) require any filing with, or
permit, authorization, consent or approval of, any Governmental Entity, (iii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the
31
Parent, any of its Subsidiaries or the Purchaser is a party or by which either
of them or any of their respective properties or assets may be bound (the
"Parent and Purchaser Agreements") or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Parent, any of its
Subsidiaries or any of their respective properties or assets, excluding from the
foregoing clauses (ii), (iii) and (iv) such violations, breaches or defaults
which would not, individually or in the aggregate have a Material Adverse Effect
on the Parent or prevent or substantially delay the consummation of the
transactions contemplated hereby. Section 4.3(b) of the Parent Disclosure
Schedule sets forth a list of all third party consents and approvals required to
be obtained under the Parent and Purchaser Agreements prior to the consummation
of the transactions contemplated by this Agreement the failure of which to
obtain would have, individually or in the aggregate, a Material Adverse Effect
on the Parent.
Section 4.4. Reports and Financial Statements. The Parent has
--------------------------------
previously furnished or otherwise made available to the Company true and
complete copies of:
(a) the Parent's Annual Reports on Form 10-K filed with the SEC for
each of the years ended December 31, 1996 and 1997;
(b) the Parent's Quarterly Report on Form 10-Q filed with the SEC for
the quarters ended March 31, 1997, June 30, 1997 and September 30, 1997;
(c) each definitive proxy statement filed by the Parent with the SEC
since December 31, 1996;
(d) each final prospectus filed by the Parent with the SEC since
December 31, 1996, except any final prospectus on Form S-8; and
(e) all Current Reports on Form 8-K filed by the Parent with the SEC
since January 1, 1997.
As of their respective dates, such reports, proxy statements and
prospectuses (collectively with any amendments, supplements and exhibits
thereto, the "Parent SEC Reports") (i) complied as to form in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act and the rules and regulations promulgated thereunder, and (ii) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or
32
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Except to the extent that
information contained in any Parent SEC Report was amended or was superseded by
a later filed Parent SEC Report, none of the Parent SEC Reports contains any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. None
of the Parent's Subsidiaries is required to file any forms, reports or other
documents with the SEC. The audited consolidated financial statements and
unaudited consolidated interim financial statements included in the Parent SEC
Reports (including any related notes and schedules) fairly present the financial
position of the Parent and its consolidated Subsidiaries as of the dates thereof
and the results of operations and cash flows for the periods or as of the dates
then ended (subject, in the case of the unaudited interim financial statements,
to normal year-end adjustments), in each case in accordance with past practice
and GAAP consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto). Since January 1, 1996, the Parent has timely
filed all reports, registration statements and other filings required to be
filed by it with the SEC under the rules and regulations of the SEC.
Section 4.5. No Undisclosed Liabilities. Neither the Parent nor any
--------------------------
of its Subsidiaries has any liabilities or obligations of any nature, whether or
not accrued, contingent or otherwise, and there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such a liability or obligation, except (a) liabilities or obligations
reflected in the Parent SEC Reports and (b) liabilities or obligations which
would not, individually or in the aggregate, have a Material Adverse Effect on
the Parent.
Section 4.6. No Violation of Law. The businesses of the Parent and
-------------------
its Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity (provided that no representation or
warranty is made in this Section 4.6 with respect to Environmental Laws) except
(a) as described in the Parent SEC Reports filed prior to the date hereof and
(b) for violations or possible violations which would not, individually or in
the aggregate, have a Material Adverse Effect on the Parent.
Section 4.7. Environmental Matters.
---------------------
(a) Each of the Parent and its Subsidiaries has obtained all
33
Environmental Permits, except for such failures to have Environmental Permits
which, individually or in the aggregate, are not reasonably expected to have a
Material Adverse Effect on the Parent. Each of such Environmental Permits is in
full force and effect, and each of the Parent and its Subsidiaries is in
compliance with the terms and conditions of all such Environmental Permits and
with all applicable Environmental Laws, except for such exceptions as would not,
individually or in the aggregate, have a Material Adverse Effect on the Parent.
(b) There is no Environmental Claim pending, or to the best knowledge
of the Parent threatened, against the Parent or any of its Subsidiaries, or to
the best knowledge of the Parent against any Person whose liability for such
Environmental Claim the Parent or any of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law, that would,
individually or in the aggregate, have a Material Adverse Effect on the Parent.
(c) Except as set forth in Section 4.7(c) of the Parent Disclosure
Schedule, to the best knowledge of the Parent, there are no past or present
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the release, threatened release or presence of any Hazardous
Material, that have resulted in any Environmental Claim against the Parent or
any of its Subsidiaries, or to the best knowledge of the Parent against any
Person whose liability for any Environmental Claim the Parent or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law, except for such liabilities which would not, individually or
in the aggregate, have a Material Adverse Effect on the Parent.
(d) To the best knowledge of the Parent, no site or facility now or
previously owned, operated or leased by the Parent or any of its Subsidiaries is
listed or proposed for listing on the National Priorities List promulgated
pursuant to CERCLA.
(e) No Liens have arisen under or pursuant to any Environmental Law on
any site or facility owned, operated or leased by the Parent or any of its
Subsidiaries, except for such Liens which would not, individually or in the
aggregate, have a Material Adverse Effect on the Parent, and no action of any
Governmental Entity has been taken or, to the best knowledge of the Parent, is
in process which could subject any of such properties to such Liens except for
any such action which would not, individually or in the aggregate, have a
Material Adverse Effect on the Parent.
34
Section 4.8. Employee Benefit Plans; ERISA.
-----------------------------
(a) Except as described in the Parent SEC Reports or as would not
have a Material Adverse Effect on the Parent, (i) all Parent Employee Benefit
Plans (as hereinafter defined) are in compliance with all applicable
requirements of law, including ERISA (as hereinafter defined) and the Code, and
(ii) neither the Parent nor any of its Subsidiaries nor any ERISA Affiliate has
any liabilities or obligations with respect to any such Parent Employee Benefit
Plans, whether accrued, contingent or otherwise, nor to the best knowledge of
the Parent, are any such liabilities or obligations expected to be incurred.
Except as described in the Parent SEC Reports or as set forth in Section 4.8(a)
of the Parent Disclosure Schedule, the execution of, and performance of the
transactions contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
Parent Employee Benefit Plan that will or may result in any payment or any
continuation benefit under COBRA (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 policies applicable to the Parent or any of its Subsidiaries are the
policies specifically described in Section 4.8(a) of the Parent Disclosure
Schedule.
(b) With respect to each of its Plans, the Parent has heretofore
delivered or otherwise made available to the Company complete and correct copies
of each of the following documents, as applicable: (i) a copy of the Plan; (ii)
a copy of the most recent annual report; (iii) a copy of the most recent
actuarial report; (iv) a copy of the most recent Summary Plan Description and
all material modifications; (v) a copy of the trust or other funding agreement;
and (vi) the most recent determination letter received from the IRS with respect
to each Plan that is intended to be qualified under Section 401 of the Code and
all notices of reportable events received following receipt of such letter.
(c) No liability under Title IV of ERISA has been incurred by the
Parent or any ERISA Affiliate within the past twelve years that has not been
satisfied in full. To the best knowledge of the Parent, no condition exists
that presents a material risk to the Parent, any of its Subsidiaries or any
ERISA Affiliate of incurring a liability under such Title. The PBGC has not
instituted proceedings to terminate any of the Plans, and no condition exists
that presents a material risk that such proceedings will be instituted. Except
as otherwise disclosed
35
in the documents delivered or otherwise made available pursuant to Section
4.8(b), with respect to each of the Plans that is subject to Title IV of ERISA,
the present value of accrued benefits under such Plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such Plan's actuary with respect to such Plan, did not, as of its
latest valuation date, exceed the then current value of the assets of such Plan
allocable to such accrued benefits, and there have been no changes since such
latest valuation date which would cause the present value of such accrued
benefits to exceed the current value of such assets. None of the Plans or any
trust established thereunder has incurred any "accumulated funding deficiency"
(as defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each of the Plans
ended prior to the date of this Agreement. None of the Plans is a "multiemployer
plan," as such term is defined in Section 3(37) of ERISA. Each of the Plans that
is intended to be "qualified" within the meaning of Section 401(a) of the Code
is so qualified and the trusts maintained thereunder are exempt from taxation
under Section 501(a) of the Code. Except as set forth in Section 4.8(c) of the
Parent Disclosure Schedule, no Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect to
current or former employees after retirement or other termination of service
(other than coverage mandated by applicable law or benefits, the full cost of
which is borne by the current or former employee). Except as set forth in
Section 4.8(c) of the Parent Disclosure Schedule, there are no pending or
threatened claims by or on behalf of any Plan, by any employee or beneficiary
covered under any such Plan, or otherwise involving any such Plan (other than
routine claims for benefits).
(d) As used in this Agreement: "Parent Employee Benefit Plan" means
any Plan entered into, established, maintained, sponsored, contributed to or
required to be contributed to by the Parent, any of its Subsidiaries or ERISA
Affiliates for the benefit of the current or former employees or directors of
the Parent or any of its Subsidiaries and existing on the date of this Agreement
or at any time subsequent thereto and on or prior to the Effective Time and, in
the case of a Plan which is subject to ERISA, Section 412 of the Code or Title
IV of ERISA, at any time during the twelve-year period preceding the date of
this Agreement.
Section 4.9. Absence of Certain Changes or Events. Except as
------------------------------------
disclosed in the Parent SEC Reports, (a) since December 31, 1997 the businesses
of the Parent and its Subsidiaries have been conducted in the ordinary course
36
consistent with past practice, and (b) there has not been any event, occurrence,
development or state of circumstances or facts that has had, or is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
the Parent.
Section 4.10. Litigation. Except as disclosed in the Parent SEC
----------
Reports, there are no actions, suits or proceedings pending (or, to the best
knowledge of the Parent, threatened) against or affecting the Parent or its
Subsidiaries, or any of their respective properties at law or in equity, by or
before any Governmental Entity which, individually or in the aggregate, have a
Material Adverse Effect on the Parent or would prevent or substantially delay
any of the transactions contemplated by this Agreement or otherwise prevent the
Parent from performing its obligations hereunder.
Section 4.11. Proxy Statement/Prospectus; Registration Statement.
--------------------------------------------------
The Registration Statement and Form S-4 to be filed with the SEC by the Parent
in connection with the issuance of the Parent Common Stock pursuant to the
Merger, as amended or supplemented from time to time (as so amended and
supplemented, the "Registration Statement"), and any other documents to be filed
by the Parent with the SEC or any other Government Entity in connection with the
Merger and the other transactions contemplated hereby will (in the case of the
Registration Statement and any such other documents filed with the SEC under the
Securities Act or the Exchange Act) comply as to form in all material respects
with the requirements of the Exchange Act and the Securities Act, respectively,
and will not, on the date of filing with the SEC or, in the case of the
Registration Statement, at the time it becomes effective under the Securities
Act, on the date the Proxy Statement is first mailed to stockholders of the
Company, 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 made therein, in the light of the circumstances under which they are
made, not misleading or shall, at the time of the Special Meeting or at the
Effective Time, omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Special Meeting which shall have become false or misleading in
any material respect. Notwithstanding the foregoing, neither the Parent nor the
Purchaser makes any representation or warranty with respect to the statements
made in any of the foregoing documents based on and in conformity with
information supplied by or on behalf of the Company specifically for inclusion
therein.
Section 4.12. Intellectual Property.
---------------------
37
(a) The Parent and its Subsidiaries own or have valid rights to use
all items of Intellectual Property utilized in the conduct of the business of
the Parent and its Subsidiaries as presently conducted, free and clear of all
Liens with such exceptions as would not have, individually or in the aggregate,
a Material Adverse Effect on the Parent.
(b) To the best knowledge of the Parent, (i) neither the Parent nor
any Subsidiary is in default (or with the giving of notice or lapse of time or
both, would be in default) under any license to use such Intellectual Property,
(ii) the Intellectual Property is not being infringed by any third party, (iii)
neither the Parent nor any Subsidiary is infringing any Intellectual Property of
any third party with such exceptions as would not have, individually or in the
aggregate, a Material Adverse Effect on the Parent, and (iv) within the last
three years neither the Parent nor any Subsidiary has received any claim or
notice of infringement by any third party except as would not, individually or
in the aggregate, have a Material Adverse Effect on the Parent.
Section 4.13. Tax Matters.
-----------
(a) All federal, state, local and foreign Tax Returns required to be
filed by or on behalf of the Parent, each of its Subsidiaries, and each
affiliated, combined, consolidated or unitary group of which the Parent or any
of its Subsidiaries (i) is a member (a "Current Parent Group") or (ii) was a
member during any years not closed with the IRS for U.S. federal income Tax
purposes but is not currently a member, but only insofar as any such Tax Return
relates to a taxable period or portion thereof ending on a date within the last
six years during which the Parent or such Subsidiary was a member of such
affiliated, combined, consolidated or unitary group for purposes of the
relevant Tax (a "Past Parent Group," and together with Current Parent Groups, a
"Parent Affiliated Group") have been timely filed or requests for extensions
have been timely filed and any such extension has been granted and has not
expired, and all such filed Tax Returns are complete and accurate except to the
extent any failure to file or any inaccuracies in filed Tax Returns would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
(it being understood that the representations made in this Section 4.13, to the
extent that they relate to Past Parent Groups, are made to the best knowledge of
the Parent and only with respect to taxable periods or portions thereof ending
on a date within the last six years during which the Parent or any of its
Subsidiaries was a member of such affiliated,
38
combined, consolidated or unitary group for purposes of the relevant Tax). All
Taxes due and owing by the Parent, any Subsidiary of the Parent or any Parent
Affiliated Group have been paid, or adequately reserved for, except to the
extent any failure to pay or reserve would not, individually or in the
aggregate, have a Material Adverse Effect on the Parent. There is no audit,
examination, deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by the Parent, any
Subsidiary of the Parent or any Parent Affiliated Group which if determined
adversely would have a Material Adverse Effect on the Parent. All assessments
for Taxes due and owing by the Parent, any Subsidiary of the Parent or any
Parent Affiliated Group with respect to completed and settled examinations or
concluded litigation have been paid. Section 4.13(a) of the Parent Disclosure
Schedule sets forth (i) the taxable years of the Parent for which the statutes
of limitations with respect to U.S. federal income Taxes have not expired and
(ii) with respect to federal income Taxes for such years, those years for which
examinations have been completed, those years for which examinations are
presently being conducted, and those years for which examinations have not yet
been initiated. Neither the Parent nor any of its Subsidiaries has any liability
under Treasury Regulation Section 1.1502-6 for U.S. federal income Taxes of any
Person other than the Parent and its Subsidiaries. The Parent and each of its
Subsidiaries have complied in all material respects with all rules and
regulations relating to the withholding of Taxes, except to the extent any such
failure to comply would not, individually or in the aggregate, have a Material
Adverse Effect on the Parent.
(b) Neither the Parent nor any Subsidiary of the Parent has (i)
entered into a closing agreement or other similar agreement with a taxing
authority relating to Taxes of the Parent or any Subsidiary of the Parent with
respect to a taxable period for which the statute of limitations is still open,
or (ii) with respect to U.S. federal income Taxes, granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any income Tax, in either case, that is still outstanding. There
are no Liens relating to Taxes upon the assets of the Parent or any Subsidiary
of the Parent other than Liens relating to Taxes not yet due. Neither the
Parent nor any Subsidiary of the Parent is a party to any agreement relating to
allocating or sharing of Taxes which has not been disclosed in its Tax Returns.
No consent under Section 341(f) of the Code has been filed with respect to the
Parent or any Subsidiary of the Parent.
Section 4.14. Opinion of Financial Advisor. The Board of Directors
----------------------------
of the Parent has received the opinion of Credit Suisse First Boston
Corporation, dated the date of this Agreement, substantially to the effect that
the
39
consideration to be offered by the Parent in the Offer and the Merger, taken
together, is fair to the Parent from a financial point of view.
Section 4.15. Employment Matters. Neither the Parent nor any of its
------------------
Subsidiaries has experienced any work stoppages, strikes, collective labor
grievances, other collective bargaining disputes or claims of unfair labor
practices in the last five years which would, individually or in the aggregate,
have a Material Adverse Effect on the Parent. To the best knowledge of the
Parent, there is no organizational effort presently being made or threatened by
or on behalf of any labor union with respect to employees of the Parent or any
of its Subsidiaries.
Section 4.16. Ownership of Shares. As of the date hereof, neither
-------------------
the Parent nor the Purchaser is an "interested stockholder" of the Company, as
such term is defined in Section 203 of the DGCL.
ARTICLE V
Covenants and Agreements
-------------------------
Section 5.1. Conduct of Business by the Company. The Company agrees
----------------------------------
that, from and after the date hereof and prior to the Effective Time or the
date, if any, on which this Agreement is earlier terminated pursuant to Section
7.1 (the "Termination Date"), and except as may be agreed in writing by the
other parties hereto or as may be expressly permitted pursuant to this
Agreement, the Company:
(i) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their ordinary and usual course of
business in substantially the same manner as heretofore conducted;
(ii) shall use its reasonable best efforts, and cause each of
its Subsidiaries to use its reasonable best efforts, to preserve intact its
business organization and goodwill, keep available the services of its
current officers and other key employees and preserve its relationships
with those persons having business dealings with the Company and its
Subsidiaries;
(iii) shall confer at such times as the Parent may reasonably
request with one or more representatives of the Parent to report material
40
operational matters and the general status of ongoing operations;
(iv) shall notify the Parent of any emergency or other change
in the normal course of its or its Subsidiaries' respective businesses or
in the operation of its or its Subsidiaries' respective properties and of
any complaints or hearings (or communications indicating that the same may
be contemplated) of any Governmental Entity if such emergency, change,
complaint, investigation or hearing would have a Material Adverse Effect on
the Company;
(v) shall not, and shall not permit any of its Subsidiaries
that is not wholly owned to, authorize or pay any dividends on or make any
distribution with respect to its outstanding shares of stock;
(vi) shall not, and shall not permit any of its Subsidiaries
to, except as otherwise provided in this Agreement, establish, enter into
or amend any Plan or increase the compensation payable or to become payable
or the benefits provided to its officers or employees, subject to such
exceptions as are set forth in Section 5.1(vi) of the Company Disclosure
Schedule;
(vii) except as set forth in Section 5.1(vii) of the Company
Disclosure Schedule, shall not, and shall not permit any of its
Subsidiaries to, authorize, propose or announce an intention to authorize
or propose, or enter into an agreement with respect to, any merger,
consolidation or business combination (other than the Merger), any
acquisition of a material amount of assets or securities, any disposition
of a material amount of assets or securities, except (x) for the sale of
goods and products manufactured by the Company and held for sale in the
ordinary course (for purposes of this Section 5.1(vii) "material" shall
mean any amount in excess of $1 million) and (y) as provided in the Profit
and Capital Plan of 1998 previously provided to the Parent and not in
excess of $150 million in the aggregate;
(viii) shall not, and shall not permit any of its Subsidiaries
to, propose or adopt any amendments to its certificate of incorporation or
by-laws (or other similar organizational documents);
(ix) shall not, and shall not permit any of its Subsidiaries
to, issue or authorize the issuance of, or agree to issue or sell any
shares of
41
capital stock of any class (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise), except for the issuance of (1) not more than 3,161,525 Shares
upon the exercise of employee stock options granted under, and 319,610
Shares issuable pursuant to, the 1993 Plan referred to in clause (ii) of
Section 3.2, (2) not more than 571,475 Shares upon the exercise of employee
stock options granted under, and 190,564 Shares issuable pursuant to, the
1995 Plan referred to in clause (iii) of Section 3.2, (3) not more than
80,000 Shares upon the exercise of stock options granted under, and 20,750
Shares issuable pursuant to, The Alumax Inc. Non-Employee Directors' Stock
Compensation Plan referred to in clause (iv) of Section 3.2, (4) not more
than 74,148 Shares issuable pursuant to The Alumax Inc. Non-Employee
Directors' Compensation Plan referred to in clause (iv) of Section 3.2, (5)
not more than 623,350 Shares upon the exercise of options granted under,
and 26,603 Shares issuable pursuant to, employee deferred compensation
arrangements referred to in clause (vi) of Section 3.2, and (6) not more
than 180,000 Shares issuable in connection with regularly scheduled
matching contributions to the Alumax Inc. Thrift Plans referred to in
clause (v) of Section 3.2;
(x) shall not, and shall not permit any of its Subsidiaries
to, reclassify, combine, split, purchase or redeem any shares of its
capital stock or purchase or redeem any rights, warrants or options to
acquire any such shares;
(xi) other than in the ordinary course of business consistent
with past practice, shall not, and shall not permit any of its Subsidiaries
to, (a) incur, assume or prepay any indebtedness or any other material
liabilities or issue any debt securities, or (b) assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently
or otherwise) for the obligations of any other person, other than
guarantees of obligations of wholly owned Subsidiaries of the Company in
the ordinary course of business;
(xii) shall not, and shall not permit any of its Subsidiaries
to, (a) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets (including
securitizations), other than in the ordinary course of business consistent
with past practice; (b) modify, amend or terminate any of its material
contracts or waive, release or assign any material rights (contract or
other); or (c) permit any insurance policy naming it as a beneficiary or a
loss
42
payable payee to lapse, be cancelled for reasons within the Company's
control or expire unless a new policy with substantially identical coverage
is in effect as of the date of lapse, cancellation or expiration;
(xiii) shall not, and shall not permit any of its Subsidiaries
to, (a) make any material Tax election or settle or compromise any material
Tax liability or (b) change any of the accounting methods used by it unless
required by GAAP; and
(xiv) shall not, and shall not permit any of its Subsidiaries
to, agree, in writing or otherwise, to take any of the foregoing actions or
knowingly take any action which would (y) make any representation or
warranty in Article III hereof untrue or incorrect in any material respect
or (z) result in any of the conditions to the Offer set forth in Annex A
hereto or any of the conditions to the Merger set forth in Article VI
hereof not being satisfied.
Section 5.2. Access; Confidentiality.
-----------------------
(a) Except for competitively sensitive information as to which
access, use and treatment is covered by Section 5.2(c), the Company shall (and
shall cause each of its Subsidiaries to) afford to the officers, employees,
accountants, counsel and other authorized representatives of the Parent
reasonable access on reasonable prior notice during normal business hours,
throughout the period prior to the earlier of the Effective Time or the
Termination Date, to all of its properties, offices, employees, contracts,
commitments, books and records (including but not limited to Tax Returns) and
any report, schedule or other document filed or received by it pursuant to the
requirements of federal or state securities laws and shall (and shall cause each
of its Subsidiaries to) furnish promptly to the Parent such additional financial
and operating data and other information as to its and its Subsidiaries'
respective businesses and properties as the Parent may from time to time
reasonably request. The Parent and the Purchaser will make all reasonable
efforts to minimize any disruption to the businesses of the Company and its
Subsidiaries which may result from the requests for data and information
hereunder. No investigation pursuant to this Section 5.2(a) shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
(b) Except for competitively sensitive information as to which
43
access, use and treatment is covered by Section 5.2(c), the Parent shall (and
shall cause each of its Subsidiaries to) afford to the officers, employees,
accountants, counsel and other authorized representatives of the Company
reasonable access on reasonable prior notice during normal business hours,
throughout the period prior to the earlier of the Effective Time or the
Termination Date, to all of its properties, offices, employees, contracts,
commitments, books and records (including but not limited to Tax Returns) and
any report, schedule or other document filed or received by it pursuant to the
requirements of federal or state securities laws and shall (and shall cause each
of its Subsidiaries to) furnish promptly to the Company such additional
financial and operating data and other information as to its and its
Subsidiaries' respective businesses and properties as the Company may from time
to time reasonably request. The Company will make all reasonable efforts to
minimize any disruption to the businesses of the Parent and its Subsidiaries
which may result from the requests for data and information hereunder. No
investigation pursuant to this Section 5.2(b) shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto.
(c) As promptly as possible following the date hereof the parties
intend to establish an appropriate protocol which shall remain in place until
the expiration of the applicable waiting periods under the HSR Act pursuant to
which each party may disclose to a limited number of representatives of the
other party confidential information which is competitively sensitive in nature.
(d) The Parent and the Company will not, and will cause their
respective officers, employees, accountants, counsel and representatives not to,
use any information obtained pursuant to this Section 5.2 for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement. Subject to the requirements of law, pending consummation of the
transactions herein contemplated, each of the Parent and the Company will keep
confidential, and will cause their respective officers, employees, accountants,
counsel and representatives to keep confidential, all information and documents
obtained pursuant to this Section 5.2 unless such information (i) was already
known to it, (ii) becomes available to it from other sources not known by it to
be bound by a confidentiality obligation, (iii) is independently acquired by it
as a result of work carried out by any of its employees or representatives to
whom no disclosure of such information has been made, (iv) is disclosed with the
prior written approval of the other party or (v) is or becomes readily
ascertainable from published information or trade sources. Upon any termination
of this Agreement, each party will collect and
44
deliver to the other party all documents obtained by it or any of its officers,
employees, accountants, counsel and representatives then in their possession and
any copies thereof.
Section 5.3. Special Meeting, Proxy Statement, Registration Statement.
--------------------------------------------------------
(a) As promptly as practicable following the date of this Agreement, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Special Meeting") for the purposes of considering and
taking action upon the approval of the Merger and the approval and adoption of
this Agreement;
(b) As promptly as practicable following the date of this Agreement, the
Company shall:
(i) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement and (x) obtain and
furnish the information required to be included by the SEC in the Proxy
Statement (as hereinafter defined) and, after consultation with the Parent,
respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive proxy or
information statement, including any amendment or supplement thereto (the
"Proxy Statement") to be mailed to its stockholders at the earliest
practicable date after the Registration Statement is declared effective by
the SEC, provided that no amendment or supplement to the Proxy Statement
will be made by the Company without consultation with Parent and its
counsel and (y) use its reasonable best efforts to obtain the necessary
approvals of the Merger and this Agreement by its stockholders; and
(ii) unless this Agreement has been terminated in accordance with
Article VII, include in the Proxy Statement the recommendation of the Board
that stockholders of the Company vote in favor of the approval of the
Merger and the approval and adoption of this Agreement; provided, however,
that if the Board of Directors of the Company, based on the advice of
outside legal counsel, determines in good faith that the amendment or
withdrawal of its recommendation is necessary for the Board of Directors of
the Company to avoid breaching its fiduciary
45
duties to the Company's stockholders under applicable law, then any such
amendment or withdrawal shall not constitute a breach of this Agreement.
(c) As promptly as practicable following the date of this Agreement,
the Parent shall prepare and file with the SEC the Registration Statement, in
which the Proxy Statement shall be included as a prospectus, and shall use its
reasonable best efforts to have the Registration Statement declared effective by
the SEC as promptly as practicable. The Parent shall obtain and furnish the
information required to be included by the SEC in the Registration Statement
and, after consultation with the Company, respond promptly to any comments made
by the SEC with respect to the Registration Statement and cause the prospectus
included therein, including any amendment or supplement thereto, to be mailed to
the Company's stockholders at the earliest practicable date after the
Registration Statement is declared effective by the SEC. The Parent shall also
take any action required to be taken under state blue sky or other securities
laws in connection with the issuance of Parent Common Stock in the Merger.
(d) The Parent shall vote, or cause to be voted, all of the Shares
then owned by it, the Purchaser or any of its other Subsidiaries in favor of the
approval and adoption of this Agreement.
Section 5.4. Reasonable Best Efforts; Further Assurances.
-------------------------------------------
(a) Subject to the terms and conditions of this Agreement and
applicable law, each of the parties shall act in good faith and use reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement as soon as
practicable. Without limiting the foregoing, the parties shall (and shall cause
their respective subsidiaries, and use reasonable best efforts to cause their
respective affiliates, directors, officers, employees, agents, attorneys,
accountants and representatives, to) consult and fully cooperate with and
provide assistance to each other in (i) the preparation and filing with the SEC
of the Offer Documents, the Schedule 14D-9, the preliminary Proxy Statement, the
Proxy Statement and the Registration Statement and all necessary amendments or
supplements thereto; (ii) obtain all necessary consents, approvals, waivers,
licenses, permits, authorizations, registrations, qualifications or other
permissions or actions by, and give all necessary notices to and make all
necessary filings with and applications and submissions to, any Governmental
Entity or other Person as soon as reasonably practicable after filing; and (iii)
provide all such information concerning such
46
party, its Subsidiaries and its officers, directors, employees, partners and
affiliates as may be necessary or reasonably requested in connection with any of
the foregoing. Prior to making any application to or filing with a Governmental
Entity or other entity in connection with this Agreement (other than filing
under the HSR Act), each party shall provide the other party with drafts thereof
and afford the other party a reasonable opportunity to comment on such drafts.
(b) In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each of the parties to this Agreement shall use their
reasonable best efforts to take all such action.
(c) Notwithstanding the foregoing, neither the Parent nor the
Purchaser shall be obligated to enter into any "hold-separate" agreement or
other agreement with respect to the disposition of any assets or businesses of
the Parent or any of its Subsidiaries or the Company or any of its Subsidiaries
in order to obtain clearance from the Federal Trade Commission or the Antitrust
Division of the Department of Justice or any state antitrust or competition
authorities to proceed with the consummation of the transactions contemplated by
this Agreement.
(d) The Company, the Parent and the Purchaser each shall keep the
other apprised of the status of matters relating to completion of the
transactions contemplated hereby, including promptly furnishing the other with
copies of notices or other communications received by the Parent, the Purchaser
or the Company, as the case may be, or any of their respective Subsidiaries
(other than in any such case with respect to Acquisition Proposals), from any
third party and/or any Governmental Entity with respect to the transactions
contemplated by this Agreement.
(e) The Company, the Parent and the Purchaser shall each use their
reasonable best efforts to reduce or eliminate any amounts specified in Section
3.14(c) of the Company Disclosure Schedule, it being understood that the
foregoing shall not require the Company or any of its Subsidiaries to amend any
Plan, terminate or retire any employee or to otherwise adversely affect the
rights of any employee.
Section 5.5. Employee Stock Options and Other Employee Benefits.
--------------------------------------------------
47
(a) Simultaneously with the Merger, (i) each outstanding option (the
"Company Stock Options") to purchase or acquire a share of Company Common Stock
under employee incentive or benefit plans, programs or arrangements and non-
employee director plans presently maintained by the Company (the "Company Option
Plans") shall be converted into an option to purchase the number of shares of
Parent Common Stock equal to the product of (x) the Exchange Ratio multiplied by
(y) the number of shares of Company Common Stock which could have been issued
prior to the Effective Time upon the exercise of such option, at an exercise
price per share (rounded upward to the nearest cent) equal to the exercise price
for each share of Company Common Stock subject to such option divided by the
Exchange Ratio, and all references in each such option to the Company shall be
deemed to refer to the Parent, where appropriate, provided, however, that with
respect to any Option which is an "incentive stock option", within the meaning
of Section 422 of the Code, the adjustments provided in this Section shall, if
applicable, be modified in a manner so that the adjustments are consistent with
requirements of Section 424(a) of the Code, and (ii) the Parent shall assume the
obligations of the Company under the Company Option Plans. The other terms of
each such option, and the plans under which they were issued, shall continue to
apply in accordance with their terms, including any provisions providing for
acceleration. At or prior to the Effective Time, the 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 Company Stock Options
assumed by it in accordance with this Section. As soon as practicable after the
Effective Time, if necessary, the Parent shall file a registration statement on
Form S-8 (or any successor or other appropriate forms), or another appropriate
form with respect to the Parent Common Stock subject to such Company Stock
Options, and shall use its best efforts to maintain the effectiveness of such
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as the Company Stock Options remain
outstanding.
(b) For the period through and including December 31, 1999, the Parent
shall, or shall cause the Surviving Corporation to, maintain employee benefit
plans, programs and arrangements which are, in the aggregate, for the employees
who were active full-time employees of the Company or any Subsidiary immediately
prior to the Effective Time and continue to be active full-time employees of the
Purchaser, the Surviving Corporation, any Subsidiary or any other affiliate of
the Purchaser, no less favorable than those provided by the Company and any
Subsidiary immediately prior to the Effective Time. From and
48
after the Effective Time, for purposes of determining eligibility, vesting and
entitlement to vacation and severance and other benefits for employees actively
employed full-time by the Company or any Subsidiary immediately prior to the
Effective Time under any compensation, severance, welfare, pension, benefit,
savings or other Plan of the Parent or any of its Subsidiaries in which active
full-time employees of the Company and any Subsidiary become eligible to
participate (whether pursuant to this Section 5.5(b) or otherwise), service with
the Company or any Subsidiary (whether before or after the Effective Time) shall
be credited as if such service had been rendered to the Parent or such
Subsidiary. Parent will, and will cause the Surviving Corporation to, observe
all employee benefit obligations to current and former employees under the
Company Employee Benefit Plans existing as of the Effective Time and all
employment or severance agreements, plans or policies of the Company and its
Subsidiaries, copies of which have been made available to Parent pursuant to
Section 3.8, in accordance with their terms.
Section 5.6. Takeover Statute. If any "fair price," "moratorium,"
----------------
"control share acquisition" or other form of anti-takeover statute or regulation
shall become applicable to the transactions contemplated hereby, each of the
Company, the Parent and the Purchaser and the members of their respective Boards
of Directors shall grant such approvals and take such actions as are reasonably
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such statute or regulation on the
transactions contemplated hereby.
Section 5.7. Solicitation by the Company.
---------------------------
(a) Nothing contained in this Agreement shall prohibit the Board of
Directors of the Company from furnishing information to, or entering into
discussions with, any Person that makes a bona fide Acquisition Proposal. The
term "Acquisition Proposal" as used herein means any tender or exchange offer
involving the capital stock of the Company or any of its Subsidiaries, any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the business or assets of, the Company or any of its
Subsidiaries, any proposal or offer with respect to any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or
restructuring of or involving the Company or any of its Subsidiaries, or any
proposal or offer with respect to any other transaction similar to any of the
foregoing with respect to the Company or
49
any of its Subsidiaries, other than the transactions contemplated by this
Agreement. Except for the transactions contemplated by this Agreement, as of the
date of this Agreement, neither the Company nor any of its officers, directors,
employees, financial advisors, attorneys or other representatives, is engaged
in, or is a party to, any discussions or negotiations, or is currently
furnishing any information with respect to the Company, relating to, or which
could be reasonably expected to lead to, an Acquisition Proposal.
(b) Nothing contained in this Agreement shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if the Board of Directors of the Company determined in
good faith, after consultation with outside legal counsel, that it is necessary
to do so in order to avoid breaching its fiduciary duties under applicable law;
provided, however, that neither the Company nor its Board of Directors nor any
committee thereof shall withdraw or modify, or propose publicly to withdraw or
modify, its position with respect to this Agreement, the Offer or the Merger, or
approve or recommend, or propose publicly to approve or recommend, an
Acquisition Proposal, except if, and only to the extent that, the Board of
Directors of the Company, based on the advice of outside legal counsel,
determines in good faith that such Acquisition Proposal is a Superior Proposal
(as hereinafter defined) and that such action is necessary for the Board of
Directors of the Company to avoid breaching its fiduciary duties to the
Company's stockholders under applicable law. Nothing herein shall require the
Board of Directors of the Company to violate applicable laws.
Section 5.8. Public Announcements. The Parent and the Company agree
--------------------
that neither one of them will issue any press release or otherwise make any
public statement or respond to any press inquiry with respect to this Agreement
or the transactions contemplated hereby or thereby without the prior approval of
the other party (which approval will not be unreasonably withheld), except as
may be required by applicable law or the rules of the New York Stock Exchange,
Inc. (the "NYSE").
Section 5.9. Indemnification and Insurance.
-----------------------------
From and after the Effective Time, the Parent will indemnify and hold
harmless each present and former director and officer of the Company and its
subsidiaries (the "Indemnified Parties"), against any costs or expenses
(including
50
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or occurring at
or prior to the Effective Time, to the fullest extent that the Company or such
subsidiary would have been permitted under applicable law and the Certificate of
Incorporation or Bylaws of the Company or such subsidiary in effect on the date
hereof to indemnify such person (and the Parent shall also advance expenses as
incurred to the fullest extent permitted under applicable law provided the
Person to whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such Person is not entitled to
indemnification).
Section 5.10. Additional Reports and Information.
----------------------------------
(a) The Company shall furnish to the Parent copies of all reports of
the type referred to in Section 3.4 which it files with the SEC on or after the
date hereof, and the Company represents and warrants that as of the respective
dates thereof, such reports will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements and
the unaudited consolidated interim financial statements included in such reports
(including any related notes and schedules) will fairly present the financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the results of operations and cash flows or other information
included therein for the periods or as of the date then ended (subject, in the
case of the interim financial statements, to normal, year-end adjustments and
the absence of footnotes), in each case in accordance with past practice and
GAAP consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto).
(b) The Parent shall furnish to the Company copies of all reports of
the type referred to in Section 4.4 which it files with the SEC on or after the
date hereof, and the Parent represents and warrants that as of the respective
dates thereof, such reports will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements and
the unaudited consolidated interim financial statements included in such reports
(including any related notes and schedules) will fairly present the financial
position of the Parent
51
and its consolidated Subsidiaries as of the dates thereof and the results of
operations and cash flows or other information included therein for the periods
or as of the date then ended (subject, in the case of the interim financial
statements, to normal, year-end adjustments and the absence of footnotes), in
each case in accordance with past practice and GAAP consistently applied during
the periods involved (except as otherwise disclosed in the notes thereto).
Section 5.11. Affiliates. At the time the Proxy Statement is mailed
----------
to stockholders of the Company, the Company shall deliver to the Parent a list
identifying, to the best of the Company's knowledge, all persons who are, at the
time of the Company Stockholder Approval, deemed to be "affiliates" of the
Company for purposes of Rule 145 under the Securities Act. The Company shall
advise the Parent of any additions or deletions to or from such list from time
to time thereafter. The Company shall use its reasonable best efforts to cause
each such person to deliver to the Parent at least 30 days prior to the Closing
Date a written agreement substantially in the form of Exhibit A to this
Agreement.
Section 5.12. NYSE Listing. The Parent shall use its best efforts to
------------
cause the shares of Parent Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, prior
to the Closing Date.
Section 5.13. Tax-Free Reorganization. The parties intend that the
-----------------------
transactions contemplated hereby qualify as a reorganization under Sections
368(a)(1)(A) and 368(a)(2)(D) of the Code; each party and its affiliates shall
use all reasonable efforts to cause such transactions to so qualify; neither
party nor any affiliate shall take any action that would cause such transactions
not to qualify as a reorganization under such Sections; and the parties will
take the position for all purposes that the transactions qualify as a
reorganization under such Sections.
Section 5.14. The Company Rights Plan. On the date of the
-----------------------
commencement of the Offer, (i) the Company will take all necessary action to
redeem all the preferred stock purchase rights outstanding under the Rights
Agreement, and (ii) shall provide the Parent with prompt notice that such action
has been taken.
ARTICLE VI
52
Conditions to the Merger
------------------------
Section 6.1. Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Merger. The respective obligations of each party to effect the Merger shall be
- ------
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) The Company Stockholder Approval shall have been obtained.
(b) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits the consummation of the Merger substantially
on the terms contemplated hereby or has the effect of making the acquisition of
Shares by the Parent or the Purchaser or any affiliate of either of them
illegal.
(c) The Parent or the Purchaser or any affiliate of either of them
shall have purchased Shares pursuant to the Offer, except that this condition
shall not apply if the Parent, the Purchaser or such affiliate shall have failed
to purchase Shares pursuant to the Offer in breach of their obligations under
this Agreement.
(d) The applicable waiting period under the HSR Act shall have expired
or been terminated.
(e) The shares of Parent Common Stock to be issued in the Merger shall
have been approved for listing on the NYSE, subject to official notice of
issuance.
(f) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act.
Section 6.2. Conditions to Obligation of the Parent and the Purchaser
--------------------------------------------------------
to Effect the Merger. The obligation of the Parent and the Purchaser to effect
- --------------------
the Merger shall be subject to the satisfaction at or prior to the Effective
Time of the following additional condition, unless waived in writing by the
Parent:
(a) Tax Opinion. The Parent shall have received an opinion of
-----------
Skadden, Arps, Slate, Meagher & Flom LLP, tax counsel to the Parent, dated as of
the Effective Time, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. The issuance
of such opinion
53
shall be conditioned upon the receipt by such tax counsel of customary
representation letters from each of the Parent, the Purchaser and the Company,
in each case, in form and substance reasonably satisfactory to such tax counsel.
Each such representation letter shall be dated on or before the date of such
opinion and shall not have been withdrawn or modified in any material respect.
Section 6.3. Conditions to Obligation of the Company to Effect the
-----------------------------------------------------
Merger. The obligation of the Company to effect the Merger shall be subject to
- ------
the satisfaction at or prior to the Effective Time of the following additional
condition, unless waived in writing by the Company:
(a) Tax Opinion. The Company shall have received an opinion of
-----------
Sullivan & Cromwell, tax counsel to the Company, dated as of the Effective Time,
to the effect that the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code. The issuance of such opinion shall be
conditioned upon the receipt by such tax counsel of customary representation
letters from each of the Parent, the Purchaser and the Company, in each case, in
form and substance reasonably satisfactory to such tax counsel. Each such
representation letter shall be dated on or before the date of such opinion and
shall not have been withdrawn or modified in any material respect.
Section 6.4. Additional Conditions to the Obligations of the Parent
------------------------------------------------------
and the Purchaser to Effect the Merger. In the event that the Purchaser
- --------------------------------------
purchases a number of Shares in the Offer which is less than the 50% Share
Number, the obligation of the Parent and the Purchaser to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following conditions, unless waived in writing by the Parent or unless the
Company Stockholder Approval is obtained prior thereto, in which event such
conditions shall thereupon be deemed fulfilled:
(a) The representations and warranties of the Company set forth in
this Agreement shall be true and correct, ignoring for this purpose any
qualification as to materiality or Material Adverse Effect, as if such
representations or warranties were made as of the Effective Time, except for
such inaccuracies as, individually or in the aggregate, would not have a
Material Adverse Effect on the Company.
(b) The Company shall have performed and complied in all material
respects with all agreements, obligations and conditions required by this
54
Agreement to be performed and complied with by it on or prior to the Closing
Date.
(c) The Company shall have furnished a certificate of an officer to
evidence compliance with the conditions set forth in Sections 6.4(a) and (b) of
this Agreement.
Section 6.5. Additional Conditions to the Obligations of the Company
--------------------------------------------------------
to Effect the Merger. In the event that the Purchaser purchases a number of
- --------------------
Shares in the Offer which is less than the 50% Share Number, the obligation of
the Company to effect the Merger shall be subject to the fulfillment at or prior
to the Effective Time of the following conditions, unless waived in writing by
the Company or unless the Company Stockholder Approval is obtained prior
thereto, in which event such conditions shall thereupon be deemed fulfilled:
(a) The representations and warranties of the Parent and the Purchaser
set forth in this Agreement shall be true and correct, ignoring for this purpose
any qualification as to materiality or Material Adverse Effect, as if such
representations or warranties were made as of the Effective Time, except for
such inaccuracies as, individually or in the aggregate, would not have a
Material Adverse Effect on the Parent.
(b) The Parent and the Purchaser shall have performed and complied in
all material respects with all agreements, obligations and conditions required
by this Agreement to be performed and complied with by them on or prior to the
Closing Date.
(c) The Parent and the Purchaser shall have furnished a certificate of
their respective officers to evidence compliance with the conditions set forth
in Section 6.5(a) and (b) of this Agreement.
ARTICLE VII
Termination
-----------
Section 7.1. Termination. This Agreement may be terminated and the
-----------
other transactions contemplated herein abandoned at any time prior to the
Effective Time, whether before or after obtaining the Company Stockholder
55
Approval:
(a) by the mutual written consent of the Company, the Parent and the
Purchaser;
(b) by either the Parent or the Company if (i) (1) the Offer shall
have expired without any Shares being purchased pursuant thereto, or (2) the
Offer has not been consummated on or before September 30, 1998 (the "Termination
Date"); provided, however, that the right to terminate this Agreement pursuant
to this Section 7.1(b)(i) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Shares to have been purchased pursuant to the Offer; (ii)
a statute, rule, regulation or executive order shall have been enacted, entered
or promulgated prohibiting the consummation of the Offer or the Merger
substantially on the terms contemplated hereby; or (iii) an order, decree,
ruling or injunction shall have been entered permanently restraining, enjoining
or otherwise prohibiting the consummation of the Offer or the Merger
substantially on the terms contemplated hereby and such order, decree, ruling or
injunction shall have become final and non-appealable; provided further that the
Termination Date shall be extended by one business day for each business day
which elapses from March 16, 1998, until the date upon which the applicable
filings under the HSR Act are made by the Company with the appropriate
Governmental Entity;
(c) by the Parent, (i) if due to an occurrence or circumstance, other
than as a result of a breach by the Parent or the Purchaser of its obligations
hereunder, resulting in a failure to satisfy any condition set forth in Annex A
hereto, the Purchaser shall have (1) failed to commence the Offer within 30 days
following the date of this Agreement, or (2) terminated the Offer without having
accepted any Shares for payment thereunder; or (ii) if either the Parent or the
Purchaser is entitled to terminate the Offer as a result of the occurrence of
any event set forth in paragraph (e) of Annex A hereto;
(d) by the Company, upon approval of its Board of Directors, if due
to an occurrence or circumstance, other than as a result of a breach by the
Company of its obligations hereunder, that would result in a failure to satisfy
any of the conditions set forth in Annex A hereto, the Purchaser shall have
terminated the Offer without having accepted any Shares for payment thereunder;
(e) by the Company, if the Company receives a Superior
56
Proposal and the Board of Directors of the Company, based on the advice of
outside legal counsel, determines in good faith that such action is necessary
for the Board of Directors to avoid breaching its fiduciary duties to the
Company's stockholders under applicable law. The term "Superior Proposal" as
used herein means any bona fide Acquisition Proposal made by a third party to
acquire, directly or indirectly, 20% or more of the outstanding Shares on a
fully diluted basis or all or substantially all the assets of the Company and
its Subsidiaries and otherwise on terms and conditions which the Board of
Directors of the Company determines in good faith, after consultation with and
based upon the written opinion of its financial advisor, to be a superior
financial alternative to the stockholders of the Company than the Offer and the
Merger; or
(f) by the Parent or the Company, if after the Company convenes and
holds the special Meeting and certifies the vote with respect to the Merger the
Company's stockholders have voted against granting the Company Stockholder
Approval.
Section 7.2. Effect of Termination. In the event of termination of
---------------------
this Agreement pursuant to Section 7.1, written notice thereof shall forthwith
be given to the other party or parties specifying the provision hereof pursuant
to which such termination is made, and this Agreement shall terminate and be of
no further force and effect (except for the provisions of Sections 5.2 and 8.2),
and there shall be no other liability on the part of the Parent, the Purchaser
or the Company except liability arising out of a breach of this Agreement. In
the event of termination of this Agreement pursuant to Section 7.1 prior to the
expiration of the Offer, the Parent and the Purchaser will promptly terminate
the Offer upon such termination of this Agreement.
ARTICLE VIII
Miscellaneous
-------------
Section 8.1. No Survival of Representations and Warranties. None of
---------------------------------------------
the representations or warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time.
Section 8.2. Expenses. Except as expressly contemplated by this
--------
Agreement, all costs and expenses incurred in connection with this Agreement and
57
the transactions contemplated hereby shall be paid by the party incurring such
costs and expenses.
Section 8.3. Counterparts; Effectiveness. This Agreement may be
---------------------------
executed in two or more separate counterparts, each of which shall be deemed to
be an original but all of which shall constitute one and the same agreement.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by each of the other parties hereto.
Section 8.4. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of laws thereof.
Section 8.5. Notices. All notices and other communications hereunder
-------
shall be in writing (including telecopy or similar writing) and shall be
effective (a) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section 8.5 and the appropriate telecopy
confirmation is received or (b) if given by any other means, when delivered at
the address specified in this Section 8.5:
To the Parent or the Purchaser:
Aluminum Company of America
425 Sixth Avenue
Pittsburgh, Pennsylvania 15219
Attention: Lawrence R. Purtell, Esq.
Executive Vice President and
General Counsel
Telecopy: (412) 553-3113
copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: J. Michael Schell, Esq.
Telecopy: (212) 735-2000
To the Company:
58
Alumax Inc.
3424 Peachtree Road, N.E.
Suite 2100
Atlanta, Georgia 30326
Attention: Robert P. Wolf, Esq.
Senior Vice President
and General Counsel
Telecopy: (404) 846-4769
copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: John Evangelakos, Esq.
Telecopy: (212) 558-3588
Section 8.6. Assignment; Binding Effect. Neither this Agreement nor
--------------------------
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties, except that the Purchaser may
assign, in its sole discretion, all or any of its rights and interests hereunder
to the Parent or to any direct or indirect wholly owned Subsidiary of the Parent
and in the event of any such assignment, the Parent hereby unconditionally
guarantees the performance by the assignee of all obligations assigned
thereunder in accordance with the terms of this Agreement. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Any assignment not permitted under this Section 8.6 shall be null and
void.
Section 8.7. Severability. Any term or provision of this Agreement
------------
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 8.8. Enforcement of Agreement. The parties hereto
------------------------
59
agree that money damages or other remedy at law would not be sufficient or
adequate remedy for any breach or violation of, or a default under, this
Agreement by them and that in addition to all other remedies available to them,
each of them shall be entitled to the fullest extent permitted by law to an
injunction restraining such breach, violation or default or threatened breach,
violation or default and to any other equitable relief, including, without
limitation, specific performance, without bond or other security being required.
Section 8.9. Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement constitute the entire agreement, and supersede all other prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof and thereof and except for
the provisions of Section 5.9 hereof, is not intended to and shall not confer
upon any Person other than the parties hereto any rights or remedies hereunder.
Section 8.10. Headings. Headings of the Articles and Sections of
--------
this Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
Section 8.11. Definitions. References in this Agreement to (a)
-----------
"Subsidiaries" of the Company or the Parent shall mean any corporation or other
form of legal entity of which more than 50% of the outstanding voting securities
are on the date hereof directly or indirectly owned by the Company or the Parent
or in which the Company or the Parent has the right to elect a majority of the
members of the board of directors or other similar governing body; (b)
"Significant Subsidiaries" shall mean Subsidiaries which constitute "significant
subsidiaries" under Rule 405 promulgated by the SEC under the Securities Act;
(c) (except as otherwise specifically defined) "affiliates" shall mean, as to
any Person, any other Person which, directly or indirectly, controls, or is
controlled by, or is under common control with, such Person; and (d) "Person"
shall mean an individual, a corporation, a partnership, an association, a trust
or any other entity or organization, including, without limitation, a
Governmental Entity. As used in the definition of "affiliates," "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of management or policies of a Person, whether
through the ownership of securities or partnership of other ownership interests,
by contract or otherwise.
Section 8.12. Finders or Brokers. Except for BT Wolfensohn
------------------
60
with respect to the Company, a copy of whose engagement agreement has been or
will be provided to the Parent, and Credit Suisse First Boston Corporation with
respect to the Parent, neither the Company nor the Parent nor any of their
respective Subsidiaries has employed any investment banker, broker, finder or
intermediary in connection with the transactions contemplated hereby who might
be entitled to any fee or any commission in connection with or upon consummation
of the Offer and the Merger.
Section 8.13. Amendment or Supplement. At any time prior to the
-----------------------
Effective Time, this Agreement may be amended or supplemented in any and all
respects, whether before or after the Company Stockholder Approval, by written
agreement of the parties hereto, by action taken by their respective Boards of
Directors (which in the case of the Company shall include the Independent
Director Approval contemplated in Section 1.3(c)), with respect to any of the
terms contained in this Agreement; provided, however that following the Company
Stockholder Approval there shall be no amendment or change to the provisions
hereof which would reduce the amount or change the type of consideration into
which each Share shall be converted upon consummation of the Merger without
further approval by the stockholders of the Company.
Section 8.14. Extension of Time, Waiver, Etc. At any time prior to
------------------------------
the Effective Time, any party may (a) extend the time for the performance of any
of the obligations or acts of any other party hereto; (b) waive any inaccuracies
in the representations and warranties of any other party hereto contained herein
or in any document delivered pursuant hereto; or (c) subject to the proviso of
Section 8.13 waive compliance with any of the agreements or conditions of any
other party hereto contained herein; provided, however, in the case of the
Company following the acceptance of Shares for payment in the Merger, the
Independent Director Approval contemplated in Section 1.3(c) is obtained.
Notwithstanding the foregoing no failure or delay by the Company, the Parent or
the Purchaser in exercising any right hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right hereunder. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
61
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
ALUMINUM COMPANY OF AMERICA
By: /s/ Paul H. O'Neill
---------------------------------------------
Name: Paul H. O'Neill
Title: Chairman and Chief Executive Officer
AMX ACQUISITION CORP.
By: /s/ Richard B. Kelson
---------------------------------------------
Name: Richard B. Kelson
Title: Vice President and Treasurer
ALUMAX INC.
By: /s/ Allen Born
---------------------------------------------
Name: Allen Born
Title: Chairman and Chief Executive Officer
ANNEX A
-------
Conditions to the Offer
-----------------------
Notwithstanding any other provision of the Offer and subject to the
terms of this Agreement, the Purchaser shall not be required to accept for
payment any Shares tendered pursuant to the Offer, and may terminate the Offer
and may postpone the acceptance for payment of and payment for Shares tendered,
if (i) any applicable waiting period under the HSR Act shall not have expired or
been terminated prior to the expiration of the Offer, or (ii) immediately prior
to the acceptance for payment of Shares, any of the following conditions shall
be reasonably determined by the Parent to be existing:
(a) there shall have been entered, enforced, promulgated or issued by
any court or governmental, administrative or regulatory authority or agency
of competent jurisdiction, domestic or foreign, any judgment, order,
injunction or decree, (i) which makes illegal or prohibits or makes
materially more costly the making of the Offer, the acceptance for payment
of, or payment for, any Shares by the Parent, the Purchaser or any other
affiliate of the Parent, or the consummation of any other transaction
contemplated by this Agreement, or imposes material damages in connection
with any transaction contemplated by this Agreement; (ii) which prohibits
the ownership or operation by the Company or any of its Subsidiaries or, as
a result of the transactions contemplated by this Agreement, the Parent and
its Subsidiaries, of all or any material portion of the business or assets
of the Company, the Parent or any of their Subsidiaries as a whole, or
compels the Company, the Parent or any of their Subsidiaries to dispose of
or hold separate all or any material portion of the business or assets of
the Company, the Parent or any of their Subsidiaries as a whole; (iii)
which imposes or confirms limitations on the ability of the Parent, the
Purchaser or any other affiliate of the Parent to exercise effectively full
rights of ownership of any Shares, including, without limitation, the right
to vote any Shares acquired by the Purchaser pursuant to the Offer or
otherwise on all matters properly presented to the Company's stockholders,
including, without limitation, the approval and adoption of this Agreement
and the transactions contemplated by this
A-1
Agreement; (iv) requires divestiture by the Parent, the Purchaser or any
other affiliate of the Parent of any Shares; or (v) which otherwise would
have a Material Adverse Effect on the Company or, as a result of the
transactions contemplated by this Agreement, the Parent and its
Subsidiaries;
(b) there shall have been any action taken, or any statute, rule,
regulation, legislation or interpretation enacted, entered, enforced,
promulgated, amended, issued or deemed applicable to (i) the Company or any
Subsidiary of the Company or, as a result of the transactions contemplated
by this Agreement, the Parent or any Subsidiary or affiliate of the Parent,
or (ii) any transaction contemplated by this Agreement, by any legislative
body, court, government or governmental, administrative or regulatory
authority or agency, domestic or foreign, other than the routine
application of the waiting period provisions of the HSR Act to the Offer or
the Merger, which is reasonably likely to result, directly or indirectly,
in any of the consequences referred to in clauses (i) through (v) of
paragraph (a) above;
(c) there shall have occurred and be continuing, (i) any general
suspension of, or limitation on prices for, trading in securities on the
NYSE other than a shortening of trading hours or any coordinated trading
halt triggered solely as a result of a specified increase or decrease in a
market index, (ii) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States, (iii) the
commencement of a war, material armed hostilities or any other material
international or national calamity involving the United States, or (iv) in
the case of any of the foregoing existing at the time of the commencement
of the Offer, a material acceleration or worsening thereof;
(d) the representations or warranties of the Company set forth in the
Agreement shall not be true and correct, ignoring for this purpose any
qualification as to materiality or Material Adverse Effect, as if such
representations or warranties were made as of such time on or after the
date of this Agreement, except where the failure to be so true and correct,
individually and in the aggregate would not have a Material Adverse Effect;
(e) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with
A-2
by it under the Agreement;
(f) the Agreement shall have been terminated in accordance with its
terms; or
(g) the Purchaser and the Company shall have agreed that the
Purchaser shall terminate the Offer or postpone the acceptance for payment
of or payment for Shares thereunder;
which, in the reasonable good faith judgment of the Purchaser in any such case,
and regardless of the circumstances (including any action or inaction by the
Parent or any of its affiliates) giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Purchaser and
the Parent and may be asserted by the Purchaser or the Parent regardless of the
circumstances giving rise to any such condition or may be waived by the
Purchaser or the Parent in whole or in part at any time and from time to time in
their sole discretion. The failure by the Parent or the Purchaser at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right; the waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances; and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
A-3
TABLE OF CONTENTS
-----------------
ARTICLE I
The Offer
Section 1.1. The Offer.......................................................2
Section 1.2. Company Actions.................................................4
Section 1.3. Directors of the Company........................................5
ARTICLE II
The Merger
Section 2.1. The Merger......................................................6
Section 2.2. Closing.........................................................7
Section 2.3. Effective Time..................................................7
Section 2.4. Effects of the Merger...........................................7
Section 2.5. Certificate of Incorporation; By-laws...........................7
Section 2.6. Directors; Officers of Surviving Corporation....................8
Section 2.7. Conversion of Securities........................................8
Section 2.8. Exchange of Certificates........................................9
Section 2.9. Appraisal Rights...............................................12
Section 2.10. Adjustment to Prevent Dilution.................................13
ARTICLE III
Representations and Warranties of the Company
Section 3.1. Organization, Qualification, Etc..............................14
Section 3.2. Capital Stock.................................................15
Section 3.3. Corporate Authority Relative to this Agreement; No Violation..16
Section 3.4. Reports and Financial Statements..............................17
Section 3.5. No Undisclosed Liabilities....................................19
Section 3.6. No Violation of Law...........................................19
Section 3.7. Environmental Matters.........................................19
Section 3.8. Employee Benefit Plans; ERISA.................................21
Section 3.9. Absence of Certain Changes or Events..........................24
Section 3.10. Litigation....................................................24
Section 3.11. Schedule 14D-9; Offer Documents; Registration Statement and
i
Proxy Statement............................................24
Section 3.12. Intellectual Property..........................................25
Section 3.13. Tax Matters....................................................26
Section 3.14. Opinion of Financial Advisor...................................28
Section 3.15. Required Vote of the Company Stockholders......................28
Section 3.16. Employment Matters.............................................28
ARTICLE IV
Representations and Warranties of the Parent and the Purchaser
Section 4.1. Organization, Qualification, Etc...............................29
Section 4.2. Capital Stock..................................................30
Section 4.3. Corporate Authority Relative to this Agreement; No Violation...30
Section 4.4. Reports and Financial Statements...............................32
Section 4.5. No Undisclosed Liabilities.....................................33
Section 4.6. No Violation of Law............................................33
Section 4.7. Environmental Matters..........................................33
Section 4.8. Employee Benefit Plans; ERISA..................................34
Section 4.9. Absence of Certain Changes or Events...........................36
Section 4.10. Litigation.....................................................36
Section 4.11. Proxy Statement/Prospectus; Registration Statement.............36
Section 4.12. Intellectual Property..........................................37
Section 4.13. Tax Matters....................................................38
Section 4.14. Opinion of Financial Advisor...................................39
Section 4.15. Employment Matters.............................................39
Section 4.16. Ownership of Shares............................................39
ARTICLE V
Covenants and Agreements
Section 5.1. Conduct of Business by the Company.............................40
Section 5.2. Access; Confidentiality........................................43
Section 5.3. Special Meeting, Proxy Statement, Registration Statement......44
Section 5.4. Best Efforts; Further Assurances...............................46
Section 5.5. Employee Stock Options and Other Employee Benefits.............47
Section 5.6. Takeover Statute...............................................48
Section 5.7. Solicitation by the Company....................................49
Section 5.8. Public Announcements...........................................49
ii
Section 5.9. Indemnification and Insurance...............................49
Section 5.10. Additional Reports and Information...........................50
Section 5.11. Affiliates...................................................51
Section 5.12. NYSE Listing.................................................51
Section 5.13. Tax-Free Reorganization......................................51
Section 5.14. The Company Rights Plan......................................52
ARTICLE VI
Conditions to the Merger
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger....52
Section 6.2. Conditions to Obligation of the Parent and the Purchaser
to Effect the Merger.....................................53
Section 6.3. Conditions to Obligation of the Company to Effect
the Merger...............................................53
Section 6.4. Additional Conditions to the Obligations of the Parent
and the Purchaser to Effect the Merger....................53
Section 6.5. Additional Conditions to the Obligations of the Company
to Effect the Merger.....................................54
ARTICLE VII
Termination
Section 7.1. Termination...................................................55
Section 7.2. Effect of Termination.........................................56
ARTICLE VIII
Miscellaneous
Section 8.1. No Survival of Representations and Warranties.................57
Section 8.2. Expenses......................................................57
Section 8.3. Counterparts; Effectiveness...................................57
Section 8.4. Governing Law.................................................57
Section 8.5 Notices.......................................................57
Section 8.6. Assignment; Binding Effect....................................58
Section 8.7. Severability..................................................59
Section 8.8. Enforcement of Agreement......................................59
iii
Section 8.9. Entire Agreement; No Third-Party Beneficiaries...............59
Section 8.10. Headings.....................................................59
Section 8.11. Definitions..................................................59
Section 8.12. Finders or Brokers...........................................60
Section 8.13. Amendment or Supplement......................................60
Section 8.14. Extension of Time, Waiver, Etc...............................60
Annex A -- Conditions to the Offer
Exhibit A -- Form of Affiliate Letter for Affiliates of Alumax Inc.
iv
EXHIBIT A
FORM OF
AFFILIATE LETTER FOR AFFILIATES OF ALUMAX INC.
Aluminum Company of America
425 Sixth Avenue
Pittsburgh, Pennsylvania 15219
Alumax Inc.
3424 Peachtree Road, NE
Atlanta, Georgia 30326
AMX Acquisition Corp.
425 Sixth Avenue
Pittsburgh, Pennsylvania 15219
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of Alumax, Inc., a Delaware corporation (the "Company"), as
the term "affiliate" is (i) defined for purposes of paragraphs (c) and (d) of
Rule 145 of the rules and regulation (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"). Pursuant to the terms of the Agreement and
Plan of Merger, dated as of March 8, 1998 (the "Merger Agreement"), among
Aluminum Company of America, a Pennsylvania corporation (the "Parent"), AMX
Acquisition Corp., a Delaware corporation (the "Purchaser") and the Company
pursuant to which the Company will be merged with and into the Purchaser with
the Purchaser continuing as the surviving corporation (the "Merger").
Capitalized terms used in this letter without definition shall have the meanings
assigned to them in the Merger Agreement.
As a result of the Merger, I may receive shares of common stock, par
value $1.00 per share, of the Parent (the "Parent Common Stock"). I would
receive such Parent Common Stock in exchange for shares (or upon exercise of
options for
shares) owned by me of common stock, par value $.01 per share, of
the Company (the "Company Common Stock").
1. I hereby represent, warrant and covenant to the Parent, the Purchaser and
the Company that in the event I receive any shares of Parent Common Stock as a
result of the Merger:
A. I shall not make any offer, sale, pledge, transfer or other
disposition of the shares of Parent Common Stock in violation of the Act or the
Rules and Regulations.
B. I have carefully read this letter and the Merger Agreement and
discussed the requirements of such documents and other applicable limitations
upon my ability to sell, transfer or otherwise dispose of the shares of Parent
Common Stock, to the extent I felt necessary, with my counsel or counsel for the
Company.
C. I have been advised that the issuance of the shares of Parent Common
Stock to me pursuant to the Merger has been registered with the Commission under
the Act on a Registration Statement on Form S-4. However, I have also been
advised that, because at the time the Merger is submitted for a vote of the
stockholders of the Company (a) I may be deemed to be an affiliate of the
Company and (b) the distribution by me of the shares of Parent Common Stock has
not been registered under the Act, I may not sell, transfer or otherwise dispose
of the shares of Parent Common Stock issued to me in the Merger unless (i) such
sale, transfer or other disposition is made in conformity with the volume and
other limitations of Rule 145 promulgated by the Commission under the Act, (ii)
such sale, transfer or other disposition has been registered under the Act or
(iii) in the opinion of counsel reasonably acceptable to the Parent, or a "no
action" letter obtained by the undersigned from the staff of the Commission such
sale, transfer or other disposition is otherwise exempt from registration under
the Act.
D. I understand that the Parent is under no obligation to register the
sale, transfer or other disposition of the Parent Common Stock by me or on my
behalf under the Act or except as provided in paragraph 2(A) below, to take any
other action necessary in order to make compliance with an exemption from such
registration available.
E. I also understand that stop transfer instructions will be given to the
Companys' transfer agent with respect to the shares of Company Common Stock
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currently held and to Parent's transfer agent with respect to the shares of
Parent Common Stock issued to me in the Merger, and there will be placed on the
certificates for such shares of Parent Common Stock, a legend stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO
WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED [ ], 1998 BETWEEN THE
REGISTERED HOLDER HEREOF, ALUMINUM COMPANY OF AMERICA, ALUMAX INC., AND AMX
ACQUISITION CORP., A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF ALUMINUM COMPANY OF AMERICA."
F. I also understand that unless a sale or transfer is made in conformity
with the provisions of Rule 145, or pursuant to a registration statement, Parent
reserves the right to put the following legend on the certificates issued to my
transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE
HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
G. Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of the Company as described in the first paragraph
of this letter, nor as a waiver of any rights I may have to object to any claim
that I am such an affiliate on or after the date of this letter.
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2. By Parent's acceptance of this letter, Parent hereby agrees with me as
follows:
A. For so long as and to the extent necessary to permit me to sell the
shares of Parent Common Stock pursuant to Rule 145 and, to the extent
applicable, Rule 144 under the Act, Parent shall (a) use its reasonable best
efforts to (i) file, on a timely basis, all reports and data required to be
filed with the Commission by it pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended, and (ii) furnish to me upon request a written
statement as to whether Parent has complied with such reporting requirements
during the 12 months preceding any proposed sale of the shares of Parent Common
Stock by me under Rule 145, and (b) otherwise use its reasonable efforts to
permit such sales pursuant to Rule 145 and Rule 144.
B. It is understood and agreed that certificates with the legends set
forth in paragraphs E and F above will be substituted by delivery of
certificates without such legend if (i) one year shall have elapsed from the
date the undersigned acquired the Parent Common Stock received in the Merger and
the provisions of Rule 145(d)(2) are then available to the undersigned, (ii) two
years shall have elapsed from the date the undersigned acquired the shares of
Parent Common Stock received in the Merger and the provisions of Rule 145(s)(3)
are then applicable to the undersigned, or (iii) Parent received either an
opinion of counsel, which opinion and counsel shall be reasonably satisfactory
to the Parent, or a "no-action" letter obtained by the undersigned from the
staff of the Commission, to the effect that the restrictions imposed by Rule 144
and Rule 145 under the Act no longer apply to the undersigned.
Very truly yours,
____________________________________
Name:
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Agreed and accepted this day of
,1998, by
ALUMINUM COMPANY OF AMERICA
By: ________________________________
Name:
Title:
ALUMAX INC.
By: ________________________________
Name:
Title:
AMX ACQUISITION CORP.
By: ________________________________
Name:
Title:
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