THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is filed
as an Exhibit to the Schedule 14D-1 on file with the Commission. Such summary is
qualified in its entirety by reference to the Merger Agreement.
THE OFFER. The Merger Agreement provides for the commencement of the Offer
no later than five business days after the initial public announcement of
Purchaser's intention to commence the Offer. The obligation of Purchaser to
accept for payment Shares tendered pursuant to the Offer is subject, among other
things, to the satisfaction of the Minimum Condition. Purchaser and Thyssen have
agreed that no change in the Offer may be made which decreases the price per
Share payable in the Offer, changes the form of consideration payable in the
Offer, reduces the maximum number of Shares to be purchased in the Offer or
reduces the Minimum Condition; imposes conditions to the Offer in addition to
those set forth in the Merger Agreement, or modifies or amends any terms of the
Offer in a manner adverse to the Company's shareholders. Purchaser may (and, at
the Company's request, if certain conditions are met, shall) extend the Offer on
one or more occasions for up to ten business days for each such extension beyond
the then scheduled expiration date until such time as the conditions to the
Offer are met or waived, if at the then scheduled expiration date of the Offer,
any of the conditions to Purchaser's obligation to accept for payment and pay
for the Shares shall not be satisfied or waived. Purchaser may also extend the
Offer without the Company's consent for not more than five business days beyond
the latest expiration date that would otherwise be permitted under the Merger
Agreement, if there have been insufficient shares tendered to effect the Merger
as a short-form merger without a meeting of Company's shareholders.
BOARD CONTROL. The Merger Agreement provides that within two business days
upon the purchase by Purchaser of Shares pursuant to the Offer, either (i) a
majority of the members of the Board of Directors of the Company shall resign,
and the remaining Board members shall fill the positions vacated with persons
designated by Thyssen, or (ii) the size of the Board of Directors of the Company
shall be expanded
and vacant seats filled with persons designated by Thyssen so that, in either
case, a majority of the members of the Board of Directors of the Company are
persons designated by Thyssen.
THE MERGER. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with Delaware and Wisconsin Law, at
the Effective Time, Purchaser shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Purchaser will cease
and the Company will continue as the Surviving Corporation (the "Surviving
Corporation") and will become an indirect wholly owned subsidiary of Thyssen.
Upon consummation of the Merger, each issued and then outstanding Share (other
than any Shares held in the treasury of the Company, or owned by Purchaser,
Thyssen or any direct or indirect wholly owned subsidiary of Thyssen or of the
Company) shall be automatically converted into, and exchanged for, the right to
receive $21.00 in cash (the "Merger Consideration").
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of the Company immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation. The
Merger Agreement provides that, at the Effective Time, the Certificate of
Incorporation of Purchaser will be the Articles of Incorporation of the
Surviving Corporation. The Merger Agreement also provides that the By-laws of
Purchaser, as in effect immediately prior to the Effective Time, will be the
By-laws of the Surviving Corporation.
Immediately prior to the Effective Time, each outstanding option granted to
a Company employee, consultant or director to purchase Shares ("Option"),
whether or not then exercisable, shall be cancelled by the Company, and each
holder of a cancelled Option shall be entitled to receive a lump sum cash
payment, in consideration for the cancellation of each such Option, equal to the
product of (i) the number of Shares subject to such Option and (ii) the excess
of the per Share Merger Consideration over the exercise price per Share of such
Option; PROVIDED, HOWEVER, that any Option with respect to which the Merger
Consideration does not exceed the exercise price shall be cancelled and no
payment shall be made with respect thereto.
ACQUISITION PROPOSALS. The Company has agreed that neither it nor any of
its subsidiaries nor any of the respective officers and directors of the Company
and its subsidiaries shall, directly or indirectly, solicit, initiate, encourage
or otherwise facilitate any inquiries or the making of any proposal with respect
to a merger, consolidation or similar transaction involving, or any purchase of
all or any significant portion of the assets or equity of the Company or any of
its subsidiaries (an "Acquisition Proposal") or, except to the extent legally
required for the discharge by the Board of Directors of its fiduciary duties as
advised in writing by counsel, engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions or negotiations
with, any person relating to an Acquisition Proposal, or otherwise facilitate
any effort or attempt to make or implement an Acquisition Proposal.
None of the foregoing shall prohibit the Company or its Board of Directors
from (A) complying with Rules 14d-9 and 14e-2 under the Exchange Act with regard
to an Acquisition Proposal; (B) providing information in response to an
unsolicited bona fide Acquisition Proposal if the Board of Directors takes
reasonable steps to protect the confidentiality of such information; (C)
engaging in negotiations with any person who has made an unsolicited bona fide
written Acquisition Proposal; or (D) recommending such an Acquisition Proposal
to the Company's shareholders if (1) in the case of clauses (B), (C) and (D)
above, the Company reasonably determines in good faith based upon the advice of
outside legal counsel that such action is necessary in order for the Board of
Directors of the Company to comply with its fiduciary duties and (2) in the case
of clauses (C) and (D) above, the Board of Directors of the Company determines
in good faith that the Acquisition Proposal is financially superior to a
transaction with Purchaser.
BEST EFFORTS. The Merger Agreement provides that, subject to its terms and
conditions, the Company, Thyssen and Purchaser will take all actions necessary
and proper under applicable law, to consummate the
Merger, including Purchaser and Thyssen using their best efforts to prevent any
injunction by a government entity relating to consummation of the transactions
contemplated by the Merger Agreement; PROVIDED, HOWEVER, that the Merger
Agreement shall not require or be construed to require Thyssen to agree to, sell
or hold separate and agree to sell, any interest in any assets or businesses of
Thyssen, the Company or any of their respective affiliates (or to consent to any
sale, or agreement to sell, by the Company of any of its assets or businesses)
or to agree to any material changes or restriction in the operations of any such
assets or businesses.
DIRECTORS AND OFFICERS INDEMNIFICATION AND INSURANCE. Pursuant to the
Merger Agreement, Thyssen has agreed that for a period ending not sooner than
the sixth anniversary of the Effective Time, the Surviving Corporation will
maintain all rights to indemnification existing on the date of this Agreement in
favor of the present and the former directors, officers, employees and agents of
the Company as provided in the Company's Articles of Incorporation and Bylaws,
in each case as in effect on the date of the Merger Agreement, and that during
such period, the Articles of Incorporation and Bylaws of the Surviving
Corporation will not be amended or repealed or otherwise modified in any manner
that would adversely affect the rights of indemnity afforded to the present and
former directors, officers, employees and agents of the Company unless required
by law; PROVIDED, that if any claim is asserted within such six-year period, all
rights to indemnification in respect of such claim shall continue until
disposition of such claim.
The Merger Agreement provides that Thyssen and the Surviving Corporation
will maintain in effect for five years from the Effective Time, the current
directors' and officers' liability insurance policies maintained by the Company
and its subsidiaries (provided that the Surviving Corporation may substitute
policies of substantially the same coverage containing terms and conditions
which are no less advantageous) with respect to matters occurring at or prior to
the Effective Time; PROVIDED, HOWEVER, that in no event will Thyssen or the
Surviving Corporation be required to pay an annual premium greater than 125% of
the last annual premium paid prior to the date thereof by the Company for such
insurance.
EMPLOYEE BENEFITS. The Merger Agreement provides that, for a period of one
year following the Effective Time, Thyssen will provide the employees of the
Company with employee benefit plans and programs (excluding plans or programs
which provide for issuance of Shares or options on Shares) that are in the
aggregate no less favorable than current employee benefit plans and programs
maintained by the Company. The Merger Agreement provides that Thyssen will cause
the surviving company to honor (without modification) certain specified written
employment agreements, severance agreements and certain other agreements as in
effect on the date of the Merger Agreement. The Merger Agreement also provides
that Thyssen also agrees to maintain the Company's severance and incentive plans
and the Xxxxxxxx & Xxxxx Foundation, Inc. for certain periods of time.
TERMINATION AND TERMINATION FEE. The Merger Agreement provides that it may
be terminated and the Merger and the Offer may be abandoned at any time prior to
the Effective Time: (a) by mutual written consent of Thyssen and the Company;
(b) by Thyssen or the Company if (i) any governmental body or regulatory
authority of the United States of America or the Federal Republic of Germany
shall have commenced or provided formal notice of legal action with respect to
the transactions contemplated by the Merger Agreement, (ii) Purchaser shall not
have purchased Shares pursuant to the Offer on or before December 31, 1997; or
(c) by the Company if based on the advice of outside legal counsel, the Board of
Directors enters into an agreement to accept a financially superior Acquisition
Proposal, in order to comply with its fiduciary duties under applicable law,
gives written notice to Thyssen of an intention to enter such agreement, and
within two business days of such written notice Thyssen does not agree to amend
the Merger Agreement such that its terms are determined in good faith by the
Company's Board of Directors (after consultation with its financial advisors) to
be as favorable financially to the shareholders of the Company as such
Acquisition Proposal and prior to termination, the Company pays to Thyssen the
Termination Fee and Expense Reimbursement described below; (d) by the Company if
Purchaser has not commenced the Offer within five business days following the
date of public announcement of the Offer or
has terminated the Offer without purchasing Shares, or if there is a material
breach by Purchaser or Thyssen of any of their representations, warranties or
covenants contained in the Merger Agreement that is not curable (or if curable,
that is not cured within 30 days of notice); (e) by Thyssen, if (i) the Board of
Directors of the Company has withdrawn, adversely modified or not reconfirmed
its approval (within five business days of written request to do so) of the
Merger Agreement, (ii) there has been a material breach by the Company of any of
its representations, warranties or covenants contained in the Merger Agreement
that is noncurable (or if curable that is not cured within 30 days of notice),
(iii) on a scheduled expiration date all conditions to Purchaser's obligation to
accept for payment and pay for shares other than the Minimum Condition have been
satisfied or waived and Purchaser terminates Offer without purchasing Shares
pursuant to the Offer, or (iv) Purchaser shall have otherwise terminated the
Offer in accordance with the Merger Agreement without purchasing Shares.
In the event of the termination of the Merger Agreement and abandonment of
the Offer, the Merger Agreement provides that it will become void and there will
be no liability thereunder on the part of any party except under the provisions
of the Merger Agreement related to fees and expenses described below and under
certain other provisions of the Merger Agreement which survive termination.
The Merger Agreement provides that if it is terminated by Thyssen or
Purchaser upon the Company's entry into an agreement that constitutes a
financially superior Acquisition Proposal, or the Board of Directors of the
Company shall have withdrawn or failed to reconfirm their recommendation of the
Merger, then within no later than two days after the date of such termination,
the Company will pay Thyssen a termination fee of $20 million, (the "Termination
Fee") as well as reimburse Thyssen and Purchaser for expenses and fees up to $3
million incurred in connection with the Merger Agreement (the "Expense
Reimbursement").
In addition, if the Merger Agreement is terminated by Thyssen or by the
Company because Purchaser has terminated the Offer due to a failure to satisfy
the Minimum Condition, and within one year after such termination either (x) the
Company enters into an agreement to merge with another company (except where the
Company will acquire more than 50% of the voting shares of such surviving
corporation) where more than 50% of the voting securities are acquired by
another person, or where another person or the shareholders of another company
acquire more than 50% of the shares, or (y) another person acquires more than
50% of the Shares, no later than two days after the date of such occurrences the
Company shall pay Thyssen the Termination Fee and Expense Reimbursement.
The Merger Agreement also contains other restrictions as to the conduct of
business by the Company pending the Merger, as well as representations and
warranties of each of the parties customary in transactions of this kind.
