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AGREEMENT AND PLAN OF MERGER
among
ALCOA INC.,
OMEGA ACQUISITION CORP.
and
CORDANT TECHNOLOGIES INC.
Dated as of March 14, 2000
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I
Section 1.1 The Offer................................................... 2
Section 1.2 Company Actions............................................. 4
Section 1.3 Directors of the Company.................................... 5
ARTICLE II
THE MERGER
Section 2.1 The Merger.................................................. 6
Section 2.2 Closing..................................................... 6
Section 2.3 Effective Time.............................................. 7
Section 2.4 Effects of the Merger....................................... 7
Section 2.5 Certificate of Incorporation; By-laws....................... 7
Section 2.6 Directors; Officers of Surviving Corporation................ 8
Section 2.7 Conversion of Securities.................................... 8
Section 2.8 Exchange of Certificates.................................... 9
Section 2.9 Appraisal Rights............................................ 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Qualification, Etc............................ 12
Section 3.2 Capital Stock............................................... 13
Section 3.3 Corporate Authority Relative to this Agreement; No Violation 15
Section 3.4 Reports and Financial Statements............................ 16
Section 3.5 No Undisclosed Liabilities.................................. 18
Section 3.6 No Violation of Law......................................... 18
Section 3.7 Environmental Matters....................................... 18
Section 3.8 Employee Benefit Plans; ERISA............................... 20
Section 3.9 Absence of Certain Changes or Events........................ 22
Section 3.10 Litigation.................................................. 23
Section 3.11 Schedule 14D-9; Offer Documents; and Proxy Statement........ 23
Section 3.12 Intellectual Property....................................... 23
Section 3.13 Tax Matters................................................. 24
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Page
----
Section 3.14 Opinion of Financial Advisor................................ 26
Section 3.15 Required Vote of the Company Stockholders................... 26
Section 3.16 Employment Matters.......................................... 26
Section 3.17 Rights Plan................................................. 27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF ALCOA AND THE PURCHASER
Section 4.1 Organization, Qualification, Etc............................ 27
Section 4.2 Corporate Authority Relative to this Agreement; No Violation 28
Section 4.3 Offer Documents; Proxy Statement; Schedule 14D-9............ 29
Section 4.4 Financing................................................... 29
Section 4.5 Opinion of Financial Advisor................................ 29
Section 4.6 Ownership of Capital Stock.................................. 30
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of Business Prior to the Effective Time............. 30
Section 5.2 Access; Confidentiality..................................... 33
Section 5.3 Special Meeting; Proxy Statement............................ 34
Section 5.4 Reasonable Best Efforts; Further Assurances................. 35
Section 5.5 Employee Stock Options and Other Employee Benefits.......... 37
Section 5.6 Takeover Statute............................................ 39
Section 5.7 No Solicitation by the Company.............................. 39
Section 5.8 Public Announcements........................................ 42
Section 5.9 Indemnification; Insurance.................................. 42
Section 5.10 Disclosure Schedule Supplements............................. 43
Section 5.11 Howmet Acquisition.......................................... 44
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.. 43
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Page
----
ARTICLE VII
TERMINATION
Section 7.1 Termination................................................. 45
Section 7.2 Effect of Termination....................................... 46
Section 7.3 Termination Fee............................................. 46
ARTICLE VIII
MISCELLANEOUS
Section 8.1 No Survival of Representations and Warranties............... 47
Section 8.2 Expenses.................................................... 47
Section 8.3 Counterparts; Effectiveness................................. 47
Section 8.4 Governing Law............................................... 47
Section 8.5 Notices..................................................... 47
Section 8.6 Assignment; Binding Effect.................................. 48
Section 8.7 Severability................................................ 49
Section 8.8 Enforcement of Agreement.................................... 49
Section 8.9 Entire Agreement; No Third-Party Beneficiaries.............. 49
Section 8.10 Headings.................................................... 49
Section 8.11 Definitions................................................. 49
Section 8.12 Finders or Brokers.......................................... 50
Section 8.13 Amendment or Supplement..................................... 50
Section 8.14 Extension of Time, Waiver, Etc.............................. 50
iii
<PAGE>
Index of Defined Terms
Defined Term Section
------------ -------
Acquisition Agreement.................................................... 5.7(b)
Acquisition Proposal..................................................... 5.7(a)
affiliates................................................................. 8.11
Agreement.......................................................... Introduction
Alcoa.............................................................. Introduction
Alcoa and Purchaser Agreements........................................... 4.2(b)
Alcoa Common Stock....................................................... 5.5(a)
Alcoa Disclosure Schedule............................... Article IV Introduction
Asset Transaction........................................................ 5.7(a)
Business Combination Transaction......................................... 5.7(a)
CERCLA................................................................... 3.7(d)
Certificate of Merger....................................................... 2.3
Certificate of Ownership and Merger......................................... 2.3
Certificates............................................................. 2.8(b)
Closing..................................................................... 2.2
Closing Date................................................................ 2.2
Code..................................................................... 2.8(f)
Company............................................................ Introduction
Company Affiliated Group................................................ 3.13(a)
Company Agreements....................................................... 3.3(b)
Company Common Stock................................................... Recitals
Company Disclosure Schedule............................ Article III Introduction
Company Employee......................................................... 5.5(b)
Company Option Plans..................................................... 5.5(a)
Company Plans............................................................ 3.8(a)
Company Preferred Stock.................................................. 3.2(a)
Company Representatives.................................................. 5.7(a)
Company SEC Reports...................................................... 3.4(e)
Company Stockholder Approval............................................... 3.15
Company Title IV Plan.................................................... 3.8(d)
Computer Software....................................................... 3.12(c)
Confidentiality Agreement................................................ 5.2(b)
control.................................................................... 8.11
Copyrights.............................................................. 3.12(c)
DGCL................................................................... Recitals
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Defined Term Section
------------ -------
Disclosure Schedule..................................... Article IV Introduction
Dissenting Shares........................................................... 2.9
Dissenting Stockholders..................................................... 2.9
Drop Dead Date........................................................... 7.1(b)
Effective Time.............................................................. 2.3
Employee Stock Options................................................... 5.5(a)
Environmental Claim................................................... 3.7(f)(i)
Environmental Law.................................................... 3.7(f)(ii)
Environmental Permits.................................................... 3.7(a)
ERISA.................................................................... 3.8(a)
ERISA Affiliate.......................................................... 3.8(a)
Exchange Act............................................................. 1.1(a)
Exchange Agent........................................................... 2.8(a)
Foreign Plans............................................................ 3.8(a)
GAAP..................................................................... 3.4(e)
Governmental Entity...................................................... 3.3(b)
Group SEC Reports........................................................ 3.4(e)
Hazardous Materials................................................. 3.7(f)(iii)
Howmet................................................................... 3.1(b)
Howmet Common Stock...................................................... 3.1(b)
Howmet Options........................................................... 3.2(b)
Howmet Preferred Stock................................................... 3.2(b)
Howmet SEC Reports....................................................... 3.4(e)
Howmet Transaction......................................................... 5.11
HSR Act.................................................................. 3.3(b)
Incipient Superior Proposal.............................................. 5.7(a)
Including.................................................................. 8.11
Indemnified Parties...................................................... 5.9(a)
Independent Director Approval............................................ 1.3(c)
Intellectual Property................................................... 3.12(c)
IRS...................................................................... 3.8(b)
Lien..................................................................... 3.1(b)
Material Adverse Effect.................................................. 3.1(a)
Merger................................................................. Recitals
Merger Consideration..................................................... 2.7(b)
Minimum Condition........................................................ 1.1(a)
New Share Number......................................................... 5.5(a)
ii
<PAGE>
Defined Term Section
------------ -------
Offer.................................................................. Recitals
Offer Documents.......................................................... 1.1(b)
Offer Price............................................................ Recitals
Offer to Purchase........................................................ 1.1(b)
Patents................................................................. 3.12(c)
Person..................................................................... 8.11
Policies................................................................. 5.9(c)
Proxy Statement...................................................... 5.3(a)(ii)
Purchase Date............................................................ 5.5(a)
Purchaser.......................................................... Introduction
Regulatory Condition....................................... Annex A Introduction
Rights................................................................... 3.2(c)
Rights Agreement......................................................... 3.2(a)
Schedule 14D-9........................................................... 1.2(b)
Schedule TO.............................................................. 1.1(b)
SEC...................................................................... 1.1(a)
Securities Act........................................................... 3.3(b)
Shares................................................................. Recitals
Significant Subsidiaries................................................... 8.11
Special Meeting....................................................... 5.3(a)(i)
Subsidiaries............................................................... 8.11
Superior Proposal........................................................ 5.7(a)
Surviving Corporation....................................................... 2.1
Tax Return.............................................................. 3.13(c)
Taxes................................................................... 3.13(c)
Termination Date............................................................ 5.1
Termination Fee............................................................. 7.3
Trademarks.............................................................. 3.12(c)
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of March 14, 2000 (the
"Agreement"), among ALCOA INC., a Pennsylvania corporation ("Alcoa"), OMEGA
ACQUISITION CORP., a Delaware corporation (the "Purchaser"), and CORDANT
TECHNOLOGIES INC., a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of Alcoa, the Purchaser and the
Company deem it advisable and in the best interests of their respective
stockholders that Alcoa acquire the Company upon the terms and subject to the
conditions provided for in this Agreement;
WHEREAS, in furtherance thereof it is proposed that the acquisition be
accomplished by the Purchaser commencing a cash tender offer (as it may be
amended from time to time as permitted by this Agreement, the "Offer") to
purchase all of the issued and outstanding shares of common stock, par value
$1.00 per share, of the Company (the "Company Common Stock") and the associated
Rights (the shares of Company Common Stock and any associated Rights are
referred to herein as "Shares"), for $57.00 per Share (such amount or any
greater amount per Share paid pursuant to the Offer being hereinafter referred
to as the "Offer Price"), subject to applicable withholding Taxes, net to the
seller in cash, upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the Board of Directors of the Company has approved the Offer
and the Merger and resolved to recommend that holders of Shares tender their
Shares pursuant to the Offer and approve and adopt this Agreement and the
Merger; and
WHEREAS, the Boards of Directors of Alcoa (on its own behalf and as
the sole stockholder of the Purchaser), the Purchaser and the Company have each
approved this Agreement and the merger of the Purchaser with and into the
Company (the "Merger") in accordance with the General Corporation Law of the
State of Delaware (the "DGCL"), in the case of each of the Company and the
Purchaser, and in accordance with the Pennsylvania Business Corporation Law, in
the case of Alcoa, 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, the Purchaser and the Company agree as follows:
<PAGE>
ARTICLE I
Section 1.1 The Offer.
---------
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 7.1 and none of the events set forth in paragraphs (a)
through (i) of Annex A hereto shall have occurred or be existing (and shall not
have been waived by the Purchaser), the Purchaser shall commence (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) the Offer as promptly as reasonably practicable after the date
hereof, but in no event later than five business days after the public
announcement of the execution of this Agreement. The obligation of the
Purchaser to accept for payment and pay for Shares tendered pursuant to the
Offer shall be subject only to the satisfaction of the condition that there be
validly tendered and not withdrawn prior to the expiration of the Offer that
number of Shares which represents at least a majority of the then outstanding
Shares on a fully diluted basis (the "Minimum Condition") and to the
satisfaction or waiver by the Purchaser of the other conditions set forth in
Annex A hereto. The Company agrees that no Shares held by the Company or any of
its Subsidiaries will be tendered to the Purchaser pursuant to the Offer. The
Purchaser expressly reserves the right to waive any of such conditions (other
than the Minimum Condition), to increase the price per Share payable in the
Offer and to make any other changes in the terms of the Offer; provided,
however, that no change may be made without the prior written consent of the
Company which decreases the price per Share payable in the Offer, reduces the
maximum number of Shares to be purchased in the Offer, changes the form of
consideration to be paid in the Offer, modifies or amends any of the conditions
set forth in Annex A hereto, imposes conditions to the Offer in addition to the
conditions set forth in Annex A hereto, waives the Minimum Condition or makes
other changes in the terms and conditions of the Offer that are in any manner
adverse to the holders of Shares or, except as provided below, extends the
Offer. Subject to the terms of the Offer and this Agreement and the
satisfaction or earlier waiver of all the conditions of the Offer set forth in
Annex A hereto as of any expiration date of the Offer, the Purchaser will accept
for payment and pay for all Shares validly tendered and not withdrawn pursuant
to the Offer as soon as it is permitted to do so under applicable law.
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (i) extend the Offer beyond the scheduled expiration date, which shall
be 25 business days following the date of commencement of the Offer, if, at the
scheduled expiration of the Offer, any of the conditions to the Purchaser's
obligation to accept for payment and to pay for the Shares shall not be
satisfied or, to the extent permitted by this Agreement, waived or (ii) extend
2
<PAGE>
the Offer for any period required by any rule, regulation or interpretation of
the Securities and Exchange Commission (the "SEC") or the staff thereof
applicable to the Offer, other than Rule 14e-5 promulgated under the Exchange
Act. Unless the Company advises the Purchaser that it does not wish the
Purchaser to extend the Offer, the Purchaser shall extend the Offer from time to
time until the earlier of (A) the date that is 30 days after the date on which
the Regulatory Condition (as defined in Annex A) is satisfied or (B) the Drop
Dead Date, in the event that, at the then-scheduled expiration date, all of the
conditions of the Offer set forth in Annex A hereto have not been satisfied or
waived as permitted by this Agreement. Any extension of the Offer pursuant to
the preceding sentence of clause (i) of the second preceding sentence or this
Section 1.1 shall not exceed the lesser of ten business days or such fewer
number of days that the Purchaser reasonably believes are necessary to cause the
conditions of the Offer set forth in Annex A hereto to be satisfied. The
Purchaser shall provide a "subsequent offering period" (as contemplated by Rule
14d-11 under the Exchange Act) of not less than three business days following
its acceptance for payment of Shares in the Offer. On or prior to the dates
that the Purchaser becomes obligated to accept for payment and pay for Shares
pursuant to the Offer, Alcoa shall provide or cause to be provided to the
Purchaser the funds necessary to pay for all Shares that the Purchaser becomes
so obligated to accept for payment and pay for pursuant to the Offer. The Offer
Price shall, subject to any required withholding of Taxes, be net to the seller
in cash, upon the terms and subject to the conditions of the Offer.
(b) As promptly as practicable on the date of commencement of the
Offer, the Purchaser shall file with the SEC a Tender Offer Statement on
Schedule TO (together with all amendments and supplements thereto, the "Schedule
TO") with respect to the Offer. The Schedule TO shall contain or incorporate by
reference an offer to purchase (the "Offer to Purchase") and forms of the
related letter of transmittal and all other ancillary Offer documents
(collectively, together with all amendments and supplements thereto, the "Offer
Documents"). Alcoa and the Purchaser shall cause the Offer Documents to be
disseminated to the holders of the Shares as and to the extent required by
applicable federal securities laws. Alcoa and the Purchaser, on the one hand,
and the Company, on the other hand, will promptly correct any information
provided by it for use in the Offer Documents if and to the extent that it shall
have become false or misleading in any material respect, and the Purchaser will
cause the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. The Company and its counsel
shall be given a reasonable opportunity to review and comment upon the Schedule
TO before it is filed with the SEC. In addition, Alcoa and the Purchaser agree
to provide the Company and its counsel with any comments,
3
<PAGE>
whether written or oral, that Alcoa or the Purchaser or their counsel may
receive from time to time from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments and to consult with the
Company and its counsel prior to responding to any such comments.
Section 1.2 Company Actions.
---------------
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Company's Board of Directors, at a meeting duly
called and held, has (i) determined that the terms of the Offer and the Merger
are fair to and in the best interests of the stockholders of the Company, (ii)
approved this Agreement and approved the transactions contemplated hereby,
including the Offer and the Merger and (iii) resolved to recommend that the
stockholders of the Company accept the Offer, tender their Shares to the
Purchaser thereunder and approve and adopt this Agreement and the Merger.
Subject to Section 5.7, the Company hereby consents to the inclusion in the
Offer Documents of the recommendation of the Board described in the immediately
preceding sentence.
(b) As promptly as practicable on the date of commencement of the
Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") which shall contain the recommendation referred
to in clause (iii) of Section 1.2(a) hereof. The Company further agrees to take
all steps necessary to cause the Schedule 14D-9 to be disseminated to holders of
the Shares as and to the extent required by applicable federal securities laws.
The Company, on the one hand, and each of Alcoa and the Purchaser, on the other
hand, will promptly correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect, and the Company will cause the Schedule 14D-
9 as so corrected to be filed with the SEC and to be disseminated to holders of
the Shares, in each case as and to the extent required by applicable federal
securities laws. Alcoa and its counsel shall be given a reasonable opportunity
to review and comment upon the Schedule 14D-9 before it is filed with the SEC.
In addition, the Company agrees to provide Alcoa, the Purchaser and their
counsel with any comments, whether written or oral, that the Company or its
counsel may receive from time to time from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments and to consult
with Alcoa, the Purchaser and their counsel prior to responding to any such
comments.
4
<PAGE>
(c) The Company shall promptly furnish the Purchaser with mailing
labels containing the names and addresses of all record holders of Shares and
with security position listings of Shares held in stock depositories, each as of
a recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
non-objecting beneficial owners of Shares. The Company shall furnish the
Purchaser with such additional information, including, without limitation,
updated listings and computer files of stockholders, mailing labels and security
position listings, and such other assistance as Alcoa, the Purchaser or their
agents may reasonably require in communicating the Offer to the record and
beneficial holders of Shares. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Offer or the Merger, Alcoa
and the Purchaser shall hold in confidence the information contained in such
labels, listings and files, shall use such information solely in connection with
the Offer and the Merger, and, if this Agreement is terminated in accordance
with Section 7.1 or if the Offer is otherwise terminated, shall promptly deliver
or cause to be delivered to the Company all copies of such information, labels,
listings and files then in their possession or in the possession of their agents
or representatives.
Section 1.3 Directors of the Company.
------------------------
(a) Promptly upon the purchase of and payment for Shares by the
Purchaser or any of its affiliates pursuant to the Offer, Alcoa shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board of Directors of the Company as is equal to the product
obtained by multiplying the total number of directors on such Board (giving
effect to the directors designated by Alcoa pursuant to this sentence) by the
percentage that the number of Shares so purchased and paid for bears to the
total number of Shares then outstanding. In furtherance thereof, the Company
shall, upon request of the Purchaser, promptly increase the size of its Board of
Directors or exercise its best efforts to secure the resignations of such number
of directors, or both, as is necessary to enable Alcoa's designees to be so
elected to the Company's Board and, subject to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder, shall cause Alcoa's designees to be so
elected. At such time, the Company shall, if requested by Alcoa, also cause
directors designated by Alcoa to constitute at least the same percentage
(rounded up to the next whole number) as is on the Company's Board of Directors
of each committee of the Company's Board of Directors. Notwithstanding the
foregoing, if Shares are purchased pursuant to the Offer, there shall be until
the Effective Time at least two members of the Company's Board of Directors who
are directors on the date hereof and are not employees of the Company.
5
<PAGE>
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under Section 1.3(a), including mailing to
stockholders together with the Schedule 14D-9 the information required by such
Section 14(f) and Rule 14f-1 as is necessary to enable Alcoa's designees to be
elected to the Company's Board of Directors. Alcoa and the Purchaser will
supply the Company and be solely responsible for any information with respect to
them and their nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1.
(c) Following the election of Alcoa's designees to the Company's Board
of Directors pursuant to this Section 1.3, prior to the Effective Time (i) any
amendment or termination of this Agreement by the Company, (ii) any extension or
waiver by the Company of the time for the performance of any of the obligations
or other acts of Alcoa or the Purchaser under this Agreement, or (iii) any
waiver of any of the Company's rights hereunder shall, in any such case, require
the concurrence of a majority of the directors of the Company then in office who
neither were designated by the Purchaser nor are employees of the Company (the
"Independent Director Ap proval").
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the
----------
conditions set forth in this Agreement, and in accordance with the DGCL, at the
Effective Time the Purchaser shall merge with and into the Company, and the
separate corporate existence of the Purchaser 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 the Purchaser, all as provided in the DGCL.
Section 2.2 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,
6
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Slate, Meagher & Flom LLP, Four Times Square, New York, New York, unless another
place is agreed to by the parties hereto.
Section 2.3 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 in accordance with
Section 251 of the DGCL (the "Certificate of Merger") or a certificate of
ownership and merger (the "Certificate of Ownership and Merger") in accordance
with Section 253 of the DGCL, as applicable, 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 Certificate of
Ownership and Merger or at such other time as is agreed by the parties hereto
and specified in the Certificate of Merger or Certificate of Ownership and
Merger (the time at which the Merger becomes fully effective being hereinafter
referred to as the "Effective Time").
Section 2.4 Effects of the Merger. The Merger shall have the
---------------------
effects set forth in Section 259 of the DGCL.
Section 2.5 Certificate of Incorporation; By-laws.
-------------------------------------
(a) At the Effective Time, the Certificate of Incorporation of the
Purchaser, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation; provided, however,
that Article FIRST of the Certificate of Incorporation of the Surviving
Corporation shall be amended to read in its entirety as follows: "FIRST: The
name of the corporation is Cordant Technologies Inc." and as so amended shall be
the Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by the DGCL and such Certificate of Incorporation.
(b) At the Effective Time, the By-laws of the Purchaser, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by the DGCL, the Certificate of
Incorporation of the Surviving Corporation and such By-laws.
7
<PAGE>
Section 2.6 Directors; Officers of Surviving Corporation.
--------------------------------------------
(a) The directors of the Purchaser at the Effective Time shall be the
directors of the Surviving Corporation until their respective successors are
duly elected and qualified or their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and By-laws of the Surviving
Corporation.
(b) The officers of the 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.
Section 2.7 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 the Purchaser or the Company:
(a) Each Share that is owned by Alcoa, the Purchaser, any of their
respective Subsidiaries, the Company or any Subsidiary of the Company shall
automatically be cancelled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(b) Each issued and outstanding Share, other than Shares to be
cancelled in accordance with Section 2.7(a) and Dissenting Shares, shall
automati cally be converted into the right to receive the Offer Price in cash
(the "Merger Consideration"), payable, without interest, to the holder of such
Share, upon surrender, in the manner provided in Section 2.8, of the certificate
that formerly evidenced such Share. All such Shares, when so converted, shall
no longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each holder of a certificate representing any such
Shares shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration therefor upon the surrender of such certificate
in accordance with Section 2.8.
(c) Each issued and outstanding share of common stock, par value $.01
per share, of the Purchaser shall be converted into one validly issued, fully
paid and nonassessable share of common stock of the Surviving Corporation.
8
<PAGE>
Section 2.8 Exchange of Certificates.
------------------------
(a) Exchange Agent. Prior to the Effective Time, 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, the Company and its Subsidiaries, and Dissenting Shares) in
connection with the Merger (the "Exchange Agent") to receive in trust, the
aggregate Merger Consideration to which holders of Shares shall become entitled
pursuant to Section 2.7(b). Alcoa shall deposit such aggregate Merger
Consideration with the Exchange Agent promptly following the Effective Time.
Such aggregate Merger Consideration shall be invested by the Exchange Agent as
directed by Alcoa or the Surviving Corporation.
(b) Exchange Procedures. Promptly after the Effective Time, Alcoa and
-------------------
the Surviving Corporation shall cause to be mailed to each holder of record, as
of the Effective Time, of a certificate or certificates, which immediately prior
to the Effective Time represented outstanding Shares (the "Certificates"), whose
Shares were converted pursuant to Section 2.7(b) into the right to receive the
Merger Consideration, a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as Alcoa may reasonably specify) and
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 the Merger
Consideration for each Share formerly represented by such Certificate, and the
Certificate so surrendered shall forthwith be cancelled. No interest will be
paid or accrued on the cash payable upon the surrender of the Certificates. If
payment 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 payment that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the Person
requesting such payment 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.
Until surrendered as contemplated by this Section 2.8, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration for each Share in cash as contemplated by this
Section 2.8.
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(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. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following the
---------------------------------
first anniversary of the Effective Time, the Surviving Corporation shall be
entitled to require the Exchange Agent to deliver to it any funds (including
any interest received with respect thereto) which had been made available to the
Exchange Agent, and holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat or other similar laws) only
as general creditors thereof with respect to the Merger Consideration payable
upon due surrender of their Certificates without any interest thereon.
Notwithstanding the foregoing, neither the Surviving Corporation nor the
Exchange Agent shall be liable to any holder of a Certificate for Merger
Consider ation 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 2.8(b) deliverable in respect of the Shares represented by
such lost, stolen or destroyed Certificates.
(f) Withholding Taxes. Alcoa and the Purchaser shall be entitled to
-----------------
deduct and withhold, or cause the Exchange Agent to deduct and withhold, from
the Offer Price or the Merger Consideration payable to a holder of Shares
pursuant to the Offer or the Merger any such amounts as are required under the
Internal Revenue Code of 1986, as amended (the "Code"), or any applicable
provision of state, local or foreign Tax law. To the extent that amounts are so
withheld by Alcoa or the Purchaser, such withheld amounts shall be treated for
all purposes of this Agreement as having
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been paid to the holder of the Shares in respect of which such deduction and
withholding was made by Alcoa or the Purchaser.
Section 2.9 Appraisal Rights. Notwithstanding anything in this
----------------
Agreement to the contrary, Shares (the "Dissenting Shares") that are issued and
outstanding immediately prior to the Effective Time and which are held by
stockholders who did not vote in favor of the Merger and who comply with all of
the relevant provisions of Section 262 of the DGCL (the "Dissenting
Stockholders") shall not be converted into or be exchangeable for the right to
receive the Merger Consideration, unless and until the holder or holders thereof
shall have failed to perfect or shall have effectively withdrawn or lost their
rights to appraisal under the DGCL. If any Dissenting Stockholder shall have
failed to perfect or shall have effectively withdrawn or lost such right, such
holder's Shares shall thereupon be converted into and become exchangeable for
the right to receive, as of the Effective Time, the Merger Consideration for
each Share without any interest thereon. The Company shall give Alcoa (i)
prompt notice of any written demands for appraisal of any Shares, attempted
withdrawals of such demands and any other instruments served pursuant to the
DGCL and received by the Company relating to stockholders' rights of appraisal,
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the DGCL. Neither the Company nor the Surviving
Corporation shall, except with the prior written consent of Alcoa, voluntarily
make any payment with respect to, or settle or offer to settle, any such demand
for payment. If any Dissenting Stockholder shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent, the Shares held by such
Dissenting Stockholder shall thereupon be treated as though such Shares had been
converted into the right to receive the Merger Consideration pursuant to Section
2.7(b).
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"), the Company represents and warrants to Alcoa and the Purchaser 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 required for it to own its properties and assets and to
carry on its business as it is now being 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 the Offer and the Merger 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 such state of facts, event, change or effect
that has had, or would reasonably be expected to have, a material adverse effect
on the business, results of operations, assets or financial condition of the
Company and its Subsidiaries, taken as a whole, or Alcoa and its Subsidiaries,
taken as a whole, as the case may be. The Company has delivered or made
available to Alcoa copies of the certificate of incorporation and by-laws of the
Company. Such certificate of incorporation and by-laws are complete and correct
and in full force and effect, and the Company is not in violation of any of the
provisions of its certificate of incorporation or by-laws.
(b) Each of the Company's Significant Subsidiaries is a corporation or
other business entity 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 (i) has the corporate or other
organizational power and authority required for it to own its properties and
assets and to carry on its business as it is now being conducted and (ii) 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. All the outstanding shares of capital
stock of, or other ownership interests in, the Company's Subsidiaries are duly
authorized, validly issued, fully paid and non-assessable and, with respect to
such shares or ownership interests that are owned by the Company or its
Subsidiaries, are free and clear of all liens, claims, mortgages, encumbrances,
pledges, security interests, equities or charges of any kind (each, a "Lien").
All the outstanding shares of capital stock of, or other ownership interests in,
the Company's Subsidiaries are wholly owned by the Company, directly or
indirectly, except for the common stock, par value $0.01 per share
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<PAGE>
(the "Howmet Common Stock"), of Howmet International Inc. ("Howmet"), of which a
wholly owned Subsidiary of the Company owns as of the date hereof 84,650,000
shares. Other than the Subsidiaries listed in Section 3.1 of the Company
Disclosure Schedule, there are no Persons in which the Company owns, of record
or beneficially, any direct or indirect equity or similar interest or any right
(contingent or otherwise) to acquire the same.
Section 3.2 Capital Stock.
-------------
(a) The authorized capital stock of the Company consists of
200,000,000 shares of Company Common Stock and 25,000,000 shares of Preferred
Stock, par value $1.00 per share (the "Company Preferred Stock"). As of March
3, 2000, (i) 36,714,831 shares of Company Common Stock are issued and
outstanding; (ii) 1,560,220 shares of Company Common Stock are subject to
outstanding options issued under the Company's 1989 Stock Awards Plan; (iii)
1,514,143 shares of Company Common Stock are subject to outstanding options
issued under the Company's 1996 Stock Awards Plan, as amended; (iv) 4,356,725
shares of Company Common Stock are issued and held in the treasury of the
Company; and (v) no shares of Company Preferred Stock are issued, outstanding or
reserved for issuance, except for 600,000 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, dated May 22,
1997, between the Company and First Chicago Trust Company of New York (the
"Rights Agreement"). Since March 3, 2000 through the date of this Agreement,
(A) no options to purchase shares of Company Common Stock have been granted, (B)
no shares of Company Common Stock have been issued other than pursuant to the
exercise of options to purchase shares of Company Common Stock outstanding on
March 3, 2000 and (C) no shares of Company Preferred Stock have been issued.
Section 3.2(a) of the Company Disclosure Schedule sets forth a complete and
correct list, as of February 29, 2000, of all holders of options, directors'
restricted stock or other rights to purchase or receive capital stock of the
Company under a stock option or other stock based employee or non-employee
director benefit plan of the Company or any of its Subsidiaries, including such
person's name, the number of options (vested, unvested and total) or other
rights held by such person, the date of grant and the exercise price for each
such option or right.
(b) The authorized capital stock of Howmet consists of 400,000,000
shares of Howmet Common Stock, and 10,000,000 shares of preferred stock, par
value $.01 per share ("Howmet Preferred Stock"). As of March 3, 2000, (i)
100,033,307 shares of Howmet Common Stock are issued and outstanding; (ii)
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<PAGE>
4,301,250 shares of Howmet Common Stock are subject to outstanding options
issued under Howmet's 1997 Stock Awards Plan ("Howmet Options"); (iii) no shares
of Howmet Common Stock are issued and held in the treasury of Howmet; (iv) no
shares of Howmet Preferred Stock are issued and outstanding; and (v) no shares
of Howmet Preferred Stock are issued and outstanding or reserved for issuance.
Since March 3, 2000 through the date of this Agreement, (A) no Howmet Options
have been granted, (B) no shares of Howmet Common Stock have been issued other
than pursuant to the exercise of Howmet Options outstanding as of March 3, 2000
and (C) no shares of Howmet Preferred Stock have been issued. Section 3.2(b) of
the Company Disclosure Schedule sets forth a complete and correct list, as of
February 29, 2000 of all holders of options or other rights to purchase or
receive capital stock of Howmet under a stock option or other stock based
employee or non-employee director benefit plan of the Company, Howmet or any of
their Subsidiaries, including such person's name, the number of options (vested,
unvested and total) or other rights held by such person, the date of grant and
the exercise price for each such option or right.
(c) All the outstanding shares of Company Common Stock are duly
authorized, validly issued, fully paid and non-assessable. Except as set forth
in paragraph (a) or (b) above, except for the Company's obligations under the
Rights Agreement (including with respect to the preferred share purchase rights
issued or issuable thereunder (the "Rights"), and except for the transactions
contemplated by this Agreement, (1) there are no shares of capital stock of the
Company authorized, issued or outstanding, (2) there are no authorized or
outstanding options, warrants, calls, preemptive rights, subscriptions or other
rights, agreements, arrangements or commitments of any character obligating the
Company or any of its Subsidiaries to issue, transfer or sell or cause to be
issued, transferred or sold any shares of capital stock or other equity interest
in the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment, 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 (other than a Subsidiary that is wholly owned, directly or
indirectly, by the entity obligated to provide such funds) or other entity.
14
<PAGE>
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 or the Certificate of Ownership and Merger,
as applicable, 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 approved for purposes of Section 203 of
the DGCL the entering into by Alcoa, the Purchaser and the Company of this
Agreement and the consummation of the transactions contemplated hereby and has
taken all appropriate action so that Section 203 of the DGCL, with respect to
the Company, will not be applicable to Alcoa and the Purchaser by virtue of such
actions. The Board of Directors of Howmet approved for purposes of Section 203
of the DGCL Alcoa and the Purchaser becoming "interested stockholders" pursuant
to Alcoa executing a letter agreement, dated March 13, 2000 with Howmet or their
entry into an agreement with the Company providing for a tender offer by the
Purchaser to acquire the outstanding Shares, to be followed by a merger in which
Alcoa would acquire the remaining Shares, and the consummation of such
transactions and the Board of Directors of Howmet has taken all appropriate
action so that Section 203 of the DGCL, with respect to Howmet, will not be
applicable to Alcoa and the Purchaser by virtue of such actions. 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 the
Purchaser, constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms.
(b) Except for the filings, permits, authorizations, consents and
approvals set forth in Section 3.3(b)(i) of the Company Disclosure Schedule or
as may be required under the Securities Act of 1933, as amended (the "Securities
Act"), the Exchange Act, the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), state securities or blue sky laws, the rules
and regulations of the New York Stock Exchange or the Chicago Stock Exchange or
the anti-competition laws or regulations of the European Union or any foreign
jurisdiction in which the Company or Alcoa (directly or through Subsidiaries, in
each case ) has material assets or conducts material operations, and the filing
of the Certificate of Merger or Certificate of Ownership and Merger, as
applicable, under the DGCL, none of the execution, delivery
15
<PAGE>
or performance of this Agreement by the Company, the consummation by the Company
of the transactions contemplated hereby or compliance by the Company with any of
the provisions hereof will (i) conflict with or result in any breach of any
provision of the certificate of incorporation, by-laws or similar organizational
documents of the Company or any of its Subsidiaries, (ii) require any filing by
the Company or any of its Subsidiaries 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 filings, permits, authorizations,
consents, approvals, violations, breaches or defaults which will not,
individually or in the aggregate, have a Material Adverse Effect on the Company
or prevent or substan tially delay the consummation of the transactions
contemplated hereby.
Section 3.4 Reports and Financial Statements. The Company has
--------------------------------
previously furnished or otherwise made available (by electronic filing or
otherwise) to Alcoa true and complete copies of:
(a) the Annual Reports on Form 10-K filed by the Company with the
SEC for the fiscal year ended June 30, 1998 and the fiscal period ended December
31, 1998, and the Annual Reports on Form 10-K filed by Howmet with the SEC for
each of the fiscal years ended December 31, 1997 and 1998;
(b) the Quarterly Reports on Form 10-Q filed by each of the
Company and Howmet with the SEC for the quarters ended March 31, 1999, June 30,
1999 and September 30, 1999;
(c) each definitive proxy statement filed by each of the Company
and Howmet with the SEC since December 31, 1997;
16
<PAGE>
(d) each final prospectus filed by each of the Company and Howmet
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 each of the Company
and Howmet with the SEC since January 1, 1998.
As of their respective dates, such reports, proxy statements and prospectuses
filed by the Company (collectively with, and giving effect to, any amendments,
supplements and exhibits thereto, the "Company SEC Reports") and filed by Howmet
(collectively with, and giving effect to, any amendments, supplements and
exhibits thereto, the "Howmet SEC Reports," and together with the Company SEC
Reports, the "Group SEC Reports") (i) complied as to form in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act and the rules and regulations promulgated thereunder in effect as of the
date of filing, 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 Group SEC Report was amended or was superseded by a later filed Group SEC
Report, none of the Group 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. Except for (x) filing
requirements of Subsidiaries of the Company in connection with guarantees by
such Subsidiaries of indebtedness of the Company, (y) Cordant Technologies
Holding Company (with respect to the filing of Statements on Schedule 13D under
the Exchange Act) and (z) Howmet, 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 Group SEC Reports (including any related notes and
schedules) fairly present in all material respects the consolidated financial
position of each of the Company and Howmet, as the case may be, and its
respective 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), and in each case were prepared in accordance
with 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, 1999, each of the Company and Howmet
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.The
Company
17
<PAGE>
represents and warrants to Alcoa that, as of the respective dates
thereof, all reports of the type referred to in this Section 3.4 which the
Company files with the SEC on or after the date hereof, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements 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 in all material respects the consolidated
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), and will be prepared in each case in accordance with GAAP
consistently applied during the periods involved (except as otherwise disclosed
in the notes thereto).
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 in a consolidated balance sheet of the Company and its
consolidated Subsidiaries 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
liabilities or obligations (a) reflected in the Group SEC Reports or (b) 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 Group SEC Reports, and (b) for violations or possible
violations which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
Section 3.7 Environmental Matters.
---------------------
(a) Each of the Company and its Subsidiaries has obtained all
licenses, permits, authorizations, approvals and consents from Governmental
Entities which are required under any applicable Environmental Law and necessary
for it to carry on its business or operations as now conducted ("Environmental
Permits"), except for such failures to have Environmental Permits which,
individually or in the aggregate,
18
<PAGE>
would not have a Material Adverse Effect on the Company. Each of such Environmen
tal 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 full force and effect or in compliance which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
(b) There are no Environmental Claims pending or, to the best
knowledge of the Company, threatened against the Company or any of its
Subsidiaries, or, to the best knowledge of the Company, for which the Company or
any of its Subsidiaries is liable, that, individually or in the aggregate, would
have a Material Adverse Effect on the Company.
(c) To the best knowledge of the Company, there are no past or present
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the release, threatened release or presence of any Hazardous
Material, that would form the basis of any Environmental Claim against the
Company or any of its Subsidiaries, or for which the Company or any of its
Subsidiaries is liable, except for such Environmental Claims which, individually
or in the aggregate, would not have a Material Adverse Effect on the Company.
(d) To the best knowledge of the Company, no site or facility now or
previously owned, operated or leased by the Company or any of its Subsidiaries
is listed or proposed for listing on the National Priorities List promulgated
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, and the rules and regulations thereunder ("CERCLA").
(e) No Liens have arisen under or pursuant to any 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 best knowledge of the Company, is
in process which could subject any of such properties to such Liens, except for
any such action which, individually or in the aggregate, would not have a
Material Adverse Effect on the Company.
19
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(f) As used in this Agreement:
(i) "Environmental Claim" means any claim, action, lawsuit
or proceeding by any Person which seeks to impose liability (including,
without limitation, 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 which would give rise to
any violation, or alleged violation, of any Environmental Law.
(ii) "Environmental Law" means any law or order of any
Governmental Entity relating to (A) the generation, treatment, storage,
disposal, use, handling, manufacturing, transportation or shipment of
Hazardous Materials or (B) the environment or to emissions, discharges,
releases or threatened releases of Hazardous Material into the environment.
(ii) "Hazardous Materials" means (A) any petroleum or
petroleum products, radioactive materials or friable asbestos; (B) any
chemicals or other materials or substances which are now defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "pollutants,"
contaminants," "infectious wastes," "hazardous chemicals" or "hazardous
pollutants," under any Environmental Law; and (C) pesticides.
Section 3.8 Employee Benefit Plans; ERISA.
-----------------------------
(a) Section 3.8(a) of the Company Disclosure Schedule contains a true
and complete list of each material deferred compensation, incentive compensation
or equity compensation plan; "welfare" plan, fund or program (within the meaning
of section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")); "pension" plan, fund or program (within the meaning of
section 3(2) of ERISA); each material employment, consulting, termination or
severance agreement; and each other material employee benefit plan, fund,
program, agreement or arrangement, 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
20
<PAGE>
a "single employer" within the meaning of section 4001(b) of ERISA, or to which
the Company or an ERISA Affiliate is party, for the benefit of any employee or
former employee of the Company or any Subsidiary (the "Company Plans");
provided, that Section 3.8(a) of the Company Disclosure Schedule does not set
forth a complete list of Company Plans that are maintained outside the United
States primarily for the benefit of persons who are not citizens or residents of
the United States ("Foreign Plans"). The Company shall deliver a true and
complete list of Foreign Plans to Purchaser as soon as practicable after the
date hereof. The Company and its Subsidiaries do not have any material
liabilities or obligations with respect to Foreign Plans (whether or not
accrued, contingent or otherwise) which are not reflected in the Group SEC
Reports to the extent required to be so reflected.
(b) With respect to each Company Plan, the Company shall, as soon as
practicable after the date hereof, deliver or make available to Alcoa true and
complete copies of the Company Plans and any amendments thereto, any related
trust or other funding vehicle, any reports or summaries required under ERISA or
the Code and the most recent determination letter received from the Internal
Revenue Service (the "IRS") with respect to each Company Plan intended to
qualify under Section 401 of the Code.
(c) 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), except as would not have a Material Adverse Effect on the
Company.
(d) No Company Plan that is subject to Title IV (a "Company Title IV
Plan") is a "multiemployer pension plan," as defined in section 3(37) of ERISA,
nor is any Company Title IV Plan a plan described in section 4063(a) of ERISA.
(e) Each Company Plan has been operated and administered in accordance
with its terms and applicable law, including but not limited to ERISA and the
Code, except as would not have a Material Adverse Effect on the Company, and
each 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, except for failures to so
qualify or be exempt that would reasonably be expected to be curable without a
Material Adverse Effect on the Company.
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(f) No Company Plan provides medical, surgical, hospitaliza tion,
death or similar benefits (whether or not insured) for employees or former
employees of the Company or any Subsidiary for periods extending beyond their
retirement or other termination of service, other than (i) coverage mandated by
applicable law, (ii) death benefits under any "pension plan," or (iii) benefits
the full cost of which is borne by the current or former employee (or his
beneficiary).
(g) Section 3.8(g)(i) of the Company Disclosure Schedule sets forth
each Company Plan under which payments may be made that could constitute "excess
parachute payments" within the meaning of Section 280G of the Code. The
aggregate amount of such excess parachute payments (exclusive of "gross-up
payments" for excise tax) shall not exceed the amount set forth in Section
3.8(g)(ii) of the Company Disclosure Schedule.
(h) Section 3.8(h) of the Company Disclosure Schedule sets forth each
Company Plan under which, as a result of the consummation of the Offer or the
Merger, either alone or in combination with another event, (A) any current or
former employee or officer of the Company or any ERISA Affiliate may become
entitled to severance pay or any other payment, except as expressly provided in
this Agreement, or (B) compensation due any such employee or officer may become
accelerated the time of payment or vested, or increased.
(i) There are no pending or, to the best knowledge of the Company,
threatened claims by or on behalf of any Company Plan, by any employee or
beneficiary covered under any such Company Plan, or otherwise involving any such
Company Plan (other than routine claims for benefits), except as would not have
a Material Adverse Effect on the Company.
(j) There are no pending or scheduled audits of any Company Plan by
any Governmental Entity or any pending nor, to the best knowledge of the
Company, threatened claims or penalties resulting from any such audit, except as
would not have a Material Adverse Effect on the Company.
Section 3.9 Absence of Certain Changes or Events. Except as
------------------------------------
disclosed in the Group SEC Reports, since December 31, 1998 (a) the businesses
of the Company and its Subsidiaries have been conducted in all material respects
in the ordinary course, and (b) there has not been any event, occurrence,
development or state
22
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of circumstances or facts that has had, or would have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Section 3.10 Litigation. Except as disclosed in the Group SEC
----------
Reports, there are no claims, actions, suits, proceedings, arbitrations or
investigations pending (or, to the best knowledge of the Company, threatened)
against or affecting the Company or its Subsidiaries or any of their respective
properties or assets at law or in equity, by or before any Governmental Entity
which, individually or in the aggregate, will have a Material Adverse Effect on
the Company or would prevent or substantially delay the Offer or the Merger.
Section 3.11 Schedule 14D-9; Offer Documents; and Proxy Statement.
----------------------------------------------------
Neither the Schedule 14D-9 nor any information supplied by the Company for
inclusion in the Offer Documents will, at the respective times the Schedule 14D-
9, the Offer Documents or any amendments or supplements thereto are filed with
the SEC or are first published, sent or given to stockholders of the Company, as
the case may be, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they are made, not misleading. The Proxy Statement 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 will, at the time of the Special
Meeting, 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. The Schedule 14D-9 and the Proxy Statement will, when filed by the
Company with the SEC, comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to information supplied by or on behalf of Alcoa or the
Purchaser which is contained in any of the foregoing documents.
Section 3.12 Intellectual Property.
---------------------
(a) The Company and its Subsidiaries own or have valid rights to use
all items of Intellectual Property utilized in the conduct of the business of
the Company and its Subsidiaries as presently conducted free and clear of all
Liens with
23
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such exceptions as would not have, individually or in the aggregate,
a Material Adverse Effect on the Company.
(b) Except as would not individually or in the aggregate have a
Material Adverse Effect on the Company, (i) neither the Company nor any
Subsidiary of the Company is in default (or with the giving of notice or lapse
of time or both, would be in default) under any license or other grant to use
such Intellectual Property, (ii) such Intellectual Property is not being
infringed by any third party, (iii) neither the Company nor any Subsidiary is
infringing any Intellectual Property of any third party, and (iv) in the last
three years neither the Company nor any Subsidiary has received any written
claim or notice of infringement from any third party.
(c) As used in this Agreement, "Intellectual Property" means all of
the following: (i) U.S. and foreign registered and unregistered trademarks and
pending trademark applications, trade dress, service marks, logos, trade names,
brand names, corporate names, assumed names and business names and all
registrations and applications to register the same (the "Trademarks"), (ii)
issued U.S. and foreign patents and pending patent applications, invention
disclosures, and any and all divisions, continuations, continuations-in-part,
reissues, continuing patent applications, reexaminations, and extensions
thereof, any counterparts claiming priority therefrom, utility models, patents
of importation/confirmation, certificates of invention, certificates of
registration and like statutory rights (the "Patents"), (iii) U.S. and foreign
copyrights (including, but not limited to, those in computer software and
databases), rights of publicity, and all registrations and applications to
register the same (the "Copyrights"), (iv) all categories of trade secrets as
defined in the Uniform Trade Secrets Act and under corresponding foreign
statutory and common law, including, but not limited to, business, technical and
know-how information, (v) all licenses and agreements pursuant to which the
Company or any Subsidiary has acquired rights in or to any Trademarks, Patents,
trade secrets, technology, know-how, Computer Software, rights of publicity or
Copyrights, or licenses and agreements pursuant to which the Company has
licensed or transferred the right to use any of the foregoing, and (vi) all
computer software, data files, source and object codes, user interfaces, manuals
and other specifications and documentation and all know-how relating thereto
(collectively, "Computer Software").
Section 3.13 Tax Matters.
-----------
(a) All federal, state, local and foreign Tax Returns 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
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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. There is no audit, examination, deficiency, refund
litigation, proposed adjustment or matter in controversy with respect to any
Taxes due and owing by the Company, any Subsidiary of the Company or any Company
Affiliated Group which if determined adversely would, 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 any failures to pay would not
individually or in the aggregate have a Material Adverse Effect on the Company.
Section 3.13(a) of the Company Disclosure Schedule sets forth (i) the taxable
years of the Company for which the statutes of limitations with respect to U.S.
federal income Taxes have not expired, and (ii) with respect to federal income
Taxes for such years, those years for which examinations have been completed,
those years for which examinations are presently being conducted, and those
years for which examinations have not yet been initiated. Neither the Company
nor any of its Subsidiaries has any liability under Treasury Regulation Section
1.1502-6 for U.S. federal income Taxes of any Person other than the Company and
its Subsidiar ies 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
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. There
are no Liens relating to material Taxes upon the assets of the Company or any
Subsidiary of the Company other than Liens relating to Taxes not yet due or
Liens for which adequate reserves have been established.
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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 or
practice 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). No consent under Section 341(f) of the Code has been filed with
respect to the Company or any Subsidiary of 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 3.14 Opinion of Financial Advisor. The Board of Directors
----------------------------
of the Company has received the opinion of Morgan Stanley & Co. Incorporated,
dated the date of this Agreement, substantially to the effect that, the
consideration to be received by the holders of Shares pursuant to this Agreement
is fair to such stockholders from a financial point of view.
Section 3.15 Required Vote of the Company Stockholders. The
-----------------------------------------
affirmative vote of the holders of a majority of the outstanding shares of
Company 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.
Section 3.16 Employment Matters. Neither the Company nor any of its
------------------
Subsidiaries has experienced any work stoppages, strikes, collective labor
grievances, other collective bargaining disputes or claims of unfair labor
practices in the last year which would, individually or in the aggregate, have a
Material Adverse Effect on the Company. There is no organizational effort
presently being made or, to the best knowledge of the Company, threatened by or
on behalf of any labor union with respect to employees of the Company or any of
its Subsidiaries, except as would not have a Material Adverse Effect on the
Company.
26
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Section 3.17 Rights Plan. The Board of Directors of the Company has
-----------
amended the Rights Agreement to provide that (i) so long as this Agreement has
not been terminated pursuant to Section 7.1, a Distribution Date (as such term
is defined in the Rights Agreement) shall not occur or be deemed to occur, and
neither Alcoa nor the Purchaser shall become an Acquiring Person (as such term
is defined in the Rights Agreement), as a result of the execution, delivery or
performance of this Agreement, the announcement, making or consummation of the
Offer, the acquisition of Shares pursuant to the Offer or the Merger, the
consummation of the Merger or any other transaction contemplated by this
Agreement and (ii) the Rights shall expire immediately prior to the consummation
of the Offer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF ALCOA AND THE PURCHASER
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"), Alcoa
and the Purchaser jointly and severally represent and warrant to the Company as
set forth below:
Section 4.1 Organization, Qualification, Etc. Each of Alcoa and
---------------------------------
the Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority and all governmental approvals required for it to
own its properties and assets and to carry on its business as it is now being
conducted or presently proposed to be conducted. Each of Alcoa and the Purchaser
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 the Purchaser from
performing its obligations hereunder. The Purchaser is a wholly owned
Subsidiary of Alcoa.
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Section 4.2 Corporate Authority Relative to this Agreement; No
--------------------------------------------------
Violation.
---------
(a) Each of Alcoa and the Purchaser has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of each of Alcoa and the Purchaser. Alcoa, as the sole
stockholder of the Purchaser, has duly and validly approved and adopted this
Agreement. Other than the filing of the Certificate of Merger no other
corporate proceedings on the part of Alcoa or the Purchaser (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 the Purchaser and, assuming this Agreement
constitutes a valid and binding agreement of the Company, constitutes a valid
and binding agreement of each of Alcoa and the Purchaser, enforceable against
each of Alcoa and the Purchaser in accordance with its terms.
(b) Except for the filings, permits, authorizations, consents and
approvals as may be required under the Exchange Act, the HSR Act, or the anti-
competition laws or regulations of the European Union or any foreign
jurisdiction in which the Company or Alcoa (directly or through Subsidiaries, in
each case) has material assets or conducts material operations and the filing of
the merger certificate under the DGCL, none of the execution, delivery or
performance of this Agreement by Alcoa or the Purchaser, the consummation by
Alcoa or the Purchaser of the transactions contemplated hereby or compliance by
Alcoa or the Purchaser with any of the provisions hereof 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 of any of its Subsidiaries, including the Purchaser,
(ii) require any filing with, or permit, authorization, consent or approval of,
any Governmental Entity, (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Alcoa or any of its Subsidiaries is a party or by which any of them or any of
their respective properties or assets may be bound (the "Alcoa and Purchaser
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
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defaults which will not, individually or in the aggregate, have a Material
Adverse Effect on Alcoa or prevent or substantially delay the consummation of
the transactions contemplated hereby.
Section 4.3 Offer Documents; Proxy Statement; Schedule 14D-9.
------------------------------------------------
Neither the Offer Documents nor any information supplied by Alcoa or the
Purchaser for inclusion in the Schedule 14D-9 will, at the time the Offer
Documents, the Schedule 14D-9, or any amendments or supplements thereto, are
filed with the SEC or are first published, sent or given to stockholders of the
Company, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading. The information supplied by Alcoa
for inclusion in 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 therein, in the light of the circumstances under which they are made,
not misleading, or shall, at the time of the Special Meeting, 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. Notwithstanding the foregoing, Alcoa and the
Purchaser make no representation or warranty with respect to any information
supplied by or on behalf of the Company which is contained in any of the Offer
Documents, the Proxy Statement or any amendment or supplement thereto. The Offer
Documents shall comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder.
Section 4.4 Financing. At or prior to the dates that the Purchaser
---------
becomes obligated to accept for payment and pay for Shares pursuant to the
Offer, and at the Effective Time, Alcoa and the Purchaser will have sufficient
cash resources available to pay for the Shares that the Purchaser becomes so
obligated to accept for payment and pay for pursuant to the Offer and to pay the
aggregate Merger Consider ation pursuant to the Merger.
Section 4.5 Opinion of Financial Advisor. The Board of Directors
----------------------------
of Alcoa has received the opinion of Salomon Smith Barney Inc., dated the date
of this Agreement, substantially to the effect that the consideration to be
offered by Alcoa in the Offer and the Merger, taken together, is fair to Alcoa
from a financial point of view.
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Section 4.6 Ownership of Capital Stock. Immediately prior to the
--------------------------
execution and delivery of this Agreement, neither Alcoa nor any of its
Subsidiaries beneficially owned any Shares or any shares of Howmet Common Stock.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of Business Prior to the Effective Time. (a)
-----------------------------------------------
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 Alcoa, which agreement shall not be unreasonably
withheld or delayed, as may be expressly permitted pursuant to this Agreement or
as set forth in Section 5.1 of the Company Disclosure Schedule, the Company:
(i) shall, and shall cause each of its Subsidiaries to,
conduct its operations in all material respects according to their ordinary
course of business in substantially the same manner as heretofore
conducted;
(ii) shall use its reasonable best efforts, and cause each
of its Subsidiaries to use its reasonable best efforts, to preserve intact
its business organization and goodwill, keep available the services of its
current officers and other key employees and preserve its current
relationships with those Persons having significant business dealings with
the Company and its Subsidiaries;
(ii) shall notify Alcoa of any emergency or other
substantial change in the normal course of its or its Subsidiaries'
respective businesses or in the operation of its or its Subsidiaries'
respective properties and of any complaints of or hearings (or written
communications indicating that the same are threatened) of which the
Company has knowledge before any Governmental Entity if such emergency,
change, complaint, investigation or hearing would have a Material Adverse
Effect on the Company ;
(iv) shall not, and shall not permit any of its
Subsidiaries that is not incorporated or organized in the United States or
not wholly owned to, repatriate funds, authorize or pay any dividends on or
make any distribution with respect to its outstanding shares of capital
stock (other than (A) regularly
30
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quarterly cash dividends by the Company in an amount not to exceed $0.10
per Share per quarter declared and paid in accordance with past practice,
including establishment of record and payment dates and (B) dividends or
distributions by wholly owned Subsidiaries of the Company;
(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 materially increase the compensation
payable or to become payable or the benefits provided to its officers or
employees, except as may be required by applicable law or a contract in
existence on the date hereof, and except for increases for nonofficer
employees in the normal course of business consistent with past practice;
(vi) shall not, and shall not permit any of its Subsidiaries
to, authorize or announce an intention to authorize, or enter into an
agreement with respect to, any merger, consolidation or business
combination (other than the Merger), any acquisition of any assets or
securities, or any disposition of any assets or securities, except in an
amount that is not material to the Company and its Subsidiaries taken as a
whole;
(vii) shall not, and shall not permit any of its
Subsidiaries to, propose or adopt any amendments to its certificate of
incorporation or by-laws (or other similar organizational documents);
(viii) shall not, and shall not permit any of its Subsidiar
ies 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 (1) the
issuance of Company Common Stock and associated Rights pursuant to options
and grants outstanding as of the date of this Agreement which were issued
or made, as the case may be, pursuant to the Company's 1989 Stock Awards
Plan, 1996 Stock Awards Plan and Key Executive Long-Term Incentive Plan and
each of which is set forth in Section 3.2(a) of the Company Disclosure
Schedule, (2) the issuance of Howmet Common Stock pursuant to options and
grants outstanding as of the date of this Agreement, which were issued or
made, as the case may be, pursuant to Howmet's 1997 Stock Awards Plan, and
each of which is set forth in Section 3.2(b) of the Company Disclosure
Schedule; or take any action to cause to be exercisable any otherwise
unexercisable option under any existing stock option
31
<PAGE>
plan and (3) the annual issuance to each non-employee director of the
Company of shares of Company Common Stock having a value of $20,000;
provided, that such issuance is made at such time as is consistent with
past practice;
(ix) shall not, and shall not permit any of its
Subsidiaries to, reclassify, combine, split, purchase or redeem any shares
of its capital stock or purchase or redeem any rights, warrants or options
to acquire any such shares (other than as contemplated by the Company
Plans);
(x) 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 (i) incurrences and repayments of indebtedness under the Company's or
its Subsidiaries' credit facilities in existence on the date of this
Agreement in the ordinary course of business consistent with past practice
and (ii) in an amount not to exceed $40 million in the aggregate 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 wholly owned Subsidiaries), except for guarantees
by Subsidiaries of the Company of indebtedness permitted under the
preceding clause (A) ;
(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 other than
the Company or any wholly-owned Subsidiary of the Company (including any
intercompany loans, advances or capital contributions to, or investments
in, any affiliate) other than advances to employees in the ordinary course
of business in accordance with the Company's or its Subsidiaries'
established policies;
(xii) shall not, and shall not permit any of its
Subsidiaries to, (A) enter into any material lease or license or otherwise
subject to any material Lien any of its properties or assets (including
securitizations), other than in the ordinary course of business consistent
with past practice; (B) modify or amend in any material respect, or
terminate, any of its material contracts (except (x) with respect to
"classified" contracts or (y) in the ordinary course of business); (C)
waive, release or assign any rights that are material to the Company and
its Subsidiaries taken as a whole; or (D) permit any insurance policy
naming it as a beneficiary or a loss payable payee to lapse, be cancelled
32
<PAGE>
or expire unless a new policy with substantially identical coverage is in
effect as of the date of lapse, cancellation or expiration;
(xiii) shall not, and shall not permit any of its Subsidiar
ies to change any of the financial accounting methods used by it unless
required by generally accepted accounting principles of the applicable
country or change in applicable law;
(xiv) shall not, and shall not permit any of its Subsidiar
ies to, file with, or submit to, any Governmental Entity (including the
SEC) any registration statement, prospectus or other similar document, or
any amendment or supplement thereto, relating to the issuance of any
securities of the Company or any Subsidiary of the Company, other than a
registration statement of the Company on Form S-8 (including any final
prospectus thereon) or any amendment or supplement thereto, filed with the
SEC in connection with the Company Stock Plans, in each case, in the
ordinary course of business consistent with past practice;
(xv) 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 in any
material respect, or (z) result in any of the conditions to the Offer set
forth in Annex A hereto or any of the conditions to the Merger set forth in
Article VI hereof not being satisfied;
(b) Alcoa agrees that, from and after the date hereof and prior to the
earlier of the Effective Time and the Termination Date, and except as may be
agreed in writing by the Company or as may be expressly permitted pursuant to
this Agreement, Alcoa shall not, and shall not permit any of its Subsidiaries to
(i) agree, in writing or otherwise, to take any action which would result in any
of the conditions to the Offer set forth in Annex A hereto or any of the
conditions to the Merger set forth in Article VI hereof not being satisfied or
(ii) delay the consummation of the Offer, including by application of Rule 14e-5
under the Exchange Act.
Section 5.2 Access; Confidentiality.
-----------------------
(a) Except for competitively sensitive information or government
"classified" information or as limited by applicable law (including, without
limitation, antitrust laws) or the terms of any confidentiality agreement or
provision in
33
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effect on the date of this Agreement, 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, facilities, employees, contracts, commitments, books
and records (including but not limited to Tax Returns and supporting work
papers) 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 Tax and other information as to its and its
Subsidiaries' respective businesses and properties as Alcoa may from time to
time reasonably request. Alcoa and the Purchaser will use their 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. No
investigation pursuant to this Section 5.2(a) shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto.
(b) Alcoa will hold any information provided under this Section 5.2
that is non-public in confidence to the extent required by, and in accordance
with, the provisions of the letter dated December 2, 1999, between Alcoa and the
Company (the "Confidentiality Agreement").
Section 5.3 Special Meeting; Proxy Statement.
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(a) Following the purchase of Shares pursuant to the Offer, if
required by applicable law in order to consummate the Merger, the Company,
acting through its Board of Directors, shall, in accordance with applicable law:
(i) 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 and adoption of this Agree
ment; and
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and 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 informa
tion statement and cause a definitive proxy or information statement,
including
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any amendments or supplements thereto (the "Proxy Statement") to be mailed
to its stockholders at the earliest practicable date, provided that no
amendments or supplements to the Proxy Statement will be made by the
Company without consultation with Alcoa and its counsel.
(b) Alcoa shall vote, or cause to be voted, all of the Shares acquired
in the Offer or otherwise then owned by it, the Purchaser or any of Alcoa's
other Subsidiaries in favor of the approval and adoption of this Agreement.
(c) Notwithstanding the provisions of paragraphs (a) and (b) above, in
the event that Alcoa, the Purchaser and any other Subsidiaries of Alcoa shall
acquire in the aggregate at least 90% of the outstanding shares of each class of
capital stock of the Company pursuant to the Offer or otherwise, the parties
hereto shall, subject to Article VI hereof, take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of stockholders of the Company, in accordance
with Section 253 of the DGCL.
Section 5.4 Reasonable Best Efforts; Further Assurances.
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(a) Subject to the terms and conditions of this Agreement and
applicable law, each of the parties shall act in good faith and use reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement as soon as
practicable. Without limiting the foregoing, the parties shall (and shall cause
their respective Subsidiaries, and use reasonable best efforts to cause their
respective affiliates, directors, officers, employees, agents, attorneys,
accountants and representatives, to) (i) consult and cooperate with and provide
assistance to each other in the preparation and filing with the SEC of the Offer
Documents, the Schedule 14D-9, the preliminary Proxy Statement and the Proxy
Statement and all necessary amendments or supplements thereto; (ii) obtain all
consents, approvals, waivers, licenses, permits, authorizations, registrations,
qualifications or other permissions or actions by, and give all necessary
notices to, and make all filings with and applications and submissions to, any
Governmental Entity or other Person necessary in connection with the
consummation of the transactions contemplated by this Agreement as soon as
reasonably practicable; (iii) provide all such information concerning such
party, its Subsidiaries and its officers, directors, employees, partners and
affiliates as may be necessary or reasonably requested in connection with any of
the foregoing; (iv) avoid the entry of, or have vacated or terminated, any
decree, order, or judgment that would restrain, prevent, or delay the
consummation of the Offer or the
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Merger, including but not limited to defending through litigation on the merits
any claim asserted in any court by any Person; (v) take any and all reasonable
steps necessary to avoid or eliminate every impediment under any antitrust,
competition, or trade regulation law that is asserted by any Governmental Entity
with respect to the Offer or the Merger so as to enable the consummation of the
Offer or the Merger to occur as expeditiously as possible; and (vi) divest such
plants, assets or businesses of the Company or any of its 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 purchase of Shares pursuant to the Offer or the
consummation of 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
purchase of Shares pursuant to the Offer or 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 (x) Alcoa or any of its
Subsidiaries or (y) of the Company or any of its Subsidiaries that accounted in
the aggregate for more than $60 million in revenues in the Company's 1999 fiscal
year. 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 purchase of Shares in
the Offer. Prior to making any application to or filing with a Governmental
Entity or other entity in connection with this Agreement (other than filing
under the HSR Act), each party shall provide the other party with drafts thereof
and afford the other party a reasonable opportunity to comment on such drafts.
(b) The Company, Alcoa and the Purchaser shall keep the other
reasonably apprised of the status of matters relating to completion of the
transactions contemplated hereby, including promptly furnishing the other with
copies of notices or other communications received by Alcoa, the Purchaser or
the Company, as the case may be, or any of their respective Subsidiaries, from
any third party and/or any Governmental Entity with respect to the transactions
contemplated by this Agreement.
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Section 5.5 Employee Stock Options and Other Employee Benefits.
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(a) The Company shall use its reasonable best efforts to cause each
outstanding option to purchase shares of Company Common Stock (including any
related alternative rights) granted under any stock option or compensation plan
or arrangement of the Company or its Subsidiaries (collectively, the "Company
Option Plans") (including those granted to current or former employees and
directors of the Company or any of its Subsidiaries) (the "Employee Stock
Options") to become exercisable, and each share of restricted Company Common
Stock granted under the Company Option Plans, to vest in full and become fully
transferable and free of restrictions, either prior to the purchase of the
Shares pursuant to the Offer or immediately prior to the Effective Time, as
permitted pursuant to the terms and conditions of the applicable Company Option
Plan. The Company shall offer to each holder of an Employee Stock Option that
is outstanding immediately prior to the first purchase of Shares pursuant to the
Offer (the "Purchase Date") (whether or not then presently exercisable or
vested) to cancel such Employee Stock Option in exchange for an amount in cash
equal to the product obtained by multiplying (x) the difference between the
Offer Price and the per share exercise price of such Employee Stock Option, and
(y) the number of shares of Company Common Stock covered by such Employee Stock
Option. All payments in respect of such Employee Stock Options shall be made as
promptly as practicable after the Purchase Date, subject to the collection of
all applicable withholding Taxes required by law to be collected by the Company.
Each Employee Stock Option, the holder of which does not accept such offer, that
remains outstanding immediately before the Effective Time shall be assumed by
Alcoa and converted, effective as of the Effective Time, into an option with
respect to that number (the "New Share Number") of shares of common stock, par
value $1.00 per share, of Alcoa ("Alcoa Common Stock") that equals the number of
shares of Company Common Stock subject to such Employee Stock Option immediately
before the Effective Time, times an amount equal to the Merger Consideration
divided by the Alcoa Share Value (as defined below), rounded to the nearest
whole number, with a per-share exercise price equal to the aggregate exercise
price of such option immediately before the Effective Time, divided by the New
Share Number, rounded to the nearest whole cent; provided, that in the case of
any such option that was granted as an "incentive stock option" within the
meaning of Section 422 of the Code and did not cease to qualify as such as a
result of any acceleration of vesting provided for above or otherwise, the
number of shares shall be rounded down to the nearest whole number to determine
the New Share Number, and the new per-share exercise price shall be determined
by rounding up to the nearest whole cent. The Alcoa Share Value means the
average of the daily high and low trading prices of the Alcoa Common Stock on
the New York Stock Exchange on each
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trading day during the period of 30 days ending the second trading day prior to
the Effective Time. Upon the Effective Time or as soon as reasonably practicable
thereafter, Alcoa shall file with the SEC a Registration Statement or
Registration Statements on Form S-8 covering all shares of Alcoa Common Stock to
be issued pursuant to the options converted into options to purchase shares of
Alcoa Common Stock pursuant to the terms of this Section 5.5(a) and shall cause
such Registration Statement to remain effective so long as Alcoa continues to
have a registration statement on Form S-8 (or any successor form) outstanding
for other options to purchase Alcoa Common Stock. Prior to the Purchase Date,
the Company and Alcoa shall take all action as may be necessary to carry out the
terms of this Section 5.5.
(b) For the period from the Purchase Date through and including
December 31, 2001, Alcoa shall, or shall cause the Company or the Surviving
Corporation to, maintain employee benefit plans, programs and arrangements which
are, in the aggregate, for the employees who were employees of the Company or
any Subsidiary of