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EXHIBIT 99.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
ALCOA INC.,
RLM ACQUISITION CORP.
and
▇▇▇▇▇▇▇▇ METALS COMPANY
Dated as of August 18, 1999
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
Section 1.1 The Merger................................................ 2
Section 1.2 Closing................................................... 2
Section 1.3 Effective Time............................................ 2
Section 1.4 Effects of the Merger..................................... 2
Section 1.5 Certificate of Incorporation; By-laws..................... 3
Section 1.6 Directors; Officers of Surviving Corporation.............. 3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1 Conversion of Securities.................................. 3
Section 2.2 Exchange of Certificates.................................. 4
Section 2.3 Adjustments to Prevent Dilution........................... 8
Section 2.4 Section 16b-3............................................. 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Qualification, Etc.......................... 9
Section 3.2 Capital Stock............................................. 10
Section 3.3 Corporate Authority Relative to this Agreement;
No Violation............................................ 11
Section 3.4 Reports and Financial Statements.......................... 12
Section 3.5 No Undisclosed Liabilities................................ 13
Section 3.6 No Violation of Law....................................... 13
Section 3.7 Environmental Matters..................................... 14
Section 3.8 Employee Benefit Plans; ERISA............................. 16
Section 3.9 Absence of Certain Changes or Events...................... 17
Section 3.10 Proxy Statement/Prospectus; Registration Statement........ 17
Section 3.11 Tax Matters............................................... 18
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Section 3.12 Opinion of Financial Advisors............................. 19
Section 3.13 Required Vote of the Company Stockholders................. 20
Section 3.14 Rights Plan............................................... 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF ALCOA AND MERGER SUB
Section 4.1 Organization, Qualification, Etc.......................... 20
Section 4.2 Capital Stock............................................. 21
Section 4.3 Corporate Authority Relative to this Agreement;
No Violation............................................ 22
Section 4.4 Reports and Financial Statements.......................... 23
Section 4.5 No Undisclosed Liabilities................................ 24
Section 4.6 No Violation of Law....................................... 24
Section 4.7 Environmental Matters..................................... 25
Section 4.8 Absence of Certain Changes or Events...................... 26
Section 4.9 Proxy Statement/Prospectus; Registration Statement........ 26
Section 4.10 Tax Matters............................................... 27
Section 4.11 Opinion of Financial Advisor.............................. 28
Section 4.12 Ownership of Shares; Stockholder Vote..................... 28
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of Business by the Company........................ 28
Section 5.2 Alcoa Interim Operations.................................. 31
Section 5.3 Access; Confidentiality................................... 33
Section 5.4 Special Meeting; Proxy Statement; Registration Statement.. 34
Section 5.5 Further Action; Reasonable Best Efforts................... 35
Section 5.6 Employee Stock Options and Other Employee Benefits........ 37
Section 5.7 Takeover Statute.......................................... 39
Section 5.8 Solicitation by the Company............................... 39
Section 5.9 Public Announcements...................................... 41
Section 5.10 Indemnification; Insurance................................ 41
Section 5.11 Additional Reports and Information........................ 42
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Section 5.12 Affiliates................................................ 43
Section 5.13 NYSE Listing.............................................. 43
Section 5.14 Tax-Free Reorganization................................... 43
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger.................................................. 44
Section 6.2 Conditions to Obligation of Alcoa and Merger Sub to
Effect the Merger....................................... 44
Section 6.3 Conditions to Obligation of the Company to Effect the
Merger.................................................. 45
ARTICLE VII
TERMINATION
Section 7.1 Termination............................................... 46
Section 7.2 Effect of Termination..................................... 47
Section 7.3 Termination Fee........................................... 48
ARTICLE VIII
MISCELLANEOUS
Section 8.1 No Survival of Representations and Warranties............. 48
Section 8.2 Expenses.................................................. 48
Section 8.3 Counterparts; Effectiveness............................... 49
Section 8.4 Governing Law............................................. 49
Section 8.5 Notices................................................... 49
Section 8.6 Assignment; Binding Effect................................ 50
Section 8.7 Severability.............................................. 50
Section 8.8 Enforcement of Agreement.................................. 51
Section 8.9 Entire Agreement; No Third-Party Beneficiaries............ 51
Section 8.10 Headings.................................................. 51
Section 8.11 Definitions............................................... 51
Section 8.12 Finders or Brokers........................................ 52
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Section 8.13 Amendment or Supplement................................... 52
Section 8.14 Extension of Time, Waiver, Etc............................ 52
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INDEX OF DEFINED TERMS
DEFINED TERM SECTION
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Acquisition Proposal................................. 5.8(a)
affiliates........................................... 5.12, 8.11
Agreement............................................ Introduction
Alcoa................................................ Introduction
Alcoa Affiliated Group............................... 4.9(a)
Alcoa and Merger Sub Agreements...................... 4.3(b)
Alcoa Certificates................................... 2.2(a)
Alcoa Class B Serial Preferred Stock................. 4.2(a)
Alcoa Common Stock................................... Recitals
Alcoa Disclosure Schedule............................ Article IV Introduction
Alcoa Incentive Plans................................ 4.2(a)
Alcoa Required Approvals............................. 4.3(b)
Alcoa SEC Reports.................................... 4.4(e)
Alcoa Serial Preferred Stock......................... 4.2(a)
CERCLA............................................... 3.7(d)
Certificate of Merger................................ 1.3
Certificates......................................... 2.2(b)
Closing.............................................. 1.2
Closing Date......................................... 1.2
Code................................................. Recitals
Common Shares Trust.................................. 2.2(g)(ii)
Company.............................................. Introduction
Company Affiliated Group............................. 3.11(a)
Company Agreements................................... 3.3(b)
Company Common Stock................................. Recitals
Company Disclosure Schedule.......................... Article III Introduction
Company Employee..................................... 5.6(b)
Company Plans........................................ 3.8(a)
Company Policy....................................... 5.10(b)
Company Preferred Stock.............................. 3.2(a)
Company Representatives.............................. 5.7
Company Required Approvals........................... 3.3(b)
Company Second Preferred Stock....................... 3.2(a)
Company SEC Reports.................................. 3.4(e)
Company Stock Options................................ 5.6(a)
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Company Stockholder Approval......................... 3.13
control.............................................. 8.11
control share acquisition............................ 5.7
controlled by........................................ 8.11
Costs................................................ 5.10(a)
Current Company Group................................ 3.9(a)
Current Alcoa Group.................................. 4.13(a)
DGCL................................................. Recitals
determination........................................ 5.14
Disclosure Schedule.................................. Article IV Introduction
disqualified individual.............................. 3.11(c)
Effective Time....................................... 1.3
Environmental Claim.................................. 3.7(f)(i)
Environmental Law.................................... 3.7(f)(ii)
Environmental Permits................................ 3.7(a)
Equity Plan.......................................... 5.1(viii)
ERISA................................................ 3.8(a)
ERISA Affiliate...................................... 3.8(a)
excess parachute payment............................. 3.11(c)
Excess Shares........................................ 2.2(g)(ii)
Exchange Act......................................... 3.3(b)
Exchange Agent....................................... 2.2(a)
Exchange Fund........................................ 2.2(a)
Exchange Ratio....................................... 2.1(b)
extremely hazardous wastes........................... 3.7(f)(iii)
fair price........................................... 5.7
GAAP................................................. 3.4(e)
Governmental Consents................................ 5.5(a)
Governmental Entity.................................. 3.3(b)
hazardous materials.................................. 3.7(f)(iii)
hazardous substances................................. 3.7(f)(iii)
hazardous wastes..................................... 3.7(f)(iii)
Hazardous Materials.................................. 3.7(f)(iii)
HSR Act.............................................. 3.3(b)
incentive stock option............................... 5.6(a)
Indemnified Parties.................................. 5.10(a)
Intellectual Property................................ 3.12(d)
interested stockholder............................... 3.3(a)
IRS.................................................. 3.8(b)
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Lien................................................. 3.1(b)
material............................................. 3.1(a)
Material Adverse Effect.............................. 3.1(a)
Merger............................................... Recitals
Merger Consideration................................. 2.1(b)
Merger Sub........................................... Introduction
moratorium........................................... 5.7
NYSE................................................. 2.2(g)(ii)
Past Alcoa Group..................................... 4.9(a)
Past Company Group................................... 3.13(a)
Patents.............................................. 3.12(d)
Person............................................... 8.11
Preferred Stock...................................... 3.2(a)
Proxy Statement...................................... 5.4(b)(i)
Registration Statement............................... 4.8
restricted hazardous wastes.......................... 3.7(f)(iii)
Rights Agreement..................................... Recitals
SEC.................................................. 3.4(a)
Second Preferred Stock............................... 3.2(a)
Securities Act....................................... 3.3(b)
Shares............................................... Recitals
Significant Subsidiaries............................. 8.11
single employer...................................... 3.8(a)
Special Meeting...................................... 5.4(a)
Subsidiaries......................................... 8.11
Superior Proposal.................................... 5.8(a)
Surviving Corporation................................ 1.1
Surviving Corporation Common Stock................... 2.1(a)
Tax Return........................................... 3.11(d)
Taxes................................................ 3.11(d)
Termination Date..................................... 5.1
Termination Fee...................................... 7.3
toxic pollutants..................................... 3.7(f)(iii)
toxic substances..................................... 3.7(f)(iii)
under common control with............................ 8.11
Upstream Merger...................................... 5.14
U.S. Company Plan.................................... 3.8(a)
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AGREEMENT AND PLAN OF MERGER, dated as of August 18, 1999 (the
"Agreement"), among ALCOA INC., a Pennsylvania corporation ("Alcoa"), RLM
ACQUISITION CORP., a Delaware corporation ("Merger Sub"), and ▇▇▇▇▇▇▇▇ METALS
COMPANY, a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of Alcoa, Merger Sub and the
Company deem advisable and in the best interests of their respective
stockholders the merger of Merger Sub with and into the Company (the "Merger")
upon the terms and subject to the conditions provided for in this Agreement,
whereby each outstanding share of common stock, no par value per share, of the
Company (together with the rights associated with such shares issued pursuant to
the Amended and Restated Rights Agreement, dated as of March 8, 1999 (the
"Rights Agreement"), the "Company Common Stock" or the "Shares") will be
converted into the right to receive shares of common stock, par value $1.00 per
share, of Alcoa (the "Alcoa Common Stock"), upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, the Board of Directors of the Company has unanimously by
all members present approved the Merger and resolved and agreed to recommend
that holders of Shares approve and adopt this Agreement and the Merger all in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL");
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 for purposes of Section 368 of the Code; and
WHEREAS, the Boards of Directors of Alcoa (on its own behalf and
as the sole stockholder of Merger Sub), Merger Sub and the Company have each
approved this Agreement and the Merger in accordance with the Pennsylvania
Business Corporation Law, in the case of Alcoa, and in accordance with the DGCL,
in the case of each of Merger Sub and the Company, 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, Alcoa, Merger Sub and the Company agree as follows:
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ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL, Merger
Sub shall merge with and into the Company, and the separate corporate existence
of Merger Sub shall thereupon cease, and the Company shall be the surviving
corporation in the Merger (the "Surviving Corporation"). The Surviving
Corporation shall possess all the rights, privileges, powers and franchises of a
public as well as of a private nature and shall be subject to all of the
restrictions, disabilities, duties, debts and obligations of the Company and
Merger Sub, all as provided in the DGCL.
Section 1.2 Closing. The closing of the Merger (the "Closing")
will 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 or waiver of the conditions set forth in Article VI, unless another
time or date, or both, are agreed to in writing by the parties hereto. The
Closing will be held at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
919 Third Avenue, New York, New York, unless another place is agreed to by the
parties hereto.
Section 1.3 Effective Time. Subject to the provisions of this
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 agreed by the parties hereto
and specified in the Certificate of Merger (the time at which the Merger becomes
fully effective being hereinafter referred to as the "Effective Time").
Section 1.4 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
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Section 1.5 Certificate of Incorporation; By-laws.
(a) At the Effective Time, the Certificate of
Incorporation of Merger Sub, 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 ▇▇▇▇▇▇▇▇ Metals Company" 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 Merger Sub, 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 1.6 Directors; Officers of Surviving Corporation.
(a) The directors of Merger Sub 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 Company 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.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
securities of Alcoa, Merger Sub or the Company:
(a) Each Share that is owned by Alcoa shall be converted
into one validly issued, fully paid and nonassessable share of common stock, par
value $.01
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per share, of the Surviving Corporation ("Surviving Corporation Common Stock").
Each share that is owned by the Company shall be cancelled and retired.
(b) Each issued and outstanding Share, other than Shares
converted into Surviving Corporation Common Stock or cancelled and retired in
accordance with Section 2.1(a), shall be converted into 1.06 (the "Exchange
Ratio") shares of Alcoa Common Stock (such number of shares of Alcoa Common
Stock being herein referred to 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 whole number of
shares of Alcoa Common Stock equal to the Exchange Ratio multiplied by the
number of Shares represented thereby, together with the right to receive cash in
lieu of fractional shares of Alcoa Common Stock in accordance with Section
2.2(g), without interest.
(c) Each issued and outstanding share of common stock, par
value $.01 per share, of Merger Sub shall be converted into one validly issued,
fully paid and nonassessable share of Surviving Corporation Common Stock.
Section 2.2 Exchange of Certificates.
(a) Exchange Agent. Alcoa shall designate a bank or trust
company reasonably acceptable to the Company to act as agent for the holders of
the Shares (other than Shares held by Alcoa and its Subsidiaries and the Company
and its Subsidiaries) in connection with the Merger (the "Exchange Agent") to
receive in trust from Alcoa as of the Effective Time for the benefit of such
holders certificates ("Alcoa Certificates") representing the number of whole
shares of Alcoa Common Stock deliverable pursuant to Section 2.1(b) in exchange
for outstanding Shares (such shares of Alcoa Common Stock, 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 Alcoa
Common Stock being hereinafter referred to as the "Exchange Fund"). Alcoa shall
make available to the Exchange Agent Alcoa Certificates for these purposes.
(b) Exchange Procedures. As soon as reasonably practicable
after the 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 2.1(b) into the
Merger Consideration, (i) a letter of
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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 Alcoa 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 Alcoa, 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 an Alcoa Certificate representing
that number of whole shares of Alcoa Common Stock which such holder has the
right to receive pursuant to Section 2.1(b), certain dividends or other
distributions in accordance with Section 2.2(f), and cash in lieu of any
fractional share in accordance with Section 2.2(g), 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 any cash payable
upon the surrender of the Certificates. If the issuance of the Merger
Consideration is to be made to a Person 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 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 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.
(d) Termination of Fund; No Liability. At any time
following six months after the Effective Time, the Surviving Corporation shall
be entitled to require the Exchange Agent to deliver to it any remaining portion
of the Exchange Fund (including any interest received with respect thereto), and
holders shall be entitled to look only to Alcoa and the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) with respect to
the Merger Consideration, any cash in lieu of fractional shares of Alcoa Common
Stock and any dividends or other distributions with respect to Alcoa Common
Stock payable upon due surrender of their Certificates,
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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 (or dividends or distributions with respect
thereto) or cash from the Exchange Fund in each case 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 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 Alcoa, the posting by such
Person of a bond in such sum as Alcoa 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 2.2(b) deliverable in respect of the Shares represented by
such lost, stolen or destroyed Certificates.
(f) Dividends; Distributions. No dividends or other
distributions with respect to Alcoa 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 Alcoa Common Stock represented thereby, and no cash
payment in lieu of fractional shares shall be paid to any such holder pursuant
to Section 2.2(g), and all such dividends, other distributions and cash in lieu
of fractional shares of Alcoa Common Stock shall be paid by Alcoa to the
Exchange Agent and shall be included in the Exchange Fund, in each case until
the surrender 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 an Alcoa Certificate
representing whole shares of Alcoa 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 Alcoa Common Stock and the amount of any
cash payable in lieu of a fractional share of Alcoa Common Stock to which such
holder is entitled pursuant to Section 2.2(g), 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 Alcoa
Common Stock. Alcoa shall make available to the Exchange Agent cash for these
purposes.
(g) No Fractional Shares. (i) No Alcoa Certificates or
scrip representing fractional shares of Alcoa Common Stock shall be issued upon
the surrender for exchange of Certificates; no dividend or distribution by Alcoa
shall relate
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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 Alcoa.
(ii) As promptly as practicable following the
Effective Time, the Exchange Agent will determine the excess of (A) the
number of whole shares of Alcoa Common Stock delivered to the Exchange
Agent by Alcoa pursuant to Section 2.2(a) over (B) the aggregate number
of whole shares of Alcoa Common Stock to be distributed to holders of
Shares pursuant to Section 2.2(b) (such excess being herein called the
"Excess Shares"). Following the Effective Time, the Exchange Agent will,
on behalf of former stockholders of the Company, sell the Excess Shares
at then-prevailing prices on the New York Stock Exchange, Inc. (the
"NYSE"), all in the manner provided in Section 2.2(g)(iii).
(iii) The sale of the Excess Shares by the Exchange
Agent will be executed on the NYSE through one or more member firms of
the NYSE and will be executed in round lots to the extent practicable.
The Exchange Agent will use reasonable efforts to complete the sale of
the Excess Shares as promptly following the Effective Time as, in the
Exchange Agent's sole judgment, is practicable consistent with obtaining
the best execution of such sales in light of prevailing market
conditions. Until the net proceeds of such sale or sales have been
distributed to the holders of Shares, the Exchange Agent will hold such
proceeds in trust for the holders of Shares (the "Common Shares Trust").
The Surviving Corporation will pay all commissions, transfer Taxes and
other out-of-pocket transaction costs, including the expenses and
compensation of the Exchange Agent incurred in connection with such
sale of the Excess Shares. The Exchange Agent will determine the portion
of the Common Shares Trust to which each holder of Shares is entitled,
if any, by multiplying the amount of the aggregate net proceeds
comprising the Common Shares Trust by a fraction, the numerator of which
is the amount of the fractional share interest to which such holder of
Shares is entitled (after taking into account all Shares held at the
Effective Time by such holder) and the denominator of which is the
aggregate amount of fractional share interests to which all holders of
Shares are entitled.
(iv) As soon as practicable after the determination
of the amount of cash, if any, to be paid to holders of Shares with
respect to any fractional share interests, the Exchange Agent will make
available such amounts
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to such holders of Shares subject to and in accordance with the terms of
Section 2.2(b).
(h) Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund as directed by Alcoa. Any interest
and other income resulting from such investments shall be paid to Alcoa.
Section 2.3 Adjustments to Prevent Dilution. In the event that
Alcoa changes the number of outstanding shares of Alcoa Common Stock or the
number of outstanding securities convertible or exchangeable into or exercisable
for shares of Alcoa Common Stock 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, repurchase (other than in the ordinary course of business), or other
similar transaction, or declares or pays any dividend or distribution (including
of rights) other than any regular quarterly cash dividends, the Merger
Consideration shall be equitably adjusted.
Section 2.4 Section 16b-3. Alcoa, Merger Sub and the Company
shall take all such steps as may be required to cause the transactions
contemplated by this Article II and Section 5.5 and any other dispositions of
equity securities of the Company (including derivative securities) or
acquisitions of Alcoa equity securities (including derivative securities) in
connection with the Agreement by each individual who (a) is a director or
officer of the Company or (b) at the Effective Time, will become a director or
officer of Alcoa, to be exempt under Rule 16b-3 promulgated under the Exchange
Act.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the schedule delivered by the Company to
Alcoa prior to the execution and delivery of this Agreement (the "Company
Disclosure Schedule"), and except as otherwise disclosed in Company SEC Reports,
the Company represents and warrants to Alcoa and Merger Sub as set forth below:
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Section 3.1 Organization, Qualification, Etc.
(a) 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 or presently proposed to be conducted. The Company 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 qualified
or in good standing would not, individually or in the aggregate, have a Material
Adverse Effect on the Company or substantially 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 Alcoa, as the case may be,
means a material adverse effect on the financial condition, assets or results of
operations of the Company and its Subsidiaries, taken as a whole, or Alcoa and
its Subsidiaries, taken as a whole, as the case may be, excluding any such
effect resulting from or arising in connection with (A) this Agreement, the
transactions contemplated hereby or the announcement thereof, (B) changes or
conditions generally affecting the industries in which the Company or Alcoa, as
the case may be, operate (including metals or aluminum pricing) or (C) changes
in general economic, regulatory or political conditions (and "material" and all
other correlative terms shall have correlative meanings). The Company has
delivered or made available to Alcoa copies of the certificate of incorporation
and by-laws or other similar organizational documents for the Company. Such
certificate of incorporation and by-laws 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.
(b) 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. Each of the Company's
Significant Subsidiaries 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 or presently proposed to be
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 qualified or in good standing or to have such governmental
approvals would not, individually or in the aggregate, be reasonably likely
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to have a Material Adverse Effect on the Company. All the outstanding shares of
capital stock of, or other ownership interests in, the Company's Significant
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, claims, mortgages, encumbrances, pledges, security interests of any kind
except as would not have a Material Adverse Effect (each, a "Lien"). Exhibit 21
to the Company's Annual Report on a Form 10-K for 1998 lists all the Company's
Significant Subsidiaries as of the date hereof.
Section 3.2 Capital Stock.
(a) The authorized capital stock of the Company consists
of 200,000,000 shares of Company Common Stock, 20,000,000 shares of preferred
stock, without par value, designated as "Preferred Stock" (the "Company
Preferred Stock"), and 1,000,000 shares of preferred stock, par value $100.00
per share, designated as "Second Preferred Stock" (the "Company Second Preferred
Stock"). As of July 30, 1999, (i) 62,887,628 shares of Company Common Stock are
issued and outstanding; (ii) not more than 6,000,000 shares of Company Common
Stock are subject to outstanding options issued under the Company's 1996
Nonqualified Stock Option Plan; (iii) 9,409,082 shares of Company Common Stock
have been reserved for issuance under the Company's Equity Plans; (v) 11,341,216
shares of Company Common Stock are issued and held in the treasury of the
Company; (vi) no shares of Company Preferred Stock are issued, outstanding or
reserved for issuance, except for 2,000,000 shares of the Company Preferred
Stock which have been designated as Series A Junior Participating Preferred
Stock and reserved for issuance in connection with the Rights Agreement, between
the Company and ChaseMellon Shareholder Services, L.L.C., as rights agent; and
(vii) no shares of Company Second Preferred Stock are issued, outstanding or
reserved for issuance.
(b) All the outstanding Shares are duly authorized,
validly issued, fully paid and non-assessable. Except as set forth in paragraph
(a) above, except for the Company's obligations under the Rights Agreement, and
except for the transactions contemplated by this Agreement, (1) there are no
shares of capital stock of the Company authorized, or as of the date of this
Agreement issued or outstanding, (2) as of the date of this Agreement 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
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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, and (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 other entity.
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 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 Alcoa nor Merger
Sub will be an "interested stockholder" within the meaning of Section 203 of the
DGCL by virtue of Alcoa, Merger Sub 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 Alcoa and Merger Sub,
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 Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
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
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its 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, judgment, permit, license,
ordinance, law, 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 are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on the Company or prevent or substantially delay the
consummation of the transactions contemplated hereby.
Section 3.4 Reports and Financial Statements. The Company has
previously furnished or otherwise made available to Alcoa true and complete
copies of:
(a) the Company's Annual Reports on Form 10-K filed with
the Securities and Exchange Commission (the "SEC") for each of the years ended
December 31, 1997 and 1998;
(b) the Company's Quarterly Reports on Form 10-Q filed
with the SEC for the quarters ended March 31, 1999 and June 30, 1999;
(c) each definitive proxy statement filed by the Company
with the SEC since December 31, 1997;
(d) each final prospectus filed by the Company with the
SEC since December 31, 1997, 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, 1998.
As of their respective dates or as amended or superceded thereafter, 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
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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. 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 in all
material respects the financial position of the Company 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 recurring 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, 1998, 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
required to be set forth on a balance sheet of the Company under GAAP, whether
or not accrued, contingent or otherwise, and there is no existing condition,
situation or set of circumstances which could be expected to result in such a
liability or obligation, except (a) liabilities or obligations reflected in the
Company SEC Reports filed prior to the date hereof and (b) liabilities or
obligations incurred in the ordinary course of business since the date of the
Company's latest financial statements included in the Company SEC Reports, and
(c) liabilities and obligations which, individually or in the aggregate, would
not 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 order, writ,
injunction, decree, judgment, permit, license, ordinance, law, statute, rule or
regulation of any Governmental Entity (provided that no representation or
warranty is made in this Section 3.6 with respect to Environmental Laws), 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.
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Section 3.7 Environmental Matters.
(a) Except as set forth on Section 3.7 of the Company
Disclosure Schedule, 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 failures to be in compliance which, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect on the Company.
(b) Except as set forth on Section 3.7 of the Company
Disclosure Schedule, there are no Environmental Claims pending, or to the
knowledge of the Company threatened, against the Company or any of its
Subsidiaries, or, to the knowledge of the Company, any Person whose liability
for any such Environmental Claim the Company or any of its Subsidiaries has or
may have retained or assumed either contractually or by operation of law for
which adequate reserves have not been established, that, individually or in the
aggregate, would have a Material Adverse Effect on the Company.
(c) Except as set forth in Section 3.7(c) of the Company
Disclosure Schedule and for matters as to which adequate reserves have been
established therefor, to the 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, that could form the basis of any Environmental Claim
against the Company or any of its Subsidiaries, or to the 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 have a Material Adverse Effect on the Company.
(d) Except as set forth in Section 3.7(d) of the Company
Disclosure Schedule, to the 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
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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 Environ-
mental 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 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:
(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 (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 now or hereafter 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
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other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated by any Governmental Entity under any
Environmental Law.
Section 3.8 Employee Benefit Plans; ERISA.
(a) The term "Company Plan" means a deferred compensation,
incentive compensation or equity compensation plan; a "welfare" plan, fund or
program (within the meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); or a "pension" plan, fund or
program (within the meaning of section 3(2) of ERISA), in each case, that is
sponsored, maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Company would be deemed a "single employer"
within the meaning of section 4001(b) of ERISA, for the benefit of any employee
or former employee of the Company or any Subsidiary (the "Company Plans"). The
term "U.S. Company Plan" means a Company Plan that is not maintained outside the
United States primarily for the benefit of persons substantially all of whom are
nonresident aliens with respect to the United States.
(b) No U.S. Company Plan has been adopted since December
31, 1998, and no amendments have been made to any U.S. Company Plan since
December 31, 1998.
(c) Except as would not have a Material Adverse Effect, no
liability under Title IV or section 302 of ERISA has been incurred by the
Company or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring any such liability, other than liability for premiums due
the Pension Benefit Guaranty Corporation (which premiums have been paid when
due).
(d) Except as would not have a Material Adverse Effect,
each Company Plan has been operated and administered in all material respects in
accordance with its terms and applicable law, including but not limited to ERISA
and the Code, and each U.S. Company Plan 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.
(e) The consummation of the transactions contemplated by
this Agreement will not, either alone or in combination with another event, (A)
entitle
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any current or former employee or officer of the Company or any ERISA Affiliate
to severance pay or any other payment, except as expressly provided in this
Agreement, or (B) accelerate the time of payment or vesting, or increase the
amount of, compensation due any such employee or officer.
(f) Except as would not have a Material Adverse Effect,
there are no pending, threatened or anticipated claims by or on behalf of any
U.S. Company Plan, by any employee or beneficiary covered under any such U.S.
Company Plan, or otherwise involving any such U.S. Company Plan (other than
routine claims for benefits).
(g) No amounts payable under the Company Plans will be
"excess parachute payments" within the meaning of Section 280G of the Code and
the proposed Treasury regulations thereunder.
Section 3.9 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports, since the date of the last filed 10-Q (a)
the businesses of the Company and its Subsidiaries have been conducted in the
ordinary course 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 Company.
Section 3.10 Proxy Statement/Prospectus; Registration Statement.
The Proxy Statement 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, 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.
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 contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
will, 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,
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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 Alcoa or Merger Sub for inclusion
therein.
Section 3.11 Tax Matters.
(a) All federal, state, local and foreign Tax Returns
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 is a member (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. 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 for would not, individually or in the aggregate, have
a Material Adverse Effect on the Company. No issue has been raised on any audit
or examination and there is no 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, individually or in the aggregate, 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 except to the extent that any failures to pay would not, individually or in
the aggregate, have a Material Adverse Effect on the Company. The federal income
Tax Returns of the Company Affiliated Group have been examined, and such
examinations have been resolved, or the statute of limitations has expired, for
all taxable years through 1991. 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 except to
the extent of any liabilities that would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. 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
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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 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, except
for any such agreements, waivers or extensions that would not, individually or
in the aggregate, have a Material Adverse Effect on the Company. There are no
Liens relating to Taxes upon the assets of the Company or any Subsidiary of the
Company other than Liens relating to Taxes not yet due and Liens that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Neither the Company nor any Subsidiary of the Company is a party to or is bound
by any Tax sharing agreement, Tax indemnity obligation or similar agreement in
respect of Taxes (other than with respect to agreements solely between or among
members of the consolidated group of which the Company is the common parent and
agreements and obligations that would not, individually or in the aggregate,
have a Material Adverse Effect on the Company). No consent under Section 341(f)
of the Code has been filed with respect to the Company or any Subsidiary of the
Company, other than consents which, individually or in the aggregate, would not
have a Material Adverse Effect on the Company.
(c) 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 3.12 Opinion of Financial Advisors. The Board of
Directors of the Company has received the opinions of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and
▇▇▇▇▇▇▇, Sachs & Co., dated the date of this Agreement, substantially to the
effect that, as of such date, the Exchange Ratio to be offered by Alcoa in the
Merger is fair to such holders from a financial point of view.
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Section 3.13 Required Vote of the Company Stockholders. The
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock (the "Company Stockholder Approval") is the only vote of
the holders of any class or series of the Company's capital stock which is
necessary to approve and adopt this Agreement and the transactions contemplated
hereby.
Section 3.14 Rights Plan. The Company has duly amended the Rights
Agreement so that the Rights Agreement will not be applicable to Alcoa, Merger
Sub, this Agreement, the Merger or any other transaction contemplated by this
Agreement, in each case to the extent provided for and made consistent with the
terms of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF ALCOA AND MERGER SUB
Except as set forth on the schedule delivered by Alcoa to the
Company prior to the execution of this Agreement (the "Alcoa Disclosure
Schedule," and together with the Company Disclosure Schedule, the "Disclosure
Schedule"), and except as otherwise disclosed on the Alcoa SEC Reports, Alcoa
and Merger Sub represent and warrant to the Company as set forth below:
Section 4.1 Organization, Qualification, Etc.
(a) Each of Alcoa and Merger Sub 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 or presently proposed to be
conducted. Each of Alcoa and Merger Sub 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 qualified and in good standing would
not, individually or in the aggregate, have a Material Adverse Effect on Alcoa
or delay consummation of the transactions contemplated by this Agreement or
otherwise prevent Alcoa or Merger Sub from performing its obligations hereunder.
Alcoa has delivered or made available to the Company copies of the articles of
incorporation and by-laws for Alcoa and each of its Significant Subsidiaries and
the certificate of
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incorporation and by-laws for Merger Sub. Such organizational documents are
complete and correct and in full force and effect, and neither Alcoa nor any of
its Significant Subsidiaries nor Merger Sub is in violation of any of the
provisions of their respective articles or certificate of incorporation, or
by-laws or similar organizational documents. Merger Sub is a wholly owned
Subsidiary of Alcoa.
(b) Each of Alcoa's Significant Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization. Each of Alcoa's
Significant Subsidiaries 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 or presently proposed to be
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 qualified or in good standing or to have such governmental
approvals is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on Alcoa.
Section 4.2 Capital Stock.
(a) The authorized capital stock of Alcoa consists of
600,000,000 shares of Alcoa Common Stock, 660,000 shares of $3.75 Cumulative
Preferred Stock, par value $100.00 per share ("Alcoa Serial Preferred Stock")
and 10,000,000 shares of Class B Serial Preferred Stock, par value $1.00 per
share ("Alcoa Class B Serial Preferred Stock"). As of July 31, 1999, (i)
366,753,484 shares of Alcoa Common Stock were issued and outstanding; (ii)
28,453,649 shares of Alcoa Common Stock were subject to outstanding options
issued pursuant to Alcoa's existing stock incentive plans (the "Alcoa Incentive
Plans"), and 47,409,056 shares of Alcoa Common Stock were reserved for issuance
under the Alcoa Incentive Plans; (iii) no shares of Alcoa Common Stock were
reserved for issuance under Alcoa's employees savings plans; (iv) no shares of
Alcoa Common Stock were reserved for issuance under Alcoa's incentive
compensation plan; (v) 27,942,442 shares of Alcoa Common Stock were issued and
held in the treasury of Alcoa; (vi) 557,649 shares of Alcoa Serial Preferred
Stock were issued and outstanding; and (vii) no shares of Alcoa Class B Serial
Preferred Stock are issued and outstanding.
(b) All the outstanding shares of Alcoa Common Stock and
Alcoa 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,
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validly issued, fully paid and non-assessable. Except as set forth in paragraph
(a) above, and except for the transactions contemplated by this Agreement, (1)
there are no shares of capital stock of Alcoa 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 Alcoa,
obligating Alcoa to issue, transfer or sell or cause to be issued, transferred
or sold any shares of capital stock or other equity interest in Alcoa or
securities convertible into or exchangeable for such shares or equity interests,
or obligating Alcoa to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment, and (3)
there are no outstanding contractual obligations of Alcoa to repurchase, redeem
or otherwise acquire any capital stock of Alcoa.
Section 4.3 Corporate Authority Relative to this Agreement; No
Violation.
(a) Each of Alcoa and Merger Sub 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 Alcoa and Merger Sub and by Alcoa as the sole
stockholder of Merger Sub, and other than the filing of the Certificate of
Merger no other corporate proceedings on the part of Alcoa or Merger Sub
(including their respective stockholders) are necessary to authorize the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Alcoa and Merger Sub and, assuming
this Agreement constitutes a valid and binding agreement of the Company,
constitutes a valid and binding agreement of each of Alcoa and Merger Sub,
enforceable against each of Alcoa and Merger Sub in accordance with its terms.
(b) Except for the filings, permits, authorizations, consents and
approvals set forth in Section 4.3(b) of the Alcoa Disclosure Schedule or as may
be required under, and other applicable requirements of the Securities Act, the
Exchange Act, the HSR Act, state securities or blue sky laws and the filing of
the merger certificate under the DGCL (the "Alcoa Required Approvals"), none of
the execution, delivery or performance of this Agreement by Alcoa or Merger Sub,
the consummation by Alcoa or Merger Sub of the transactions contemplated hereby
or compliance by Alcoa or Merger Sub with any of the provisions hereof or
thereof will (i) conflict with or result in any breach of any provision of the
articles of incorporation or by-laws of Alcoa or the certificate of
incorporation, by-laws or similar organizational documents
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of any of its Subsidiaries, including Merger Sub, (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 Alcoa, any of its
Subsidiaries or Merger Sub is a party or by which any of them or any of their
respective properties or assets may be bound (the "Alcoa and Merger Sub
Agreements"), or (iv) violate any order, writ, injunction, decree, judgment,
permit, license, ordinance, law, statute, rule or regulation applicable to
Alcoa, 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 are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on Alcoa or prevent or substantially
delay the consummation of the transactions contemplated hereby. Section 4.3(b)
of the Alcoa Disclosure Schedule sets forth a list of all third party consents
and approvals required to be obtained under Alcoa and Merger Sub Agreements
prior to the consummation of the transactions contemplated by this Agreement.
Section 4.4 Reports and Financial Statements. Alcoa has previously
furnished or otherwise made available to the Company true and complete copies
of:
(a) Alcoa's Annual Reports on Form 10-K filed with the SEC
for each of the years ended December 31, 1997 and 1998;
(b) Alcoa's Quarterly Reports on Form 10-Q filed with the
SEC for the quarters ended March 31, 1999 and June 30, 1999;
(c) each definitive proxy statement filed by Alcoa with the
SEC since December 31, 1997;
(d) each final prospectus filed by Alcoa with the SEC since
December 31, 1997, except any final prospectus on Form S-8; and
(e) all Current Reports on Form 8-K filed by Alcoa with the
SEC since January 1, 1998.
As of their respective dates, such reports, proxy statements and prospectuses
(collectively with any amendments, supplements and exhibits thereto, the "Alcoa
SEC Reports") (i) complied as to form in all material respects with the
applicable require-
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ments 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 Alcoa SEC Report was amended or was superseded by a
later filed Alcoa SEC Report, none of the Alcoa 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
Alcoa'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 Alcoa SEC Reports
(including any related notes and schedules) fairly present the financial
position of Alcoa 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 recurring 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, 1997, Alcoa 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 Alcoa nor any of its
Subsidiaries has any liabilities or obligations of any nature required to be set
forth in a balance sheet of Alcoa under GAAP, 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 Alcoa SEC
Reports filed prior to the date hereof, and (b) liabilities or obligations
incurred in the ordinary course of business consistent with past practice since
the date of Alcoa's latest financial statements included in the Alcoa SEC
Reports, which are not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect on Alcoa.
Section 4.6 No Violation of Law. The businesses of Alcoa and its
Subsidiaries are not being conducted in violation of any order, writ,
injunction, decree, judgment, permit, license, ordinance, law, statute, rule 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 Alcoa SEC Reports filed prior to the date hereof and (b)
for violations or possible violations which are not,
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individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on Alcoa.
Section 4.7 Environmental Matters.
(a) Each of Alcoa and its Subsidiaries has obtained all
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 Alcoa. Each of such Environmental Permits is in full
force and effect, and each of Alcoa 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 failures to be in compliance
which, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on Alcoa.
(b) There are no Environmental Claims pending, or to the
knowledge of Alcoa threatened, against Alcoa or any of its Subsidiaries, or, to
the knowledge of Alcoa, any Person whose liability for any such Environmental
Claim Alcoa or any of its Subsidiaries has or may have retained or assumed
either contractually or by operation of law, that, individually or in the
aggregate, would have a Material Adverse Effect on Alcoa.
(c) Except as set forth in Section 4.7(c) of the Alcoa
Disclosure Schedule, to the knowledge of Alcoa, 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 could form the basis of any Environmental Claim against Alcoa or
any of its Subsidiaries, or to the knowledge of Alcoa against any Person whose
liability for any Environmental Claim Alcoa or any of its Subsidiaries has or
may have retained or assumed either contractually or by operation of law,
except for such liabilities which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on Alcoa.
(d) To the knowledge of Alcoa, no site or facility now or
previously owned, operated or leased by Alcoa 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 Environ
mental Law on any site or facility owned, operated or leased by Alcoa or any of
its Subsidiaries, except for such Liens which would not, individually or in the
aggregate, have a Material Adverse Effect on Alcoa, and no action of any
Governmental Entity has
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been taken or, to the 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
Alcoa.
Section 4.8 Absence of Certain Changes or Events. Except as disclosed
in the Alcoa SEC Reports, since the date of the last filed 10-Q (a) the
businesses of Alcoa and its Subsidiaries have been conducted in the ordinary
course 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 Alcoa.
Section 4.9 Proxy Statement/Prospectus; Registration Statement. The
Registration Statement on Form S-4 to be filed with the SEC by Alcoa in
connection with the issuance of the Alcoa 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 Alcoa 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, and on the
date the Proxy Statement is first mailed to stockholders of the Company and at
the time of the Special Meeting, contain any untrue statement of a material
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they are made, not misleading or, 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 Alcoa nor Merger Sub 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.
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Section 4.10 Tax Matters.
(a) All federal, state, local and foreign Tax Returns
required to be filed by or on behalf of Alcoa, each of its Subsidiaries and each
affiliated, combined, consolidated or unitary group of which Alcoa or any of its
Subsidiaries is a member (an "Alcoa 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 Alcoa. All Taxes due and owing by Alcoa, any Subsidiary of Alcoa or
any Alcoa Affiliated Group have been paid, or adequately reserved for, except to
the extent any failure to pay or reserve for would not, individually or in the
aggregate, have a Material Adverse Effect on Alcoa. No issue has been raised on
any audit or examination and there is no deficiency, refund litigation, proposed
adjustment or matter in controversy with respect to any Taxes due and owing by
Alcoa, any Subsidiary of Alcoa or any Alcoa Affiliated Group which if determined
adversely would, individually or in the aggregate, have a Material Adverse
Effect on Alcoa. All assessments for Taxes due and owing by Alcoa, any
Subsidiary of Alcoa or any Alcoa Affiliated Group with respect to completed and
settled examinations or concluded litigation have been paid except to the extent
that any failures to pay would not, individually or in the aggregate, have a
Material Adverse Effect on Alcoa. The federal income Tax Returns of the Alcoa
Affiliated Group have been examined, and such examinations have been resolved,
or the statute of limitations has expired, for all taxable years through 1992.
Neither Alcoa 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 Alcoa and its Subsidiaries except to the extent of any liabilities that
would not, individually or in the aggregate, have a Material Adverse Effect on
Alcoa. Alcoa 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 Alcoa.
(b) Neither Alcoa nor any Subsidiary of Alcoa has (i) entered into a
closing agreement or other similar agreement with a taxing authority relating to
Taxes of Alcoa or any Subsidiary of Alcoa 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, except for any such agreements,
waivers or extensions that would not, individually or
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in the aggregate, have a Material Adverse Effect on Alcoa. There are no Liens
relating to Taxes upon the assets of Alcoa or any Subsidiary of Alcoa other than
Liens relating to Taxes not yet due and Liens that would not, individually or in
the aggregate, have a Material Adverse Effect on Alcoa. Neither Alcoa nor any
Subsidiary of Alcoa is a party to or is bound by any Tax sharing agreement, Tax
indemnity obligation or similar agreement in respect of Taxes (other than with
respect to agreements solely between or among members of the consolidated group
of which Alcoa is the common parent and agreements and obligations that would
not, individually or in the aggregate, have a Material Adverse Effect on Alcoa).
No consent under Section 341(f) of the Code has been filed with respect to Alcoa
or any Subsidiary of Alcoa, other than consents which, individually or in the
aggregate, would not have a Material Adverse Effect on Alcoa.
Section 4.11 Opinion of Financial Advisor. The Board of Directors of
Alcoa has received the opinion of Credit Suisse First Boston Corporation, dated
the date of this Agreement, substantially to the effect that, as of such date,
the Exchange Ratio to be offered by Alcoa in the Merger is fair to Alcoa from a
financial point of view.
Section 4.12 Ownership of Shares; Stockholder Vote. As of the date
hereof, neither Alcoa nor Merger Sub is an "interested stockholder" of the
Company, as such term is defined in Section 203 of the DGCL and neither of them
owns any securities of the Company (except up to 100 Shares). No meeting or vote
of any holders of any class or series of Alcoa capital stock is necessary for
the approval, adoption or consummation by Alcoa of this Agreement or the
transactions contemplated by this Agreement.
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, as may be expressly permitted pursuant to this Agreement,
as may be contemplated by the Company's capital budget or operating budget or as
set forth in Section 5.1 of the Company Disclosure Schedule, the Company:
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(i) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their ordinary and usual course of business;
(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 notify Alcoa of any emergency in the course
of its or its Subsidiaries' respective businesses or in the operation of its or
its Subsidiaries' respective properties if such emergency would have a Material
Adverse Effect on the Company;
(iv) shall not authorize or pay any dividends on or
make any distribution with respect to its outstanding shares of capital stock
(other than regularly quarterly cash dividends by the Company in an amount not
to exceed $0.35 per Share per quarter declared and paid substantially in
accordance with past practice, including establishment of record and payment
dates);
(v) shall not, and shall not permit any of its
Subsidiaries to establish, enter into or amend any severance plan, agreement or
arrangement or any Company Plan or increase the compensation payable or to
become payable or the benefits provided to its officers or employees, other than
as contemplated by any existing contract, employee benefit or welfare plan or
policy, or in the ordinary course of business (1) with respect to employees who
are not officers of the Company, and (2) with respect to annual bonuses and
other incentive awards of employees including officers;
(vi) except with respect to the Company's continuing
restructuring plan, 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 securities except
as contemplated by Section 5.8;
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(vii) shall not propose or adopt any amendments to its
certificate of incorporation or by-laws (or other similar organizational
documents);
(viii) 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 capital stock of any class (whether through the issuance or
granting of options, warrants, commitments, convertible securities,
subscriptions, rights to purchase or otherwise), except for the issuance of
Company Common Stock pursuant to options and grants outstanding as of the date
hereof under any of the Company's 1999 Nonqualified Stock Option Plan, 1996
Nonqualified Stock Option Plan, 1992 Nonqualified Stock Option Plan, 1987
Nonqualified Stock Option Plan, Long Term Performance Share Plan, Stock Plan for
Outside Directors and Restricted Stock Plan for Outside Directors and pursuant
to the terms of the Company's Savings and Investment Plan for Salaried
Employees, Hourly Savings Plan, Employee Savings Plan and Incentive Compensation
Plan (each such plan, an "Equity Plan") or (2) options and other equity awards
granted in the ordinary course of business consistent with past practice or
pursuant to formula awards, in either case under an Equity Plan;
(ix) shall not 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;
(x) other than in the ordinary course of business,
shall not, and shall not permit any of its Subsidiaries to, (a) incur, assume or
prepay any indebtedness or any other material liabilities for borrowed money or
issue any debt securities other than as may be necessary or advisable in
connection with the Company's capital and operating budget or to effectively
manage cash flow, 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 Subsidiaries);
(xi) shall not, and shall not permit any of its
Subsidiaries to (or consent to any proposal by any Person in which the Company
has an investment to), make or forgive any loans, advances or capital
contributions to, or investments in, any other Person (including any
intercompany loans, advances or capital contributions to, or investments in, any
affiliate) other than in the ordinary course of business or as may be required
by existing obligations;
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(xii) shall not, and shall not permit any of its
Subsidiaries to, (a) sell, lease, license or otherwise subject to any Lien or
otherwise dispose of any of its properties or assets (including
securitizations), other than in the ordinary course of business and other than
in connection with transactions permitted by subsection (x) above or in
connection with the receivables securitization previously approved by the
Company's Board; (b) modify, amend or terminate any of its material contracts or
waive, release or assign any material rights (except in the ordinary course of
business); or (c) permit any insurance policy naming it as a beneficiary or a
loss payable payee to lapse, be cancelled or expire unless a new policy with
substantially identical coverage is in effect as of the date of lapse,
cancellation or expiration except in the ordinary course of business;
(xiii) shall not, and shall not permit any of its
Subsidiaries to change any of the financial 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 take any action which would (y) make any representation or warranty
in Article III hereof untrue or incorrect, or (z) result in any of the
conditions to the Merger set forth in Article VI hereof not being satisfied.
Section 5.2 Alcoa Interim Operations. Except as set forth in Section
5.2 of the Alcoa Disclosure Schedule, or as otherwise expressly contemplated
hereby, without the prior consent of the Company, from the date hereof until the
Effective Time, Alcoa shall, and shall cause each of its Subsidiaries to,
conduct their business in all material respects in the ordinary course
consistent with past practice and use all reasonable efforts to (i) preserve
intact its present business organization, (ii) keep available the services of
its key officers and key employees, (iii) maintain in effect all material
foreign, federal, state and local licenses, approvals and authorizations,
including, without limitation, all material licenses and permits that are
required for Alcoa or any of its Subsidiaries to carry on its business and (iv)
preserve existing relationships with its material partners, lenders, suppliers
and others having material business relationships with it so that the business
of Alcoa and its Subsidiaries shall not be impaired in any material respect at
the Effective Time. Without limiting the generality of the foregoing, except as
set forth in the above-mentioned written disclosure or as otherwise expressly
contemplated by this Agreement, from the date hereof until
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the Effective Time, without the prior written consent of the Company, Alcoa
shall not, nor shall it permit any Subsidiary to:
(a) amend Alcoa's articles of incorporation or by-laws;
(b) amend any material terms of the shares of Alcoa Common
Stock;
(c) split, combine, subdivide or reclassify any shares of
Alcoa Common Stock or declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of Alcoa Common Stock, except for (i) regular quarterly cash dividends,
(ii) regular dividends on any future series of preferred stock pursuant to the
terms of such securities, or (iii) dividends paid by any Subsidiary to Alcoa or
any Subsidiary that is, directly or indirectly, wholly owned by Alcoa;
(d) take any action that would or would reasonably be
expected to prevent, impair or materially delay the ability of the Company or
Alcoa to consummate the transactions contemplated by this Agreement;
(e) change (i) its methods of accounting or accounting
practices in any material respect except as required by concurrent changes in
GAAP or by law or (ii) its fiscal year;
(f) enter into or acquire any new line of business that (i)
is material to Alcoa and its Subsidiaries, taken as a whole, and (ii) is not
strategically related to the current business or operations of Alcoa and its
Subsidiaries;
(g) incur indebtedness outside of the ordinary course or for
acquisitions unless, in the reasonable judgment of Alcoa, such incurrence is not
reasonably likely to result in the rating accorded Alcoa's senior debt by
▇▇▇▇▇'▇ Investor's Service and Standard & Poor's Rating Services to be
non-investment grade;
(h) engage in any (i) merger, consolidation, share exchange,
business combination, reorganization, recapitalization or other similar
transaction unless the shareholders of Alcoa prior to such transaction own,
directly or indirectly, a majority of the equity interests in the surviving or
resulting corporation, (ii) transaction as a result of which any third party
acquires, directly or indirectly, an equity interest representing greater than
25% of the voting securities of Alcoa or any of its Significant Subsidiaries
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or (iii) disposition, directly or indirectly, of assets, securities or ownership
interests representing 15% or more of the total assets of Alcoa and its
Subsidiaries taken as a whole;
(i) take any action that would make any representation or
warranty of Alcoa hereunder inaccurate in any material respect at the Effective
Time; or
(j) agree or commit to do any of the foregoing.
Section 5.3 Access; Confidentiality.
(a) Except for competitively sensitive information and
subject to legal and contractual restrictions, the Company shall (and shall
cause each of its Subsidiaries to) afford to the officers, employees,
accountants, counsel and other authorized representatives of Alcoa reasonable
access during normal business hours upon reasonable notice, throughout the
period prior to the earlier of the Effective Time or the Termination Date, to
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 to Alcoa such additional financial and operating data and other
information as to its and its Subsidiaries' respective businesses and properties
as Alcoa may from time to time reasonably request. Alcoa and Merger Sub will
make all reasonable best 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. Alcoa shall afford to the officers, employees,
accountants, counsel and other authorized representatives of the Company
reasonable access during normal business hours upon reasonable notice, to its
officers and accountants to the extent reasonably necessary in connection with
the preparation of the Proxy Statement. No investigation pursuant to this
Section 5.3(a) shall affect any representation or warranty in this Agreement of
any party hereto or any condition to the obligations of the parties hereto. All
requests for access and information shall be coordinated through senior
executives of the parties to be designated.
(b) Alcoa will not, and will cause its officers, employees,
accountants, counsel and representatives not to, use any information obtained
pursuant to this Section 5.3 for any purpose unrelated to the consummation of
the transactions contemplated by this Agreement. Pending consummation of the
transactions herein
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contemplated, Alcoa will keep confidential, and will cause its officers,
employees, accountants, counsel and representatives to keep confidential, all
information and documents obtained pursuant to this Section 5.3 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, or (iv) is disclosed with the prior written approval of the other party.
Upon any termination of this Agreement, Alcoa will, upon request, collect and
deliver to the Company all documents obtained by it or any of its officers,
employees, accountants, counsel and representatives then in their possession and
any copies thereof. Alcoa and its representatives shall not contact any
distributors, suppliers, employees or customers of the Company in connection
with or in discussion of the transactions contemplated hereby without the
Company's prior consent.
Section 5.4 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 and, after consultation with Alcoa, 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
amendments or supplements 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 amendments or supplements to
the Proxy Statement will be made by the Company without consultation with Alcoa
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
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(ii) unless this Agreement has been terminated in
accordance with Article VII and subject to fiduciary duties and Section 5.8(a),
include in the Proxy Statement the recommendation of the Board that stockhold
ers of the Company vote in favor of the approval of the Merger and the approval
and adoption of this Agreement.
Alcoa will cooperate with respect to the Company' efforts respecting the
foregoing and provide all appropriate information promptly.
(c) As promptly as practicable following the date of this
Agreement, Alcoa 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. Alcoa 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 amendments or supplements thereto, to be mailed
to the Company's stockholders at the earliest practicable date after the
Registration Statement is declared effective by the SEC, provided that no
amendments or supplements to the Registration Statement will be made by Alcoa
without consultation with the Company and its counsel. Alcoa shall also take any
action required to be taken under state blue sky or other securities laws in
connection with the issuance of Alcoa Common Stock in the Merger. Alcoa shall
take all action necessary to cause the representations in Section 4.4 to be true
and correct at all applicable times with respect to the Registration Statement.
Section 5.5 Further Action; Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions hereof,
each of the parties hereto shall use its best efforts to take, or cause to be
taken, all appropriate action, and to do or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement as
soon as practicable, including, but not limited to, (i) cooperating in the
preparation and filing of the Proxy Statement, the Registration Statement, any
required filings under the HSR Act or under any foreign antitrust, competition
or trade regulation law, regulation or statute, and any amendments to any
thereof, (ii) promptly making all required regulatory filings and applications
including, without limitation, responding promptly to requests for further
information, to obtain all licenses, permits, consents, clearances, approvals,
authorizations, qualifications and
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orders of governmental authorities and parties to contracts with the Company and
its subsidiaries as are necessary for the consummation of the transactions
contemplated by this Agreement and to fulfill the conditions to the Merger
("Governmental Consents"), (iii) defending through litigation on the merits any
antitrust, trade regulation or competition claim asserted in any court by any
Governmental Entity, including, but not limited to, defending against any
request for, or seeking to have vacated or terminated, any decree, order or
judgment that would restrain, prevent or delay consummation of the Merger, and
(iv) divesting such plants, assets or businesses of Alcoa or the Company or any
of their respective Subsidiaries (including entering into customary ancillary
agreements on commercially reasonable terms relating to any such divestiture of
such assets or businesses) as may be required in order to avoid the filing of a
lawsuit by any Governmental Entity seeking to enjoin the Merger, or the entry
of, or to effect the dissolution of, any injunction, temporary restraining
order, or other order in any suit or proceeding, which would otherwise have the
effect of preventing or delaying the consummation of the Merger; provided,
however, that Alcoa shall not be required to take any actions in connection
with, or agree to, any hold separate order, sale, divestiture, or disposition of
plants, assets and businesses of Alcoa and its Subsidiaries or the Company and
its Subsidiaries that accounted in the aggregate for more than 2 1/2% of the
combined sales of Alcoa and the Company in fiscal year 1998. At the request of
Alcoa, the Company shall agree to divest, hold separate or otherwise take or
commit to take any action that limits its freedom of action with respect to, or
its ability to retain, any of the businesses, product lines or assets of the
Company or any of its Subsidiaries, provided that any such action shall be
conditioned upon the consummation of the Merger.
(b) The Company and Alcoa shall keep the other apprised of
the status of matters relating to the completion of the transactions
contemplated hereby and work cooperatively in connection with obtaining
Governmental Consents, including, without limitation: (i) promptly notifying the
other of, and if in writing, furnishing the other with copies of (or, in the
case of material oral communications, advise the other orally of) any
communications from or with any Governmental Entity with respect to the Merger
or any of the other transactions contemplated by this Agreement, (ii) permitting
the other party to review and discuss in advance, and considering in good faith
the views of one another in connection with, any proposed written (or any
material proposed oral) communication with any Governmental Entity, (iii) not
participating in any meeting with any Governmental Entity unless it consults
with the other party in advance and to the extent permitted by such Governmental
Entity gives the other party the opportunity to attend and participate thereat,
(iv) furnishing the other party with copies of all correspondence, filings and
communications (and
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memoranda setting forth the substance thereof) between it and any Governmental
Entity with respect to this Agreement and the Merger, and (v) furnishing the
other party with such necessary information and reasonable assistance as such
other party may reasonably request in connection with its preparation of
necessary filings or submissions of information to any Governmental Entity. The
Company and Alcoa may, as each deems advisable and necessary, reasonably
designate any competitively sensitive material provided to the other under this
Section as "outside counsel only." Such materials and the information contained
therein shall be given only to the outside legal counsel of the recipient and
will not be disclosed by such outside counsel to employees, officers, or
directors of the recipient unless express permission is obtained in advance from
the source of the materials (the Company or Alcoa, as the case may be) or its
legal counsel.
Section 5.6 Employee Stock Options and Other Employee Benefits.
(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 Alcoa 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 Alcoa, 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 5.6
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) Alcoa 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, Alcoa shall take
all corporate action necessary to reserve for issuance a sufficient number of
shares of Alcoa Common Stock for delivery upon exercise of Company Stock Options
assumed by it in accordance with this Section 5.6. As soon as practicable after
the Effective Time, if necessary, Alcoa shall file a registration statement on
Form S-8 (or any successor or other appropriate forms), or another appropriate
form with respect to the Alcoa Common Stock subject
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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, 2001,
Alcoa shall, or shall cause the Surviving Corporation and its subsidiaries to,
maintain employee benefit plans, programs and arrangements for each individual
who was an employee or retiree of the Company or any Subsidiary immediately
prior to the Effective Time and is after the Effective Time an employee or
retiree of Alcoa, the Surviving Corporation, any Subsidiary or any other
affiliate of Alcoa, which are, in the aggregate, no less favorable than those
provided by the Company and its Subsidiaries as of immediately before the
Effective Time. Each person who is an employee or former employee of the Company
or its Subsidiaries immediately prior to the Effective Time (a "Company
Employee") shall be given credit for all service with the Company (and service
credited by the Company) prior to the Effective Time, using the same methodology
utilized by the Company as of immediately before the Effective Time for
crediting service and determining levels of benefits, under (i) all employee
benefit plans, programs and arrangements maintained by or contributed to by
Alcoa and its Subsidiaries (including, without limitation, the Surviving
Corporation) in which such Company Employees become participants for purposes of
eligibility to participate, vesting and determination of level of benefits
(excluding, however, benefit accrual under any defined benefit plans), and (ii)
severance plans for purposes of calculating the amount of each Company
Employee's severance benefits. Alcoa and the Surviving Company shall (x) waive
all limitations as to preexisting conditions exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Company
Employees under any welfare benefit plans that such Company Employees may be
eligible to participate in after the Effective Time, other than limitations or
waiting periods that are already in effect with respect to such employees and
that have not been satisfied as of the Effective Time under any welfare benefit
plan maintained for the Company Employees immediately prior to the Effective
Time, and (y) provide each Company Employee with credit for any co-payments and
deductibles paid prior to the Effective Time in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that such
employees are eligible to participate in after the Effective Time. Without
limiting the generality of the foregoing: (i) Alcoa shall, and shall cause the
Surviving Corporation and its subsidiaries to, assume and honor the Company's
Severance Plan for Salaried Employees, all other Company Plans, all employment,
consulting, termination and severance agreements and all other employee benefit
plans, funds, programs, agreements and arrangements, in each case in accordance
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with their terms; (ii) for the period through and including December 31, 2001,
Alcoa shall, or shall cause the Surviving Corporation and its Subsidiaries to,
maintain retiree medical benefits for employees and former employees of the
Company and its Subsidiaries that are no less favorable than those provided
immediately before the Effective Time.
Section 5.7 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, Alcoa and Merger Sub 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 5.8 Solicitation by the Company.
(a) From and after the 30th day following the date of this
Agreement, neither the Company nor any of its Subsidiaries nor any of the
officers and directors of any of them shall, and the Company shall direct and
use its reasonable best efforts to cause its and its Subsidiaries' employees,
agents and representatives, including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries (the Company, its
Subsidiaries and their respective officers, directors, employees, agents and
representatives being the "Company Representatives") not to, directly or
indirectly, initiate, solicit or encourage any inquiries (by way of furnishing
information or otherwise) or the making of any proposal or offer with respect to
a merger, reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving it,
or any purchase or sale of the consolidated assets (including, without
limitation, stock of Subsidiaries) of it or any of its Subsidiaries, taken as a
whole, having an aggregate value equal to 20% or more of its market
capitalization, or any purchase or sale of, or tender or exchange offer for, 20%
or more of its equity securities (any such proposal or offer being referred to
as an "Acquisition Proposal"). Neither the Company nor any of its Subsidiaries
nor any of their respective officers and directors shall, and the Company shall
direct and use its reasonable best efforts to cause the Company Representatives
not to, directly or indirectly, have any discussion with or provide any
confidential information or data to any Person relating to or in contemplation
of an Acquisition Proposal or engage in any negotiations concerning an
Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent either the Company or its Board of Directors
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from (A) taking any action, or causing the Company Representatives to take any
action, within the 30 days immediately following the date of this Agreement with
respect to any actual or potential Acquisition Proposal, including directly or
indirectly initiating, soliciting, encouraging or facilitating (including by
furnishing information or otherwise) any Acquisition Proposal or entering into
discussions or negotiations with any Person with respect to any Acquisition
Proposal; (B) complying with Rule 14e-2 promulgated under the Exchange Act with
regard to an Acquisition Proposal or changing its recommendation; (C) engaging
in any discussions or negotiations with or providing any information to, any
Person in response to an unsolicited bona fide written Acquisition Proposal by
any such Person; or (D) recommending such an unsolicited bona fide written
Acquisition Proposal to the shareholders of the Company; provided further that
the actions referred to in clause (C) shall be permissible only if and to the
extent that the Board of Directors of the Company concludes in good faith (after
consultation with its outside legal counsel and its financial advisor) that such
Acquisition Proposal is reasonably capable of being completed, taking into
account all legal, financial, regulatory and other aspects of the proposal,
including the Person making the proposal, and would, if consummated, result in a
transaction more favorable to the Company's shareholders than the transaction
contemplated by this Agreement (any such more favorable Acquisition Proposal
being referred to as a "Superior Proposal").
(b) Following the 30th day after the date of this Agreement,
the Company shall immediately cease and terminate any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal. The Company shall take the necessary steps promptly
to inform each Company Representative of the obligations undertaken in Section
5.7(a). Following the 30th day after the date of this Agreement, the Company
shall notify Alcoa promptly (in any event, within 24 hours) if any such
inquiries, proposals or offers are received by, any such information is
requested from, or any such discussions or negotiations are sought to be
initiated or continued with, any Company Representative indicating, in
connection with such notice, the name of such Person making such inquiry,
proposal, offer or request and the substance of any such inquiries, proposals or
offers. The Company thereafter shall keep Alcoa informed, on a reasonably
current basis, of the status and terms of any such inquiries, proposals or
offers and the status of any such inquiries, proposals or offers and the status
of any such discussions or negotiations. On the 30th day after the date of this
Agreement, the Company will promptly request each Person that has theretofore
executed a confidentiality agreement in connection with its consideration of any
Acquisition Proposal to return or destroy all confidential information
theretofore furnished to such Person by or on behalf of the Company or any of
its Subsidiaries.
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(c) At the meeting of the Company's Board of Directors at
which this Agreement was considered, authorized and approved, held August 18,
1999, the Board of Directors of the Company unanimously by all members present
declared it advisable that the Company's stockholders approve this Agreement.
Notwithstanding any subsequent determination by the Board of Directors of the
Company to change such recommendation, unless it has been terminated in
accordance with Section 7.1, this Agreement shall be submitted to the
stockholders of the Company at the Special Meeting for the purpose of obtaining
the Company Stockholder Approval and nothing herein shall be deemed to relieve
the Company of such obligation.
Section 5.9 Public Announcements. Alcoa 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 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 NYSE.
Section 5.10 Indemnification; Insurance. (a) From and after the
Effective Time, Alcoa 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 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 same
extent that such Indemnified Party is currently indemnified by the Company or
such Subsidiary under the certificate or articles of incorporation or by-laws or
other organizational documents, agreements or policies of the Company or such
Subsidiary in effect on the date hereof.
(b) For six years from the Effective Time, Alcoa shall
maintain in effect the Company's current directors' and officers' liability
insurance policy (the "Company Policy") covering those persons who are currently
covered by the Company Policy; provided, however, that in no event shall Alcoa
be required to expend in any one year an amount in excess of the annual premiums
currently paid by the Company for such insurance, and, provided, further, that
if the annual premiums of such insurance coverage exceeds such amount, Alcoa
shall be obligated to obtain a policy with the greatest coverage available for a
cost not exceeding such amount; and provided,
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further, that Alcoa may meet its obligations under this paragraph by covering
the above persons under Alcoa's insurance policy or policies on the terms
described above.
Section 5.11 Additional Reports and Information.
(a) The Company shall furnish to Alcoa 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, recurring
year-end adjustments), in each case in accordance with GAAP consistently applied
during the periods involved (except as otherwise disclosed in the notes
thereto).
(b) Alcoa 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 Alcoa 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 Alcoa 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, recurring 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).
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Section 5.12 Affiliates. At the time the Proxy Statement is mailed to
stockholders of the Company, the Company shall deliver to Alcoa a list
identifying, to the best of the Company's knowledge, all persons who will be, 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 Alcoa 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 Alcoa at least 30 days prior to the Closing Date a
written "affiliates" agreement in customary form and substance.
Section 5.13 NYSE Listing. Alcoa shall use its best efforts to cause
the shares of Alcoa 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 5.14 Tax-Free Reorganization. Alcoa and the Company intend
that the Merger will qualify as a reorganization within the meaning of Section
368(a) of the Code. Alcoa and the Company shall each use all reasonable efforts
to cause the Merger to so qualify. The parties agree and acknowledge that if (i)
Alcoa has, not later than three days prior to the Effective Time, provided
written notice to the Company of its intention to merge the Surviving
Corporation with and into Alcoa with Alcoa surviving the merger (the "Upstream
Merger") and (ii) the Company consents to the Upstream Merger, which consent
shall not be unreasonably withheld, then the Upstream Merger shall occur
immediately following the Effective Time. Neither Alcoa nor the Company shall
knowingly take any action, or knowingly fail to take any action, that would
cause the Merger or the Upstream Merger (if the Upstream Merger occurs) not to
qualify as a reorganization within the meaning of Section 368(a) of the Code,
unless otherwise required pursuant to a "determination" within the meaning of
Section 1313(a) of the Code. No representation or warranty is made as to any
filings, notices or consents which may be necessary in connection with the
Upstream Merger, and the failure to obtain any such consents shall not affect
the conditions to the Closing or constitute a basis for delay with respect to
the Closing.
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ARTICLE VI
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 permanent 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; provided that the party
seeking to rely upon this condition has fully complied with and performed its
obligations pursuant to Section 5.3.
(c) The applicable waiting period under the HSR Act shall
have expired or been terminated.
(d) The shares of Alcoa Common Stock to be issued in the
Merger shall have been approved for listing on the NYSE, subject to official
notice of issuance.
(e) The Registration Statement shall have become effective
in accordance with the provisions of the Securities Act and no stop order
suspending such effectiveness shall have been issued and remain in effect.
Section 6.2 Conditions to Obligation of Alcoa and Merger Sub to Effect
the Merger. The obligation of Alcoa and Merger Sub to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
additional conditions, unless waived in writing by Alcoa:
(a) Alcoa shall have received an opinion of Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, tax counsel to Alcoa, 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 Alcoa, Merger Sub
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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. The opinion condition referred to in this Section 6.2(a) shall
not be waivable after receipt of the Company Stockholder Approval referred to in
Section 6.1(a), unless further stockholder approval is obtained with appropriate
disclosure.
(b) 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 (other than
those that speak as of a specific date or as of the date hereof, which shall be
true and correct as of such specific date or as of the date hereof,
respectively), except for such inaccuracies as, individually or in the
aggregate, would not have a Material Adverse Effect on the Company.
(c) The Company 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 it on or prior to the
Closing Date.
(d) The Company shall have furnished a certificate of an
officer to evidence compliance with the conditions set forth in Section 6.2(b)
and (c) of this Agreement.
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
conditions, unless waived in writing by the Company:
(a) The Company shall have received an opinion of Wachtell,
Lipton, ▇▇▇▇▇ & ▇▇▇▇, 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 Alcoa, Merger Sub 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. The opinion
condition referred to in this Section 6.3(a) shall not be waivable after receipt
of the Company Stockholder Approval referred to in Section 6.1(a), unless
further stockholder approval is obtained with appropriate disclosure.
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(b) The representations and warranties of Alcoa and Merger
Sub 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 (other
than those that speak as of a specific date or as of the date hereof, which
shall be true and correct as of such specific date or as of the date hereof,
respectively), except for such inaccuracies as, individually or in the
aggregate, would not have a Material Adverse Effect on Alcoa.
(c) Alcoa and Merger Sub 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.
(d) Alcoa and Merger Sub shall have furnished a certificate
of their respective officers to evidence compliance with the conditions set
forth in Section 6.3(b) and (c) of this Agreement.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after obtaining the Company
Stockholder Approval:
(a) by the mutual written consent of the Company and Alcoa;
(b) by either Alcoa or the Company, if the Merger has not
been consummated by August 30, 2000, provided that such date shall automatically
be extended until February 28, 2001 if, on August 30, 2000, the waiting period
under the HSR Act has not expired or been terminated or any injunction, order or
decree shall prohibit or restrain consummation of the Merger and provided
further that the right to terminate this Agreement under this clause (b) shall
not be available to any party whose failure to fulfill any of its obligations
under this Agreement has been the cause of or resulted in the failure to
consummate the Merger by such date;
(c) by either Alcoa or the Company if (i) a statute, rule,
regulation or executive order shall have been enacted, entered, promulgated or
enforced
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by any Governmental Entity prohibiting the consummation of the Merger
substantially on the terms contemplated hereby; or (ii) an order, decree, ruling
or injunction shall have been entered permanently restraining, enjoining or
otherwise prohibiting the consummation of the Merger substantially on the terms
contemplated hereby and such order, decree, ruling or injunction shall have
become final and non-appealable; provided, that the party seeking to terminate
this Agreement pursuant to this Section 7.1(c)(ii) shall have used its
reasonable best efforts to remove such order, decree, ruling or injunction and
shall not be in violation of Section 5.5;
(d) by the Company, if the Board of Directors of the Company
has provided written notice to Alcoa that the Company intends to enter into a
binding written agreement for a Superior Proposal; provided, however, that: (i)
the Company shall have complied with Section 5.8 hereof in all material
respects; (ii) the Board of Directors of the Company shall have reasonably
concluded in good faith, prior to giving effect to any offer which may be made
to the Company by Alcoa pursuant to clause (iv) below, in consultation with its
financial advisors and outside counsel, that such proposal is a Superior
Proposal; (iii) the Company shall have (A) notified Alcoa in writing of its
receipt of such Superior Proposal, (B) further notified Alcoa in such writing
that the Company intends to enter into a binding agreement with respect to such
Superior Proposal subject to clause (iv) below and (C) attached the most current
written version of such Superior Proposal (or a summary containing all material
terms and conditions of such Superior Proposal) to such notice; and (iv) Alcoa
does not make, within three calendar days after receipt of the Company's written
notice pursuant to clause (iii) above, an offer that the Board of Directors of
the Company shall have reasonably concluded in good faith in consultation with
its financial advisors and outside counsel is more favorable to the shareholders
of the Company than the Superior Proposal; or
(e) by Alcoa 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 5.3, 7.3 and
8.2), and there shall be no other liability on
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the part of Alcoa, Merger Sub or the Company except liability arising out of a
willful breach of this Agreement.
Section 7.3 Termination Fee. In the event that (i) this Agreement
shall have been terminated pursuant to Section 7.1(d) or (ii) an Acquisition
Proposal for the Company shall have been publicly announced and, following such
announcement, this agreement is terminated pursuant to Section 7.1(e) and,
within 12 months of such termination, such Acquisition Proposal is consummated,
then the Company shall promptly, but in no event later than two days after the
date of such termination, pay to Alcoa a fee equal to $100 million (the
"Termination Fee"), payable by wire transfer of same day funds. The Company
acknowledges that the agreements contained in this Section 7.3 are an integral
part of the transactions contemplated by this Agreement, and that, without these
agreements, Alcoa and Merger Sub would not enter into this Agreement;
accordingly, if the Company fails promptly to pay the amount due pursuant to
this Section 7.3, and, in order to obtain such payment, Alcoa commences a suit
which results in a judgment against the Company for the fee set forth in this
Section 7.3, the Company shall pay to Alcoa its costs and expenses (including
attorneys' fees and expenses) in connection with such suit, together with
interest on the amount of the fee at the prime rate of Citibank N.A. in effect
on the date such payment was required to be made.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 No Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time.
Section 8.2 Expenses. Except as otherwise expressly contemplated by
this Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
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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 Alcoa or Merger Sub:
Alcoa Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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To the Company:
▇▇▇▇▇▇▇▇ Metals Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Secretary
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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 Merger Sub may assign, in its
sole discretion, all or any of its rights and interests hereunder to Alcoa or to
any direct or indirect wholly owned Subsidiary of Alcoa. Alcoa hereby
unconditionally guarantees all obligations hereunder of Merger Sub or any of its
permitted assignees. Subject to the first sentence of this Section 8.6, 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.
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Section 8.8 Enforcement of Agreement. The parties hereto 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 together with the Disclosure Schedule and exhibits hereto 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 Alcoa 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 Alcoa or in
which the Company or Alcoa 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) "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 or other ownership interests, by contract or otherwise.
"Including," as used herein, shall mean "including, without limitation."
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Section 8.12 Finders or Brokers. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and
▇▇▇▇▇▇▇, Sachs & Co. with respect to the Company, and Credit Suisse First Boston
Corporation with respect to Alcoa, neither the Company nor Alcoa 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 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, 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 or other change requiring stockholder approval
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. Notwithstanding the foregoing no failure or
delay by the Company, Alcoa or Merger Sub 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.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the date first above written.
ALCOA INC.
By: /s/ ALAIN ▇.▇. ▇▇▇▇▇
------------------------------
Name: Alain ▇.▇. ▇▇▇▇▇
Title: President and
Chief Executive Officer
RLM ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
and Treasurer
▇▇▇▇▇▇▇▇ METALS COMPANY
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
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