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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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GIDDINGS & LEWIS, INC.
(Name of Subject Company)
GIDDINGS & LEWIS, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $0.10 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
(Title of Class of Securities)
375048-10-5
(CUSIP Number of Class of Securities)
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TODD A. DILLMANN, ESQ.
CORPORATE COUNSEL AND SECRETARY
142 DOTY STREET
FOND DU LAC, WISCONSIN 54935
(414) 921-4100
(Name, address and telephone number of person authorized to
receive notices and communications on behalf of the person(s) filing statement)
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WITH A COPY TO:
CHARLES W. MULANEY, JR., ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
333 W. WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 407-0700
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Giddings & Lewis, Inc., a Wisconsin
corporation (the "Company"). The address of the principal executive offices of
the Company is 142 Doty Street, Fond du Lac, Wisconsin 54935. The title of the
class of equity securities to which this Statement relates is the common stock,
par value $0.10 per share (the "Common Stock"), of the Company, including the
associated preferred share purchase rights (the "Rights") issued pursuant to the
Rights Agreement, dated as of August 23, 1995 (as amended, the "Rights
Agreement"), between the Company and Firstar Trust Company, as Rights Agent.
References herein to the "Shares" means shares of the Common Stock and shall,
unless the context requires otherwise, include the Rights.
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer made by TAQU, Inc. ("TAQU"), a
Delaware corporation and an indirect wholly owned subsidiary of Thyssen
Aktiengesellschaft, a corporation organized under the laws of the Federal
Republic of Germany ("Thyssen"), disclosed in a Tender Offer Statement on
Schedule 14D-1, dated June 18, 1997 (the "Schedule 14D-1"), under which TAQU is
offering to purchase all outstanding Shares at a price of $21.00 per Share, net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated June 18, 1997 (the
"Offer to Purchase"), and the related Letter of Transmittal (which together
constitute the "Thyssen Offer").
The Thyssen Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of June 11, 1997 (the "Merger Agreement"), among Thyssen, TAQU and the
Company. The Merger Agreement provides, among other things, that as soon as
practicable after the satisfaction or waiver of the conditions set forth in the
Merger Agreement, TAQU will be merged with and into the Company (the "Thyssen
Merger"), and the Company will continue as the surviving corporation (the
"Surviving Corporation").
As set forth in the Schedule 14D-1, the principal executive offices of TAQU
are located at 3155 West Big Beaver Road, Troy, Michigan 48007, and the
principal executive offices of Thyssen are located at August-Thyssen-Strae 1,
40211 Dusseldorf, Germany.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person filing
this Statement, are set forth in Item 1 above.
(b) The provisions of the Merger Agreement relating to the election and
designation of directors to the Board are subject to Section 14(f) of the
Securities Exchange Act of 1934 (the "Exchange Act"), which requires the Company
to mail to its shareholders an Information Statement (the "Information
Statement") containing the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder. Reference is made to the information
contained under the captions "Board of Directors-- Director Compensation,"
"Executive Compensation," "Employment Agreements," "Pension Benefits,"
"Management Stock Purchase Program," "Stock Options" and "--Executive
Relocations" in the Information Statement. The Information Statement is attached
as Schedule I hereto and is incorporated herein by reference. Except as
described herein or incorporated herein by reference, to the knowledge of the
Company as of the date hereof, there are no material contracts, agreements,
arrangements or understandings or any actual or potential conflicts of interest
between the Company or its affiliates and (i) its executive officers, directors
or affiliates or (ii) Thyssen, its executive officers, directors or affiliates.
THE MERGER AGREEMENT
The summary of the Merger Agreement is contained in the Offer to Purchase,
which has been filed with the Securities and Exchange Commission (the
"Commission") as an exhibit to the Schedule 14D-1. A copy of such summary is
filed as Exhibit 1 hereto and is incorporated herein by reference. Such summary
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should be read in its entirety for a more complete description of the terms and
provisions of the Merger Agreement. A copy of the Merger Agreement has been
filed as Exhibit 1 hereto and is incorporated herein by reference. Capitalized
terms used but not defined herein shall have the meanings ascribed to them in
the Merger Agreement.
INTERESTS OF CERTAIN PERSONS
Certain members of the Company's management and the Board of Directors of
the Company (the "Board") may be deemed to have interests in the transactions
contemplated by the Merger Agreement that are in addition to their interests as
shareholders of the Company generally. The Board was aware of these interests
and considered them, among other matters, in approving the Merger Agreement and
the transactions contemplated thereby. In considering the recommendation of the
Board in respect of the Merger Agreement and the transactions contemplated
thereby, the shareholders of the Company should be aware of these interests
which may present actual or potential conflicts of interest.
Pursuant to the Merger Agreement, the articles of incorporation and by-laws
of the Surviving Corporation will contain the provisions with respect to
indemnification set forth in the Articles of Incorporation and By-laws of the
Company, which provisions may not be amended, repealed or otherwise modified for
a period of six years after the Effective Time in any manner that may adversely
affect the rights thereunder of current or former directors or officers of the
Company or each of its subsidiaries to be indemnified from liabilities for acts
or omissions occurring at or prior to the Effective Time. Thyssen also will, or
will cause the Surviving Corporation to, maintain policies of directors' and
officers' liability insurance equivalent to current policies of the Company and
its subsidiaries, subject to certain limitations, for five years after the
Effective Time.
The Merger Agreement provides that, subject to certain limitations, for a
period of one year following the Effective Time, Thyssen agrees to provide
employee benefit plans and programs for the benefit of employees of the Company
and its Subsidiaries that are in the aggregate no less favorable to such
employees than the Company Plans. All service credited to each employee by the
Company through the Effective Time shall be recognized by Thyssen for purposes
of eligibility and vesting under any employee benefit plan provided by Thyssen
for the benefit of the employees. Thyssen shall maintain in effect the Company
Severance Plan for a period of two years immediately following the Effective
Time, and the Company Severance Plan shall not be terminated or adversely
amended during such two-year period. Thyssen shall maintain in effect the
Company Management Incentive Compensation Plan and the Company Profit
Improvement Plan until December 31, 1997, and such plans shall not be terminated
or adversely amended until after such date.
Following the Effective Time, Thyssen has agreed to cause the Surviving
Corporation to honor in accordance with their terms, employment, severance and
other compensation agreements and arrangements as specified, including but not
limited to severance benefit plans.
CONFIDENTIALITY AGREEMENT
On April 30, 1997, the Company and Thyssen signed a confidentiality and
standstill agreement (the "Confidentiality Agreement") providing that, subject
to the terms of the agreement, each company keep confidential certain nonpublic
information furnished by the other. In addition, under the terms of the
Confidentiality Agreement, Thyssen agreed, for a period of two years, not to,
among other things, (i) acquire any equity securities or assets of the Company,
(ii) solicit proxies with regard to the Company or (iii) otherwise seek control
of the Company.
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ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE THYSSEN OFFER
AND THE THYSSEN MERGER AND DETERMINED THAT THE THYSSEN OFFER AND THYSSEN MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS.
ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT ALL HOLDERS OF SHARES ACCEPT
THE THYSSEN OFFER AND TENDER THEIR SHARES PURSUANT THERETO.
A letter to the Company's shareholders communicating the Board's
recommendation and a press release announcing the Merger Agreement and related
transactions are filed herewith as Exhibits 3 and 4 to this Schedule 14D-9,
respectively, and are incorporated herein by reference.
(b) BACKGROUND; REASONS FOR THE RECOMMENDATION
BACKGROUND. On April 21, 1997, Jeffery T. Grade, Chairman and Chief
Executive Officer of Harnischfeger Industries, Inc. ("HII"), and John N. Hansen,
President and Chief Operating Officer of HII, arranged an afternoon meeting with
Marvin L. Isles, Chief Executive Officer and a director of the Company. Prior to
meeting with Mr. Isles, Messrs. Grade and Hansen and Francis M. Corby, Jr.,
Executive Vice President for Finance and Administration and Chief Financial
Officer of HII met with John A. Becker, a director of the Company and President
and Chief Operating Officer of Firstar Corporation, which has banking
relationships with HII, and informed Mr. Becker that Mr. Grade intended to
present Mr. Isles with HII's offer to acquire the Company.
Later that afternoon Messrs. Grade and Hansen met with Mr. Isles and Douglas
E. Barnett, Vice President and Controller of the Company, at the Company's
offices. During this meeting, Mr. Grade delivered to Mr. Isles a letter in which
HII proposed to acquire the Company at a price of $19.00 per Share (the "HII
Proposal").
On April 25, 1997, Mr. Isles called Mr. Grade and informed him that the
Company would be willing to enter into discussions with HII if HII agreed to
enter into a confidentiality and standstill agreement. Mr. Grade informed Mr.
Isles that he would reflect on these matters and would respond to him. Later
that afternoon, without any further discussion of the matters or even a request
to do so, Mr. Grade sent Mr. Isles a letter indicating that through its wholly
owned subsidiary, DSFA Corporation ("DSFA"), HII intended to commence an
unsolicited tender offer for all outstanding shares of common stock of the
Company, at a price of $19 per share in cash (the "HII Offer"). The text of the
letter was included in a press release that was issued by HII that afternoon.
HII and DSFA also commenced litigation that afternoon against the Company and
certain of its directors described under Item 8 below. On April 28, 1997, HII
commenced the HII Offer.
On April 26, 1997, Mr. Isles contacted Dr. Dieter Vogel, Chairman of the
Executive Board of Thyssen, regarding a potential combination between Thyssen
and the Company. On April 30, 1997, the Company and Thyssen executed the
Confidentiality Agreement.
On April 23, April 29, April 30 and May 7, 1997, the Board met with its
legal and financial advisors to, among other things, discuss the HII Offer and
possible actions to be taken by the Company. At the May 7, 1997 meeting, the
Board unanimously rejected the HII Offer as inadequate and not in the best
interests of the shareholders of the Company and unanimously recommended that
holders of Shares reject the HII Offer and not tender their Shares pursuant
thereto. The Board also determined to further explore alternative transactions
to maximize shareholder value. In reaching its determination to reject the HII
Offer, the Board considered a number of factors, including the written opinion,
dated May 7, 1997, of Credit Suisse First Boston Corporation, the Company's
financial advisor ("CSFB"), that, based upon and subject to the matters set
forth therein, the $19 per Share cash consideration offered to holders of Shares
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pursuant to the HII Offer was inadequate from a financial point of view to such
holders other than DFSA and HII.
On May 2, 1997, Mr. Isles and a representative of CSFB met in London,
England, with Dr. Vogel, Mr. Friedhelm Hoppe, a member of the Executive Board of
Thyssen Industrie AG, Axel Kirsch, Director of Corporate Development of Thyssen,
and other members of Thyssen's management, and with representatives of Morgan
Stanley, Thyssen's financial advisor, to discuss a possible transaction
involving the Company and Thyssen. Over the next few weeks, discussions
regarding a potential business combination between Thyssen and the Company
continued and Thyssen conducted an analysis of the business and operations of
the Company.
On May 27, 1997, HII announced that it was extending its tender offer until
May 30, 1997 and sent a letter to Mr. Isles stating that its offer was its "best
and final" offer.
On June 2, 1997, Thyssen delivered to the Company a letter (the "Thyssen
Proposal") indicating that Thyssen was willing to consider an offer to purchase
all outstanding shares of the Company at $21 per share, subject to certain
conditions, including (i) the approval of the Supervisory Board of Thyssen, (ii)
the Company's agreement not to disclose the existence of such proposal to any
party prior to the execution of a definitive agreement and (iii) negotiation and
execution of a mutually acceptable merger agreement.
Thereafter, representatives of the Company and Thyssen, with their
respective legal advisors, negotiated the terms of the Merger Agreement. Such
negotiations continued through late evening on June 11, 1997.
On June 8, 1997, the Board met with its financial and legal advisors to
discuss the Thyssen Proposal. At the meeting, representatives of CSFB made a
presentation to the Board and delivered the written opinion, dated June 8, 1997,
of CSFB that, based upon and subject to the matters set forth therein and as of
the date thereof, the cash consideration to be received by the shareholders of
the Company in the Thyssen Offer and the Thyssen Merger was fair to such
shareholders from a financial point of view. See "--Opinion of CSFB."
After discussion and further analysis, the Board unanimously determined to
approve the Thyssen Offer and the Thyssen Merger and authorized the management
of the Company, if and when Thyssen presented a definitive proposal that was
authorized by the Supervisory Board of Thyssen and that reflected the terms of
the Thyssen Offer and the Thyssen Merger as presented to the Board, to enter
into a definitive merger agreement on such terms on behalf of the Company. See
"Reasons for the Recommendation." In addition, the Board unanimously determined
to recommend that shareholders (i) accept the Thyssen Offer and tender their
Shares pursuant thereto and (ii) vote in favor of approval and adoption of the
Merger Agreement and the Thyssen Merger (if necessary).
In the early evening of June 11, 1997, Thyssen informed the Company that its
Supervisory Board had taken all action necessary to authorize the Merger
Agreement.
Shortly thereafter, Thyssen and the Company entered into the Merger
Agreement and issued a press release with respect thereto, a copy of which is
attached as Exhibit 4 hereto.
On June 18, 1997, Thyssen and TAQU commenced the Thyssen Offer.
REASONS FOR THE RECOMMENDATION. In reaching the conclusions with respect to
the Thyssen Offer and the Thyssen Merger referred to in Item 4(a), the Board
considered numerous factors, including, but not limited to:
(i) the Board's familiarity with the Company's business, financial
condition, prospects, current business strategy and opportunities and the
Company's position in its industries;
(ii) presentations by the Company's management relating to the Company's
financial performance and future opportunities and prospects;
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(iii) the presentation of CSFB at the June 8, 1997 Board meeting and the
written opinion of CSFB dated June 8, 1997 that, based upon and subject to
the matters set forth therein and as of the date thereof, the cash
consideration to be received by the Company's shareholders in the Thyssen
Offer and the Thyssen Merger was fair to the Company's shareholders from a
financial point of view (see "--Opinion of CSFB"). A copy of the written
opinion of CSFB, which sets forth the factors considered, assumptions made
and limitations on the review conducted by CSFB, is attached hereto as
Exhibit 5 and incorporated herein by reference. Shareholders are urged to
read the opinion of CSFB carefully and in its entirety;
(iv) the Board's review, based in part on presentations by its financial
advisors, of alternatives to the Thyssen Offer and the HII Offer, including
the fact that the HII Offer was commenced on April 28, 1997 and since that
time no alternative proposal had been made to the Company that was superior
to the Thyssen Offer;
(v) the Board's assessment, with the assistance of counsel, concerning
the likelihood that Thyssen would obtain all required regulatory approvals
for the Thyssen Merger;
(vi) the fact that (1) the Merger Agreement permits the Company, under
certain circumstances, to furnish information to and negotiate with third
parties and terminate the Merger Agreement upon the payment to Thyssen of a
$20 million fee and the reimbursement of expenses up to $3 million, (2) the
Board believed that such payment obligations in the Merger Agreement would
not deter a more attractive offer for the Company and were necessary in
order to secure a transaction that the Board believed to be superior to that
proposed by HII and (3) such payment obligations had been reduced during the
course of negotiations from those initially proposed by Thyssen;
(vii) historical market prices and trading information for the Shares;
and
(viii) the interest of Thyssen in enhancing all of the Company's
businesses and its knowledge of the Company's markets and customers,
including the Company's automotive segment, which accounts for 50% of all
Company sales, and the positive impact such interest was expected to have on
the Company's employees, customers and suppliers and the communities in
which the Company operates.
The foregoing discussion of the information and factors considered and given
weight by the Board is not intended to be exhaustive. In view of the variety of
factors considered in connection with its evaluation of the Thyssen Offer, the
Board did not assign relative weights to the foregoing factors or determine that
any factor was of particular importance, and individual directors may have given
differing weights to different factors. Rather, the Board viewed its position
and recommendation as being based on the totality of the information presented
to and considered by it.
OPINION OF CSFB
CSFB delivered its written opinion to the Board on June 8, 1997 that, based
upon and subject to the matters set forth therein and as of the date thereof,
the cash consideration to be received by the shareholders of the Company in the
Thyssen Offer and the Thyssen Merger was fair to such shareholders of the
Company from a financial point of view.
A copy of the written opinion of CSFB, which sets forth the factors
considered, assumptions made and limitations on the review conducted by CSFB, is
attached hereto as Exhibit 5 and incorporated herein by reference. Shareholders
are urged to read the opinion of CSFB carefully and in its entirety.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement dated March 7, 1997 (the "CSFB March
Engagement Letter"), between CSFB and the Company, the Company has retained CSFB
to act as its financial advisor for a period of three years (beginning March 7,
1997) with respect to the Company's preparations for responding to any
acquisition or business combination proposals involving the Company that the
Company may
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receive, or any other attempts to effect a change in control of the Company
through a merger, tender or exchange offer, purchase of all or a portion of its
stock, assets or debt, proxy contest or consent solicitation, open market
accumulation program or any similar action. The CSFB March Engagement Letter
provides for the payment to CSFB of a financial advisory fee of $75,000
annually, payable upon the execution of the CSFB March Engagement Letter and on
each of the two subsequent annual anniversaries of the CSFB March Engagement
Letter. The Company also agreed that, in the event of the occurrence of any of
the proposals or events described above, the Company would engage CSFB as its
exclusive financial advisor with regard to such proposals or events and pay CSFB
customary fees to be mutually agreed upon. The Company also agreed to reimburse
CSFB for CSFB's out-of-pocket expenses, including fees and expenses of CSFB's
legal counsel. In addition, the Company agreed to indemnify CSFB against certain
liabilities, including liabilities arising under federal securities laws.
The Company also retained CSFB to act as its exclusive financial advisor
with respect to the HII Offer pursuant to a letter agreement, dated April 25,
1997 (the "CSFB April Engagement Letter"), between CSFB and the Company. The
CSFB April Engagement Letter provides for the payment to CSFB of a retainer
advisory fee of $500,000, payable upon execution of the letter, and a
transaction fee, payable upon the consummation of a Sale (as defined in the CSFB
April Engagement Letter) within twelve months after the date of the CSFB April
Engagement Letter, in an amount equal to 1.5% of the equity value of the Sale.
The retainer advisory fee would be fully creditable (to the extent paid) against
the transaction fee. The Company also agreed to reimburse CSFB for CSFB's
out-of-pocket expenses, including fees and expenses of CSFB's legal counsel. In
the event that the Company remains independent for one year after the date of
the CSFB April Engagement Letter, the Company has agreed to pay CSFB a fee of
$1.5 million. In addition, the Company agreed to indemnify CSFB against certain
liabilities, including liabilities arising under federal securities laws.
CSFB has provided certain investment banking services to the Company from
time to time for which CSFB has received customary compensation. In the ordinary
course of its business, CSFB and its affiliates may actively trade the debt and
equity securities of both the Company and HII for their own accounts and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
The Company has retained The Abernathy MacGregor Group Inc. as public
relations advisor in connection with the HII Offer and the Thyssen Offer and
related matters. Such firms will receive customary compensation for services
rendered and also will be reimbursed for their out-of-pocket expenses.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any persons to make solicitations
or recommendations to shareholders with respect to the Thyssen Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best knowledge of the Company, except as set forth below, no
transactions in the Shares have been effected during the past 60 days by the
Company or any executive officer, director, affiliate or subsidiary of the
Company.
Over the course of the past 60 days (i) the Company has withheld
restricted Shares to pay taxes incurred in connection with the lapse of
restrictions in the ordinary course, (ii) nondiscretionary investments in the
Company Stock Fund under the Company-sponsored 401(k) plan of less than $1,775
in the aggregate have been made by executive officers of the Company, (iii) the
Company issued 24,000 Shares of restricted stock to Thomas Arndt, Vice
President, Automotive and (iv) on April 30, 1997, the Compensation Committee of
the Board (A) awarded 2,100 Shares of restricted stock to certain directors of
the Company, including 420 Shares to each of John A. Becker, Ruth M. Davis,
Clyde H. Folley, John N. Guffey, Jr. and Ben R. Stuart and (B) granted each of
Messrs. Folley and Stuart options to purchase 1,000
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Shares at an exercise price of $20.25 per Share. Affiliates of Mr. Becker may
from time to time effect transactions in Shares over which Mr. Becker has
neither investment nor voting power.
(b) To the best knowledge of the Company, its executive officers and
directors presently intend to tender, pursuant to the Thyssen Offer, any Shares
which are held of record or are beneficially owned by such persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, the Company is not presently
engaged in any negotiation in response to the Thyssen Offer that relates to or
would result in (i) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any subsidiary of the Company; (ii) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) To the best of the Company's knowledge, there are currently no
transactions, board resolutions, agreements in principle or signed contracts in
response to the Thyssen Offer, other than as described in Item 3(b) of this
Schedule, that relate to or would result in one or more of the matters referred
to in Item 7(a).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(A) LITIGATION
On April 25, 1997, HII and DSFA commenced an action in the United States
District Court for the Eastern District of Wisconsin against the Company and
certain of the Company's directors (the "Action"). HARNISCHFEGER INDUS., INC. V.
ISLES, ET AL., C.A. No. 97-C-0488. In the complaint in the Action, HII and DSFA
allege, among other things, that the defendants have violated the disclosure
requirements of the Exchange Act, and the rules and regulations promulgated by
the Commission thereunder, by making false or misleading statements, or omitting
to state facts required to be disclosed in order to prevent other statements
from being misleading, in connection with (i) disclosures in the Company's
Annual Proxy Statement describing the Management Stock Purchase Program; (ii)
disclosures in such Annual Proxy Statement concerning the number of nominees the
Company has nominated for election at its April 30, 1997 Annual Meeting and the
provisions of the By-laws concerning board size and composition; and (iii)
disclosures in the Company's public filings concerning the Rights Agreement. In
addition, HII and DSFA allege in the complaint in the Action that the defendants
are now violating, and threaten to violate, their fiduciary duties to the
Company's shareholders in connection with the consideration of HII's acquisition
proposal and in connection with the proxy contest that HII indicated that it
would pursue. Among other things, HII and DSFA allege that, under the
circumstances present here, defendants have a fiduciary duty to redeem the
Rights and/or to cause them to be inapplicable to the HII Offer.
The foregoing summary is qualified by reference to the text of the
complaint, a copy of which is filed as Exhibit 7 hereto.
On May 6, 1997, a putative class action was filed against the Company and
certain of its directors in the Circuit Court of Milwaukee County, Wisconsin,
entitled CHARLES MILLER, ET AL. V. GIDDINGS & LEWIS, INC., ET AL. No. 97 CV
003823 (the "Milwaukee Action"). The complaint in the Milwaukee Action alleges,
among other things, that the director defendants breached their fiduciary duties
to the public shareholders of the Company by refusing to consider the HII Offer,
using their positions to thwart other attempts to acquire the Company, and
trying to entrench themselves in their positions with the Company. As relief,
the complaint seeks, among other things, (i) a declaration that the action be
certified as a proper class action; (ii) injunctive relief requiring that the
director defendants cooperate fully with any entity or person, including HII,
having a BONA FIDE interest in proposing any transactions that would maximize
shareholder
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value, and take all appropriate steps to maximize shareholder value; and (iii)
damages, costs and attorneys' fees.
The foregoing summary is qualified by reference to the text of the
complaint, a copy of which is filed as Exhibit 8 hereto.
On May 13, 1997, a derivative and individual action entitled CHARLES MILLER,
ET AL. V. ISLES, ET AL. No. 97-C-0561 (the "Second Federal Action") was filed
against the Company's directors and the Company as nominal defendant in the
United States District Court for the Eastern District of Wisconsin. The
complaint in the Second Federal Action contains six counts and alleges, among
other things, that the director defendants breached their fiduciary duties to
the public shareholders of the Company by (i) failing to properly consider the
HII Offer, (ii) trying to entrench their positions with the Company, and (iii)
failing to disclose all material facts to the Company's shareholders in
connection with the election of directors at the Annual Meeting. The complaint
also alleges that the director defendants violated the Exchange Act and Rule
14a-9 promulgated thereunder by making false or misleading statements or
omissions in connection with the Company's Annual Proxy Statement. As relief,
the complaint seeks, among other things, (a) a determination that the action be
certified as a proper derivative action; (b) a declaration that the director
defendants breached their fiduciary duties; (c) injunctive relief requiring that
the director defendants take all appropriate steps to maximize shareholder
value; and (d) damages, costs and attorneys' fees.
The foregoing summary is qualified by reference to the text of the
complaint, a copy of which is filed as Exhibit 9 hereto.
(B) BOARD OF DIRECTORS
At the April 30, 1997 meeting, the Board increased the number of directors
of the Company from six to seven and appointed Mr. Folley and Joseph R. Coppola
to fill the vacancies created by this increase and the resignation of Benjamin
F. Garmer III. As a result of such increase, as provided in the Company's By-
laws, the Board has been reclassified from three classes of two directors each,
to three classes of directors, two consisting of two members and the other
consisting of three members. At the time of the meeting, in light of the Board's
ongoing review of strategic alternatives and the pending HII Offer, the Board
determined that it would be in the best interests of the shareholders to retain
the knowledge and experience of Messrs. Folley and Coppola as directors. Messrs.
Coppola and Folley had intended to retire from the Board at this year's annual
meeting.
(C) RIGHTS AGREEMENT
Each Right issued pursuant to the Rights Agreement initially entitles the
registered holder thereof to purchase one one-hundredth of a share of Class A
Preferred Stock, Series B, $.10 par value (the "Preferred Shares"), of the
Company at a price of $60 per one one-hundredth of a Preferred Share, subject to
adjustment. On the earlier of (i) the tenth day after the acquisition by a
person or group of affiliated or associated persons (an "Acquiring Person") of
beneficial ownership of 20% or more of the outstanding Shares or (ii) the tenth
business day (or such later date as may be determined by action of the Company's
board of directors prior to the time any person becomes an Acquiring Person)
after a person has commenced a tender offer or exchange offer the consummation
of which would result in the beneficial ownership by a person or group of 20% or
more of such outstanding Shares (the earlier of such date being the
"Distribution Date") the Rights become exercisable and trade separately from the
Common Stock. In the event that a person becomes an Acquiring Person (and in
certain other circumstances specified in the Rights Agreement), each holder of a
Right (other than the Acquiring Person) will thereafter have the right to
receive, upon exercise of a Right, Common Stock having a market value of two
times the exercise price of the Right. The Rights may be redeemed at a price of
$.01 per Right at any time prior to a person becoming an Acquiring Person. For a
complete description of the Rights Agreement, see the Company's
8
<PAGE>
Form 8-A, dated August 23, 1995, and the Company's Current Report on Form 8-K,
dated as of August 23, 1995, each as filed with the Commission and incorporated
herein by reference.
At a meeting held on May 7, 1997, the Board resolved that the Distribution
Date shall not occur until the earlier of (i) the date on which an Acquiring
Person becomes such and (ii) such date as may be determined by action of the
Board prior to the time any person or group becomes an Acquiring Person. As a
result of such action, the commencement of the HII Offer did not, in and of
itself, result in the occurrence of a Distribution Date.
The Company has entered into an amendment to the Company Rights Agreement to
make it inapplicable to the Thyssen Offer, the Thyssen Merger and the other
transactions contemplated by the Merger Agreement. A copy of such amendment to
the Rights Agreement is filed as Exhibit 6 hereto and incorporated hereunder by
reference.
(D) WISCONSIN BUSINESS CORPORATION LAW
The Wisconsin Business Corporation Law ("WBCL") regulates certain Section
1141 business combinations, including mergers, of a Wisconsin corporation, such
as the Company, with a stockholder that beneficially owns 10% or more of the
outstanding voting stock of such corporation. Because the Board has approved the
Merger Agreement and the transactions contemplated thereby, Section 1141 of the
WBCL will not apply to the transactions contemplated by the Merger Agreement.
The WBCL contains certain other provisions restricting certain business
combinations and other transactions with significant shareholders under certain
circumstances and limiting, under certain circumstances, the voting power of a
shareholder that holds in excess of 20% of the voting power of certain
corporations. The Company's Restated Articles of Incorporation provide, however,
that the Company has elected not to have such provisions apply to the Company.
(E) REGULATORY FILINGS
UNITED STATES. On June 16, 1997, Thyssen filed with the Federal Trade
Commission ("FTC") and the Antitrust Division a Premerger Notification and
Report Form with respect to the Thyssen Offer and the Thyssen Merger under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). The Company is expected to file such form on June 19, 1997. Under the
provisions of the HSR Act applicable to the Thyssen Merger, the purchase of
shares pursuant to the Thyssen Offer may not be consummated until the expiration
of a 15-calendar day waiting period following Thyssen's filing under such HSR
Act. Accordingly, assuming the filings made by Thyssen and the Company were not
deficient, the waiting period with respect to the Thyssen Offer will expire at
11:59 p.m., New York City time, on July 1, 1997, unless Thyssen receives a
request for additional information or documentary material or the Antitrust
Division and the FTC terminate the waiting period prior thereto.
GERMANY. On or before June 20, 1997, Thyssen expects to file a Pre-Merger
Notification with the German Federal Cartel Office ("FCO") under the German Act
Against Restraints of Competition ("ARC"). Under the ARC, the purchase of shares
pursuant to the Thyssen Offer may not be consummated until the expiration of a
one-month waiting period following the filing by Thyssen. Accordingly, assuming
the filing is made by Thyssen on or before June 20, 1997, and is not deficient,
the waiting period with respect to the Thyssen Offer will expire on or before
July 20, 1997, unless Thyssen is informed by the FCO that the FCO has started an
in-depth review of the Thyssen Merger.
9
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------ --------------------------------------------------------------------------------
<S> <C>
Exhibit 1 Summary of Merger Agreement from the Offer to Purchase attached as Exhibit
(a)(1) to the Schedule 14D-1, filed with the Commission by Thyssen AG and TAQU,
Inc. on June 18, 1997.
Exhibit 2 Agreement and Plan of Merger, dated as of June 11, 1997, by and among Giddings &
Lewis, Inc., Thyssen AG and TAQU, Inc.
*Exhibit 3 Letter to Shareholders, dated June 18, 1997.
Exhibit 4 Press Release issued by Giddings & Lewis, Inc. and Thyssen AG, dated June 12,
1997.
*Exhibit 5 Written Opinion of Credit Suisse First Boston Corporation, dated June 8, 1997.
Exhibit 6 First Amendment to Rights Agreement, dated June 8, 1997, between Giddings &
Lewis, Inc. and Firstar Trust Company.
Exhibit 7 Complaint Seeking Declaratory and Injunctive Relief filed in the United States
District Court for the Eastern District of Wisconsin on April 25, 1997
(incorporated by reference to Exhibit 10 to the Schedule 14D-9 of the Company
with respect to the HII Offer, filed with the Commission on May 8, 1997).
Exhibit 8 Class Action Seeking Declaratory and Injunctive Relief filed in the Circuit
Court of Milwaukee County, Wisconsin, on May 6, 1997 (incorporated by reference
to Exhibit 11 to the Schedule 14D-9 of the Company with respect to the HII
Offer, filed with the Commission on May 8, 1997).
Exhibit 9 Complaint Seeking Declaratory and Injunctive Relief filed in the United States
District Court for the Eastern District of Wisconsin on May 13, 1997
(incorporated by reference to Exhibit 16 to the Schedule 14D-9 of the Company
with respect to the HII Offer, filed with the Commission on May 8, 1997).
</TABLE>
- ------------------------
* Included in copies of the Schedule 14D-9 mailed to shareholders.
10
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
GIDDINGS & LEWIS, INC.
By: /s/ DOUGLAS E. BARNETT
-----------------------------------------
Name: Douglas E. Barnett
Title: Vice President and Corporate
Controller
Dated: June 18, 1997
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------ ----------------------------------------------------------------------------------------------------
<S> <C>
Exhibit 1 Summary of Merger Agreement from the Offer to Purchase attached as Exhibit (a)(1) to the Schedule
14D-1, filed with the Commission by Thyssen AG and TAQU, Inc. on June 18, 1997.
Exhibit 2 Agreement and Plan of Merger, dated as of June 11, 1997, by and among Giddings & Lewis, Inc.,
Thyssen AG and TAQU, Inc.
*Exhibit 3 Letter to Shareholders, dated June 18, 1997.
Exhibit 4 Press Release issued by Giddings & Lewis, Inc. and Thyssen AG, dated June 12, 1997.
*Exhibit 5 Written Opinion of Credit Suisse First Boston Corporation, dated June 8, 1997.
Exhibit 6 First Amendment to Rights Agreement, dated June 8, 1997, between Giddings & Lewis, Inc. and Firstar
Trust Company.
Exhibit 7 Complaint Seeking Declaratory and Injunctive Relief filed in the United States District Court for
the Eastern District of Wisconsin on April 25, 1997 (incorporated by reference to Exhibit 10 to the
Schedule 14D-9 of the Company with respect to the HII Offer, filed with the Commission on May 8,
1997).
Exhibit 8 Class Action Seeking Declaratory and Injunctive Relief filed in the Circuit Court of Milwaukee
County, Wisconsin, on May 6, 1997 (incorporated by reference to Exhibit 11 to the Schedule 14D-9 of
the Company with respect to the HII Offer, filed with the Commission on May 8, 1997).
Exhibit 9 Complaint Seeking Declaratory and Injunctive Relief filed in the United States District Court for
the Eastern District of Wisconsin on May 13, 1997 (incorporated by reference to Exhibit 16 to the
Schedule 14D-9 of the Company with respect to the HII Offer, filed with the Commisson on May 8,
1997).
</TABLE>
- ------------------------
* Included in copies of the Schedule 14D-9 mailed to shareholders.
<PAGE>
SCHEDULE I
GIDDINGS & LEWIS, INC.
142 DOTY STREET, P.O. BOX 590
FOND DU LAC, WISCONSIN 54936-0590
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES EXCHANGE ACT
OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about June 18, 1997, as
part of the Company's Schedule 14D-9. You are receiving this Information
Statement in connection with the possible election of persons designated by
Thyssen to a majority of the seats on the Board. The Merger Agreement requires
the Company, upon the request of Thyssen, promptly to cause Thyssen's designees
to be elected to the Board under the circumstances described therein. See
"Rights to Designate Directors; Thyssen Designees."
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used herein shall have
the meaning set forth in the Schedule 14D-9.
Pursuant to the Merger Agreement, Thyssen commenced the Thyssen Offer on
June 18, 1997. The Thyssen Offer is scheduled to expire at 12:00 midnight,
Eastern Time, July 16, 1997, unless the Thyssen Offer is extended.
I-1
<PAGE>
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each Share has one vote. As of June 6, 1997, there were 31,043,365
voting Shares outstanding. At the April 30, 1997, meeting of the Board, the
Board increased the number of directors of the Company from six to seven and
appointed Clyde H. Folley and Joseph R. Coppola to fill the vacancies created by
this increase and the resignation of Benjamin F. Garmer III. As a result of such
increase, as provided in the Company's By-laws, the Board was reclassified from
three classes of two directors each, to three classes of directors, two
consisting of two members and the other consisting of three members. Each
director holds office until such director's successor is elected and qualified
or until such director's earlier resignation, death or removal.
RIGHTS TO DESIGNATE DIRECTORS; THYSSEN DESIGNEES
The Merger Agreement provides that, subject to compliance with the
applicable law, promptly upon the purchase of the Shares pursuant to the Thyssen
Offer, and from time to time thereafter, the Company will, upon the request of
Thyssen, promptly cause a majority of the directors of the Company to consist of
Thyssen's designees (the "Thyssen Designees"). The Thyssen Designees will be
selected by Thyssen. Not less than 10 days prior to the date any such Designee
takes office as a director, Thyssen will file with the Commission and mail to
all holders of record of securities of the Company who would be entitled to vote
at a meeting for election of directors the name, age, present principal
occupation or employment and five year employment history of each Thyssen
Designee.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The name, age, present principal occupation or employment, five-year
employment history and Share ownership of the current Directors and Executive
Officers of the Company are set forth below. Each person is a citizen of the
United States, and the business address of each such person is c/o Giddings &
Lewis, Inc., 142 Doty Street, P.O. Box 590, Fond du Lac, Wisconsin 54936-0590.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME AND AGE OWNERSHIP AS OF PERCENT YEAR FIRST
OF DIRECTORS AND JUNE 1, OF BECAME
EXECUTIVE OFFICERS 1997(1)(2) CLASS DIRECTOR
- ------------------------------------ ----------------- ----------- -----------
<S> <C> <C> <C> <C>
John A. Becker--55.................. Director 5,316 * 1989
Joseph R. Coppola--66............... Director and Vice Chairman of the 344,430 1.1% 1989
Board
Ruth M. Davis--68................... Director 3,116 * 1993
Clyde H. Folley--69................. Director 7,759(3) * 1990
John N. Guffey, Jr.--59............. Director 5,404 * 1995
Marvin L. Isles--51................. Director, President and Chief 234,285 * 1996
Executive Officer and Chairman of
the Board
Ben R. Stuart--62................... Director 4,116 * 1990
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME AND AGE OWNERSHIP AS OF PERCENT
OF DIRECTORS AND JUNE 1, OF
EXECUTIVE OFFICERS 1997(1)(2) CLASS
- ------------------------------------------ ----------------- -----------
<S> <C> <C> <C>
Heinz G. Anders--63....................... Group Vice President and General 88,000 *
Manager-European Operations
Stephen M. Peterson--48................... Group Vice President and General 112,517 *
Manager-Fadal Engineering
Philip N. Ciarlo--46...................... Group Vice President and General 78,000 *
Manager-Integrated Automation
Richard C. Kleinfeldt--56................. Retired as Vice President-Finance and 78,475(4) *
Director in December 1996
All directors and executive officers as a 1,534,102 5.1%
group (18 persons)........................
</TABLE>
- ------------------------
* Less than 1%.
(1) Includes the following shares subject to stock options which are currently
exercisable or exercisable within 60 days of June 1, 1997: Mr. Becker, 2,000
shares; Mr. Coppola, 291,000 shares; Dr. Davis, 1,000 shares; Mr. Folley,
2,000 shares; Mr. Isles, 10,000 shares; Mr. Stuart, 1,000 shares; Mr.
Anders, 31,000 shares; Mr. Peterson, 31,367 shares; Mr. Ciarlo, 13,000
shares; Mr. Kleinfeldt, 24,287 shares; and all directors, nominees and
executive officers as a group, 599,334 shares.
(2) Includes the following restricted shares of Common Stock granted under
either the 1989 Restricted Stock Plan or the 1993 Plan over which the
holders have sole voting but no investment power: Mr. Becker, 2,116 shares;
Mr. Coppola, 357 shares; Dr. Davis, 2,116 shares; Mr. Folley, 1,759 shares;
Mr. Guffey, 1,404 shares; Mr. Isles, 75,000 shares; Mr. Stuart, 2116 shares;
Mr. Anders, 51,000 shares; Mr. Peterson, 45,000 shares; Mr. Ciarlo, 51,000
shares; Mr. Kleinfeldt, 36,000 shares; and all Directors and Executive
Officers as a group, 500,164 shares. The shares of restricted stock
reflected in the table include shares granted to the Executive Officers and
directors of the Company in February 1997 and on April 30, 1997,
respectively.
(3) Mr. Folley shares notice and investment power over 4,000 shares of Common
Stock with his wife.
(4) Mr. Kleinfeldt retired as Vice President-Finance and as a director of the
Company in December 1996.
The amounts shown above do not include the vesting of options or other
rights upon a change of control of the Company as a result of the Thyssen
Merger.
There is no family relationship between any director, executive officer or
person nominated or chosen by the Board of Directors to become a director or
executive officer. There are no arrangements or understandings between any
director and any other person pursuant to which the director was selected as a
director.
Mr. Becker has served as President and Chief Operating Officer of Firstar
Corporation (a bank holding company) since February 1991 and as President
thereof since January 1990. Mr. Becker is a director of Firstar Corporation and
Firstar Trust Company.
Mr. Coppola was appointed Chairman of the Board and Chief Executive Officer
of the Company in July 1993. Prior thereto, Mr. Coppola was Senior Vice
President of Manufacturing Services for Cooper Industries, Inc. (a manufacturer
of electrical equipment, tools and hardware, automotive products and petroleum
and industrial equipment). Mr. Coppola is a director of Belden Inc. and Coltec
Industries Inc. Mr. Coppola retired as Chief Executive Officer of the Company on
March 17, 1997 and remained on the Board and on April 30, 1997, was elected Vice
Chairman.
I-3
<PAGE>
Dr. Davis has served as President and Chief Executive Officer of The
Pymatuning Group, Inc. (a technology management services firm) since 1981 and as
Chairperson of The Aerospace Corporation (a nonprofit entity engaged in space
technology) since December 1992. Dr. Davis is Vice Chairman of the Board of
Betac Corporation, a trustee of Consolidated Edison Company of New York and a
director of Air Products and Chemicals, Inc., BTG, Inc., Ceridian Corporation,
Premark International, Inc., Sprint Corporation, Tupperware Corp. and Varian
Associates, Inc.
Mr. Folley served as Vice Chairman and as Chief Financial Officer of
Ingersoll-Rand Company (a manufacturer of compressors, automated tools and
construction, mining and industrial process equipment) from 1986 until his
retirement in August 1992.
Mr. Guffey, Jr. has served as Chairman and Chief Executive Officer since
February 1995, and as President since May 1991, of Coltec Industries Inc. (a
manufacturer serving the aerospace, automotive and general industrial markets).
Mr. Guffey is a director of Coltec Industries Inc. and Gleason Corporation.
Mr. Isles has served as President and Chief Operating Officer of the Company
since June 1996. From 1994 until joining the Company, Mr. Isles was Executive
Vice President of GenCorp Inc. (a manufacturer of automotive, polymer and
aerospace and defense products). Between 1988 and 1994, Mr. Isles was Vice
President of GenCorp Inc. and President of its automotive business. On March 17,
1997, Mr. Isles was appointed President and Chief Executive Officer of the
Company and on April 30, 1997, was elected Chairman of the Board.
Mr. Stuart has served as President and Chief Executive Officer of
Dresser-Rand Company (a manufacturer of centrifugal, axial and reciprocating
compressors, gas and steam turbines and electric motors) since March 1992. Since
1988, Mr. Stuart has also served as Senior Vice President-Operations of Dresser
Industries, Inc. (a manufacturer of drilling, mining and energy-processing
equipment). Mr. Stuart is a director of CRSS, Inc.
The Board has standing Audit, Compensation, and Executive/Nominating
Committees. The Audit Committee recommends to the Board the appointment of
independent auditors, approves the scope of the annual audit activities of the
auditors, approves the audit fee payable to the auditors, reviews the adequacy
of internal audit procedures and reviews audit results. Dr. Davis and Messrs.
Folley (Chairman) and Guffey are members of the Audit Committee. The Audit
Committee held three meetings in 1996. The Compensation Committee (i) reviews
and recommends to the Board the compensation structure for the Company's
directors, officers and other managerial personnel, including salary rates,
participation in any incentive bonus plans, fringe benefits, noncash perquisites
and other forms of compensation, and (ii) administers the Company's 1989
Restricted Stock Plan (as amended, the "1989 Restricted Stock Plan"), 1989 Stock
Option Plan (as amended, the "1989 Stock Option Plan"), 1993 Stock and Incentive
Plan (as amended, the "1993 Plan"), Management Stock Purchase Program (as
amended, the "MSPP") and Independent Director Stock-Based Incentive Plan (the
"Independent Director Plan"). Messrs. Becker (Chairman), Guffey and Stuart are
members of the Compensation Committee. The Compensation Committee held four
meetings in 1996. The Executive/ Nominating Committee may exercise all of the
powers of the Board when the Board is not in session, except as otherwise
provided by law or the Company's By-laws. The Executive/Nominating Committee
also recommends persons to be nominated by the Board for election as directors
of the Company and recommends persons to fill vacancies on the Board. Messrs.
Coppola (Chairman), Becker, Folley and Stuart are members of the
Executive/Nominating Committee. The Executive/Nominating Committee did not meet
in 1996. The Executive/Nominating Committee will consider nominees recommended
by shareholders but has no established procedures which shareholders must follow
to make a recommendation. Current committee assignments are as follows: Messrs.
Becker (Chair), Guffey and Stuart are members of the Compensation Committee; Dr.
Davis (Chair) and Mr. Folley are members of the Audit Committee; Messrs. Isles
(Chair), Becker, Coppola, and Stuart are members of the Executive/Nominating
Committee; Mr. Guffey (Chair) and Dr. Davis are
I-4
<PAGE>
members of the Governance Committee. The Company's By-laws also provide for
shareholder nominations of candidates for election as directors. These
provisions require such nominations to be made pursuant to timely notice (as
specified in the By-laws) in writing to the Secretary of the Company. The
shareholder's notice of nomination must contain information relating to the
nominee which is required to be disclosed by the Company's By-laws and the
Exchange Act.
During the year 1996 the Board held six meetings. Each director attended at
least 75% of the aggregate of (i) the total number of meetings of the Board and
(ii) the total number of meetings held by all committees of the Board on which
such director served during the year.
DIRECTOR COMPENSATION
RETAINER AND FEES. Directors who are officers or employees of the Company
receive no compensation for service as members of the Board. Directors who are
not officers and employees of the Company or any affiliate of the Company
("non-employee directors") are paid an annual retainer fee of $17,000 plus a fee
of $1,000 for each Board meeting attended and a fee of $1,000 ($1,200 for the
committee chairman) for each committee meeting attended. Payment of director
fees may be deferred, in whole or in part, at the option of a non-employee
director, under the Company's Deferred Compensation Plan for Non-Employee
Directors (the "Deferred Compensation Plan"). The Deferred Compensation Plan
provides that any fee deferred thereunder shall be credited at the end of each
quarter to (i) a share account, which allows for the purchase of share units
that represent shares of Common Stock, (ii) a cash account, which pays interests
at a rate based on the ninety-day Treasury bill rate over the past twelve
months, or (iii) a combination of both. The amount deferred under the Deferred
Compensation Plan will be paid, at the non-employee director's option, in a lump
sum, or over a ten-year period commencing, on the first business day of the
calendar year following the year during which the non-employee director ceases
to be a director of the Company.
STOCK-BASED PLANS. The Company maintains the Independent Director Plan for
its non-employee directors. Under the Independent Director Plan, on each date on
which a non-employee director is elected or reelected (whichever the case may
be) (the "Election Date") to serve on the Board, such non-employee director will
automatically receive options to purchase 1,000 shares of Common Stock. Options
granted under the Independent Director Plan are not exercisable until such
non-employee director's term as a director (which began as of the Election Date
for which such options were granted) has expired; PROVIDED, HOWEVER, that if a
non-employee director's status as a director terminates due to such non-employee
director's death or disability or retirement after reaching age 65, the options
will become immediately exercisable in full. The purchase price at which shares
of Common Stock may be purchased under the Independent Director Plan will be
equal to the closing price of a share of Common Stock on the Election Date (or
if such day is a day for which no closing price is set forth, the next preceding
day for which a closing price is so set forth). Stock options granted under the
Independent Director Plan will terminate on the earlier of ten years following a
non-employee director's Election Date; six months after the non-employee
director ceases to be a director of the Company by reason of death, disability
or retirement; or the time at which the non-employee director ceases to be a
director of the Company for any reason other than by reason of death, disability
or retirement. All stock options granted under the Independent Director Plan are
nonqualified stock options for purposes of the Internal Revenue Code. The
aggregate number of shares of Common Stock eligible for issuance to non-employee
directors under the exercise of stock options under the Independent Director
Plan is 50,000. On April 24, 1996, each of Dr. Davis and Mr. Garmer was granted
options to purchase 1,000 shares of Common Stock at a per share exercise price
of $18. On April 30, 1997, each of Mr. Folley and Mr. Stuart was granted options
to purchase 1,000 shares of Common Stock at a per share exercise price of
$20.25. The options will become exercisable upon the expiration of the current
term of each of said non-employee directors. No options granted to the non-
employee directors under the Independent Director Plan were exercised in 1996.
The non-employee directors of the Company are also eligible to receive
grants of shares of restricted Common Stock under the 1993 Plan. Under the terms
of the 1993 Plan, each non-employee director of the
I-5
<PAGE>
Company will automatically be granted, on the date of the Company's annual
meeting of shareholders in each year during the existence of the 1993 Plan, such
number of shares of restricted stock (rounded to the next highest whole number)
equal to 50% of such director's annual retainer fee for serving as a director of
the Company divided by the closing price on the day preceding the date of grant
(or if such day is day for which no closing price is set forth, the next
preceding date for which a closing price is set forth). The annual retainer fee
used in making the foregoing determination is the annual retainer fee in effect
on the date of grant, exclusive of committee, attendance or other fees to which
the non-employee director may otherwise be entitled. Shares of restricted stock
granted to a non-employee director will not be eligible to be sold or otherwise
transferred while the non-employee director remains a director of the Company,
and thereafter such restrictions will lapse. However, in the event the
non-employee director has not served as a director of the Company for at least
three calendar years at the time his or her service as a director ends, the
shares of restricted stock held by such non-employee director will be forfeited
to the Company. The non-employee directors are entitled to exercise full voting
rights and receive any dividends or other distributions paid with respect to
their shares of restricted stock. On April 24, 1996, 476 shares of restricted
stock were awarded under the 1993 Plan to each of Dr. Davis and Messrs. Becker,
Folley, Garmer, Guffey and Stuart. On April 30, 1997, 420 shares of restricted
stock were awarded under the 1993 Plan to each of Dr. Davis and Messrs. Becker,
Folley, Guffey and Stuart.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information, as of January 21, 1997,
regarding beneficial ownership by the only persons known to the Company to own
beneficially more than 5% of the Common Stock issued and outstanding on that
date. The beneficial ownership set forth below has been reported on filings made
on Schedule 13G with the Commission by the beneficial owners.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
----------------------------------------------
VOTING POWER INVESTMENT POWER
NAME AND ADDRESS --------------------- ----------------------- PERCENT OF
OF BENEFICIAL OWNER SOLE SHARED SOLE SHARED AGGREGATE CLASS
- ----------------------------------------------- ---------- --------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
State of Wisconsin ............................ 3,120,000 (0) 3,120,000 (0) 3,120,000 9.4%
Investment Board
P.O. Box 7842
Madison, Wisconsin 53707
Sanford C. Bernstein & Co., Inc. .............. 1,446,450 27,950 1,710,200 (0) 1,710,200 5.2%
767 Fifth Avenue
New York, New York 10153
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors to file reports of ownership and changes in ownership
with the Commission. The regulations of the Commission require officers and
directors to furnish the Company with copies of all Section 16(a) forms they
file. Based on such forms, the Company believes that all its officers and
directors have complied with the Section 16(a) filing requirements.
EXECUTIVE COMPENSATION
The following table sets forth current and long-term compensation
information for each of the last three fiscal years of the Chief Executive
Officer and each of the other executive officers whose salary and bonus for the
fiscal year 1996 exceeded the disclosure threshold established by the
Commission.
I-6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION(1) RESTRICTED
----------------------- STOCK ALL OTHER
NAME AND PRINCIPAL POSITION (2) YEAR SALARY($) BONUS($)(3) AWARDS($)(4) COMPENSATION($)(5)
- --------------------------------------------- --------- ---------- ----------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
Joseph R. Coppola............................ 1996 $ 475,008 $ 269,439 $ 450,000 $ 62,022
Chairman, Chief Executive 1995 424,992 240,771 -- 53,478
Officer and Director(5) 1994 399,996 188,158 968,750 50,112
Marvin L. Isles.............................. 1996 247,919 200,000 249,375 35,416
President and Chief Operating 1995 -- -- -- --
Officer(5) 1994 -- -- -- --
Heinz G. Anders.............................. 1996 246,700 40,000 225,000 --
Group Vice President and 1995 253,200 28,969 190,500 --
General Manager-European 1994 185,690 45,161 149,400 7,077
Operations
Stephen M. Peterson.......................... 1996 190,008 77,000 180,000 1,125
Group Vice President and 1995 187,008 70,545 142,875 1,125
General Manager-Fadal 1994 165,000 47,000 -- 1,125
Engineering
Philip N. Ciarlo............................. 1996 187,238 110,000 375,000 36,223
Group Vice President and 1995 147,982 68,740 190,500 1,125
General Manager-Integrated 1994 74,842 41,666 -- 1,125
Automation
Richard C. Kleinfeldt(6)..................... 1996 227,004 85,000 270,000 1,125
1995 216,996 78,485 285,750 1,125
1994 207,996 63,563 -- 1,125
</TABLE>
- ------------------------
(1) Certain personal benefits provided by the Company and its subsidiaries to
the named executive officers are not included in the table. The aggregate
amount of such personal benefits in each year reflected in the table did not
exceed the lesser of $50,000 or salary and bonus in each respective year.
(2) Mr. Coppola retired as Chief Executive Officer of the Company on March 17,
1997. Mr Isles was appointed as Chief Executive Officer on that date to
succeed him.
(3) For 1996, consists of awards under the Company's Management Incentive
Compensation Plan, which is a performance-based plan.
(4) The amounts in the table reflect the market value on the date of grant (net
of any consideration paid by the named executive officer) of restricted
shares of Common Stock awarded under the 1989 Restricted Stock Plan and the
1993 Plan. The number of shares of restricted Common Stock held by the named
executive officers and the market value of such shares (net of any
consideration paid by the named executive officers) as of December 31, 1996,
were as follows: Mr. Coppola, 80,357 shares ($1,034,596); Mr. Isles, 15,000
shares ($193,125); Mr. Anders, 29,000 shares ($373,375); Mr. Peterson,
21,000 shares ($270,375); Mr. Ciarlo, 37,000 shares ($476,375); and Mr.
Kleinfeldt, 36,000 shares ($463,500). During 1996, Messrs. Coppola, Isles,
Anders, Ciarlo, Peterson and Kleinfeldt were awarded 30,000, 15,000, 15,000,
15,000, 12,000 and 18,000 shares of restricted stock, respectively, which,
except for Mr. Isles's and Mr. Coppola's shares, will vest following the
release of financial statements for the year ended December 31, 1998
assuming certain performance criteria are achieved. Mr. Isles's award vest
in increments of 5,000 shares on June 1, 1997, 1998 and 1999. Mr. Coppola's
I-7
<PAGE>
award was subject to vesting based on performance criteria for the year
ended December 31, 1996. Based on such performance criteria, 14,000 shares
of Mr. Coppola's 1996 restricted stock grant vested and the remaining shares
were forfeited. During 1996, Mr. Ciarlo received an additional grant of
10,000 shares of restricted stock, which shares were subject to vesting
based on certain performance criteria for the year ended December 31, 1996.
All of such shares were forfeited by Mr. Ciarlo. A portion of the shares of
restricted stock granted to each named executive officer in 1995 will vest
following the release of financial statements for the year ended December
31, 1997 assuming that certain performance criteria are achieved. During
1994, Mr. Coppola was awarded 12,000 shares of restricted stock which vested
on January 31, 1997 and 38,000 shares of restricted stock which by their
terms were subject to vesting on January 31, 1997, based on certain
performance criteria. Of such 38,000 restricted shares, 8,000 shares vested
on January 31, 1997 and the remaining shares were forfeited. Holders of
shares of restricted Common Stock are entitled to receive dividends on such
shares.
(5) The amounts reflected in the table for fiscal 1996 consist of the following:
(a) for Mr. Coppola, a $60,897 contribution (including accrued interest)
credited to his account under his supplemental pension arrangement, see
"Pension Plan Benefits," and a Company matching contribution of $1.125 under
the Giddings & Lewis Savings Plan (the "Savings Plan"), which is a
profit-sharing plan under Section 401(k) of the Internal Revenue Code; (b)
for Mr. Isles, a $35,416 transfer allowance paid by the Company in
connection with Mr. Isles's appointment as President and Chief Operating
Officer; (c) for Mr. Ciarlo, a $35,098 transfer allowance paid by the
Company in connection with Mr. Ciarlo's appointment as Group Vice President
and General Manager of the Company's Integrated Automation Group and a
Company matching contribution of $1,125 under the Savings Plan; and (d) for
all other named executive officers (except Mr. Anders), Company matching
contributions under the Savings Plan.
(6) Mr. Kleinfeldt retired as Vice President-Finance and as a director of the
Company in December 1996.
EMPLOYMENT AGREEMENTS
AGREEMENTS WITH EXECUTIVE OFFICERS
On April 30, 1997, the Board authorized an employment agreement with Joseph
R. Coppola and delayed by one year the effective date of Mr. Coppola's Executive
Consulting Agreement, dated December 1, 1996 (the "Consulting Agreement").
During the one-year term of the employment agreement, Mr. Coppola will be
employed by the Company as Vice Chairman of the Board at his current level of
compensation. If his employment is terminated following a Change in Control, Mr.
Coppola will receive, in a lump sum, the total compensation payable with respect
to the remainder of the employment term, as well as the consulting fees payable
pursuant to the Consulting Agreement. Pursuant to the terms of the Consulting
Agreement, Mr. Coppola will, following his retirement, be retained by the
Company as senior consultant for a three-year period, at an annual compensation
of $200,000 for the first twelve months of his consultancy, $150,000 for the
second twelve months and $100,000 for the third twelve months. Additionally, the
Company purchased Mr. Coppola's residence at Fond du Lac, Wisconsin, for
$715,000 in accordance with an option contained in the Consulting Agreement
requiring the purchase in January 1997. Mr. Coppola's cost basis in his Fond du
Lac residence, which was built in 1994, was $785,000. The Consulting Agreement
also contains certain noncompetition and confidentiality provisions applicable
to Mr. Coppola. The Company may terminate the agreement only for cause, which
includes theft, dishonesty, fraudulent misconduct, gross dereliction of duty or
other grave misconduct on the part of Mr. Coppola which is substantially
injurious to the Company.
The Company has also entered into a retirement agreement with Mr. Kleinfeldt
in connection with his retirement as Vice President-Finance and as a director of
the Company in December 1996. Pursuant to the terms of the agreement, Mr.
Kleinfeldt agreed to remain as an employee of the Company until April 1,
I-8
<PAGE>
1997. Mr. Kleinfeldt's agreement further provides, among other things, that from
his retirement as an employee through the first to occur of March 31, 1999 or
his death, Mr. Kleinfeldt will serve as a consultant to the Company. During his
tenure as a consultant, Mr. Kleinfeldt will be treated as an employee of the
Company the purposes of the Company's employee benefit plans and fringe benefits
but will not be eligible to participate in any management incentive compensation
plans. Mr. Kleinfeldt's annual compensation as a consultant will be equal to his
base salary for 1996 ($227,000 per year) and will also include certain other
perquisites provided to Mr. Kleinfeldt while he was an executive director of the
Company. Pursuant to the terms of the retirement agreement, Mr. Kleinfeldt is
subject to certain noncompetition, nonsolicitation and confidentiality
provisions for the term of the agreement.
The Company maintains Key Executive Employment and Severance Agreements
("KEESAs") with 12 executives ("Executives"), including Messrs. Arndt, Isles,
Barnett, Melzer, Dillmann, Bosco, Ciarlo, Kelley, Peterson and Simon. These
agreements provide for the payment of certain severance and other benefits upon
certain qualifying terminations of the employment of such executives within five
years after a Change in Control as defined therein) of the Company. The
acquisition of more than 20% of the Shares pursuant to the Thyssen Offer will
constitute a Change in Control for purposes of the KEESAs. On April 30, 1997,
the Board approved the offering to the Executives of amended and restated KEESAs
("New KEESAs"), and the Company subsequently entered into New KEESAs with each
of the Executives. The New KEESAs differ from the respective original KEESAs
primarily as follows: (i) whereas the original KEESAs limited the total payments
and benefits that could be received by the Executive to the highest amount that
would not be subject to an excise tax under Section 4999 of the Code and would
not be nondeductible to the Company under Section 280G of the Code, the New
KEESAs eliminate such limitation and provide for an additional "gross-up"
payment to ensure that the Executive receives the after-tax benefit he would
have received had the payments not been subject to the excise tax; (ii) as an
additional severance benefit, each Executive will receive a lump-sum payment
equal to the present value of the benefits the Executive would have received had
he continued to participate in the Company's retirement plans until reaching age
65; (iii) termination by Mr. Isles due to the fact that he fails to continue to
serve as Chief Executive Officer and Chairman of the Board of the Company
constitutes a qualifying termination of employment under his agreement; (iv) the
New KEESAs provide for certain additional benefits upon a qualifying
termination, including relocation benefits (and, for Mr. Isles only, the
repurchase of his home at cost), the right to purchase the Company-provided car
for $1.00 and reimbursement for legal and tax-planning assistance; (v) the
severance benefits payable to certain Executives have been reduced from three in
each case, to three, two or one, as applicable, times the sum of the Executive's
annual base salary and highest annual bonus with respect to the three most
recent years preceding termination of employment (or target bonus for the year
of termination if the Executive had not then completed a full fiscal year of
employment); and (vi) the provision that termination by the Executive during a
30-day period immediately following the first anniversary of the Change in
Control constitutes a qualifying termination of employment under his agreement
has been eliminated for the five operations Executives.
In addition, a subsidiary of the Company has an agreement with Mr. Anders
pursuant to which he will be employed as Managing Director of such subsidiary
until May 31, 1998, subject to voluntary termination by Mr. Anders and
termination for cause under German law. Mr. Anders's employment agreement
provides for a minimum annual base salary of DM 350,000 (approximately $206,955)
and is subject to upward adjustment. He is eligible to participate in the
Company's Management Incentive Compensation Plan and receive certain other
perquisites. The employment agreement provides that the subsidiary will pay
one-half of Mr. Anders's obligations with respect to certain social security
contributions required by German law and will pay to Mr. Anders or his
beneficiary six months' salary in the event of his disability and three months'
salary in the event of his death. The employment agreement also contains a
covenant not to compete which extends for a period of two years after
termination of such agreement.
I-9
<PAGE>
PENSION BENEFITS
The following table shows at different levels of remuneration and years of
credited service the estimated annual benefits payable as a straight-line
annuity to a covered participant (assuming retirement at age 65) under the
Giddings & Lewis Retirement Plan as presently in effect (the "Retirement Plan")
and under the Company's unfunded supplemental benefit pension plan, which
provides benefits that would otherwise be denied participants by reason of
certain limitations imposed by the Internal Revenue Code on qualified plan
benefits (the "excess benefit plan").
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
AVERAGE -----------------------------------------------------
REMUNERATION 5 10 15 20 25
- ------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
75$,000..... $ 6,188 $ 12,375 $ 18,563 $ 24,750 $ 30,938
150,000.... 12,375 24,750 37,125 49,500 61,875
200,000.... 16,500 33,000 49,500 66,000 82,500
300,000.... 24,750 49,500 74,250 99,000 123,750
400,000.... 33,000 66,000 99,000 132,000 165,000
450,000.... 37,125 74,250 111,375 148,500 185,625
500,000.... 41,250 82,500 123,750 165,000 206,250
</TABLE>
Remuneration covered by the plans is a participant's salary and bonus, as
shown in the Summary Compensation Table, whether or not such compensation has
been deferred at the participant's election. Benefits are based on a
participant's average remuneration for the five consecutive of the last ten
calendar years for which such average is the highest or, in the case of a
participant who has been employed for less than five full calendar years, the
period of his employment covered by the plans. Under the Retirement Plan, only
salary, as shown in the Summary Compensation Table, up to the limits imposed by
the Internal Revenue Code, is taken into account. The 1996 compensation limit
applicable to the Retirement Plan was $150,000. The number of years of credited
service as of December 31, 1996 that will be recognized for certain of the named
executive officers is as follows: Mr. Isles, 1 year; Mr. Peterson, 29 years; and
Mr. Ciarlo, 2 years. At the time of his retirement as an executive officer, Mr.
Kleinfeldt had 32 years of credited service. Benefits under the plans include a
Social Security offset only for benefits attributable to service before 1989. No
benefits are payable under the plans unless a participant has at least five
years of service. Mr. Coppola and Mr. Anders do not participate in the
Retirement Plan and the excess benefit plan.
On April 30, 1997, the Board approved the amendment of the Supplemental
Executive Retirement Plan to provide for a vesting schedule which is the same as
that set forth in the Company's qualified defined benefit plan and for immediate
vesting of benefits thereunder upon a Change in Control. A copy of the amendment
to the Supplemental Executive Retirement Plan is attached as Exhibit 13 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, filed with
the Commission on May 8, 1997.
The Company also has in effect an unfunded supplemental pension arrangement
for the benefit of Mr. Coppola. This arrangement provides for an annual benefit
accrual to be credited to Mr. Coppola's account in an amount equal to 8% of his
salary and bonus. Mr. Coppola is fully vested under this arrangement and will be
entitled to receive the amounts credited to his account upon retirement plus
credited earnings thereon.
MANAGEMENT STOCK PURCHASE PROGRAM
On March 13, 1997, the Company adopted a Management Stock Purchase Program
("MSPP") pursuant to which certain members of the Company's senior management
team and other key employees
I-10
<PAGE>
purchased an aggregate of 282,355 shares of Common Stock. The program is
intended to align more closely the interests of management and shareholders.
Under the terms of the voluntary program, the participants used personal
full-recourse loans to exercise options to purchase Common Stock granted under
the 1993 Plan with an exercise price of $14.125 per share, which was the fair
market value of the Common Stock on the grant date as determined by the
Compensation Committee of the Board. The loans, which were arranged through a
commercial bank, are the personal obligations of the participants. The Company
has agreed to guarantee repayment to the bank in the event of a default by a
participant. The Company has also agreed to pay the interest on the loans (net
of dividends received on the purchased shares) on behalf of the participants. Of
the named executive officers participating in the program, Messrs. Isles,
Peterson and Ciarlo purchased 114,285, 25,000 and 14,000 shares, respectively.
Other Company executive officers who purchased shares under the program include:
Douglas E. Barnett, Vice President and Corporate Controller (19,000 shares);
Carime F. Bosco, Group Vice President and General Manager-Automation Measurement
and Control (25,000 shares); Todd A. Dillmann, Corporate Counsel and Secretary
(16,579 shares); Robert N. Kelley, Vice President-Administration (22,000
shares); and James B. Simon, Group Vice President and General Manager-Automation
Technology (10,000 shares).
Under the terms of the program, no participant may sell any portion of the
purchased shares unless all principal, interest and prepayment fees, if any, due
on the loan have been paid for all sale proceeds are simultaneously applied
first to the payment of such amounts. The program also incorporates risk and
benefit-sharing provisions. Under these provisions, if any portion of the
purchased shares is sold before the third anniversary of the exercise date, the
participant will be responsible for 100% of any loss, and will be entitled to
receive 50% of any gain, on that portion of the purchased shares. If any portion
of the purchased shares is sold on or after the third anniversary of the
exercise date while the loan remains outstanding, the participant will be
responsible for 50% of any loss, and will be entitled to receive 100% of any
gain, on that portion of the purchased shares. In the event of a participant's
death or disability, the participant will not be responsible for any loss on the
purchased shares and will be entitled to the entire amount of any gain on the
sale of such shares. In the event a participant is terminated for cause (as
defined in the program), the gain-sharing provision will continue to apply, but
the participant will not be entitled to receive any benefit of the loss-sharing
provision. On April 30, 1997, the Board approved the amendment of the MSPP to
eliminate the provision of such program requiring that a participant forfeit 50%
of the gain with respect to stock purchased thereunder in cases of certain sales
in order to eliminate such forfeiture with respect to a sale following, or in
connection with, a Change in Control. A copy of the MSPP, as amended and
restated, is attached as Exhibit 3 to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9, filed with the Commission on May 8, 1997.
STOCK OPTIONS
The Company has in effect the 1989 Stock Option Plan and the 1993 Plan
pursuant to which options to purchase Common Stock may be granted to key
employees (including officers) of the Company and its subsidiaries. The
following table presents certain information as to grants of stock options made
during fiscal 1996 to each of the named executive officers.
I-11
<PAGE>
OPTIONS GRANTS IN 1996 FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL RATES OF STOCK
------------------------------------------------------ PRICE APPRECIATION FOR OPTION
NUMBER OF TERM(2)
SECURITIES PERCENT OF -----------------------------------
UNDERLYING TOTAL OPTIONS AT 0% AT 5% AT 10%
OPTIONS GRANTED TO EXERCISE OR ANNUAL ANNUAL ANNUAL
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION GROWTH GROWTH GROWTH
NAME (#)(1) FISCAL YEAR ($/SHARE) DATE RATE RATE RATE
- -------------------------------------- ----------- --------------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph R. Coppola..................... -- -- -- -- -- -- --
Marvin L. Isles....................... 30,000 10.8% $ 16.625 6/1/06 $ 0 $ 313,661 $ 794,879
Heinz G. Anders....................... 15,000 5.4 15.00 2/2/06 0 141,501 358,592
Stephen M. Peterson................... 12,000 4.3 15.00 2/2/06 0 113,201 286,874
Philip N. Ciarlo...................... 15,000 5.4 15.00 2/2/06 0 141,501 358,592
Richard C. Kleinfeldt................. 18,000 6.5 15.00 2/2/06 0 169,802 430,310
</TABLE>
- ------------------------
(1) The options reflected in the table (which are nonqualified options for
purposes of the Internal Revenue Code) were granted in the case of Mr. Isles
on June 1, 1996 and on February 2, 1996 in the case of the other named
executive officers and vest ratably over a three-year period from the date
of grant.
(2) This presentation is intended to disclose the potential value which would
accrue to the optionee if the option were exercised the day before it would
expire and if the per share value had appreciated at the compounded annual
rate indicated in each column. The assumed rates of appreciation of 5% and
10% are prescribed by the rules of the Securities and Exchange Commission
regarding disclosure of executive compensation. The assumed annual rates of
appreciation are not intended to forecast possible future appreciation, if
any, with respect to the price of the Common Stock.
------------------------
The following table sets forth information regarding the fiscal year-end
value of unexercised options held by the named executive officers. No options
were exercised by the named executive officers during fiscal 1996.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR-END(#) FISCAL YEAR-END ($)(1)
-------------------------- --------------------------------
<S> <C> <C> <C> <C>
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ----------- -------------------
Joseph R. Coppola......................................... 171,000 35,000 $ 938 0
Marvin L. Isles........................................... -- 30,000 -- 0
Heinz G. Anders........................................... 16,000 29,000 0 0
Stephen G. Peterson....................................... 24,067 20,666 0 0
Philip N. Ciarlo.......................................... 4,000 23,000 0 0
Richard C. Kleinfeldt..................................... 46,287 34,000 117,500 0
</TABLE>
- ------------------------
(1) The dollar values are calculated by determining the difference between the
fair market value of the underlying Common Stock and the exercise price of
the options at fiscal year-end.
I-12
<PAGE>
1989 STOCK OPTION PLAN, 1989 RESTRICTED STOCK PLAN. On April 30, 1997, the
Board approved the amendment of the 1989 Stock Option Plan and the 1989
Restricted Stock Plan to provide for accelerated vesting of stock options and
restricted stock granted pursuant to these plans upon a Change in Control.
Copies of such amendments are attached as Exhibits 4 and 5, respectively, to the
Company's Solicitation/ Recommendation Statement on Schedule 14D-9, filed with
the Commission on May 8, 1997.
1993 STOCK AND INCENTIVE PLAN. On April 30, 1997, the Board approved the
amendment of agreements relating to performance-based restricted stock awards
granted pursuant to the 1993 Stock and Incentive Plan to provide that such
awards vest upon a Change in Control at a target level rather than at the
(higher) maximum award level. A copy of the form of amendment to such agreements
is attached as Exhibit 6 to the Company's Solicitation/Recommendation Statement
on Schedule 14D-9, filed with the Commission on May 8, 1997.
I-13
<PAGE>
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
<PAGE>
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
<PAGE>
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 Giddings & Lewis 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
<PAGE>
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.
<PAGE>
EXHIBIT 99.(2)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
THYSSEN AKTIENGESELLSCHAFT,
TAQU, INC.
and
GIDDINGS & LEWIS, INC.
June 11, 1997
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
THE OFFER
1.1 The Offer....................................................... 1
1.2 Company Action.................................................. 3
ARTICLE II
THE MERGER; EFFECTIVE TIME; CLOSING
2.1 The Merger...................................................... 5
2.2 Effective Time.................................................. 5
2.3 Closing......................................................... 5
ARTICLE III
SURVIVING CORPORATION
3.1 Articles of Incorporation....................................... 6
3.2 By-Laws......................................................... 6
3.3 Directors....................................................... 6
3.4 Officers........................................................ 6
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF
SHARES IN THE MERGER
4.1 Share Consideration for the Merger; Conversion or
Cancellation of Shares in the Merger............................ 6
4.2 Shareholders' Meeting........................................... 7
4.3 Payment for Shares in the Merger................................ 8
4.4 Transfer of Shares After the Effective Time..................... 10
4.5 Stock Options................................................... 10
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 Corporate Organization and Qualification........................ 10
5.2 Capitalization.................................................. 11
5.3 Authority Relative to This Agreement............................ 12
5.4 Consents and Approvals; No Violation............................ 12
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Page
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5.5 SEC Reports; Financial Statements............................... 14
5.6 Absence of Certain Changes or Events............................ 15
5.7 Litigation and Liabilities...................................... 15
5.8 Information Supplied............................................ 16
5.9 Taxes........................................................... 16
5.10 Employee Benefit Plans; Labor Matters........................... 17
5.11 Environmental Laws and Regulations.............................. 20
5.12 Brokers and Finders............................................. 21
5.13 Opinions of Financial Advisors.................................. 21
5.14 Compliance with Laws; Permits................................... 21
5.15 Takeover Statutes............................................... 22
5.16 Labor Matters................................................... 22
5.17 Insurance....................................................... 22
5.18 Intellectual Property........................................... 23
5.19 Rights Plan..................................................... 24
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
AND NEWCO
6.1 Corporate Organization and Qualification........................ 25
6.2 Authority Relative to This Agreement............................ 25
6.3 Consents and Approvals: No Violation........................... 25
6.4 Financing....................................................... 26
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
7.1 Conduct of Business of the Company.............................. 27
7.2 Acquisition Proposals........................................... 30
7.3 Approvals and Consents; Cooperation............................. 31
7.4 Further Assurances.............................................. 31
7.5 Access to Information........................................... 32
7.6 Publicity....................................................... 32
7.7 Indemnification of Directors and Officers....................... 33
7.8 Employees....................................................... 34
7.9 Notification of Certain Matters................................. 35
7.10 Company Board................................................... 35
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
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Page
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8.1 Conditions to Each Party's Obligations to Effect the
Merger.......................................................... 36
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
9.1 Termination by Mutual Consent................................... 37
9.2 Termination by Either Parent or the Company..................... 37
9.3 Termination by the Company...................................... 37
9.4 Termination by Parent........................................... 38
9.5 Effect of Termination and Abandonment........................... 39
9.6 Extension; Waiver............................................... 40
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1 Payment of Expenses............................................ 40
10.2 Survival of Representations and Warranties; Survival
of Confidentiality.............................................. 40
10.3 Modification or Amendment...................................... 40
10.4 Waiver of Conditions........................................... 40
10.5 Counterparts................................................... 40
10.6 Governing Law.................................................. 40
10.7 Notices........................................................ 41
10.8 Entire Agreement; Assignment................................... 43
10.9 Parties in Interest............................................ 43
10.10 Certain Definitions............................................. 43
10.11 Obligation of Parent............................................ 43
10.12 Validity........................................................ 44
10.13 Captions........................................................ 44
Annex A
ANNEX A.............................................................. A-1
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June
11, 1997, by and among Thyssen Aktiengesellschaft,a stock corporation organized
under the laws of Germany ("Parent"), TAQU, Inc., a Delaware corporation and an
indirect wholly owned subsidiary of Parent ("Newco"), and Giddings & Lewis,
Inc., a Wisconsin corporation (the "Company").
RECITALS
WHEREAS, the Board of Directors of the Company, has, subject to the
conditions of this Agreement, unanimously determined that each of the Offer and
the Merger (each as defined below) is in the best interests of the shareholders
of the Company and approved and adopted this Agreement and the transactions
contemplated hereby; and
WHEREAS, in furtherance thereof, it is proposed that Newco shall
make a tender offer (the "Offer") to acquire all of the outstanding shares (the
"Shares") of Common Stock, par value $.10 per share (the "Company Common
Stock"), of the Company, together with the associated Rights (as hereafter
defined), at a price of $21 per Share (such amount, or any greater amount per
share paid pursuant to the Offer, being hereinafter referred to as the "Per
Share Amount"), net to the seller in cash, in accordance with the terms and
subject to the conditions of this Agreement; and
WHEREAS, Parent, Newco and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, Parent,
Newco and the Company hereby agree as follows:
ARTICLE I
THE OFFER
1.1 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article IX, Newco shall
<PAGE>
commence the Offer not later than the fifth business day from and including the
date of initial public announcement of this Agreement. Newco shall accept for
payment Shares which have been validly tendered and not withdrawn pursuant to
the Offer at the earliest time following expiration of the Offer that all
conditions to the Offer shall have been satisfied or waived by Newco. The
obligation of Newco to accept for payment, purchase and pay for Shares tendered
pursuant to the Offer shall be subject only to such conditions and to the
further condition that a number of Shares representing not less than a majority
of the Shares then outstanding on a fully diluted basis shall have been validly
tendered and not withdrawn prior to the final expiration date of the Offer (the
"Minimum Condition"). Unless previously approved by the Company in writing, no
change in the Offer may be made (i) which decreases the price per Share payable
in the Offer, (ii) which changes the form of consideration to be paid in the
Offer, (iii) which reduces the maximum number of Shares to be purchased in the
Offer or the Minimum Condition, (iv) which imposes conditions to the Offer in
addition to those set forth in Annex A hereto or which modifies the conditions
set forth in Annex A in a manner adverse to the holders of Shares or (v) which
amends any other term of the Offer in a manner adverse to the holders of the
Shares. Notwithstanding the foregoing, Newco may, without the consent of the
Company, (i) extend the Offer on one or more occasions for up to ten business
days for each such extension beyond the then scheduled expiration date (the
initial scheduled expiration date being 20 business days following commencement
of the Offer), if at the then scheduled expiration date of the Offer any of the
conditions to Newco's obligation to accept for payment and pay for the Shares
shall not be satisfied or waived, until such time as such conditions are
satisfied or waived (and, at the request of the Company, Newco shall, subject to
Parent's right to terminate this Agreement pursuant to Article IX, extend the
Offer for additional periods, unless the only conditions not satisfied or
earlier waived on the then scheduled expiration date are one or more of the
Minimum Condition and the conditions set forth in paragraphs (b) and (e) of
Annex A hereto, provided that (x) if the only condition not satisfied is the
Minimum Condition, the satisfaction or waiver of all other conditions shall have
been publicly disclosed at least five business days before termination of the
Offer and (y) if paragraph (b) of Annex A hereto has not been satisfied and the
failure to so satisfy can be remedied, the Offer shall not be terminated unless
the failure is not remedied within 30 calendar days after Parent has furnished
the Company written notice of such failure), (ii) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
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<PAGE>
Securities and Exchange Commission (the "SEC") or the staff thereof applicable
to the Offer and (iii) extend the Offer for an aggregate period of not more than
5 business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of this sentence if there shall not have been
tendered sufficient Shares so that the Merger could be effected without a
meeting of the Company's shareholders in accordance with Section 180.1104 of the
Wisconsin Business Corporation Law (the "BCL"). Subject to the terms and
conditions of the Offer and this Agreement, Newco shall, and Parent shall cause
Newco to, pay for all Shares validly tendered and not withdrawn pursuant to the
Offer that Newco becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) As soon as practicable on the date of commencement of the
Offer, Newco shall file with the SEC a Tender Offer Statement on Schedule 14D-1
with respect to the Offer (together with any supplement or amendments thereto,
the "Offer Documents"). The Offer Documents will comply in all material respects
with the provisions of applicable federal securities laws. Parent, Newco and the
Company each agree promptly to correct any information provided by them for use
in the Offer Documents if and to the extent that it shall have become false or
misleading in any material respect and Newco further agrees to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. To the extent practicable, the
Company and its counsel shall be given an opportunity to review and comment upon
the Offer Documents and any amendments thereto prior to the filing thereof with
the SEC.
1.2 Company Action
(a) The Company hereby approves of and consents to the Offer
and represents that the Board of Directors, including all of the disinterested
directors, at a meeting duly called and held, has, subject to the terms and
conditions set forth herein, (i) approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, and that such approval
constitutes approval of the Offer, this Agreement and the Merger for purposes of
Section 180.1141 of the BCL, and (ii) resolved to recommend that the
shareholders of the Company accept the Offer, tender their Shares thereunder to
Newco and approve and adopt this Agreement and Merger; provided, that such
recommendation may be withdrawn, modified or amended if, the
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<PAGE>
Company reasonably determines in good faith, based on the advice of outside
legal counsel to the Company, that such action is necessary in order for the
Board of Directors of the Company to comply with its fiduciary duties under
applicable law. The Company consents to the inclusion of such recommendation and
approval in the Offer Documents.
(b) The Company hereby agrees to file with the SEC as soon as
practicable on the date of commencement of the Offer a Solicitation/
Recommendation Statement on Schedule 14D-9 (together with any amendments or
supplements thereto, the "Schedule 14D-9") containing the recommendation
described in Section 1.2(a). The Schedule 14D-9 will comply in all material
respects with the provisions of applicable federal securities laws. The Company,
Parent and Newco each agree promptly to correct any information provided by them
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 further agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to the holders of Shares, in each case as and to
the extent required by applicable federal securities laws. Notwithstanding
anything to the contrary in this Agreement, the Board of Directors may withdraw,
modify or amend its recommendation if the Company reasonably determines in good
faith, based on the advice of outside legal counsel to the Company, that such
action is necessary in order for the Board of Directors of the Company to comply
with its fiduciary duties under applicable law. To the extent practicable,
Parent and its counsel shall be given an opportunity to review and comment upon
the Schedule 14D-9 and any amendments thereto prior to the filing thereof with
the SEC.
(c) In connection with the Offer, the Company will promptly
furnish Parent and Newco with mailing labels, security position listings and any
available listing or computer files containing the names and addresses of the
record holders of the Shares as of a recent date and shall furnish Newco with
such additional information and assistance (including, without limitation,
updated lists of shareholders, mailing labels and lists of securities positions)
as Newco or its agents may reasonably request 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 Merger,
Parent, Newco and their affiliates, associates, agents and advisors shall use
the information contained in any such labels, listings and files only in
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<PAGE>
connection with the Offer and the Merger, and, if this Agreement shall be
terminated, will deliver to the Company all copies of such information then in
their possession.
ARTICLE II
THE MERGER; EFFECTIVE TIME; CLOSING
2.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 2.2), the Company and
Newco shall consummate a merger (the "Merger") in which (a) Newco shall be
merged with and into the Company and the separate corporate existence of Newco
shall thereupon cease, (b) the Company shall be the successor or surviving
corporation in the Merger and shall continue to be governed by the laws of the
State of Wisconsin, and (c) the separate corporate existence of the Company with
all its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger. The corporation surviving the Merger is sometimes
hereinafter referred to as the "Surviving Corporation." The Merger shall have
the effects set forth in Section 180.1106 of the BCL and Section 259 of the
Delaware General Corporation Law (the "DGCL").
2.2 Effective Time. Parent, Newco and the Company will cause
appropriate Articles of Merger (the "Articles of Merger") and an appropriate
Certificate of Merger (the "Certificate of Merger") to be executed and filed on
the date of the Closing (as defined in Section 2.3) (or on such other date as
Parent and the Company may agree) as provided in the BCL and the DGCL. The
Merger shall become effective upon the latest to occur of (i) the date on which
the Articles of Merger have been received for filing by the Department of
Financial Institutions of the State of Wisconsin, (ii) the date on which the
Certificate of Merger is filed with the Secretary of State of the State of
Delaware, or (iii) such later date as is agreed upon by the parties and
specified in the Articles of Merger and Certificate of Merger, and the time of
such effectiveness is hereinafter referred to as the "Effective Time."
2.3 Closing. The closing of the Merger (the "Closing") shall take
place (a) at the offices of Skadden, Arps, Slate, Meagher & Flom (Illinois), 333
West Wacker Drive, Chicago, Illinois, at 10:00 a.m., local time, on the first
business day following the date on which the last of the conditions set forth in
Article VIII hereof shall be fulfilled or waived in accordance
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<PAGE>
with this Agreement or (b) at such other place, time and date as Parent and the
Company may agree.
ARTICLE III
SURVIVING CORPORATION
3.1 Articles of Incorporation. The Articles of Incorporation (the
"Articles of Incorporation") of Newco, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation.
3.2 By-Laws. The By-Laws of Newco, as in effect immediately prior to
the Effective Time, shall be the By-Laws of the Surviving Corporation.
3.3 Directors. The directors of Newco at the Effective Time shall,
from and after the Effective Time, be the initial directors of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Articles of Incorporation and By-Laws.
3.4 Officers. The officers of the Company at the Effective Time
shall, from and after the Effective Time, be the initial officers of the
Surviving Corporation until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Articles of Incorporation and By-Laws.
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF
SHARES IN THE MERGER
4.1 Share Consideration for the Merger; Conversion or Cancellation
of Shares in the Merger. At the Effective Time, by virtue of the Merger and
without any action on the part of the holders of any Shares or capital stock of
Newco:
(a) Each Share, together with any preferred stock purchase
rights (the "Rights"), issued pursuant to the Rights Agreement, dated as of
August 23, 1995, by and between the
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<PAGE>
Company and Firstar Trust Company, as Rights Agent (the "Rights Agreement"),
that are issued and outstanding immediately prior to the Effective Time (other
than Shares (and Rights) owned by Parent, Newco or any direct or indirect wholly
owned subsidiary of Parent (collectively, "Parent Companies") or any of the
Company's direct or indirect wholly owned subsidiaries or shares held in the
treasury of the Company) shall, by virtue of the Merger and without any action
on the part of Newco, the Company or the holder thereof, be cancelled and
extinguished and converted into the right to receive, pursuant to Section 4.3,
the Per Share Amount in cash (the "Merger Consideration"), payable to the holder
thereof, without interest thereon, less any required withholding of taxes, upon
the surrender of the certificate formerly representing such Share.
(b) Each Share issued and outstanding and owned by any of the
Parent Companies or any of the Company's direct or indirect wholly owned
subsidiaries or authorized but unissued shares held by the Company immediately
prior to the Effective Time shall cease to be outstanding, be cancelled and
retired without payment of any consideration therefor and cease to exist.
(c) Each share of common stock of Newco issued and outstanding
immediately prior to the Effective Time shall be converted into one validly
issued, fully paid and nonassessable share of common stock of the Surviving
Corporation.
4.2 Shareholders' Meeting. (a) The Company, acting through the Board
of Directors, shall, if required by applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its shareholders (the "Shareholders Meeting"), to be
held as soon as practicable after Newco shall have purchased Shares
pursuant to the Offer, for the purpose of considering and taking action
upon this Agreement;
(ii) include in the Proxy Statement the
recommendation of the Board of Directors that shareholders of the Company
vote in favor of the approval of this Agreement and the transactions
contemplated hereby unless the Company reasonably determines in good
faith, based on the advice of outside legal counsel to the Company, that
excluding such recommendation is necessary in order for the
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<PAGE>
Board of Directors of the Company to comply with its fiduciary duties
under applicable law; and
(iii) use all reasonable efforts (A) to obtain and
furnish the information required to be included by it in the Proxy
Statement and, after consultation with Parent and Newco, respond promptly
to any comments made by the SEC with respect to the Proxy Statement and
any preliminary version thereof and cause the Proxy Statement to be mailed
to its shareholders at the earliest practicable time following the
expiration or termination of the Offer and (b) obtain the necessary
approvals by its shareholders of this Agreement and the transactions
contemplated hereby unless, the Company reasonably determines in good
faith, based on the advice of outside legal counsel to the Company, that
not taking any such action is necessary in order for the Board of
Directors of the Company to comply with its fiduciary duties under
applicable law.
At such meeting, Parent, Newco and their affiliates will vote all
Shares owned by them in favor of approval of this Agreement and the transactions
contemplated hereby.
(b) Notwithstanding the foregoing, in the event that Newco
shall acquire at least 90 percent of the then outstanding Shares, the parties
hereto agree, at the request of Newco, subject to Article VIII, to take all
necessary and appropriate action to cause the Merger to become effective, in
accordance with Section 180.1104 of the BCL, as soon as reasonably practicable
after such acquisition, without a meeting of the shareholders of the Company.
4.3 Payment for Shares in the Merger. The manner of making payment
for Shares in the Merger shall be as follows:
(a) At the Effective Time, Parent shall make available to J.P.
Morgan & Co. Inc. (the "Exchange Agent"), or such other exchange agent selected
by Parent and reasonably acceptable to the Company, for the benefit of the
holders of Shares, the funds necessary to make the payments contemplated by
Section 4.1 (the "Exchange Fund"). The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the Merger Consideration out of the Exchange
Fund. The Exchange Fund shall not be used for any other purpose.
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<PAGE>
(b) As soon as reasonably practicable, after the Effective
Time, the Exchange Agent shall mail to each holder of record (other than holders
of certificates representing Shares referred to in Section 4.1(b)) of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") (i) a form of 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 (ii) instructions for use in effecting
the surrender of the Certificates for payment therefor. Upon surrender of
Certificates for cancellation to the Exchange Agent, together with such letter
of transmittal duly executed and any other required documents, the holder of
such Certificates shall be entitled to receive for each of the Shares
represented by such Certificates the Merger Consideration, without any interest
thereon, less any required withholding of taxes, and the Certificates so
surrendered shall forthwith be cancelled. Until so surrendered, such
Certificates shall represent solely the right to receive the Merger
Consideration with respect to each of the Shares represented thereby. If payment
is to be made to a person other than the person in whose name a Certificate so
surrendered is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed and otherwise in proper
form for transfer and that the person requesting such payment shall pay to the
Exchange Agent any transfer or other taxes required by reason of the payment to
a person other than the registered holder of the Certificate surrendered, or
shall establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not applicable. Until surrendered in accordance with the provisions
of this Section 4.3(b), each Certificate (other than Certificates representing
Shares referred to in Section 4.1(b)) shall represent for all purposes only the
right to receive, for each Share represented thereby, the Merger Consideration.
(c) Any portion of the Exchange Fund made available to the
Exchange Agent which remains unclaimed by the former shareholders of the Company
one year after the Effective Time shall be delivered to Thyssen Holding
Corporation, the direct parent company of Newco, upon demand of Parent, and any
former shareholders of the Company shall thereafter look only to Thyssen Holding
Corporation for payment of their claim for the Merger Consideration for the
Shares.
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<PAGE>
4.4 Transfer of Shares After the Effective Time. No transfers of
Shares shall be made on the stock transfer books of the Company after the
Effective Time.
4.5 Stock Options.
(a) Each option granted to a Company employee, consultant or
director to acquire shares of Company Stock ("Option") that is outstanding
immediately prior to the Effective Time, whether or not then vested or
exercisable, with respect to which, as of the Effective Time, the Per Share
Amount exceeds the exercise price per share shall, effective as of immediately
prior to the Effective Time, be cancelled in exchange for a single lump sum cash
payment equal to the product of (1) the number of shares of Company Common Stock
subject to such Option and (2) the excess of the Per Share Amount over the
exercise price per share of such Option.
(b) Each Option that is outstanding immediately prior to the
Effective Time, whether or not then vested or exercisable, shall, effective as
of the Effective Time, with respect to which, as of the Effective Time, the Per
Share Amount does not exceed the exercise price per share shall, effective as of
immediately prior to the Effective Time, be cancelled and no payments shall be
made with respect thereto.
(c) Prior to the Effective Time, the Company shall use all
reasonable efforts to obtain any consents from holders of Options as are
necessary to give effect to the provisions of paragraphs (a) and (b) of this
Section 4.5.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Newco that:
5.1 Corporate Organization and Qualification. Each of the Company
and its Subsidiaries (as defined in Section 10.10) is a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and is qualified and in good standing
as a foreign corporation in each jurisdiction where the properties owned, leased
or operated, or the business conducted, by it require such qualification, except
where failure to so qualify or be in good
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<PAGE>
standing is not reasonably likely to have a Material Adverse Effect (as defined
in Section 10.10). Each of the Company and its Subsidiaries has all requisite
power and authority (corporate or otherwise) to own its properties and to carry
on its business as it is now being conducted. The Company has heretofore made
available to Parent complete and correct copies of its and its Significant
Subsidiaries' Articles of Incorporation and By-Laws or other organizational
documents as in effect on the date hereof. Schedule 5.1 contains a correct and
complete list of each jurisdiction where the Company and each of its Significant
Subsidiaries is organized and qualified to do business.
5.2 Capitalization. The authorized capital stock of the Company
consists of (i) 70,000,000 shares of Company Common Stock which, as of June 6,
1997, 31,043,365 Shares were issued and outstanding and (ii) 3,000,000 shares of
Class A Preferred Stock, par value $.10 share (the "Preferred Stock"), none of
which is issued or outstanding. All of the outstanding shares of capital stock
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable (except as provided in Section 180.0622(2)(b) of the BCL and
judicial interpretations thereof). As of June 6, 1997, (i) 1,643,483 shares of
Company Common Stock were reserved for issuance upon exercise of outstanding
options pursuant to the Option Plans, and (ii) 700,000 shares of Preferred Stock
were reserved for issuance in connection with the Rights. Except as set forth on
Schedule 5.2, as of the date hereof all outstanding shares of capital stock of
the Company's Significant Subsidiaries are owned by the Company or a direct or
indirect wholly owned subsidiary of the Company, free and clear of all liens,
charges, encumbrances, claims and options of any nature. Except as set forth
above and on Schedule 5.2 (which includes a correct and complete list of each
outstanding option to purchase Shares, including the holder, date of grant,
exercise price and number of Shares subject thereto), there are not, as of the
date hereof, any outstanding or authorized options, warrants, calls, rights
(including preemptive rights), commitments or any other agreements of any
character which the Company or any of its Significant Subsidiaries is a party
to, or may be bound by, requiring it to issue, transfer, sell, purchase, redeem
or acquire any shares of capital stock or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe for, any shares of
capital stock of the Company or any of its Significant Subsidiaries. The Company
does not have outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible into or
exercisable
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for securities having the right to vote) with the shareholders of
the Company on any matter.
5.3 Authority Relative to This Agreement.
(a) The Company has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby (other than, with respect
to the Merger, the approval of this Agreement by the shareholders of the
Company, including Newco, in accordance with the BCL and the Company's Articles
of Incorporation). This Agreement has been duly and validly executed and
delivered by the Company and, assuming this Agreement constitutes the valid and
binding agreement of Parent and Newco, constitutes the valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except that the enforcement hereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
(b) The Board of Directors of the Company has duly and validly
approved and taken all corporate action required to be taken by the Board of
Directors for the consummation of the transactions (including the Offer, the
acquisition of Shares pursuant to the Offer and the Merger) contemplated herein
in accordance with the terms hereof, including but not limited to, all actions
required to (i) render the provisions of Section 180.1141 of the BCL restricting
business combinations with "interested stockholders" inapplicable to such
transactions and (ii) amend the Rights Agreement to provide that certificates
with respect to the Rights will not be distributed and the Rights will not
become exercisable as a result of any of the execution of this Agreement, the
commencement or consummation of the Offer or the consummation of the Merger.
5.4 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement nor the consummation by the Company of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of the
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respective Articles of Incorporation or By-Laws of the Company or any of its
Significant Subsidiaries; (b) require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, except (i) in connection with the applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) pursuant to the applicable requirements of the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act"), (iii) the filing of the Articles of Merger pursuant to the
BCL and appropriate documents with the relevant authorities of other states in
which the Company or any of its subsidiaries is authorized to do business, (iv)
in connection with any state or local tax which is attributable to the
beneficial ownership of the Company's or its subsidiaries' real property, if any
(collectively, the "Gains Taxes"), (v) as may be required by any applicable
state securities or "blue sky" laws or state takeover laws, (vi) such filings
and consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or the transactions contemplated by this Agreement,
(vii) such filings, consents, approvals, orders, registrations and declarations
as may be required under the laws of any foreign country in which the Company or
any of its subsidiaries conducts any business or owns any assets, or (viii)
where the failure to obtain such consent, approval, authorization or permit, or
to make such filing or notification, would not be reasonably likely to, in the
aggregate, have a Material Adverse Effect or prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement; (c) except as set forth in Schedule 5.4(c),
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,
cancellation or acceleration or lien or other charge or encumbrance) under any
of the terms, conditions or provisions of any note, license, agreement or other
instrument or obligation to which the Company or any of its Significant
Subsidiaries or any of their assets may be bound, except for such violations,
breaches and defaults (or rights of termination, cancellation or acceleration or
lien or other charge or encumbrance) as to which requisite waivers or consents
have been obtained or which, in the aggregate, would not be reasonably likely to
have a Material Adverse Effect or prevent, materially delay or materially impair
the ability of the Company to consummate the transactions contemplated by this
Agreement; or (d) assuming the consents, approvals, authorizations or permits
and filings or notifications referred to in this Section 5.4 are duly and timely
obtained or
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made and, with respect to the Merger, the approval of this Agreement by the
Company's shareholders has been obtained, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company or any of its
subsidiaries or to any of their respective assets, except for violations which
would not in the aggregate be reasonably likely to have a Material Adverse
Effect or prevent, materially delay or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement. Schedule
5.4 set forth a correct and complete list of all agreements, leases, contracts,
notes, mortgages, indentures, arrangements or other obligations binding upon the
Company or any of its Subsidiaries pursuant to which consents or waivers are or
may be required prior to consummation of the transactions contemplated by this
Agreement, except where the failure to obtain such consents or waivers would not
in the aggregate be reasonably likely to have a Material Adverse Effect or
prevent, materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement.
5.5 SEC Reports; Financial Statements.
(a) The Company has filed all periodic reports and other
documents required to be filed by it under the Exchange Act with the SEC since
April 1, 1996 pursuant to the federal securities laws and the SEC rules and
regulations thereunder, all of which, as of their respective filing dates,
complied in all material respects with all applicable requirements of the
Exchange Act (as such post-April 1, 1996 documents have been amended since the
time of their filing, collectively, the "Company SEC Reports"). None of the
Company SEC Reports filed prior to the date hereof, including, without
limitation, any financial statements or schedules included therein, as of their
respective dates or, if amended, as of the date of the last such amendment,
contained, and any Company SEC Reports filed subsequent to the date hereof, will
not contain, any untrue statement of a material fact or omitted, or will omit,
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, or will be made, not misleading.
(b) The consolidated balance sheets and the related statements
of consolidated income, shareholders' equity and cash flows (including the
related notes thereto) of the Company included in the Company SEC Reports filed
prior to the date hereof, and to be included in the Company SEC Reports filed on
or subsequent to the date hereof, as of their respective
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<PAGE>
filing dates, complied, and will comply, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared, and will be prepared, in
accordance with generally accepted accounting principles applied on a basis
consistent with prior periods (except as otherwise noted therein), and present,
and will present, fairly the consolidated financial position of the Company and
its consolidated subsidiaries as of their respective dates, and the consolidated
results of their operations and their cash flows for the periods presented
therein (subject, in the case of the unaudited interim financial statements, to
normal year-end adjustments).
5.6 Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Reports filed prior to the date hereof, as set forth on Schedule 5.6
or as contemplated by this Agreement, since December 31, 1996 the business of
the Company has been carried on only in the ordinary and usual course, and there
has not been any change in the financial condition, properties, business or
results of operations of the Company and its Subsidiaries or any development or
combination of developments of which management of the Company and its
Subsidiaries has knowledge that, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect.
5.7 Litigation and Liabilities. Except as set forth on Schedule 5.7
or as disclosed in the Company SEC Reports filed prior to the date hereof, there
are no (i) civil, criminal or administrative actions, suits, claims, hearings,
investigations or proceedings pending or, to the knowledge of management of the
Company and its Subsidiaries, threatened against the Company or any of its
Subsidiaries or (ii) obligations or liabilities, whether or not accrued,
contingent or otherwise and whether or not required to be disclosed in the
Company SEC Reports, or any other facts or circumstances of which management of
the Company and its Subsidiaries has knowledge that could result in any claims
against, or obligations or liabilities of, the Company or any of its
Subsidiaries, except, in the case of clauses (i) or (ii), for those that are
not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect or prevent or materially burden or materially impair the ability
of the Company to consummate the transactions contemplated by this Agreement.
5.8 Information Supplied. None of the information supplied by the
Company in writing for inclusion in the Offer Documents or provided by the
Company in the Schedule 14D-9 will,
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at the respective times that the Offer Documents and the Schedule 14D-9 or any
amendments or supplements thereto are filed with the SEC and are first published
or sent or given to holders of Shares, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5.9 Taxes. Except as set forth on Schedule 5.9, the Company and each
of its Subsidiaries (or any consolidated, combined, unitary, aggregate or other
similar group for tax purposes of which any of the Company of its Subsidiaries
is a member) (i) have prepared in good faith and duly and timely filed (taking
into account any extension of time within which to file) all material Tax
Returns (as defined below) required to be filed by any of them on or before the
date of this Agreement and all such filed material Tax Returns are complete and
accurate in all material respects; (ii) have paid all Taxes (as defined below)
that are required to be paid or that the Company or any of its Subsidiaries are
obligated to withhold from amounts owing to any employee, creditor or third
party on or before the date of this Agreement, except with respect to matters
contested in good faith and have recorded as reserves on the consolidated
balance sheets all Taxes which have accrued before the date of this Agreement
but which are not yet due and payable; and (iii) have not waived any statute of
limitations with respect to Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency. Except as set forth on Schedule 5.9,
as of the date hereof, there are not pending or, to the knowledge of management
of the Company and its Subsidiaries, threatened in writing, any audits,
examinations, investigations or other proceedings in respect of Taxes or Tax
matters. Except as set forth on Schedule 5.9, there are not, to the knowledge of
management of the Company and its Subsidiaries, any unresolved questions or
claims concerning the Company's or any of its Subsidiaries' Tax liability that
are reasonably likely to have a Material Adverse Effect. There are no liens for,
or in respect of, Taxes on any of the assets of the Company or its Subsidiaries,
except with respect to matters being contested in good faith, other than liens
for current Taxes which are not yet due or payable. Except as set forth on
Schedule 5.9, neither the Company nor any Subsidiary owes any amount pursuant to
any written or unwritten Tax sharing or indemnity agreement, or will have any
liability after the date hereof for any amounts due under or in respect of any
such agreement. The Company has made available to Parent true and correct copies
of the United States federal income Tax Returns filed by the Company and its
Subsidiaries for each of the last three fiscal years.
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As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes", and "Taxable") includes all federal,
state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts and any interest in respect of such penalties and
additions, and (ii) the term "Tax Return" includes all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes.
5.10 Employee Benefit Plans; Labor Matters.
(a) All benefit and compensation plans, contracts, policies or
arrangements covering current employees or former employees of the Company and
its subsidiaries (the "Employees") and current or former directors of the
Company, including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and deferred compensation, stock option, stock purchase,
stock appreciation rights, stock based, incentive and bonus plans (the "Benefit
Plans"), are listed in Schedule 5.10. True and complete copies of all Benefit
Plans, including, but not limited to, any trust instruments and insurance
contracts forming a part of any Benefit Plans, and all amendments thereto have
been provided or made available to Purchaser.
(b) Except as set forth on Schedule 5.10, all Benefit Plans,
other than "multiemployer plans" within the meaning of Section 3(37) of ERISA,
covering Employees (the "Plans"), to the extent subject to ERISA, are in
substantial compliance with ERISA. Except as set forth on Schedule 5.10, each
Plan which is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA ("Pension Plan") and which is intended to be qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
has received a favorable determination letter from the Internal Revenue Service
with respect to "TRA" (as defined in Section 1 of Rev. Proc. 93-39), and
management of the Company and its Subsidiaries is not aware of any circumstances
likely to result in revocation of any such favorable determination letter. There
is no material pending or threatened litigation relating to the Plans. Neither
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the Company nor any of its subsidiaries has engaged in a transaction with
respect to any Plan that, assuming the taxable period of such transaction
expired as of the date hereof, could subject the Company or any subsidiary to a
tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of
ERISA in an amount which would be material.
(c) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by the Company or any of its subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). The Company and the subsidiaries have not incurred and
do not expect to incur any withdrawal liability with respect to a multiemployer
plan under Subtitle E of Title IV of ERISA (regardless of whether based on
contributions of an ERISA Affiliate). No notice of a "reportable event", within
the meaning of Section 4043 of ERISA for which the 30-day reporting requirement
has not been waived, has been required to be filed for any Pension Plan or by
any ERISA Affiliate within the 12-month period ending on the date hereof or will
be required to be filed in connection with the transactions contemplated by this
Agreement.
(d) Except as set forth on Schedule 5.10, all contributions
required to be made under the terms of any Benefit Plan have been timely made or
have been reflected on the financial statements included in the Company SEC
Reports. Neither any Pension Plan nor any single-employer plan of an ERISA
Affiliate has an "accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA
Affiliate has an outstanding funding waiver. Neither the Company nor any of its
subsidiaries has provided, or is required to provide, security to any Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(e) Except as set forth on Schedule 5.10, under each Pension
Plan which is a single-employer plan, as of the last day of the most recent plan
year ended prior to the date hereof, the actuarially determined present value of
all "benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA
(as determined on the basis of the actuarial assumptions contained in the Plan's
most recent actuarial valuation), did not exceed the then current value of the
assets of such Plan, and
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there has been no material change in the financial condition of such Plan since
the last day of the most recent plan year. The withdrawal liability of the
Company and its subsidiaries under each Benefit Plan which is a multiemployer
plan to which the Company, any of its subsidiaries or an ERISA Affiliate has
contributed during the preceding 12 months, determined as if a "complete
withdrawal", within the meaning of Section 4203 of ERISA, had occurred as of the
date hereof, does not exceed $100,000.
(f) Neither the Company nor any of its subsidiaries has any
obligations for retiree health and life benefits under any Benefit Plan, except
as set forth on Schedule 5.10. The Company and its subsidiaries have, at all
times since the effective date of any Benefit Plan providing retiree health and
life benefits, reserved the right to amend or terminate any such Benefit Plan at
any time and have communicated this right to all participants.
(g) Except as indicated on Schedule 5.10, the consummation of
the transactions contemplated by this Agreement will not (x) entitle any
employees of the Company or any of the subsidiaries to severance pay, (y)
accelerate the time of payment or vesting or trigger any payment of compensation
or benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any of the Benefit Plans or (z) result in any breach or
violation of, or a default under, any of the Benefit Plans.
(h) All Benefit Plans covering current or former non-U.S.
Employees comply in all material respects with applicable local law. The Company
and its subsidiaries have no material unfunded liabilities with respect to any
Pension Plan that covers such non-U.S. Employees.
(i) The Company has made available to Parent all collective
bargaining or other labor union contracts to which the Company or any of its
Significant Subsidiaries is a party applicable to persons employed by the
Company or its Significant Subsidiaries as of the date of this Agreement. As of
the date of this Agreement, there is no pending or threatened in writing labor
dispute, strike or work stoppage against the Company or any of its subsidiaries
which may interfere with the respective business activities of the Company or
its subsidiaries, except where such dispute, strike or work stoppage would not
have a Material Adverse Effect.
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5.11 Environmental Laws and Regulations. Except as disclosed in
Schedule 5.11 and except as would not have a Material Adverse Effect: (i) the
Company and its Subsidiaries have complied at all times with all applicable
Environmental Laws; (ii) all properties currently owned or operated by the
Company or any Subsidiary (including soils, groundwater, surface water,
buildings or other structures) are not contaminated with any Hazardous
Substance; (iii) no property formerly owned or operated by the Company or any
Subsidiary has been contaminated with any Hazardous Substance during or prior to
such period of ownership or operation; (iv) neither the Company nor any
Subsidiary is subject to liability for any Hazardous Substance disposal or
contamination on any third party property other than for matters that have been
fully resolved; (v) neither the Company nor any Subsidiary has caused any
release or threat of release of any Hazardous Substance; (vi) neither the
Company nor any Subsidiary has received any notice, demand, letter, claim or
request for information indicating that it may be in violation of or subject to
liability under any Environmental Law other than for matters that have been
fully resolved; (vii) neither the Company nor any Subsidiary is subject to any
order, decree, injunction or other agreement with any Governmental Entity
relating to liability under any Environmental Law; (viii) none of the properties
of the Company or any Subsidiary contain any underground storage tanks,
asbestos-containing material, or polychlorinated biphenyls; (ix) there are no
circumstances or conditions involving the Company or any Subsidiary that could
reasonably be expected to result in any claims, liability, costs or restrictions
on the ownership, use, or transfer of any property pursuant to any Environmental
Law; and (x) the Company has made available to Buyer copies of all material
environmental reports, studies, assessments, sampling data and other
environmental information in its possession relating to the Company or any
Subsidiary or any of their current or former properties or operations. As used
herein, the term "Environmental Law" means any federal, state or local law,
regulation, order, decree, permit, authorization, opinion, common law or agency
requirement relating to: (A) the protection, investigation or restoration of the
environment, health and safety relating to Hazardous Substances, or natural
resources, (B) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance or (C) noise, odor, wetlands, pollution,
contamination or any injury or threat of injury to persons or property relating
to Hazardous Substances. As used herein, the term "Hazardous Substance" means
any substance that is: (A) listed, classified or regulated pursuant to any
Environmental Law; or (B) any petroleum product or by-product,
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asbestos-containing material, lead-containing paint or plumbing, polychlorinated
biphenyls or radioactive materials or radon.
5.12 Brokers and Finders. Except for the fees and expenses payable
to Credit Suisse First Boston Corporation, which fees and expenses are reflected
in their agreements with the Company, true and complete copies of which have
been furnished to Parent, the Company has not employed any investment banker,
broker, finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to any investment
banking, brokerage, finder's or similar fee or commission in connection with
this Agreement or the transactions contemplated hereby.
5.13 Opinions of Financial Advisors. The Company has received the
opinion of Credit Suisse First Boston Corporation, dated June 8, 1997, to the
effect that, as of such date, the cash consideration to be received by the
shareholders of the Company pursuant to the Offer and the Merger is fair to such
shareholders from a financial point of view.
5.14 Compliance with Laws; Permits. Except as set forth in the
Company SEC Reports filed prior to the date hereof and as set forth on Schedule
5.14, the businesses of each of the Company and its Subsidiaries have not been,
and are not being, conducted in violation of any federal, state, local or
foreign law, statute, ordinance, rule, regulation, judgment, order, injunction,
decree, arbitration award, agency requirement, license or permit of any
Governmental Entity (collectively, "Laws"), except for violations or possible
violations that, individually or in the aggregate, are not reasonably likely to
have a Material Adverse Effect or prevent or materially burden or materially
impair the ability of the Company to consummate the transactions contemplated by
this Agreement. Except as set forth in the Company SEC Reports filed prior to
the date hereof and as set forth on Schedule 5.14, no investigation or review by
any Governmental Entity with respect to the Company or any of its Subsidiaries
is pending or, to the knowledge of management of the Company and its
Subsidiaries, threatened, nor has any Governmental Entity indicated an intention
to conduct the same. The Company and its Subsidiaries each has all permits,
licenses, franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct its business as
presently conducted except those the absence of which are not, individually or
in the aggregate, reasonably likely to have a Material Adverse Effect or prevent
or materially burden or materially impair the ability of the Company to
consummate the
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Merger and the other transactions contemplated by this Agreement.
5.15 Takeover Statutes. The Board of Directors of the Company has
taken all actions required to render the provisions of Section 180.1140 through
Section 180.1144 of the BCL inapplicable to the transactions contemplated by
this Agreement, including the Offer and the Merger, pursuant to the terms of
this Agreement. The Company has elected, pursuant to its Articles of
Incorporation not to be subject to the control share voting restrictions
contained in Section 180.1150 of the BCL are inapplicable to the Company.
5.16 Labor Matters. Except as listed on Schedule 5.16, neither the
Company nor any of its Subsidiaries is a party to or otherwise bound by any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization, nor is the Company or any of its
Subsidiaries the subject of any material proceeding asserting that the Company
or any of its Subsidiaries has committed an unfair labor practice or is seeking
to compel it to bargain with any labor union or labor organization nor is there
pending or, to the knowledge of management of the Company and its Subsidiaries,
threatened, nor has there been for the past three years, any material labor
strike, dispute, walk-out, work stoppage, slow-down or lockout involving
directly the Company or any of its Subsidiaries. The Company has previously made
available to Parent correct and complete copies of all labor and collective
bargaining agreements to which the Company or any of its Subsidiaries is party
or by which any of them are otherwise bound.
5.17 Insurance. Schedule 5.17 contains a correct and complete list
of all material insurance policies of the Company and its Subsidiaries. All
material fire and casualty, general liability, business interruption, product
liability, and sprinkler and water damage insurance policies maintained by the
Company or any of its Subsidiaries are with reputable insurance carriers,
provide customary coverage for all normal risks incident to the business of the
Company and its Subsidiaries and their respective properties and assets, and are
customary in character and amount at least equivalent to that carried by persons
engaged in similar businesses and subject to the same or similar perils or
hazards, except for any such failures to maintain insurance policies that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect.
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5.18 Intellectual Property. Except as disclosed in Company SEC
Reports filed prior to the date hereof or as set forth on Schedule 5.18,
(i) The Company and/or each of its Subsidiaries
owns, or is licensed or otherwise possesses valid rights to use all
patents, trademarks, trade names, service marks, copyrights, and any
applications therefor, technology, know-how, computer software programs or
applications, and tangible or intangible proprietary information or
materials that are used in the business of the Company and its
Subsidiaries as currently conducted, except for any such failures to own,
be licensed or possess rights to use that, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect,
and to the knowledge of management of the Company and its Subsidiaries all
registrations for patents, trademarks, trade names, service marks and
copyrights owned by the Company and/or its Subsidiaries are valid and
subsisting, except as are not reasonably likely to have a Material Adverse
Effect.
(ii) Except as disclosed in Company SEC Reports
filed prior to the date hereof, as set forth on Schedule 5.18 or as is not
reasonably likely to have a Material Adverse Effect:
(A) the Company is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which
the Company is authorized to use any third-party patents,
trademarks, service marks, and copyrights ("Third-Party Intellectual
Property Rights");
(B) no claims against the Company and/or its Subsidiaries with
respect to (I) the patents, registered and material unregistered
trademarks and service marks, registered copyrights, trade names,
and any applications therefor owned by the Company or any its
Subsidiaries (the "Company Intellectual Property Rights"); (II) any
trade secret material to the Company; or (III) Third-Party
Intellectual Property Rights are currently pending or, to the
knowledge of
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management of the Company and its Subsidiaries, are threatened by
any Person;
(C) management of the Company and its Subsidiaries does not know of
any valid grounds for any bona fide claims (I) to the effect that
the manufacture, sale, licensing or use of any product as now used,
sold or licensed or proposed for use, sale or license by the Company
or any of its Subsidiaries, infringes on any copyright, patent,
trademark, service mark or trade secret; (II) against the use by
the Company or any of its Subsidiaries, of any trademarks, trade
names, trade secrets, copyrights, patents, technology, know-how or
computer software programs and applications used in the business of
the Company or any of its Subsidiaries as currently conducted; (III)
challenging the ownership, or validity of any of the Company
Intellectual Property Rights or other trade secret material to the
Company; or (IV) challenging the license or right to use of the
Third-Party Intellectual Rights by the Company or any of its
Subsidiaries; and
(D) to the knowledge of management of the Company and its
Subsidiaries, there is no unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property Rights
material to the Company by any third party, including any employee
or former employee of the Company or any of its Subsidiaries.
5.19 Rights Plan. The Company has amended the Rights Agreement to
provide that Parent shall not be deemed an Acquiring Person (as defined in the
Rights Agreement) and that the Rights will not separate from the Shares as a
result of entering into this Agreement, commencing or consummating the Offer or
consummating the Merger pursuant to the terms of this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
AND NEWCO
Each of Parent and Newco represent and warrant jointly and severally
to the Company that:
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6.1 Corporate Organization and Qualification. Each of Parent and
Newco is a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation and is qualified
and in good standing as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business conducted, by it require
such qualification, except where the failure to so qualify or be in such good
standing would not have a Material Adverse Effect.
6.2 Authority Relative to This Agreement. Each of Parent and Newco
has the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This Agreement
and the consummation by Parent and Newco of the transactions contemplated hereby
have been duly and validly authorized by the respective Boards of Directors of
Parent and Newco and by Thyssen Holding Corporation as sole shareholder of
Newco, and no other corporate proceedings on the part of Parent, Newco and
Thyssen Holding Corporation are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent and Newco and, assuming
this Agreement constitutes the valid and binding agreement of the Company,
constitutes valid and binding agreements of each of Parent and Newco,
enforceable against each of them in accordance with its terms, except that the
enforcement hereof may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (b) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
6.3 Consents and Approvals: No Violation. Neither the execution and
delivery of this Agreement by Parent or Newco nor the consummation by Parent and
Newco of the transactions contemplated hereby will (a) conflict with or result
in any breach of any provision of the Articles of Incorporation or the By-Laws,
respectively, of Parent or Newco; (b) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, except (i) in connection with the applicable
requirements of the HSR Act, (ii) pursuant to the applicable requirements of the
Exchange Act, (iii) the filing of the Articles of Merger pursuant to the BCL and
appropriate documents with the relevant authorities of other states in which
Parent is authorized to do business, (iv) as may be required by any applicable
state securities or "blue
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sky" laws or state takeover laws, (v) the filing of a Pre-Merger Notification
Form with the German Federal Cartel Office pursuant to the German Act Against
Restraints of Competition (the "AARC") and such other filings, consents,
approvals, orders, registrations, declarations and filings as may be required
under the laws of any foreign country in which Parent or any of its Subsidiaries
conducts any business or owns any assets, (vi) such filings and consents as may
be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by
the Merger or the transactions contemplated by this Agreement or (vii) where the
failure to obtain such consent, approval, authorization or permit, or to make
such filing or notification, would not in the aggregate have a Material Adverse
Effect; (c) except as set forth in Schedule 6.4(c), 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, cancellation or acceleration
or lien or other charge or encumbrance) under any of the terms, conditions or
provisions of any note, license, agreement or other instrument or obligation to
which Parent or any of its Significant Subsidiaries may be bound, except for
such violations, breaches and defaults (or rights of termination, cancellation
or acceleration or lien or other charge or encumbrance) as to which requisite
waivers or consents have been obtained or which, in the aggregate, would not
have a Material Adverse Effect; or (d) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in this
Section 6.4 are duly and timely obtained or made, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent or any of
its subsidiaries or to any of their respective assets, except for violations
which would not in the aggregate have a Material Adverse Effect.
6.4 Financing. Either Parent or Newco will have at the time required
sufficient funds available to purchase all of the Shares outstanding on a fully
diluted basis and to pay all fees and expenses related to the transactions
contemplated by this Agreement.
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ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
7.1 Conduct of Business of the Company.
(a) The Company agrees that during the period from the date of
this Agreement to the Effective Time (unless the other party shall otherwise
agree in writing and except as otherwise contemplated by this Agreement), the
Company will, and will cause each of its Significant Subsidiaries to, conduct
its operations according to its ordinary and usual course of business consistent
with past practice. Without limiting the generality of the foregoing, and except
as otherwise permitted in this Agreement or set forth on Schedule 7.1, prior to
the Effective Time, neither the Company nor any of its Significant Subsidiaries
will, without the prior written consent of Parent:
(i) except for shares to be issued or delivered
pursuant to the Company's Option Plans, issue, deliver, sell, dispose of,
pledge or otherwise encumber, or authorize or propose the issuance, sale,
disposition or pledge or other encumbrance of (A) any additional shares of
capital stock of any class (including the Shares), or any securities or
rights convertible into, exchangeable for, or evidencing the right to
subscribe for any shares of capital stock, or any rights, warrants,
options, calls, commitments or any other agreements of any character to
purchase or acquire any shares of capital stock or any securities or
rights convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of capital stock, or (B) any other securities in
respect of, in lieu of, or in substitution for, Shares outstanding on the
date hereof;
(ii) except pursuant to the Company's stock-based
employee benefit plans, redeem, purchase or otherwise acquire, or propose
to redeem, purchase or otherwise acquire, any of its outstanding Shares;
(iii) split, combine, subdivide or reclassify any
Shares or declare, set aside for payment or pay any dividend, or make any
other actual, constructive or deemed distribution in respect of any Shares
or otherwise make any payments to shareholders in their capacity as such,
other than the declaration
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and payment of regular quarterly cash dividends not in excess of $0.03 per
Share for any quarterly period and except for dividends by a wholly owned
subsidiary of the Company;
(iv) adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
subsidiaries (other than the Merger);
(v) adopt any amendments to its Articles of
Incorporation or By-Laws or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate
structure or ownership of any subsidiary of the Company;
(vi) make any material acquisition, by means of
merger, consolidation or otherwise, or material disposition (other than
disposition of assets in the ordinary course of business, consistent with
past practice), of assets or securities;
(vii) other than in the ordinary course of
business consistent with past practice, incur any indebtedness for
borrowed money or guarantee any such indebtedness or make any loans,
advances or capital contributions to, or investments in, any other person,
other than to the Company or any wholly owned subsidiary of the Company;
(viii) grant any material increases in the
compensation of any of its directors, officers or key employees, except in
the ordinary course of business and in accordance with past practice;
(ix) pay or agree to pay any pension, retirement
allowance or other employee benefit not required or contemplated by any of
the existing benefit, severance, termination, pension or employment plans,
agreements or arrangements as in effect on the date hereof to any director
or officer of the Company, whether past or present;
(x) enter into any new or materially amend any
existing employment or severance or
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termination agreement with any such director or officer;
(xi) except in the ordinary course of business
consistent with past practice or as may be required to comply with
applicable law, become obligated under any new pension plan, welfare plan,
multiemployer plan, employee benefit plan, severance plan, benefit
arrangement, or similar plan or arrangement, which was not in existence on
the date hereof, or amend any such plan or arrangement in existence on
the date hereof if such amendment would have the effect of materially
enhancing any benefits thereunder;
(xii) authorize or make any individual capital
expenditure in excess of $1,000,000 or authorize or make capital
expenditures in excess of $15,000,000 in the aggregate;
(xiii) settle or compromise any material claims or
litigation or, except in the ordinary and usual course of business,
modify, amend or terminate any of its material Contracts or waive, release
or assign any material rights or claims;
(xiv) make any material change, other than in the
ordinary course of business and consistent with past practice or as
required by applicable law, regulation or change in generally accepted
accounting principles, in accounting policies or procedures applied by the
Company (including tax accounting policies and procedures);
(xv) except as otherwise required by applicable
law or regulation, make any tax election or permit any insurance policy
naming it as a beneficiary or a loss payable payee to be canceled or
terminated, except in the ordinary course of business;
(xvi) take any action to amend or alter the Rights
Agreement in any manner adverse to Parent's, Newco's or the Company's
ability to commence or consummate the transactions contemplated by this
Agreement pursuant to the terms hereof; or
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(xvii) authorize, or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.
7.2 Acquisition Proposals. The Company agrees that neither it nor
any of its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, initiate, solicit, encourage or
otherwise facilitate any inquiries or the making of any proposal or offer with
respect to a merger, reorganization, share exchange, consolidation or similar
transaction involving, or any purchase of all or any significant portion of the
assets or equity securities of, it or any of its Subsidiaries (any such proposal
or offer being hereinafter referred to as an "Acquisition Proposal"). The
Company further agrees that neither it nor any of its Subsidiaries nor any of
the officers and directors of it or its Subsidiaries shall, and that it shall
direct and use its best efforts to cause its and its Subsidiaries' employees,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) not to, directly or
indirectly, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any Person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; provided, however, that nothing contained in
this Agreement shall prevent the Company or its Board of Directors from (A)
complying with Rules 14d-9 and 14e-2 promulgated under the Exchange Act with
regard to an Acquisition Proposal; (B) providing information in response to a
request therefor by a Person who has made an unsolicited bona fide written
Acquisition Proposal if the Board of Directors takes reasonable steps to protect
the confidentiality of such information; (C) engaging in any negotiations or
discussions with any Person who has made an unsolicited bona fide written
Acquisition Proposal; or (D) recommending such an Acquisition Proposal to the
shareholders of the Company, if (i) in each such case referred to in clause (B),
(C) or (D) above, the Company reasonably determines in good faith based upon the
advice of outside legal counsel to the Company that such action is necessary in
order for the Board of Directors of the Company to comply with its fiduciary
duties under applicable law, and (ii) in each case referred to in clause (C) or
(D) above, the Board of Directors of the Company determines in good faith (after
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consultation with its financial advisor) that such Acquisition Proposal would,
if consummated, result in a transaction more favorable to the Company's
shareholders from a financial point of view than the transaction contemplated by
this Agreement (any such more favorable Acquisition Proposal being referred to
in this Agreement as a "Superior Proposal"). The Company agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. The Company agrees that it will take the necessary
steps to promptly inform the individuals or entities referred to in the first
sentence hereof of the obligations undertaken in this Section 7.2. The Company
agrees that it will notify Parent immediately if any such inquiries, proposals
or offers are received by, any such information is requested from, or any such
discussions or negotiations are sought to be initiated or continued with, any of
its representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers. The
Company also agrees that it will promptly request each Person that has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring it or any of its Subsidiaries to return all
confidential information heretofore furnished to such Person by or on behalf of
it or any of its Subsidiaries.
7.3 Approvals and Consents; Cooperation. Subject to the other
provisions of this Agreement, the parties hereto shall use their respective best
efforts, and cooperate with each other, to obtain as promptly as practicable all
governmental and third party authorizations, approvals, consents or waivers,
including, without limitation, pursuant to the HSR Act and the AARC, required in
order to consummate the transactions contemplated by this Agreement, including,
without limitation, the Offer and the Merger.
7.4 Further Assurances. Subject to the other provisions of this
Agreement, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, the Offer and the Merger, which efforts shall
include, without limitation, Parent and Newco using their best efforts to
prevent any preliminary or permanent injunction or other order by a court of
competent jurisdiction or governmental entity relating to consummating the
transactions
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contemplated by this Agreement, including, without limitation, under the
antitrust laws, and, if issued, to appeal any such injunction or order through
the appellate court or body for the relevant jurisdiction; provided, however,
that nothing in this Agreement shall require, or be construed to require, Parent
to proffer to, or agree to, sell or hold separate and agree to sell, before or
after the Effective Time, any assets, businesses, or interest in any assets or
businesses of Parent, 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. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the parties hereto shall take or cause to be taken all such
necessary action, including, without limitation, the execution and delivery of
such further instruments and documents as may be reasonably requested by the
other party for such purposes or otherwise to consummate and make effective the
transactions contemplated hereby.
7.5 Access to Information. Upon reasonable notice, the Company shall
(and shall cause each of its subsidiaries to) afford to officers, employees,
counsel, accountants and other authorized representatives of Parent
("Representatives"), in order to evaluate the transactions contemplated by this
Agreement, reasonable access, during normal business hours throughout the period
prior to the Effective Time, to its properties, books and records and, during
such period, shall (and shall cause each of its subsidiaries to) furnish
promptly to such Representatives all information concerning its business,
properties and personnel as may reasonably be requested. Parent agrees that it
will not, and will cause its Representatives not to, use any information
obtained pursuant to this Section 7.5 for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement. The
Confidentiality Agreement, dated April 30, 1997 (the "Confidentiality
Agreement"), by and between the Company and Parent shall apply with respect to
information furnished by the Company, its subsidiaries and the Company's
officers, employees, counsel, accountants and other authorized representatives
hereunder.
7.6 Publicity. The parties will consult with each other and will
mutually agree upon any press releases or public announcements pertaining to the
Offer or the Merger and shall not issue any such press releases or make any such
public announcements prior to such consultation and agreement, except as
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may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange, in which case the party
proposing to issue such press release or make such public announcement shall use
its reasonable efforts to consult in good faith with the other party before
issuing any such press releases or making any such public announcements.
7.7 Indemnification of Directors and Officers.
(a) The Articles of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to indemnification set
forth in the Articles of Incorporation and By-Laws of the Company on the date of
this Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at any time
prior to the Effective Time were directors or officers of the Company in respect
of actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement), unless
such modification is required by law; provided, that in the event any claim or
claims are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
disposition of any and all such claims.
(b) Parent shall cause to be maintained in effect for the
Indemnified Parties (as defined below) for not less than five years the current
policies of directors, and officers, liability insurance and fiduciary liability
insurance maintained by the Company and the Company's subsidiaries with respect
to matters occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement); provided, that
Parent may substitute therefor policies of substantially the same coverage
containing terms and conditions which are no less advantageous to the Company's
present or former directors or officers or other employees covered by such
insurance policies prior to the Effective Time (the "Indemnified Parties").
Notwithstanding the foregoing, in no case shall Parent or the Surviving
Corporation be required to pay an annual premium for such insurance greater than
125% of the last annual premium paid prior to the date hereof. Should payment of
the maximum amount of premium provided for in the previous sentence not allow
the purchase of an amount of such insurance equal to the amount provided under
the current policies, Parent shall purchase the maximum amount of insurance
available for 125% of the last annual premium.
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(c) This Section 7.7 is intended to benefit the Indemnified
Parties and shall be binding on all successors and assigns of Parent, Newco, the
Company and the Surviving Corporation.
7.8 Employees
(a) Except as set forth on Schedule 7.8(a), for a period of
one year following the Effective Time, Parent agrees to provide employee benefit
plans and programs for the benefit of employees of the Company and its
Subsidiaries (excluding plans or programs which provide for issuance of Shares
or options on Shares) that are in the aggregate no less favorable to such
employees than the Company Plans. All service credited to each employee by the
Company through the Effective Time shall be recognized by Parent for purposes of
eligibility and vesting under any employee benefit plan provided by Parent for
the benefit of the employees.
(b) Parent shall cause the Surviving Corporation to honor
(without modification) and assume the written employment agreements, severance
agreements and other agreements listed on Schedule 7.8(b), all as in effect on
the date of this Agreement.
(c) Parent shall maintain in effect the Company Severance Plan
for a period of two years immediately following the Effective Time and the
Company Severance Plan shall not be terminated or adversely amended during such
two-year period.
(d) Parent shall maintain in effect the Company Management
Incentive Compensation Plan and the Company Profit Improvement Plan until
December 31, 1997 and such plans shall not be terminated or adversely amended
until after such date.
(e) Parent shall maintain in effect the Giddings & Lewis
Foundation, Inc. for a period of two years immediately following the Effective
Time and, during such period, shall operate the Giddings & Lewis Foundation,
Inc. on substantially the same basis (which shall include selection of
beneficiaries based on the same geographical and other attributes) as the
Giddings & Lewis Foundation, Inc. was operated during the twelve-month period
immediately preceding the Effective Time; provided, however that neither Parent
nor any of its subsidiaries nor the Company or any of its subsidiaries shall be
required to expend any funds in connection with the operation of the Giddings &
Lewis Foundation, Inc.
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7.9 Notification of Certain Matters. The Company shall give prompt
notice to Parent of: (a) any notice of, or other communication relating to, a
default or event that, with notice or lapse of time or both, would become a
default, received by the Company or any of its subsidiaries subsequent to the
date of this Agreement and prior to the Effective Time, under any Contract to
which the Company or any of its subsidiaries is a party or is subject, which
default is reasonably likely to have a Material Adverse Effect; and (b) any
material adverse change in the financial condition, properties, business or
results of operations of the Company and its subsidiaries taken as a whole or
the occurrence of any event which is reasonably likely to result in any such
change. Each of the Company and Parent shall give prompt notice to the other
party of any notice or other communication from any third party alleging that
the consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement.
7.10 Company Board.
(a) Promptly (but in any event within two business days) upon
the purchase by Parent of a majority of the outstanding Shares pursuant to the
Offer, either (a) a majority of the members of the Board of Directors of the
Company shall resign and the remaining members of the Board of Directors of the
Company shall fill all of the Board positions so vacated with persons designated
by Parent or (b) the size of the Board of Directors of the Company shall be
expanded and the vacant seats filled with persons designated by Parent so that
Parent's designees shall constitute a majority of the members of the Board of
Directors of the Company. In either case, at all times thereafter through the
Effective Time a majority of the members of the Board of Directors of the
Company shall be persons designated by Parent.
(b) The Company's obligation to appoint designees to the Board
of Directors of the Company shall be subject to Section 14(f) of the Exchange
Act and Rule 14e-1 promulgated thereunder. The Company shall promptly take all
actions required pursuant to such Section and Rule in order to fulfill its
obligations under this Section 7.10 and shall include in the Schedule 14D-9 such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14e-1 to fulfill such obligations. Parent
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or Newco shall supply to the Company and be solely responsible for any
information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14e-1.
(c) Following the election of designees of Newco pursuant to
this Section 7.10, prior to the Effective Time, any amendment of this Agreement
or the Articles of Incorporation or By-laws of the Company, any termination of
this Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Newco or waiver
of any of the Company's rights hereunder shall require the concurrence of a
majority of the directors of the Company then in office who are directors as of
the date hereof or persons designated by such directors and who were neither
designated by Newco nor employees of the Company ("Continuing Directors"). Prior
to the Effective Time, the Company and Newco shall use all reasonable efforts to
ensure that the Company's Board of Directors at all times includes at least
three Continuing Directors.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
8.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Shareholder Approval. To the extent required by applicable
law, this Agreement shall have been duly approved by the shareholders of the
Company in accordance with applicable law and the Articles of Incorporation of
the Company; provided that Parent and Newco shall vote all of their Shares in
favor of the Merger.
(b) Injunction. There shall not be in effect any statute,
rule, regulation, executive order, decree, ruling or injunction or other order
of a court or governmental or regulatory agency of competent jurisdiction
directing that the transactions contemplated herein not be consummated;
provided, however, that prior to invoking this condition each party shall use
its best efforts to have any such decree, ruling, injunction or order vacated.
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(c) Governmental Filings and Consents. All governmental
consents, orders and approvals legally required for the consummation of the
Merger and the transactions contemplated hereby shall have been obtained and be
in effect at the Effective Time, except where the failure to obtain any such
consent would not reasonably be expected to have a Material Adverse Effect on
Parent and its subsidiaries, considered as whole (assuming the Merger had taken
place), and the waiting periods under the HSR Act shall have expired or been
terminated.
(d) The Offer. Newco shall have purchased Shares pursuant to
the Offer.
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
9.1 Termination by Mutual Consent. This Agreement may be terminated
and the Offer and the Merger may be abandoned at any time prior to the Effective
Time, by the mutual written consent of Parent and the Company.
9.2 Termination by Either Parent or the Company. This Agreement may
be terminated and the Offer and the Merger may be abandoned by Parent 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 legal
action or provided formal notice to Parent, Newco or the Company that it is
about to commence legal action, with respect to the transactions contemplated by
this Agreement, or (ii) Newco shall not have purchased Shares pursuant to the
Offer on or prior to December 31, 1997; provided, that the right to terminate
this Agreement pursuant to this Section 9.2 shall not be available to any party
whose failure to fulfill any of its obligations under this Agreement results in
such failure to purchase.
9.3 Termination by the Company. This Agreement may be terminated and
the Offer and the Merger may be abandoned at any time prior to the Effective
Time, by action of the Board of Directors of the Company:
(a) if (i) the Company, based on the advice of outside legal
counsel to the Company that such action is necessary in order for the Board of
Directors of the Company to comply with its fiduciary duties under applicable
law, subject to complying with the terms of this Agreement, enters into a
binding
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written agreement concerning a transaction that constitutes a Superior Proposal
and the Company notifies Parent in writing that it intends to enter into such an
agreement, attaching the most current version of such agreement to such notice,
(ii) Parent does not make, within two business days of receipt of the Company's
written notification of its intention to enter into a binding agreement for a
Superior Proposal, an offer to enter into an amendment to this Agreement such
that the Board of Directors of the Company determines, in good faith after
consultation with its financial advisors, that this Agreement as so amended is
at least as favorable, from a financial point of view, to the shareholders of
the Company as the Superior Proposal and (iii) the Company prior to such
termination pays to Parent in immediately available funds any fees required to
be paid pursuant to Section 9.5. The Company agrees (A) that it will not enter
into a binding agreement referred to in clause (i) above until at least the
third business day after it has provided the notice to Parent required thereby
and (B) to notify Parent promptly if its intention to enter into a written
agreement referred to in its notification shall change at any time after giving
such notification.
(b) if (i) Newco shall have (x) failed to commence the Offer
within five business days following the date of the initial public announcement
of the Offer or (y) terminated the Offer without purchasing Shares pursuant to
the Offer, or (ii) there has been a material breach by Parent or Newco of any
representation, warranty, covenant or agreement contained in this Agreement that
is not curable or, if curable, is not cured within 30 calendar days after
written notice of such breach is given by the Company to the party committing
such breach.
9.4 Termination by Parent. This Agreement may be terminated and the
Offer and Merger may be abandoned at any time prior to the Effective Time by
action of the Board of Directors of Parent if (i) the Board of Directors of the
Company shall have withdrawn or adversely modified its approval or
recommendation of this Agreement or failed to reconfirm its recommendation of
this Agreement within five business days after a written request by Parent to do
so, (ii) there has been a breach by the Company of any representation, warranty,
covenant or agreement contained in this Agreement that is qualified as to
materiality or there has been a material breach of any other representation,
warranty, covenant or agreement contained in this Agreement, in any case that is
not curable or, if curable, is not cured within 30 calendar days after written
notice of such breach is given by Parent to the party committing such breach, or
(iii) on a
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scheduled expiration date all conditions to Newco's obligation to accept for
payment and pay for Shares pursuant to the Offer shall have been satisfied or
waived other than the Minimum Condition and Newco terminates the Offer without
purchasing Shares pursuant to the Offer, provided that the satisfaction or
waiver of all other conditions shall have been publicly disclosed at least five
business days before termination of the Offer, or (iv) Newco shall have
otherwise terminated the Offer in accordance with the terms of this Agreement,
including Annex A, without purchasing shares pursuant to the Offer.
9.5 Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article IX, this Agreement (other than, with respect to the parties hereto, the
obligations pursuant to this Section 9.5 and Sections 10.1 and 10.2) shall
become void and of no effect with no liability on the part of any party hereto
(or of any of its directors, officers, employees, agents, legal and financial
advisors or other representatives); provided, however, except as otherwise
provided herein, no such termination shall relieve any party hereto of any
liability or damages resulting from any wilful breach of this Agreement.
(b) In the event that (x) this Agreement is terminated by the
Company pursuant to Section 9.3(a) or (y) this Agreement is terminated by Parent
pursuant to Section 9.4(i) then the Company shall promptly, but in no event
later than two days after the date of such termination or event, pay Parent a
termination fee of $20,000,000 (the "Termination Fee") and shall promptly, but
in no event later than two days after being furnished documentation in respect
thereto by Parent, pay all of the charges and expenses, including those of the
Exchange Agent, actually incurred by Parent or Newco in connection with this
Agreement and the transactions contemplated by this Agreement up to a maximum
amount of $3,000,000 (the "Expense Reimbursement"), in each case payable by wire
transfer of same day funds. If (A) this Agreement is terminated by the Parent
pursuant to Section 9.4(iii) or by the Company pursuant to Section 9.3(b)(i)(y)
when the Offer is terminated by Parent under the circumstances contemplated by
Section 9.4(iii), and (B) within one year after such termination either (X) the
Company enters into an agreement to merge with another company (other than a
merger pursuant to which the shareholders of the Company will acquire more than
50% of the voting securities of such surviving corporation) or enters into an
agreement pursuant to which more than 50% of the Shares are acquired by another
person or pursuant to which new voting securities are issued to another person
or to
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<PAGE>
the shareholders of another company which will aggregate more than 50% of the
outstanding voting securities of the Company after such issuance, or (Y) another
Person acquires more than 50% of the Shares, then the Company shall promptly,
but in no event later than two days after the date of any of the events in (X)
or (Y), pay Parent the Termination Fee and the Expense Reimbursement. The
Company acknowledges that the agreements contained in this Section 9.5(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent and Newco would not enter into this Agreement;
accordingly, if the Company fails to promptly pay the amount due pursuant to
this Section 9.5(b), and, in order to obtain such payment, Parent or Newco
commences a suit which results in a judgment against the Company for the fee set
forth in this paragraph (b), the Company shall pay to Parent or Newco its costs
and expenses (including attorneys' fees) in connection with such suit, together
with interest on the amount of the fee at the prime rate of Citibank, N.A. in
effect on the date such payment was required to be made.
9.6 Extension; Waiver. Subject to the applicable provisions of the
BCL and the provisions of this Agreement, including Section 7.10, at any time
prior to the Effective Time, each of Parent, Newco and the Company may (i)
extend the time for the performance of any of the obligations or other acts of
the other party, (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document, certificate
or writing delivered pursuant hereto or (iii) waive compliance by the other
party with any of the agreements or conditions contained herein. Any agreement
on the part of either party hereto to any such extension or waiver shall be
valid only if set forth in any instrument in writing signed on behalf of such
party. The failure of either party hereto to assert any of its rights hereunder
shall not constitute a waiver of such rights.
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1 Payment of Expenses. Except as provided in Section 9.5(b),
whether or not the Offer and the Merger shall be consummated, each party hereto
shall pay its own expenses incident to preparing for, entering into and carrying
out this Agreement and the consummation of the transactions contemplated hereby.
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<PAGE>
10.2 Survival of Representations and Warranties; Survival of
Confidentiality. The representations and warranties made herein shall not
survive beyond the earlier of (i) termination of this Agreement or (ii) the
Effective Time, in the case of the representations and warranties of Parent or
Newco or the purchase of Shares by Newco pursuant to the Offer, in the case of
the representations and warranties of the Company. This Section 10.2 shall not
limit any covenant or agreement of the parties hereto which by its terms
contemplates performance after the Effective Time or the Purchase of Shares by
Newco pursuant to the Offer. The Confidentiality Agreement shall survive any
termination of this Agreement and the provisions of such Confidentiality
Agreement shall apply to all information and material delivered by any party
hereunder.
10.3 Modification or Amendment. Subject to the applicable provisions
of the BCL and the provisions of this Agreement, including Section 7.10, at any
time prior to the Effective Time, the parties hereto may modify or amend this
Agreement by written agreement executed and delivered by duly authorized
officers of the respective parties.
10.4 Waiver of Conditions. Subject to the applicable provisions of
the BCL and the provisions of this Agreement, including Section 7.10, the
conditions to each of the parties' obligations to consummate the Merger are for
the sole benefit of such party and may be waived by such party in whole or in
part.
10.5 Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
10.6 Governing Law. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, without giving
effect to the principles of conflicts of law thereof.
(b) Each of the parties hereto (i) consents to submit itself
to the personal jurisdiction of any Federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of
this Agreement or any of the transactions contemplated hereby, (ii) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court and (iii) agrees that
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<PAGE>
it will not bring any action relating to this Agreement or any of the
transactions contemplated hereby in any court other than a Federal or state
court sitting in the State of Delaware.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.6.
10.7 Notices. Any notice, request, instruction or other document to
be given hereunder by any party to the other parties shall be in writing and
delivered personally or sent by overnight courier with confirmation of next day
delivery or by facsimile transmission (with a confirming copy sent by overnight
courier), as follows:
(a) If to the Company, to
Giddings & Lewis, Inc.
142 Doty Street
Fond du Lac, Wisconsin 54936-0590
Attn: Marvin L. Isles
(414) 921-9400 (telephone)
(414) 929-4334 (telecopier)
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
(Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Attn: Charles W. Mulaney, Jr.
(312) 407-0700 (telephone)
(312) 407-0411 (telecopier)
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<PAGE>
(b) If to Parent, to
Thyssen Aktiengesellschaft
August-Thyssen-StraBe 1
Dusseldorf
Postanschrift: Postfach 10 10 10,
D-40001 Dusseldorf
Attn: Axel Kirsch
011 49 211 824 8004 (telephone)
011 49 211 824 8376 (telecopier)
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: Neil T. Anderson
(212) 558-4000 (telephone)
(312) 558-3588 (telecopier)
(c) If to Newco, to
TAQU, Inc.
c/o The Budd Company
3155 West Big Beaver Road
Troy, Michigan 48084
Attn: Nancy L. Hutcheson
(810) 643-3511 (telephone)
(810) 643-3636 (telecopier)
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: Neil T. Anderson
(212) 558-4000 (telephone)
(312) 558-3588 (telecopier)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
10.8 Entire Agreement; Assignment. This Agreement and the
Confidentiality Agreement (a) constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all other prior
agreements and understandings, both
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<PAGE>
written and oral, among the parties or any of them with respect to the subject
matter hereof, and (b) shall not be assigned by operation of law or otherwise.
10.9 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective successors
and assigns. Nothing in this Agreement, express or implied, other than the right
to receive the consideration payable in the Merger pursuant to Article IV hereof
is intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement;
provided, however, that the provisions of Section 7.7 shall inure to the benefit
of and be enforceable by the Indemnified Parties and the provisions of Section
7.8(b) shall inure to the benefit of and be enforceable by the officers and
directors of the Company.
10.10 Certain Definitions. As used herein:
(a) "Significant Subsidiary" shall have the meaning ascribed
to it under Rule 1-02 of Regulation S-X of the SEC.
(b) "Subsidiary" shall mean, when used with reference to any
entity, any corporation a majority of the outstanding voting securities of which
are owned directly or indirectly by such entity.
(c) "Material Adverse Effect" shall mean any adverse change or
changes in the financial condition, properties, business or results of
operations of the Company or any of its subsidiaries or Parent or any of its
subsidiaries, as the case may be, which individually or in the aggregate is or
are material to the Company and its subsidiaries, taken as a whole, or Parent
and its subsidiaries, taken as a whole, as the case may be, other than any
change or effect arising out of general economic conditions.
10.11 Obligation of Parent. Whenever this Agreement requires Newco
to take any action, such requirement shall be deemed to include an undertaking
on the part of Parent to cause Newco to take such action and a guarantee of the
performance thereof.
10.12 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or
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<PAGE>
enforceability of any other provisions of this Agreement, each of which shall
remain in full force and effect.
10.13 Captions. The Article, Section and paragraph captions herein
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the date first
above written.
THYSSEN AKTIENGESELLSCHAFT
By: /s/ Dr. Eckhard Rohkamm
--------------------------------------
Name: Dr. Eckhard Rohkamm
Title: Member of The Executive Board
By: /s/ Dr. Eckart Blockfeld
--------------------------------------
Name: Dr. Eckart Blockfeld
Title: Authorized Officer
GIDDINGS & LEWIS, INC.
By: /s/ Marvin L. Isles
--------------------------------------
Name: Marvin L. Isles
Title: Chairman and Chief Executive
Officer
TAQU, INC.
By: /s/ Axel Kirsch
--------------------------------------
Name: Axel Kirsch
Title: President
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<PAGE>
Annex A
Certain Conditions of the Offer. Notwithstanding any other provision
of the Offer and provided that Newco shall not be obligated to accept for
payment any Shares until (i) expiration of all applicable waiting periods under
the HSR Act and the AARC and (ii) the Minimum Condition shall have been
satisfied, Newco shall not be required to accept for payment or pay for, or may
delay the acceptance for payment of or payment for, any Shares tendered pursuant
to the Offer, or may, subject to the terms of the Agreement, terminate or amend
the Offer if on or after June 11, 1997, and at or before the time of payment for
any of such Shares, any of the following events shall occur (or become known to
Parent) and remain in effect:
(a) there shall have occurred and be continuing as of the then
scheduled expiration date of the Offer (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange, the Nasdaq National Market or stock exchanges in the Federal
Republic of Germany, (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or the
Federal Republic of Germany, (iii) a commencement or escalation of a war,
armed hostilities or other international or national calamity directly
involving the United States or the Federal Republic of Germany, (iv) any
material limitation (whether or not mandatory) by any governmental or
regulatory authority, agency or commission, domestic or foreign
("Governmental Entity"), on the extension of credit by banks or other
lending institutions in the United States or the Federal Republic of
Germany, (v) or in the case of any of the foregoing existing at the time
of the commencement of the Offer, a material acceleration or worsening
thereof;
(b) (i) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements under the
Agreement, (ii) any representation or warranty of the Company set forth in
the Agreement which is qualified by materiality shall not have been true
and correct as of the date of the Agreement and as of the then scheduled
expiration date of the Offer as though made on and as of the then
scheduled expiration date of the Offer or (iii) any
<PAGE>
representation or warranty of the Company set forth in the Agreement which
is not qualified by materiality shall not have been true and correct in
all material respects as of the date of this Agreement and as of the then
scheduled expiration date of the Offer as though made on and as of the
then scheduled expiration date of the Offer, except in the case of clauses
(ii) and (iii) of this paragraph (b) for representations and warranties
which by their terms speak only as of another date, which representations
and warranties, if qualified by materiality, shall not have been true and
correct as of such date and, if not qualified, shall not have been true
and correct in all material respects as of such other date;
(c) any court or Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order which is in effect and which (i)
restricts (other than restrictions which in the aggregate do not have a
Material Adverse Effect on Parent, Newco or the Company or which do not
materially restrict the ability of Parent and Newco to consummate the
Offer and the Merger as originally contemplated by Parent and Newco),
prevents or prohibits consummation of the Offer or the Merger, (ii)
prohibits or limits (other than limits which in the aggregate do not have
a Material Adverse Effect on Parent, Newco or the Company or which do not
materially limit the ability of Parent to own and operate all of the
business and assets of Parent and the Company after the consummation of
the transactions contemplated by the Offer and the Agreement) the
ownership or operation by the Company, Parent or any of their subsidiaries
of all or any material portion of the business or assets of the Company
and its subsidiaries taken as a whole, or as a result of the Offer or the
Merger compels the Company, Parent or any of their subsidiaries to dispose
of or hold separate all or any material portion of their respective
business or assets, (iii) imposes limitations (other than limits which in
the aggregate do not have a Material Adverse Effect on Parent, Newco or
the Company or which do not materially limit the ability of Parent to own
and operate all of the business and assets of Parent and the Company after
the consummation of the transactions contemplated by the Offer and the
Agreement) on the ability of Parent or
A-2
<PAGE>
any subsidiary of Parent to exercise effectively full rights of ownership
of any Shares, including, without limitation, the right to vote any Shares
acquired by Newco pursuant to the Offer or otherwise on all matters
properly presented to the Company's shareholders including, without
limitation, the approval and adoption of the Agreement and the
transactions contemplated thereby, (iv) requires divestiture by Parent or
any affiliate of Parent of any Shares or (v) otherwise materially
adversely affects the financial condition, business or results of
operations of the Company and its subsidiaries taken as a whole;
(d) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be obtained or made by the
Company, Parent or Newco with or from any governmental entity in
connection with the execution and delivery of the Agreement, the Offer and
the consummation of the transactions contemplated by the Agreement shall
not have been made or obtained as of the then scheduled expiration date of
the Offer (other than the failure to receive any consent, registration,
approval, permit or authorization or to make any notice, report or other
filing that, in the aggregate, is not reasonably likely to have a Material
Adverse Effect on Parent, Newco or the Company, or would not prevent the
consummation of the Offer or the Merger);
(e) any change or development in the financial condition,
properties, business or results of operations of the Company and its
Subsidiaries that, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect;
(f) the Board of Directors of the Company (or a special committee
thereof) shall have withdrawn or amended, or modified in a manner adverse
to Parent and Newco its recommendation of the Offer or the Merger, or
shall have endorsed, approved or recommended any other Acquisition
Proposal; or
(g) the Agreement shall have been terminated by the Company or
Parent or Newco in accordance with its terms or Parent or Newco shall have
reached an agreement or understanding in writing with the Company
A-3
<PAGE>
providing for termination or amendment of the Offer or delay in payment
for the Shares;
(h) the German Federal Cartel Office shall have notified Parent, or
Parent shall have become aware, that it will object to the transactions
contemplated by this Agreement;
which, in the reasonable judgment of Parent and Newco, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Newco) giving rise to any such conditions, makes it inadvisable to proceed with
the Offer and/or with such acceptance for payment of or payment for Shares.
The foregoing conditions (other than the Minimum Condition) are for
the sole benefit of Parent and Newco and may be asserted by Parent or Newco
regardless of the circumstances (including any action or inaction by Parent or
Newco) giving rise to such condition or may be waived by Parent or Newco, in
whole or in part at any time and from time to time in its sole discretion.
A-4
<PAGE>
[GIDDINGS & LEWIS LETTERHEAD]
June 18, 1997
Dear Giddings & Lewis, Inc. Shareholder:
I am pleased to inform you that Giddings & Lewis, Inc. (the "Company") has
signed a merger agreement with Thyssen Aktiengesellschaft ("Thyssen") under
which a subsidiary of Thyssen has commenced a tender offer to purchase all of
the outstanding shares of Common Stock of the Company at $21 per share in cash.
The tender offer will be followed by a merger of the Company and such subsidiary
and the Company will continue as the surviving corporation.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT, THE TENDER OFFER AND THE MERGER AND DETERMINED
THAT THE TENDER OFFER AND MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY AND ITS SHAREHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS ACCEPT THE THYSSEN OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
In arriving at its determination and recommendation, the Board gave careful
consideration to a number of factors that are described in the enclosed Schedule
14D-9, including the written opinion, dated June 8, 1997, of Credit Suisse First
Boston Corporation, the Company's financial advisor, that, based upon and
subject to the matters set forth therein as of such date, the cash consideration
to be received by the shareholders of the Company in the tender offer and the
merger was fair to such shareholders from a financial point of view.
Additional information with respect to the Board's decision is contained in
the enclosed Schedule 14D-9 and we urge you to consider this information
carefully.
Your Board of Directors and I greatly appreciate your continued support and
encouragement.
On behalf of the Board of Directors,
[Printer: Insert Signature]
Marvin L. Isles
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
GIDDINGS & LEWIS, INC.
<PAGE>
[THYSSEN LOGO] GIDDINGS & LEWIS
FOR IMMEDIATE RELEASE
CONTACTS:
FOR THYSSEN AG: FOR GIDDINGS & LEWIS, INC.:
Media Contact: Media Contact:
Pascale Wiedenroth Patricia Meinecke
(011-49-211) 824-36677 (414) 929-4212
Investor Contact: Investor Contact:
Konrad Tamschick Douglas Barnett
(011-49-211) 824-38347 (414) 929-4374
Joele Frank/Patricia Sturms
Abernathy MacGregor Group
(212) 371-5999
THYSSEN AG AND GIDDINGS & LEWIS
SIGN DEFINITIVE MERGER AGREEMENT FOR ACQUISITION OF
GIDDINGS & LEWIS AT $21 PER SHARE IN CASH
- --------------------------------------------------------------------------------
DUESSELDORF, GERMANY and FOND DU LAC, WI, June 12, 1997 - Thyssen AG, a company
based in Duesseldorf, Germany and Giddings & Lewis, Inc. (NASDAQ: GIDL) today
jointly announced that the two companies have signed a definitive merger
agreement for the acquisition of Giddings & Lewis by Thyssen AG at $21 per share
in cash. Giddings & Lewis has approximately 32.1 million shares outstanding on
a fully diluted basis, giving the transaction a total equity value of
approximately $675 million.
Under the terms of the agreement, a subsidiary of Thyssen AG will shortly
commence a tender offer to acquire all of the outstanding shares of Giddings &
Lewis for $21 per share in cash. Following the completion of the tender offer,
Thyssen AG will consummate a second step merger in which remaining Giddings &
Lewis shareholders will also receive the $21 per share in cash.
Giddings & Lewis will continue to operate under the Giddings & Lewis name and
will maintain its headquarters and management team in Fond du Lac, Wisconsin.
<PAGE>
Dr. Dieter H. Vogel, Chairman of Thyssen AG, said, "This merger is about
competitiveness, growth and greater opportunities. Giddings & Lewis is the
ideal fit with Thyssen AG to enhance our core production systems business. The
combination of Thyssen's financial strength and global marketing and sales
capabilities with Giddings & Lewis' market and technology leadership,
established brand names and broad range of related products and services
provides a strong platform for future growth, which we expect to benefit
employees of both organizations."
Mr. Marvin L. Isles, Chairman and Chief Executive Officer of Giddings & Lewis,
Inc., said, "Our Board of Directors unanimously concluded that this transaction
with Thyssen is in the best interests of all of Giddings & Lewis'
constituencies. At $21 per share in cash, Giddings & Lewis shareholders will
receive exceptional value. Backed by Thyssen's financial strength and global
resources, Giddings & Lewis is strategically positioned to focus on our core
purpose - providing customers worldwide with the products and services they need
to improve their manufacturing productivity. We are particularly pleased that
Thyssen has a proven track record in North America of investment, growth and
good corporate citizenship."
Dr. Eckhard Rohkamm, Chairman of Thyssen Industrie AG, the capital goods arm of
Thyssen AG, added, "Together, we can grow our joint customer base and increase
our sales potential, creating new opportunities throughout Giddings & Lewis and
Thyssen. The companies have unparalleled synergies in the global industrial
automation industry - not only in the products and services offered, but also in
geographic coverage, customer base and technical capability. We have the
potential of shared manufacturing capabilities and anticipate that Thyssen
will expand Giddings & Lewis' manufacturing volume by adding Thyssen product
lines to Giddings & Lewis facilities. Giddings & Lewis will be able to
capitalize on Thyssen's European presence to expand its manufacturing
capabilities and global market base. At the same time, Thyssen will have a
greater ability to penetrate North American markets.
"We are committed to growing all of Giddings & Lewis' businesses to better serve
our customers worldwide. Combined, we create the world's premier machine tool
manufacturer, with the global resources and flexibility to deliver exactly what
customers need, whenever and wherever they need it. The merger of our two
companies creates a stronger business positioned to compete successfully on a
global scale," Dr. Rohkamm concluded.
Mr. Isles continued, "Thyssen is the right partner for Giddings & Lewis. We are
like-minded about how to achieve our goals, and Giddings & Lewis' management is
enthusiastic about the value Thyssen adds to our business. The combination with
Thyssen will enable Giddings & Lewis to continue to pursue its growth
objectives, including the expansion of its aftermarket business for the large
installed base of machine tools in the U.S. and overseas. We are very
excited about the combination. Thyssen is committed to enhancing all our
businesses and is knowledgeable about Giddings & Lewis' markets and
customers. It was essential for Giddings & Lewis to join with a company that
is interested in all markets we serve, including our important automotive
segment, which accounts for 50% of our sales."
<PAGE>
"This combination addresses two economic and market forces at work in our
industry today: consolidation and globalization. As these trends continue,
major players will emerge who can meet the needs of global customers. Our
vision for Giddings & Lewis is of a global enterprise with regional sales and
engineering and worldwide manufacturing. We intend to be among the global
players. With this one step, we have achieved that goal. Together with
Thyssen, we have the mass, the global reach, and the industry know-how to
compete successfully today and tomorrow in the increasingly global machine tool
business," Mr. Isles concluded.
Completion of the transaction is subject to antitrust review in the United
States, Germany and certain other countries and Giddings & Lewis stockholder
approval (if necessary) of the second-step merger. Under certain circumstances,
if the agreement were terminated by Giddings & Lewis for another acquisition
transaction, Giddings & Lewis would pay Thyssen a fee of $20 million and
reimburse it for up to $3 million in expenses.
Morgan Stanley & Co. Incorporated served as the financial adviser to Thyssen AG.
Credit Suisse First Boston Corporation served as the financial adviser to
Giddings & Lewis and provided a fairness opinion in connection with the
transaction.
Headquartered in Fond du Lac, Wisconsin, Giddings & Lewis is the largest
supplier of industrial automation products and machine tools in North America,
and among the largest in the world. The company serves customers worldwide with
products and services to improve manufacturing productivity.
Thyssen AG, headquartered in Duesseldorf, is one of Germany's biggest industrial
and commercial enterprises with $26.2 billion in annual revenues and
approximately 113,000 employees around the world. Thyssen has around 320
companies in Germany, the US and numerous other countries. Thyssen AG, through
its subsidiaries, offers capital goods and manufactured products, manufactures
steel products and providers trading and services such as logistics,
distribution of production materials and waste management,
<PAGE>
and lately cellular telephony. The capital goods include automation systems,
machine tools, elevators and automotive supplies.
NOTE TO EDITORS: TODAY'S NEWS RELEASE, ALONG WITH OTHER NEWS ABOUT THYSSEN AND
GIDDINGS & LEWIS, IS AVAILABLE ON THE INTERNET AT HTTP://WWW.THYSSEN.COM AND
HTTP://WWW.GIDDINGS.COM, OR FOR GIDDINGS & LEWIS SIMPLY CALL COMPANY NEWS ON
CALL, 1-800-758-5804, EXT. 119821.
# # #
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] CREDIT SUISSE FIRST BOSTON CORPORATION
227 West Monroe Telephone 312 750
Street 3000
Chicago, IL
60606-5018
</TABLE>
June 8, 1997
Board of Directors
Giddings & Lewis, Inc.
142 Doty Street
Fond du Lac, Wisconsin 54936-0590
Members of the Board:
You have asked us to advise you with respect to the fairness from a financial
point of view to the stockholders of Giddings & Lewis, Inc. (the "Company") of
the cash consideration to be received by such stockholders pursuant to the terms
of the Agreement and Plan of Merger (the "Merger Agreement"), among Thyssen AG
(the "Acquiror"), a wholly owned subsidiary of the Acquiror (the "Sub"), and the
Company. The Merger Agreement provides for the commencement by the Sub of a
tender offer (the "Offer") for all of the outstanding shares of the common stock
of the Company, par value $.10 per share, together with the associated rights
(together, the "Shares"), at a price of $21.00 per Share, net to the seller in
cash, followed by a merger (the "Merger") of the Company with the Sub pursuant
to which the Company will become a wholly owned subsidiary of the Acquiror and
each outstanding Share (other than Shares owned by the Acquiror, the Sub or any
direct or indirect wholly owned subsidiary of the Acquiror, or any of the
Company's direct or indirect wholly owned subsidiaries or Shares held in the
treasury of the Company) will be converted into the right to receive $21.00 in
cash.
In arriving at our opinion, we have reviewed certain publicly available business
and financial information relating to the Company, as well as a draft dated June
7, 1997 of the Merger Agreement. We have also reviewed certain other
information, including financial forecasts, provided to us by the Company and
have met with the Company's management to discuss the business and prospects of
the Company.
We have also considered certain financial and stock market data of the Company,
and we have compared those data with similar data for other publicly held
companies in businesses similar to those of the Company and we have considered
the financial terms of certain other business combinations and other
transactions which have recently been effected. We also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria which we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
Company's management as to the future financial performance of the Company. In
addition, we have not been requested to make, and have not made an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of the Company, nor have we been furnished with any such evaluations or
appraisals. Our opinion is necessarily based upon financial, economic, market
and other conditions as they exist and can be evaluated on the date hereof. In
connection with our engagement, we approached third parties to solicit
indications of
<PAGE>
interest in a possible acquisition of the Company and held preliminary
discussions with certain of these parties prior to the date hereof.
We have acted as financial advisor to the Company in connection with the Offer
and the Merger and will receive a fee for our services, a significant portion of
which is contingent upon the consummation of the Merger. We have also been
retained by the Company to act as its financial advisor for a period of three
years (beginning on March 7, 1997) with respect to the Company's preparations
for responding to any acquisition or business combination proposals involving
the Company that the Company may receive, or any other attempts to effect a
change in control of the Company through a merger, tender or exchange offer,
purchase of all or a portion of its stock, assets or debt, proxy contest or
consent solicitation, open market accumulation program or similar action.
In the ordinary course of our business, we and our affiliates may actively trade
the debt and equity securities of both the Company and the Acquiror for our or
their own accounts and for the accounts of customers and, accordingly, may at
any time hold a long or short position in such securities.
It is understood that this letter is for the information of the Board of
Directors in connection with its consideration of the Offer and the Merger, does
not constitute a recommendation to any stockholder as to whether or not such
stockholder should tender shares pursuant to the Offer or vote to approve the
Merger and is not to be quoted or referred to, in whole or in part, in any
registration statement, prospectus or proxy statement, or in any other document
used in connection with the offering or sale of securities, nor shall this
letter be used for any other purposes, without our prior written consent.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the cash consideration to be received by the stockholders of the Company
in the Offer and the Merger is fair to such stockholders from a financial point
of view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
<PAGE>
EXHIBIT 6
FIRST AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT made and entered into as of the 8th day of June, 1997, by
and between Giddings & Lewis, Inc. (the "Company") and Firstar Trust Company
(the "Rights Agent"), under the Rights Agreement dated as of August 23, 1995, by
and between the Company and the Rights Agent (the "Agreement").
WHEREAS, the Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company
may from time to time prior to the Distribution Date (as defined therein)
supplement or amend the Rights Agreement in accordance with the provisions of
Section 27 thereof; and
WHEREAS, it is proposed that the Company enter into an Agreement and
Plan of Merger (the "Merger Agreement"), among the Company, Thyssen
Aktiengesellschaft ("Parent") and TAQU, Inc., a wholly-owned subsidiary of
Parent; and
WHEREAS, the Board of Directors of the Company has determined that the
transactions contemplated by the Merger Agreement are fair to and in the best
interests of the Company and its stockholders; and
WHEREAS, the Board of Directors has determined that it is in the best
interests of the Company and its stockholders to amend the Rights Agreement to
exempt the Merger Agreement and the transactions contemplated thereby from the
application of the Rights Agreement.
NOW THEREFORE, the Company and the Rights Agent hereby amend the
Rights Agreement as follows:
A. Section 1(c) is hereby amended by adding the following at the end
of such Section:
<PAGE>
Notwithstanding the foregoing, for purposes of this Agreement, neither
Thyssen Aktiengesellschaft ("Parent") nor TAQU, Inc., a wholly-owned
subsidiary of Parent (the "Permitted Purchasers") shall be deemed to be the
beneficial owner of or to beneficially own any shares of Common Stock of
the Company if and so long as (i) that certain Agreement and Plan of
Merger, dated as of the June 11, 1997, among the Company and the Permitted
Purchasers (the "Merger Agreement") has been fully executed, is in effect
and has not been terminated by any party thereto and (ii) no Permitted
Purchaser has acquired any shares of Common Stock other than pursuant to
the terms of the Merger Agreement.
B. The Agreement is hereby further amended to add a new Section 34
to the Agreement which shall read in its entirety as follows:
Section 34. Nothing in this Agreement shall be construed to create or
cause a Distribution Date or Shares Acquisition Date or to constitute a
Section 11(a)(ii) Event or Section 13 Event or give any holder of Rights or
any other Person any legal or equitable rights, remedy or claim under the
Agreement solely as a result of or in connection with the execution of the
Merger Agreement or the commencement or consummation of the transactions
contemplated by the Merger Agreement.
C. This Amendment shall be deemed to be a contract made under the
laws of the State of Wisconsin and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts to
be made and performed entirely within such state.
D. This Amendment may be executed in any number of counterparts,
each of which shall for all purposes be deemed an original, and all of which
together shall constitute but one and the same instrument.
E. Except as expressly set forth herein, this Amendment shall not
by implication or otherwise alter, modify, amend or in any way affect any of
the terms, conditions, obligations, covenants or agreements contained in the
Rights Agreement, all of which are ratified and affirmed in all respects and
shall continue in full force and affect.
2
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the date first above written.
Attest: GIDDINGS & LEWIS, INC.
By: /s/ Todd A. Dillmann By: /s/ Douglas E. Barnett
--------------------------- --------------------------------
Name: Todd A. Dillmann Name: Douglas E. Barnett
Title: Secretary Title: Vice President and Corporate
Controller
Attest: FIRSTAR TRUST COMPANY
By: /s/ Yvonne Siira By: /s/ William Caruso
--------------------------- --------------------------------
Name: Yvonne Siira Name: William Caruso
Title: Assistant Secretary Title: Assistant Vice President
<PAGE>
GIDDINGS & LEWIS, INC.
OFFICER'S CERTIFICATE PURSUANT TO
SECTION 27 OF THE RIGHTS AGREEMENT
The undersigned, of Giddings & Lewis, Inc., a Wisconsin corporation
(the "Company"), pursuant to Section 27 of the Rights Agreement, dated as of
August 23, 1995 (the "Agreement"), between the Company and Firstar Trust
Company, as Rights Agent, does hereby certify on behalf of the Company that the
amendment to the Agreement contained in the attached First Amendment to Rights
Agreement, dated as of June 8, 1997, is in compliance with the terms of Section
27 of the Agreement.
IN WITNESS WHEREOF, the undersigned has set his hand hereunto.
GIDDINGS & LEWIS, INC.
By: /s/ Todd A. Dillmann
--------------------------------
Name: Todd A. Dillmann
Title: Corporate Counsel and
Secretary
Dated: June 8, 1997
