<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
(Name of Subject Company)
HEAT ACQUISITION CORP.
AND
RHI AG
(Bidders)
COMMON STOCK, PAR VALUE $0.25 PER SHARE
(Title of Class of Securities)
------------------------------
379335102
(CUSIP Number of Class of Securities)
DR. GEORG OBERMEIR
CHIEF EXECUTIVE OFFICER
RHI AG
MOMMSENGASSE 35
A-1040 VIENNA, AUSTRIA
43-1-50213-123
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
------------------------------
COPIES TO:
ROBERT A. PROFUSEK, ESQ.
JONES, DAY, REAVIS & POGUE
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 326-3939
------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
<S> <C>
$322,533,328 $64,507
</TABLE>
* Estimated for purposes of calculating the filing fee only. Such amount was
derived by multiplying $13.00, the amount offered for each share of common
stock, par value $0.25 per share (together with the associated preferred
share purchase rights, the "Shares"), of Global Industrial Technologies,
Inc. (the "Company"), by the sum of (i) 22,412,961, representing all of the
Shares that were issued and outstanding as of July 1, 1999 (including
651,297 Shares held under the Company's 401(k) plan), (ii) 2,276,535,
representing all of the Shares reserved for issuance pursuant to outstanding
options granted under the Company's 1992 stock compensation plan, as
amended, and stock option plan for non-employee directors, as amended and
restated, and (iii) 120,760, representing all of the stock units outstanding
under the Company's deferred compensation plan.
** 1/50th of 1% of the value of the transaction.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: Not Applicable Filing Party: Not Applicable
Form or Registration No.: Not Applicable Date Filed: Not Applicable
</TABLE>
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Page 1 of 6 Pages
(Exhibit Index is located on Page 6)
<PAGE>
This Tender Offer Statement on Schedule 14D-1 is filed by RHI AG, an
Austrian stock corporation ("Parent"), and Heat Acquisition Corp., a Delaware
corporation and an indirect, wholly owned subsidiary of Parent ("Purchaser"),
relating to the offer by Purchaser to purchase all of the outstanding shares of
common stock, par value $0.25 per share (together with the associated preferred
share purchase rights issued pursuant to the Rights Agreement, dated October 31,
1995, as amended, between Global Industrial Technologies, Inc., a Delaware
corporation ("the Company"), and The Bank of New York, the "Shares"), of the
Company at a purchase price of $13.00 per Share, net to the seller in cash, on
the terms and subject to the conditions set forth in the Offer To Purchase,
dated July 16, 1999 (the "Offer To Purchase"), and in the related Letter of
Transmittal and any amendments or supplements thereto, copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively (which collectively
constitute the "Offer").
The item numbers and responses thereto below are in accordance with the
requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Global Industrial Technologies, Inc.
The address of its principal executive offices is 2121 San Jacinto Street, Suite
2500, Dallas, Texas 75201. The telephone number of the Company at such location
is (214) 953-4500.
(b) The information set forth on the cover page and under "Introduction" of
the Offer To Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer To Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is filed by Purchaser and Parent. The
information set forth on the cover page, under "Introduction," in Section 8
("Certain Information Concerning Purchaser and Parent") and in Schedule I to the
Offer To Purchase is incorporated herein by reference.
(e)-(f) None of Purchaser, Parent or, to the knowledge of Purchaser and
Parent, any of the persons listed in Schedule I to the Offer To Purchase has
during the last five years been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) a party to a
civil proceeding of a judicial or administrative body of a competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth under "Introduction" and in Section 8
("Certain Information Concerning Purchaser and Parent"), Section 10 ("Background
of the Offer; Contacts with the Company") and Section 11 ("Purpose of the Offer
and the Merger; Plans for the Company; and the Merger Agreement") of the Offer
To Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth under "Introduction" and in Section 9 ("Source
and Amount of Funds") of the Offer To Purchase is incorporated herein by
reference.
(b)-(c) Not applicable.
Page 2 of 6 Pages
(Exhibit Index is located on Page 6)
<PAGE>
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth under "Introduction" and in Section 11
("Purpose of the Offer and the Merger; Plans for the Company; and the Merger
Agreement") and Section 12 ("Dividends and Distributions") of the Offer To
Purchase is incorporated herein by reference.
(f)-(g) The information set forth in Section 13 ("Effect of the Offer on the
Market for the Shares, Stock Exchange Listing and Exchange Act Registration, and
Margin Securities") of the Offer To Purchase is incorporated herein by
reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth under "Introduction" and in Section 8
("Certain Information Concerning Purchaser and Parent") and Section 11 ("Purpose
of the Offer and the Merger; Plans for the Company; and the Merger Agreement")
of the Offer To Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth under "Introduction" and in Section 8 ("Certain
Information Concerning Purchaser and Parent"), Section 10 ("Background of the
Offer; Contacts with the Company"), Section 11 ("Purpose of the Offer and the
Merger; Plans for the Company; and the Merger Agreement") and Section 12
("Dividends and Distributions") of the Offer To Purchase is incorporated herein
by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under "Introduction" and in Section 16 ("Fees and
Expenses") of the Offer To Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Parent"), Annex A, Annex B and Annex C of the Offer To Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth under "Introduction" and in Section 8
("Certain Information Concerning Purchaser and Parent"), Section 10 ("Background
of the Offer; Contacts with the Company") and Section 11 ("Purpose of the Offer
and the Merger; Plans for the Company; and the Merger Agreement") of the Offer
To Purchase is incorporated herein by reference.
(b)-(c) The information set forth under "Introduction" and in Section 14
("Certain Conditions of the Offer") and Section 15 ("Certain Legal Matters") of
the Offer To Purchase is incorporated herein by reference.
(d) The information set forth in Section 13 ("Effect of the Offer on the
Market for the Shares, Stock Exchange Listing and Exchange Act Registration, and
Margin Securities") of the Offer To Purchase is incorporated herein by
reference.
(e) To the best knowledge of Parent and Purchaser, there are no material
pending legal proceedings.
(f) The information set forth in the Offer To Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
Page 3 of 6 Pages
(Exhibit Index is located on Page 6)
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer To Purchase, dated July 16, 1999
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9
(a)(7) Form of Summary Advertisement, dated July 19, 1999
(a)(8) Text of Joint Press Release of Parent and the Company, dated July 12, 1999
(b) Not applicable
(c)(1) Agreement and Plan of Merger, dated July 12, 1999, among Parent, Purchaser and the
Company
(d) Not applicable
(e) Not applicable
(f) Not applicable
</TABLE>
Page 4 of 6 Pages
(Exhibit Index is located on Page 6)
<PAGE>
SIGNATURES
After due 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.
<TABLE>
<S> <C> <C>
HEAT ACQUISITION CORP.
By: /s/ JAKOB MOSSER
-----------------------------------------
Name: Jakob Mosser
Title: President
RHI AG
By: /s/ JAKOB MOSSER
-----------------------------------------
Name: Jakob Mosser
Title: Member of Management Board
</TABLE>
Dated: July 16, 1999
Page 5 of 6 Pages
(Exhibit Index is located on Page 6)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<S> <C>
(a)(1) Offer To Purchase, dated July 16, 1999
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9
(a)(7) Form of Summary Advertisement, dated July 19, 1999
(a)(8) Text of Joint Press Release of Parent and the Company, dated July 12, 1999
(b)(1) Not applicable
(c)(1) Agreement and Plan of Merger, dated July 12, 1999, among Parent, Purchaser and the Company
(d) Not applicable
(e) Not applicable
(f) Not applicable
</TABLE>
Page 6 of 6 Pages
(Exhibit Index is located on Page 6)
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
AT
$13.00 NET PER SHARE
BY
HEAT ACQUISITION CORP.
AN INDIRECT, WHOLLY OWNED SUBSIDIARY
OF
RHI AG
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, AUGUST 12, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
JULY 12, 1999, AMONG GLOBAL INDUSTRIAL TECHNOLOGIES, INC. (THE "COMPANY"), RHI
AG ("PARENT") AND HEAT ACQUISITION CORP. ("PURCHASER").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1) THAT NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.25 PER SHARE (TOGETHER
WITH THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS, THE "SHARES"), OF THE
COMPANY THAT (TOGETHER WITH ANY SHARES THEN OWNED BY PARENT OR ANY OF ITS
SUBSIDIARIES) CONSTITUTES AT LEAST A MAJORITY OF THE OUTSTANDING SHARES,
CALCULATED ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE "MINIMUM
CONDITION"), (B) ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976 (THE "HSR ACT"), AND ANY APPLICABLE LAWS
REGULATING COMPETITION, ANTITRUST, INVESTMENT OR EXCHANGE CONTROLS IN GERMANY
AND MEXICO, HAVING EXPIRED OR BEEN TERMINATED, AND (C) A FINANCING CONDITION (AS
DEFINED IN THE INTRODUCTION). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE INTRODUCTION AND SECTIONS 1, 9, 11 AND 14.
THE BOARD OF DIRECTORS OF THE COMPANY HAS DULY APPROVED THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY AND DETERMINED THAT THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND THE COMPANY'S
STOCKHOLDERS (THE "STOCKHOLDERS"). THE COMPANY BOARD RECOMMENDS THAT THE
STOCKHOLDERS ACCEPT THE OFFER, TENDER THEIR SHARES PURSUANT TO THE OFFER AND
APPROVE AND ADOPT THE MERGER AGREEMENT.
--------------------------
Any Stockholder desiring to tender all or any portion of its Shares should
either (i) complete and sign the appropriate Letter(s) of Transmittal (or a
manually signed facsimile thereof) in accordance with the instructions in such
Letter(s) of Transmittal, mail or deliver such Letter(s) of Transmittal and any
other required documents to The Bank of New York (the "Depositary"), and either
deliver the certificates for those Shares to the Depositary along with such
Letter(s) of Transmittal or tender those Shares pursuant to the procedures for
book-entry transfer set forth in Section 3 hereof, or (ii) request its broker,
dealer, commercial bank, trust company or other nominee to effect the tender on
its behalf. Any Stockholder whose Shares are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact that
broker, dealer, commercial bank, trust company or other nominee if the
Stockholder desires to tender such Shares.
Any Stockholder who desires to tender Shares and whose certificate(s)
representing those Shares are not immediately available or who cannot comply
with the procedure for book-entry transfer on a timely basis should tender those
Shares by following the procedures for guaranteed delivery set forth in Section
3 hereof.
Questions and requests for assistance may be directed to Morrow & Co., Inc.
(the "Information Agent") or Deutsche Bank Securities Inc. (the "Dealer
Manager") at their respective addresses and telephone numbers set forth on the
back cover of this Offer To Purchase. Requests for additional copies of this
Offer To Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be directed to the Information Agent or to
brokers, dealers, commercial banks or trust companies.
--------------------------
The Dealer Manager for the Offer is:
DEUTSCHE BANK SECURITIES INC.
------------------
July 16, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
INTRODUCTION................................................................................. 1
1. Terms of the Offer................................................................ 4
2. Acceptance for Payment and Payment for Shares..................................... 5
3. Procedure for Tendering Shares.................................................... 6
4. Withdrawal Rights................................................................. 9
5. Certain Federal Income Tax Consequences of the Offer and the Merger............... 10
6. Price Range of the Shares; Dividends on the Shares................................ 10
7. Certain Information Concerning the Company........................................ 11
8. Certain Information Concerning Purchaser and Parent............................... 14
9. Source and Amount of Funds........................................................ 15
10. Background of the Offer; Contacts with the Company................................ 15
11. Purpose of the Offer and the Merger; Plans for the Company; and the Merger
Agreement......................................................................... 18
12. Dividends and Distributions....................................................... 32
13. Effect of the Offer on the Market for the Shares, Stock Exchange Listing and
Exchange Act Registration, and Margin Securities.................................. 33
14. Certain Conditions of the Offer................................................... 34
15. Certain Legal Matters............................................................. 36
16. Fees and Expenses................................................................. 38
17. Miscellaneous..................................................................... 39
</TABLE>
<TABLE>
<S> <C> <C>
SCHEDULE I -- DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND PARENT............ I-1
ANNEX A -- PARENT'S AUDITED CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED DECEMBER
31, 1998............................................................ A-1
ANNEX B -- PARENT'S UNAUDITED INTERIM CONSOLIDATED ACCOUNTS FOR THE THREE
MONTHS ENDED MARCH 31, 1999......................................... B-1
ANNEX C -- SUMMARY OF THE SIGNIFICANT DIFFERENCES BETWEEN U.S. AND AUSTRIAN
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES............................ C-1
</TABLE>
<PAGE>
To the Holders of Common Stock of
Global Industrial Technologies, Inc.:
INTRODUCTION
Heat Acquisition Corp., a Delaware corporation ("Purchaser") and an
indirect, wholly owned subsidiary of RHI AG, an Austrian stock corporation
("Parent"), hereby offers to purchase all of the outstanding shares of common
stock, par value $0.25 per share (such shares, together with the associated
preferred share purchase rights (the "Rights") issued pursuant to the Rights
Agreement, dated as of October 31, 1995, as amended (the "Rights Agreement"),
between Global Industrial Technologies, Inc., a Delaware corporation (the
"Company"), and The Bank of New York, the "Shares") of the Company at a purchase
price of $13.00 per Share, net to the seller in cash, without interest thereon
(the "Per Share Amount"), upon the terms and subject to the conditions set forth
in this Offer To Purchase ("Offer To Purchase") and in the related Letter of
Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer"). Purchaser has been advised that
the Rights Agreement is inapplicable to the Offer, the Merger Agreement and the
transactions contemplated thereby.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS DULY
APPROVED THE MERGER AGREEMENT (DEFINED BELOW) AND THE TRANSACTIONS CONTEMPLATED
THEREBY, AND DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (DEFINED BELOW), ARE
FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND THE COMPANY'S STOCKHOLDERS
(THE "STOCKHOLDERS"). THE COMPANY BOARD RECOMMENDED THAT THE STOCKHOLDERS ACCEPT
THE OFFER, TENDER THEIR SHARES PURSUANT TO THE OFFER AND APPROVE AND ADOPT THE
MERGER AGREEMENT.
THE COMPANY HAS ADVISED PARENT THAT, EXCEPT AS DESCRIBED IN THE FOLLOWING
SENTENCE, ALL MEMBERS OF THE COMPANY BOARD INTEND TO TENDER THEIR SHARES
PURSUANT TO THE OFFER. DIRECTOR RONALD LABOW, CHAIRMAN OF WHX CORPORATION
("WHX"), INFORMED THE COMPANY ON JULY 14, 1999, THAT HE AND HIS AFFILIATES HAVE
NOT YET DETERMINED WHETHER TO TENDER THEIR SHARES, SELL SUCH SHARES IN THE OPEN
MARKET OR OTHERWISE HOLD SUCH SHARES, AND RESERVE ALL RIGHTS WITH RESPECT TO THE
FOREGOING. ACCORDING TO PUBLICLY AVAILABLE INFORMATION, AN AFFILIATE OF WHX OWNS
9.9% OF THE SHARES.
J.P. MORGAN SECURITIES INC. AND WASSERSTEIN PERELLA & CO., INC., THE
COMPANY'S FINANCIAL ADVISERS ("J.P. MORGAN" AND "WP&CO.," RESPECTIVELY), HAVE
EACH DELIVERED TO THE COMPANY AN OPINION (TOGETHER, THE "FAIRNESS OPINIONS")
THAT, AS OF JULY 12, 1999, AND BASED ON AND SUBJECT TO THE MATTERS STATED IN
SUCH OPINIONS, THE CONSIDERATION TO BE RECEIVED BY STOCKHOLDERS IN THE OFFER AND
THE MERGER IS FAIR, FROM A FINANCIAL POINT OF VIEW, TO THE STOCKHOLDERS. A COPY
OF EACH OF THE WRITTEN FAIRNESS OPINIONS IS CONTAINED IN THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9")
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") IN
CONNECTION WITH THE OFFER, A COPY OF WHICH IS BEING MAILED TO STOCKHOLDERS
CONCURRENTLY WITH THIS OFFER TO PURCHASE.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1) THAT NUMBER OF SHARES THAT (TOGETHER WITH ANY SHARES THEN OWNED BY PARENT OR
ANY OF ITS SUBSIDIARIES) CONSTITUTES AT LEAST A MAJORITY OF THE OUTSTANDING
SHARES, CALCULATED ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE
"MINIMUM CONDITION"), (II) ANY APPLICABLE WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 (THE "HSR ACT"), AND ANY
APPLICABLE LAWS REGULATING COMPETITION, ANTITRUST, INVESTMENT OR EXCHANGE
CONTROLS IN GERMANY AND MEXICO, HAVING EXPIRED OR BEEN TERMINATED, AND (III)
PARENT AND PURCHASER HAVING RECEIVED THE FINANCING (DEFINED BELOW) ON TERMS
REASONABLY SATISFACTORY TO PARENT GIVEN THE STRUCTURE OF THE FINANCING
CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE
FINANCING CONTEMPLATED TO BE ARRANGED BY PARENT (THE "FINANCING CONDITION"). THE
OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTIONS 1, 9, 11 AND 14.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 12, 1999 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, for the commencement
of the Offer by Purchaser and that, after the purchase of Shares pursuant to the
Offer, subject to the satisfaction or waiver of certain conditions, Purchaser
will be merged with and into the Company (the "Merger"), with the Company
surviving the Merger as an indirect,
<PAGE>
wholly owned subsidiary of Parent (the "Surviving Corporation"). In the Merger,
each Share (other than Shares owned by the Company or any of its subsidiaries,
or by Parent, Purchaser or any other subsidiary of Parent, or Shares that are
held by Stockholders exercising their appraisal rights ("Dissenting
Stockholders") pursuant to Section 262 of the Delaware General Corporation Law
(the "DGCL") issued and outstanding immediately prior to the effective time of
the Merger (the "Effective Time") will, by virtue of the Merger and without any
action on the part of the holder thereof, be converted at the Effective Time
into the right to receive the Per Share Amount (or any greater per share amount
paid for Shares pursuant to the Offer), in cash payable to the holder thereof
without interest and less any required withholding taxes and, in certain
circumstances, less any required stock transfer taxes (such amount, the "Merger
Consideration"). The Merger Agreement is more fully described in Section 11.
Purchaser estimates that $635 million of financing will be required in
connection with the transactions contemplated by the Merger Agreement, assuming
the Company's indebtedness (as defined in Section 11) net of cash ("Net Debt")
is $240 million. The Company has informed Purchaser that its Net Debt is $270
million but that it expects this amount to be reduced below $240 million by the
end of the third quarter. Under the Merger Agreement, if the Company's Net Debt
exceeds $240 million, then Purchaser may extend the Expiration Date,
notwithstanding the fact that all of the conditions to the Offer have been
satisfied, until such time as the Company's Net Debt is $240 million or less.
Parent and Purchaser expect that no less than $300 million of such financing
will consist of equity contributions to North American Refractories Company, a
wholly owned subsidiary of Parent ("NARCO"), or loans from Parent. Parent
expects to fund all or a substantial portion of the equity contribution or loans
to NARCO with borrowings and equity raised by Parent. The financing described in
this paragraph is referred to herein as the "Financing."
Since early May 1999, Parent has been in communication with a number of U.S.
and European financial institutions and lenders about their willingness to
provide the Financing and the terms of any Financing. As of the date of this
Offer To Purchase, Parent and Purchaser have not entered into any binding
commitments or definitive agreements which would enable Parent to waive or
satisfy the Financing Condition, and there can be no assurance that the
Financing will be available on terms reasonably satisfactory to Parent or of the
timing thereof.
Under the terms of the Merger Agreement, unless the Merger Agreement has
been terminated in accordance with its terms and unless the Financing Condition
has been irrevocably waived in writing by Parent prior to (i) 5:00 p.m. (New
York City time) on July 30, 1999 (the "Financing Termination Time"), Parent will
be obligated to pay the Company $5.0 million, and (ii) 5:00 p.m. (New York City
time) on October 31, 1999 (the "Extended Financing Termination Time"), Parent
will be obligated to pay the Company an additional $10.0 million; except that
Parent will have no obligation to pay such $10.0 million pursuant to (ii) above
(x) unless it has elected to extend the Financing Termination Time to the
Extended Financing Termination Time and (y) if Net Debt as of the Extended
Financing Termination Time is greater than $250 million. See Section 11.
The Merger Agreement provides that, unless Parent gives notice to the
Company prior to July 30, 1999, that it wishes to extend the Financing
Termination Time to the Extended Financing Termination Time, the Company will
have the right to terminate the Merger Agreement at any time after July 30,
1999. In addition, even if Parent has extended the Financing Termination Time,
the Company will have the right to terminate the Merger Agreement at any time
after October 31, 1999 unless either (i) Parent has waived the Financing
Condition prior to such termination by the Company or (ii) the Company's Net
Debt is greater than $240 million at October 31, 1999.
The Merger Agreement provides that, immediately prior to the Effective Time,
each outstanding option to purchase Shares (the "Options") under any of the
Company's 1992 Stock Compensation Plan, as amended, and its Stock Option Plan
for Non-Employee Directors, as amended and restated (collectively, the "Stock
Option Plans") will be canceled and only entitle the holder thereof to receive
for each Share
2
<PAGE>
with respect to such Option an amount in cash equal to the difference between
(i) the Merger Consideration and (ii) the per Share exercise price under such
Option (such amount being hereinafter referred to as the "Option
Consideration"). The Merger Agreement also provides that, immediately prior to
the Effective Time, the Company will amend its Deferred Compensation Plan (the
"Deferred Compensation Plan") to, among other things, provide that each stock
unit (individually, a "Stock Unit," and together, the "Stock Units" ) credited
to Deferred Compensation Plan participants' accounts ("Plan Accounts") will be
canceled and each of the Plan Accounts will be credited for each Stock Unit an
amount in cash equal to the Merger Consideration. The treatment of Options and
Stock Units is more fully described in Section 11.
The consummation of the Merger is subject to the satisfaction or waiver of a
number of conditions, including, if required, the approval of the Merger by the
requisite vote or consent of Stockholders. The Stockholder vote necessary to
approve the Merger is the affirmative vote of the holders of a majority of the
issued and outstanding Shares, including Shares held by Purchaser and its
affiliates, voting as a single class, at a special meeting of Stockholders. If
the Minimum Condition is satisfied and Purchaser purchases Shares pursuant to
the Offer, Purchaser will be able to effect the Merger regardless of how any
other Stockholder votes. Further, if Purchaser acquires at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, Purchaser will be able to
effect the Merger pursuant to the "short-form" merger provisions of the DGCL
without further notice to, or any action by, any other Stockholder. In that
event, Purchaser intends to effect the Merger as promptly as practicable
following the purchase of Shares in the Offer, and Stockholders should consider
this Offer To Purchase as notice to that effect. See Section 11.
The Company has informed Purchaser that, as of July 1, 1999, there were (i)
22,412,961 Shares issued and outstanding (including 651,297 Shares held under
the Company's 401(k) Plan), (ii) 2,276,535 Shares reserved for future issuance
pursuant to outstanding Options granted by the Stock Option Plans and 120,760
Stock Units outstanding under the Deferred Compensation Plan, and (iii) no
Shares of preferred stock of the Company issued or outstanding. Based upon the
Shares, Options and Stock Units outstanding as of such date, at least 12,405,129
Shares would need to be validly tendered pursuant to the Offer and not withdrawn
in order for the Minimum Condition to be satisfied.
No dissenters' rights are available in connection with the Offer.
Stockholders may exercise dissenters' rights, however, in connection with the
Merger regardless of whether the Merger is consummated with or without a vote of
the Stockholders. Dissenters' rights are more fully described in Section 15.
Information appearing or incorporated by reference in this Offer To Purchase
in respect of the Company, the Company Board and the Fairness Opinions has been
furnished to Purchaser and Parent by the Company (including in the Schedule
14D-9). While Purchaser and Parent do not believe that, as of the date of this
Offer To Purchase, such information is incorrect in any material respect, none
of Purchaser, Parent, their respective affiliates or any representative of the
foregoing assumes any liability for such information.
No person has been authorized to give any information or make any
representation on behalf of Parent or Purchaser not contained in this Offer To
Purchase or in the Letter of Transmittal, and, if given or made, such
information or representation must not be relied upon as having been authorized.
Tendering Stockholders who have Shares registered in their own name and who
tender directly to the Depositary will not be obligated to pay brokerage fees,
commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
Stockholders who hold their Shares through their broker or bank should consult
with such institution as to whether it charges any service fees. Purchaser will
pay all charges and expenses of Deutsche Bank Securities Inc., as the dealer
manager (the "Dealer Manager"), The Bank of New York, as the depositary (the
"Depositary"), and Morrow & Co., Inc., as the information agent (the
"Information Agent"), in connection with the Offer. See Section 16.
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THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
On the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment (and thereby purchase) all Shares
that are validly tendered and not withdrawn in accordance with Section 4 prior
to the Expiration Date. The term "Expiration Date" means 12:00 midnight, New
York City time, on Thursday, August 12, 1999, unless and until Purchaser, in
accordance with the terms of the Merger Agreement, shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" means the latest time and date at which the Offer, as so
extended, expires. For purposes of the Offer, a "business day" means any day
other than a Saturday, Sunday or a federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.
In the event that the Offer is not consummated, Purchaser may seek to
acquire Shares through open-market purchases, privately negotiated transactions
or other means of acquisition, upon such terms and conditions and at such prices
as Purchaser shall determine, which may be more or less than the Per Share
Amount and could be for cash or other consideration.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and the Financing Condition. The Offer is also subject to
certain other conditions set forth in Section 14 (the "Offer Conditions," and
each condition individually, an "Offer Condition").
Parent and Purchaser expressly reserve the right, in their sole discretion,
subject to compliance with the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the terms of the Merger Agreement, to waive any such
condition and to make any other changes in the terms and conditions of the
Offer; except, that Parent and Purchaser will not (i) amend or waive the Minimum
Condition, (ii) decrease the Per Share Amount, (iii) decrease the maximum number
of Shares to be purchased in the Offer, (iv) waive or satisfy the Financing
Condition (as defined below) unless the representation in the Merger Agreement
with respect to the Financing shall be true and correct, or (v) amend any other
term or condition of the Offer in any manner or impose any term or condition
that is adverse to the holders of the Shares without the written consent of the
Company executed by the Chief Executive Officer of the Company stating that it
was authorized by the Company Board or a duly authorized committee thereof.
Notwithstanding any other provision hereof, Parent and Purchaser expressly
reserve the right to (but will have no obligation to), in their sole discretion,
subject to compliance with the Exchange Act and the terms of the Merger
Agreement, waive the Financing Condition. Assuming the prior satisfaction or
waiver of the Offer Conditions, Parent will cause Purchaser to accept for
payment, and pay for, in accordance with the terms of the Offer, all Shares
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after the Expiration Date.
Subject to the terms of the Merger Agreement and the rights of tendering
Stockholders to withdraw their Shares, as described in Section 4, Purchaser will
retain all tendered Shares until the Expiration Date.
Subject to the applicable regulations of the Commission and the terms of the
Merger Agreement described above, Purchaser expressly reserves the right, in its
sole discretion, at any time or from time to time, to (i) delay the acceptance
for payment of or, regardless of whether such Shares were theretofore accepted
for payment, payment for Shares pending receipt of any regulatory or
governmental approvals specified in Section 15, (ii) terminate the Offer
(whether or not any Shares have theretofore been accepted for payment) if any
condition referred to in Section 14 has not been satisfied or upon the
occurrence of any event specified in Section 14, (iii) waive any condition, or
(iv) otherwise amend the Offer in any respect, in each case by giving oral or
written notice of such termination, waiver or amendment to the Depositary. The
rights reserved by Purchaser in this paragraph are in addition to Purchaser's
rights pursuant to Section 14.
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Any extension, delay in payment, termination or amendment of the Offer will
be followed as promptly as practicable by public announcement thereof and such
announcement in the case of an extension will be made no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Without limiting the manner in which Purchaser may choose to
make any public announcement, subject to applicable law (including Rules
14d-4(c) and 14d-6(d) under the Exchange Act, which require that material
changes be promptly disseminated to Stockholders in a manner reasonably designed
to inform them of such changes), Purchaser will have no obligation to publish,
advertise or otherwise communicate any such public announcement, other than by
issuing a release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer, or if it
waives a material condition to the Offer, Purchaser will extend the Offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during
which an offer must remain open following material changes in the terms of the
Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances, including the materiality
of the changes. If a change is made with respect to the price and the percentage
of securities sought, a minimum extension of 10 business days is required to
allow for adequate dissemination and investor response. The requirement to
extend the Offer will not apply to the extent that the number of business days
remaining between the occurrence of the change and the then-scheduled Expiration
Date equals or exceeds the minimum extension period that would be required
because of such amendment.
The Company has provided Purchaser with its Stockholder list and security
position listings for the purpose of disseminating the Offer to Stockholders.
This Offer To Purchase, the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's Stockholder list
or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment (and thereby purchase) and pay for
Shares that are validly tendered and not properly withdrawn prior to the
Expiration Date as soon as practicable after the later of the following dates:
(i) the Expiration Date, (ii) the satisfaction of the Minimum Condition, and
(iii) subject to compliance with the applicable rules and regulations of the
Commission, the date of satisfaction or waiver of all the other conditions to
the Offer set forth in this Offer To Purchase. Subject to the applicable rules
of the Commission and the terms of the Merger Agreement, Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Shares in
order to comply, in whole or in part, with any other applicable law or
regulation.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates for the
Shares (or a timely Book-Entry Confirmation (as defined in Section 3) with
respect to the Shares), (ii) the appropriate Letter(s) of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed with
any required signature guarantees (or in the case of a book-entry transfer of
Shares, an Agent's Message), and (iii) all other documents required by the
Letter of Transmittal. See Section 3. The term "Agent's Message" means a
message, transmitted by a Book-Entry Transfer Facility (as defined in Section 3)
to and received by the Depositary and forming part of a Book-Entry Confirmation,
which states that (i) such Book-Entry Transfer Facility has received an express
acknowledgment from the participant in such Book-Entry Transfer Facility
tendering the Shares that are the subject of such Book-Entry Confirmation, (ii)
such participant has received and agrees to be bound by the terms of the
applicable Letter of Transmittal, and (iii) Purchaser may enforce such agreement
against such participant.
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For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) tendered Shares as, if and when Purchaser gives
oral or written notice to the Depositary of Purchaser's acceptance of such
Shares for payment. In all cases, payment for Shares purchased pursuant to the
Offer will be made by deposit of the purchase price with the Depositary, which
will act as agent for the tendering Stockholders for the purpose of receiving
payment from Purchaser and transmitting payment to the tendering Stockholders
whose Shares shall have been accepted for payment. If, for any reason,
acceptance for payment of any Shares tendered pursuant to the Offer is delayed,
or Purchaser is unable to accept for payment Shares tendered pursuant to the
Offer, then, without prejudice to Purchaser's rights under Section 14, the
Depositary may, nevertheless, on behalf of Purchaser, retain the tendered
Shares, and such Shares may not be withdrawn, except to the extent that the
tendering Stockholders are entitled to withdrawal rights as described in Section
4 and as otherwise required by Rule 14e-1(c) under the Exchange Act. Under no
circumstances will interest accrue on the consideration to be paid for the
Shares by Purchaser, regardless of any delay in making such payment.
If any tendered Shares are not purchased for any reason or if certificates
are submitted for more Shares than are tendered, certificates for the Shares not
purchased or tendered will be returned pursuant to the instructions of the
tendering Stockholder without expense to the tendering Stockholder (or, in the
case of Shares delivered by book-entry transfer into the Depositary's account at
a Book-Entry Transfer Facility pursuant to the procedures set forth in Section
3, the Shares will be credited to an account maintained at the appropriate
Book-Entry Transfer Facility) as promptly as practicable following the
expiration, termination or withdrawal of the Offer.
Parent and Purchaser reserve the right, subject to the provisions of the
Merger Agreement, to assign, in whole or, from time to time, in part, to one or
more of Parent's subsidiaries or affiliates, the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, but no such assignment
will relieve Purchaser of its obligations under the Offer or prejudice the
rights of tendering Stockholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer.
IF, PRIOR TO THE EXPIRATION DATE, PURCHASER INCREASES THE CONSIDERATION TO
BE PAID PER SHARE PURSUANT TO THE OFFER, PURCHASER WILL PAY THE INCREASED
CONSIDERATION FOR ALL OF THE SHARES PURCHASED PURSUANT TO THE OFFER, WHETHER OR
NOT THE SHARES WERE TENDERED PRIOR TO THE INCREASE IN CONSIDERATION.
3. PROCEDURE FOR TENDERING SHARES
VALID TENDERS. For Shares to be validly tendered pursuant to the Offer,
either (i) the appropriate Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer To Purchase prior to the Expiration Date, and either (a)
certificates representing tendered Shares must be received by the Depositary at
any one of those addresses prior to the Expiration Date, or (b) the Shares must
be delivered pursuant to the procedures for book-entry transfer set forth below
and a Book-Entry Confirmation must be received by the Depositary prior to the
Expiration Date, or (ii) the tendering Stockholder must comply with the
guaranteed delivery procedures set forth below. No alternative, conditional or
contingent tenders will be accepted.
THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL
AND ANY OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two
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business days after the date of this Offer To Purchase. Any financial
institution that is a participant in the Book-Entry Transfer Facility system may
make book-entry delivery of Shares by causing the applicable Book-Entry Transfer
Facility to transfer the Shares into the Depositary's account at the Book-Entry
Transfer Facility in accordance with the Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of the Shares may be
effected through book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility, the appropriate Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed with
any required signature guarantees, or an Agent's Message, and any other required
documents must, in any case, be transmitted to, and received by, the Depositary
at one of its addresses set forth on the back cover of this Offer To Purchase
prior to the Expiration Date, or the tendering Stockholder must comply with the
guaranteed delivery procedures described below. The confirmation of a book-entry
transfer of Shares into the Depositary's account at a Book-Entry Transfer
Facility as described above is referred to as a "Book-Entry Confirmation."
DELIVERY OF THE LETTER OF TRANSMITTAL OR OTHER DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY OF THE LETTER OF TRANSMITTAL OR
SUCH OTHER DOCUMENTS TO THE DEPOSITARY.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal, (i) if the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Section, includes any participant in the
Book-Entry Transfer Facility system whose name appears on a security position
listing as the owner of the Shares) of Shares tendered therewith and such
registered holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal, or (ii) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of
the Letter of Transmittal.
If the certificates representing Shares are registered in the name of a
person other than the signer of the Letter of Transmittal or if payment is to be
made or if certificates for Shares not tendered or not accepted for payment are
to be returned to a person other than the registered holder of the certificates
surrendered, then the tendered certificates representing Shares must be endorsed
or accompanied by appropriate stock powers, in each case signed exactly as the
name or names of the registered holder or owner appears on the certificates,
with the signatures on the certificates or stock powers guaranteed by an
Eligible Institution as described above and as provided in the Letter of
Transmittal. See Instructions 1 and 5 of the Letter of Transmittal.
GUARANTEED DELIVERY. If a Stockholder wishes to tender Shares pursuant to
the Offer and the Stockholder's certificates are not immediately available or
the procedures for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to be received by the Depositary
prior to the Expiration Date, the Shares may nevertheless be tendered if all the
following guaranteed delivery procedures are complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Purchaser with this Offer To
Purchase, is received by the Depositary as provided below prior to the
Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for transfer or
a Book-Entry Confirmation with respect to all tendered Shares, together
with a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof) and any required signature
guarantees (or in the case of a book-entry transfer of Shares, an
Agent's Message), and any other documents required by the Letter of
Transmittal, are received by the Depositary within three New York Stock
Exchange trading days after the date of execution of the Notice of
Guaranteed Delivery
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and a representation that the Stockholder on whose behalf the tender is
being made is deemed to own the Shares being tendered within the
meaning of Rule 14e-4 under the Exchange Act.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mailed to the Depositary and must include an
endorsement by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery and a representation that the Stockholder on whose behalf
the tender is being made is deemed to own the Shares being tendered within the
meaning of Rule 14e-4 under the Exchange Act.
Notwithstanding any other provision of this Offer To Purchase, payment for
Shares accepted for payment pursuant to the Offer in all cases will be made only
after timely receipt by the Depositary of certificates for (or Book-Entry
Confirmation with respect to) the Shares, a Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed with all
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and all other documents required by the Letter of Transmittal.
Accordingly, payments may not be made to all tendering Stockholders at the same
time, and will depend upon when Share certificates are received by the
Depositary or Book-Entry Confirmations of such Shares are received into the
Depositary's account at the Book-Entry Transfer Facility.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent backup federal income tax
withholding with respect to the payment of the purchase price for Shares
purchased pursuant to the Offer, a Stockholder must provide the Depositary with
his or her correct taxpayer identification number and certify that he or she is
not subject to backup federal income tax withholding by completing the
substitute Form W-9 included in the Letter of Transmittal. See Instruction 10 of
the Letter of Transmittal. See Section 5 below.
DETERMINATION OF VALIDITY. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares pursuant to any of the procedures described above will
be determined by Purchaser in its sole discretion, which determination will be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of Shares determined not to be in proper form or the
acceptance of or payment for which may, in the opinion of counsel, be unlawful
and reserves the absolute right to waive any defect or irregularity in any
tender of Shares. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letters of Transmittal and the instructions thereto) will
be final and binding on all parties. No tender of Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived. None of Purchaser, Parent, Depositary, the Dealer Manager, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
APPOINTMENT AS PROXY. By executing a Letter of Transmittal, a tendering
Stockholder irrevocably appoints designees of Purchaser as his or her
attorneys-in-fact and proxies, with full power of substitution and
resubstitution, in the manner set forth in the Letter of Transmittal, to the
full extent of the Stockholder's rights with respect to the Shares tendered by
the Stockholder and purchased by Purchaser and with respect to any and all other
Shares or other securities issued or issuable in respect of those Shares, on or
after the date of the Offer. All such powers of attorney and proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, Purchaser accepts the
Shares for payment. Upon acceptance for payment, all prior powers of attorney
and proxies given by the Stockholder with respect to the Shares (and any other
Shares or other securities so issued in respect of such purchased Shares) will
be revoked, without further action, and no subsequent powers of attorney and
proxies may be given (and, if given, will not be deemed effective) by the
Stockholder. Purchaser or its designees, as the case may be, will be empowered
to exercise all voting and other rights of the Stockholder with respect to such
Shares (and any other Shares or securities so issued in respect of such
purchased Shares) as they in their sole discretion may deem proper, including
without
8
<PAGE>
limitation in respect of any annual or special meeting of Stockholders, or any
adjournment or postponement of any such meeting.
Purchaser reserves the absolute right to require that, in order for Shares
to be validly tendered, immediately upon Purchaser's acceptance for payment of
the Shares, Purchaser must be able to exercise full voting and other rights with
respect to the Shares, including voting at any meeting of Stockholders then
scheduled.
Purchaser's acceptance for payment of Shares tendered pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering Stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in this Section 4. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser as provided in this Offer To Purchase, may
also be withdrawn at any time after September 13, 1999. If Purchaser extends the
Offer, is delayed in its purchase of or payment for Shares or is unable to
purchase or pay for Shares for any reason, then, without prejudice to the rights
of Purchaser, tendered Shares may be retained by the Depositary on behalf of
Purchaser and may not be withdrawn, except to the extent that tendering
Stockholders are entitled to withdrawal rights as set forth in this Section 4.
The reservation by Purchaser of the right to delay the acceptance or
purchase of or payment for Shares is subject to the terms of the Merger
Agreement and provisions of Rule 14e-1(c) under the Exchange Act, which requires
Purchaser to pay the consideration offered or to return Shares deposited by or
on behalf of Stockholders promptly after the termination or withdrawal of the
Offer.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer To Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered the Shares.
If certificates evidencing Shares have been delivered or otherwise identified to
the Depositary, then, prior to the release of the certificates, the tendering
Stockholder must also submit the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn, and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution (except in
the case of Shares tendered for the account of an Eligible Institution). If
Shares have been tendered pursuant to the procedure for book-entry transfer set
forth in Section 3, the notice of withdrawal must specify the name and number of
the account at the applicable Book-Entry Transfer Facility to be credited with
the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding on all parties. No withdrawal of
Shares will be deemed to have been made properly until all defects and
irregularities have been cured or waived. None of Parent, Purchaser, the Dealer
Manager, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failing to give such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3 above.
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5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER
The following is a summary of the material federal income tax consequences
of the Offer and the Merger to holders whose Shares are purchased pursuant to
the Offer or whose Shares are converted into the right to receive the Merger
Consideration in the Merger (including any cash amounts received by dissenting
Stockholders pursuant to the exercise of dissenters' rights). This discussion is
based upon the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the applicable Treasury Regulations promulgated and proposed thereunder
and published judicial authority and administrative rulings and practice.
Legislative, judicial or administrative authorities or interpretations are
subject to change, possibly on a retroactive basis, at any time, and a change
could alter or modify the statements and conclusions set forth below. It is
assumed for purposes of this discussion that the Shares are held as "capital
assets" within the meaning of Section 1221 of the Code. This discussion does not
address all aspects of federal income taxation that may be relevant to a
particular Stockholder in light of such Stockholder's personal investment
circumstances, or those Stockholders subject to special treatment under the
federal income tax laws (for example, life insurance companies, tax-exempt
organizations, foreign corporations and nonresident alien individuals) or to
Stockholders who acquired their Shares through the exercise of employee stock
options or other compensation arrangements. In addition, the discussion does not
address any aspect of foreign, state or local income taxation or any other form
of taxation that may be applicable to a Stockholder.
CONSEQUENCES OF THE OFFER AND THE MERGER TO STOCKHOLDERS. The receipt of
the Per Share Amount and the Merger Consideration (and any cash amounts received
by Dissenting Stockholders pursuant to the exercise of dissenters' rights) will
be a taxable transaction for federal income tax purposes (and also may be a
taxable transaction under applicable foreign, state, local and other income tax
laws). In general, for federal income tax purposes, a Stockholder will recognize
gain or loss equal to the difference between his or her adjusted tax basis in
the Shares sold pursuant to the Offer or converted to cash in the Merger or
pursuant to the exercise of dissenters' rights and the amount of cash received
therefor. Such gain or loss will be capital gain or loss and will be long-term
gain or loss, if, on the date of sale (or, if applicable, the date of the
Merger), the Shares were held for more than one year.
BACKUP TAX WITHHOLDING. Under the Code, a Stockholder may be subject, under
certain circumstances, to "backup withholding" at a 31% rate with respect to
payments made in connection with the Offer or the Merger. Backup withholding
generally applies if the Stockholder (i) fails to furnish his or her social
security number or other taxpayer identification number ("TIN"), (ii) furnishes
an incorrect TIN, (iii) fails properly to report interest or dividends, or (iv)
under certain circumstances, fails to provide a certified statement, signed
under penalties of perjury, that the TIN provided is his or her correct number
and that he or she is not subject to backup withholding. Backup withholding is
not an additional tax but merely an advance payment, which may be refunded to
the extent it results in an overpayment of tax. Certain persons generally are
exempt from backup withholding, including corporations and financial
institutions. Certain penalties apply for failure to furnish correct information
and for failure to include the reportable payments in income. Each Stockholder
should consult with his or her own tax advisor as to its qualifications for
exemption from withholding and the procedure for obtaining such exemption.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE OFFER
AND THE MERGER TO THEM IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 (the "Company 10-K") and information supplied to Parent
by the Company, the principal trading market for the Shares is the New York
Stock Exchange (the "NYSE"), and the Shares trade on the NYSE
10
<PAGE>
under the symbol "GIX." The following table sets forth the high and low sale
prices per Share for the periods indicated. No cash dividends were paid by the
Company during the periods specified below.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1997
First Quarter....................................................................................... $22 1/2 $16 1/8
Second Quarter...................................................................................... 19 1/4 16 7/8
Third Quarter....................................................................................... 20 3/4 16 3/4
Fourth Quarter...................................................................................... 21 5/8 15 11/16
1998
First Quarter....................................................................................... $17 3/8 $14 9/16
Second Quarter...................................................................................... 18 5/8 13 3/4
Third Quarter....................................................................................... 15 3/8 5 9/16
Fourth Quarter...................................................................................... 11 3/8 6 3/4
1999
First Quarter....................................................................................... $11 $ 8 1/2
Second Quarter...................................................................................... 13 1/2 10 1/8
Third Quarter (through July 15, 1999)............................................................... 12 5/8 11 3/4
</TABLE>
On July 9, 1999, the last full trading day before the public announcement of
Purchaser's intention to acquire the Shares, the last reported sale price on the
NYSE was $12 1/2 per Share. On July 15, 1999, the last full trading day before
the commencement of the Offer, the last reported sale price on the NYSE was
$12 1/8 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY
GENERAL INFORMATION. The Company is a Delaware corporation with its
principal executive offices located at 2121 San Jacinto Street, Suite 2500,
Dallas, Texas 75201. The Company is a manufacturer of technologically advanced
industrial products that support high-growth markets around the world. Products
include modular cells for refining nonferrous metals; premium refractories for
lining heat-containing industrial vessels such as steel furnaces; raw materials
used to make refractory products; and processing and recycling equipment.
HISTORICAL FINANCIAL INFORMATION. Set forth below is certain selected
consolidated financial information with respect to the Company and its
subsidiaries excerpted from the Company 10-K and the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1999 (the "Company 10-Q"), each of
which is incorporated herein by reference. More comprehensive financial
information is included in such reports and other documents filed by the Company
with the Commission, and the following summary is qualified in its entirety by
reference to such reports and other documents and all of the financial
information (including any related notes) contained therein. Such reports and
other documents should be available for inspection and copies should be
obtainable in the manner set forth below under "Available Information."
11
<PAGE>
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
TWO MONTHS
YEAR ENDED OCTOBER ENDED YEAR ENDED THREE MONTHS ENDED
31, DECEMBER 31, DECEMBER 31, JANUARY 31, MARCH 31,
1996 1997 1997 1998 1998 1999
--------- --------- --------------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues......................................... 500.0 435.1 61.7 496.0 97.3 142.1
Cost and Expenses................................ 470.5 468.7 68.3 584.0 100.4 137.9
Pre tax earnings (loss) from continuing
operations..................................... 29.5 (33.6) 6.6 (88.0) (3.1) 4.2
Income tax benefits (provision).................. (2.9) 9.0 1.6 37.0 1.3 (0.8)
Earnings (loss) from continuing operations....... 26.6 (24.6) (5.0) (51.0) (1.8) 3.4
Net earnings..................................... 45.4 (4.4) (9.1) (36.6) 0.8 (21.3)
PER SHARE DATA
Earnings (loss) from continuing operations
Basic.......................................... 1.18 (1.10) (0.23) (2.32) (0.08) 0.15
Diluted........................................ 1.15 (1.10) (0.23) (2.32) (0.08) 0.15
Net Earnings
Basic.......................................... 2.01 (0.20) (0.42) (1.64) 0.04 (0.96)
Diluted........................................ 1.97 (0.20) (0.42) (1.64) 0.04 (0.94)
</TABLE>
<TABLE>
<CAPTION>
AT AT
AT OCTOBER 31, DECEMBER 31, MARCH 31,
1996 1997 1998 1999
--------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total Current Assets............................. 375.5 $ 356.1 $ 691.2 $ 669.6
Total Assets..................................... 752.6 807.0 1,266.0 1,246.7
Total Current Liabilities........................ 207.2 245.4 534.1 539.6
Total Shareholders Equity........................ 299.9 284.1 234.5 215.1
</TABLE>
12
<PAGE>
AVAILABLE INFORMATION. The Company is subject to the informational filing
requirements of the Exchange Act. In accordance with the Exchange Act, the
Company files periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters. The
Company is required to disclose in such proxy statements certain information, as
of particular dates, concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interest of those persons in transactions
with the Company. Such reports, proxy statements and other information may be
inspected at the Commission's office at 450 Fifth Street, N.W., Washington, D.C.
20549, and also should be available for inspection and copying at the regional
offices of the Commission located at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies may be obtained upon payment of the Commission's
prescribed fees by writing to its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or through the Commission's Website
(http://www.sec.gov).
Although neither Parent nor Purchaser has any knowledge that would indicate
that statements contained herein based upon information furnished by the Company
or documents and records relating to the Company (collectively, the "Company
Information") are untrue, none of Parent, Purchaser, the Dealer Manager or the
Information Agent assumes any responsibility for the accuracy or completeness of
the Company Information or for any failure by the Company to disclose events
that may have occurred or may affect the significance or accuracy of any such
information but that are unknown to Parent and Purchaser.
CERTAIN COMPANY FORECASTS. During the course of discussions among Parent,
Purchaser and the Company that led to the execution of the Merger Agreement (see
Section 11 below), the Company provided Purchaser and Parent with certain
business and financial information which was not publicly available. Such
information included, among other things, certain budgets for 1999 and
preliminary forecasted results of operations of the Company prepared by the
operating management of the Company and summarized below (the "Company
Forecasts").
The Company Forecasts indicated (i) estimated revenues of the Company of
$593 million for 1999, $633 million for 2000, $679 million for 2001, $712
million for 2002 and $730 million for 2003, (ii) estimated earnings before
interest and taxes of $47 million for 1999, $48 million for 2000, $55 million
for 2001, $64 million for 2002 and $71 million for 2003, and (iii) estimated
earnings before interest, taxes, depreciation and amortization of $74 million
for 1999, $76 million for 2000, $85 million for 2001, $96 million for 2002 and
$103 million for 2003. Subsequent to providing Parent with the foregoing Company
Forecasts, on June 21, 1999, the Company delivered an updated budget for 1999
which indicated (i) estimated revenues of $569 million, (ii) estimated earnings
before interest and taxes of $43 million, and (iii) estimated earnings before
interest, taxes, depreciation and amortization of $70 million.
The Company Forecasts are included in this Offer To Purchase solely because
such information was provided to Parent during the course of its evaluation of
the Company. To Parent's and Purchaser's knowledge, the Company does not make
public projections or forecasts of its anticipated financial position or results
of operations as a matter of course. The reports of PricewaterhouseCoopers LLP
incorporated by reference in this Offer To Purchase relate to the historical
financial information of the Company, do not extend to the Company Forecasts,
and should not be read to do so. None of the Parent, Purchaser, the Company, the
Dealer Manager, the Information Agent or any of their respective representatives
assumes any responsibility for the validity, reasonableness, accuracy or
completeness of the Company Forecasts, and the Company has made no
representations to Parent or Purchaser regarding such information. Accordingly,
none of Parent, Purchaser or the Company anticipates that it will, and each of
Parent, Purchaser and the Company disclaims any obligation to, furnish updated
forecasts or projections to any person, cause such information to be included in
documents required to be filed with the Commission or otherwise make such
information public (irrespective in any such case of whether the Company
Forecasts, in light of events or developments occurring after the time at which
they were originally prepared, shall have ceased to have a reasonable basis).
13
<PAGE>
The Company Forecasts necessarily reflect numerous assumptions with respect
to the general business and economic conditions and other matters, many of which
are inherently uncertain or beyond the Company's, Parent's and Purchaser's
control, and do not take into account any changes in the Company's operations or
capital structure that may result from the Offer and the Merger. It is not
possible to predict whether the assumptions made in preparing the Company
Forecasts will be valid and actual results may prove to be materially higher or
lower than those contained in the Company Forecasts. The inclusion of the
Company Forecasts should not be regarded as an indication that the Company,
Parent or Purchaser or anyone else who received this information considered it a
reliable predictor of future events, and this information should not be relied
on as such.
The Company Forecasts were not prepared with a view to public disclosure or
compliance with published guidelines of the Commission or the guidelines
established by the American Institute of Certified Public Accountants.
The information from the Company Forecasts should be evaluated in
conjunction with the historical financial statements and other information
regarding the Company contained elsewhere in this Offer To Purchase, the Company
10-K and the Company 10-Q. In light of the foregoing factors and the
uncertainties inherent in the Company Forecasts, holders of Shares are cautioned
not to place undue reliance thereon.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Purchaser, a Delaware corporation, was organized to acquire all of the
Shares pursuant to the Offer and the Merger and has not conducted any unrelated
activities since its organization. All of the outstanding capital stock of
Purchaser is owned indirectly by Parent. The principal executive offices of
Purchaser are located at 500 Halle Building, 1228 Euclid Avenue, Cleveland, Ohio
44115-1809.
Parent is a stock corporation registered in Austria, with its principal
executive offices located at Mommsengasse 35, A-1040 Vienna, Austria. Parent is
a global operator in the refractories, engineering, waterproofing and insulation
businesses.
Neither Parent nor Purchaser is subject to the information requirements of
the Exchange Act and, therefore, reports relating to each of their businesses,
financial conditions and other matters have not been filed with, and will not be
available from, the Commission. However, copies of Parent's audited consolidated
accounts for the year ended December 31, 1998, Parent's unaudited interim
consolidated accounts for the three months ended March 31, 1999, and a summary
of the significant differences between U.S. and Austrian generally accepted
accounting principles are attached hereto as Annexes A, B and C, respectively.
Except as set forth elsewhere in this Offer To Purchase or Schedule I
hereto, (i) neither Parent nor Purchaser nor, to the knowledge of Parent or
Purchaser, any of the persons listed in Schedule I hereto or any associate or
majority-owned subsidiary of Parent or Purchaser or any of the persons so
listed, (a) beneficially owns or has a right to acquire any Shares or any other
equity securities of the Company, (b) has effected any transaction in the Shares
or any other equity securities of the Company during the past 60 days, or (c)
has any contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company (including any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss or the giving or withholding
of proxies, consents or authorizations), (ii) there have been no transactions
between Parent or Purchaser or any of their respective subsidiaries or, to the
knowledge of Parent or Purchaser, any of the persons listed in Schedule I
hereto, on the one hand, and the Company or any of its executive officers,
directors or affiliates, on the other hand, which would require reporting under
the rules and regulations of the Commission, and (iii) there have been no
contacts, negotiations or transactions between Parent or Purchaser or any of
their respective subsidiaries or, to the knowledge of Parent or Purchaser, any
of the persons listed in Schedule I hereto, on the one hand, and the Company or
its subsidiaries or affiliates, on the other hand, concerning a
14
<PAGE>
merger, consolidation or acquisition, a tender offer or other acquisition of
securities of any class of the Company, an election of directors of the Company
or a sale or other transfer of a material amount of assets of the Company or any
of its subsidiaries.
9. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the total amount of funds required to purchase
the fully diluted number of Shares in the Offer and the Merger will be $300
million. Purchaser estimates that the total amount of funds required to repay
the Net Debt of the Company will be $240 million. Accordingly, Purchaser
estimates that the total amount of funds required to consummate the transactions
contemplated by the Merger Agreement, including fees and expenses related to the
Offer and the Merger and initial expenditures, will be $635 million. The
Purchaser plans to obtain all funds needed for the Offer and the Merger through
a capital contribution from Parent or a subsidiary of Parent. Parent intends to
fund substantially all of this capital contribution through a series of
financing transactions.
The Company has informed Purchaser that its Net Debt is currently estimated
to be $270 million. Under the Merger Agreement, if the Company's Net Debt
exceeds $240 million, Purchaser may extend the Expiration Date, notwithstanding
that all of the conditions to the Offer have been satisfied, until such time as
the Company's Net Debt is $240 million or less.
As a result of the Financing Condition, Purchaser's obligation to accept and
pay for the Shares tendered pursuant to the Offer is conditioned upon the
Financing being available to Parent or Purchaser on terms reasonably
satisfactory to Parent given the structure of the financing contemplated for the
Offer and the Merger, including, without limitation, the financing contemplated
to be arranged by Parent.
Since early May 1999, Parent has been in communication with a number of U.S.
and European financial institutions and lenders about their willingness to
provide the Financing and the terms of any financing. As of the date of this
Offer To Purchase, Parent and Purchaser have not entered into any binding
commitments or definitive agreements which would enable Parent to waive or
satisfy the Financing Condition and there can be no assurance that the Financing
will be available on terms reasonably satisfactory to Parent or of the timing
thereof.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
In September and October of 1998, WHX acquired approximately 9.9% of the
Shares and filed a Schedule 13D relating to such purchases on October 5, 1998.
On December 17, 1998, WHX commenced a cash tender offer for any and all
outstanding Shares at $10.50 per Share (the "WHX Offer"). The Company Board
unanimously rejected the WHX Offer.
On January 19, 1999, WHX filed preliminary proxy materials, and in early
February filed definitive proxy materials, with the Commission in order to
solicit proxies for the Company's 1999 annual stockholders meeting to elect one
member of the Company Board and approve certain non-binding stockholder
resolutions designed to facilitate the sale of the Company.
In early March, a representative of the Company called Dr. Walter Ressler,
the Chief Executive Officer and Chairman of the Management Board (VORSTAND) of
Parent, indicating that no decision had been made to explore a sale of the
Company but that, as part of considering its available options, the Company
would like to know whether Parent might be interested in discussing a possible
transaction with the Company. Dr. Ressler indicated that he could see many
strategic benefits to a possible business combination and accordingly that he
and members of the Parent Management Board would be willing to meet with the
Company and its financial advisors to discuss the subject further. No further
discussions took place until April.
At its March 29, 1999 Board meeting, the Company Board instructed
management, with the assistance of the Company's financial and legal advisors,
to explore and evaluate a number of alternatives to generate
15
<PAGE>
stockholder value that may be greater than that which the Company's business
plan could create including a possible merger or strategic combination.
The Company informed Parent, that in early April, representatives of the
Company contacted a number of companies that might be interested in pursuing a
business combination with the Company, including Parent. Parent then entered
into a confidentiality and standstill agreement with the Company and received an
information memorandum.
On April 14, 1999, representatives of the Company, including the Company's
financial advisors, and Rawles Fulgham, Chairman and Chief Executive Officer of
the Company, Graham Adelman, President and Chief Operating Officer of the
Company and Alfred Williams, Senior Vice President and Chief Financial Officer
of the Company, met with Dr. Ressler and Dr. Georg Obermeier (who was appointed
Chief Executive Officer and Chairman of the Management Board of Parent as of
July 1, 1999) and two members of the Management Board of Parent, Jakob Mosser
and Roland Platzer. The parties discussed various possibilities for a business
combination transaction. Parent expressed an interest in a transaction which
would effect a strategic combination of certain businesses of the Company and
NARCO but not involve a sale of the Company.
The Company and its financial advisors indicated such a combination probably
would not be of interest and that Parent should consider making an all-cash
transaction. Parent's representatives agreed to consider whether it was prepared
to proceed with such a transaction and to contact the Company after Parent
reached a decision.
During the period from April 15 through April 27, 1999, Dr. Ressler had
several telephone conversations with Mr. Fulgham and representatives of J.P.
Morgan in which he indicated that Parent was still evaluating the situation and
remained interested in a possible transaction.
On April 21, 1999, the Company announced that it had entered into
negotiations with another party with respect to a possible transaction that
could involve a merger of the Company.
On April 27, 1999, the Company announced that it had entered into a
confidentiality and standstill agreement with WHX. On April 27, 1999, it also
announced that it had entered into an agreement with a third party to negotiate
exclusively, subject to certain limited exceptions, with respect to a possible
transaction that could involve a merger of the Company.
Dr. Ressler telephoned Mr. Fulgham on several occasions between April 27,
1999 and the middle of May, 1999, but Mr. Fulgham did not discuss a possible
transaction with Dr. Ressler due to the exclusivity agreement.
On May 7, 1999, the Company announced that it had extended the exclusivity
period with such third party until May 12, 1999. On May 11, 1999, the Company
announced that the agreement to negotiate exclusively with such third party had
terminated and that the Company would resume negotiations with other parties.
On May 14, 1999, a representative of J.P. Morgan called Dr. Ressler to
advise him that the Company's exclusivity period with the third party had
expired and to inquire whether Parent was willing to discuss an all-cash
transaction. Dr. Ressler advised that Parent was prepared to discuss a possible
transaction of this type but requested a reasonable exclusivity period to
conduct diligence and explore possible financing.
During the period May 14-18, 1999, Parent engaged Deutsche Bank (defined
below) as its financial advisor and Jones, Day, Reavis & Pogue as its legal
advisors. On May 17, 1999, Dr. Ressler wrote to Mr. Fulgham confirming Parent's
willingness to proceed on the basis discussed with the Company's representative
on May 14, 1999 and indicated that, subject to reaching agreement on the other
terms of the transaction and completing due diligence, Parent would be prepared
to offer $13.00 per Share.
16
<PAGE>
On May 17, 1999, Dr. Ressler telephoned Mr. Fulgham to indicate that, while
Parent was prepared to move as quickly as possible, it needed to have an
exclusivity period of at least four weeks to conduct due diligence and put
financing arrangements in place. In conversations on May 18 and 19, 1999 among
Parent's and the Company's financial and legal advisors, an exclusivity period
ending June 4, 1999 was agreed and that agreement was reflected in a letter
signed by Parent and the Company on May 20, 1999.
On May 20, 1999, WHX announced that it had increased its offer price per
Share from $10.50 per Share to $11.50 per Share. On May 25, 1999, the Company
announced that the Company Board had unanimously rejected the WHX Offer, as
amended.
During the period from May 21 through June 4, 1999, Parent and its financial
and legal advisors conducted due diligence, explored financing alternatives and
engaged in discussion of the terms of an agreement for a possible business
combination transaction. Dr. Ressler called Mr. Fulgham on several occasions
during this period to report on the status of Parent's efforts and
decision-making process. On June 4, 1999, Dr. Ressler advised Mr. Fulgham that,
despite Parent's efforts, signing a definitive merger agreement by June 4, 1999
would not be possible. Dr. Ressler asked if the Company could grant a further
exclusivity period and Mr. Fulgham replied that the Company would be prepared to
consider this only if Parent would be prepared to pay a substantial fee if a
merger agreement was not signed by the end of extended exclusivity period.
On June 6, 1999, Dr. Ressler and Dr. Obermeier telephoned Mr. Fulgham to
confirm Parent's continued interest in pursuing discussions of a Merger
Agreement and its willingness to agree that, in exchange for an extended
exclusivity period, it would pay a fee if a merger agreement were not signed by
the end of that period. After discussions among the principals and the Company's
and Parent's legal and financial advisors, on June 7, 1999, the Company and
Parent amended their exclusivity agreement to extend the exclusivity period
until July 12, 1999 in return for Parent's promise to pay $5 million to the
Company if a merger agreement was not signed by that date.
During the period from June 7, 1999 through July 8, 1999, Parent and its
financial and legal advisors continued due diligence and discussions of the
terms of a merger agreement for a possible transaction.
On June 21, 1999, the Company announced that Mr. LaBow had been elected to
the Company Board at the Company's annual meeting of Stockholders.
On July 8, 1999, Parent's Supervisory Board met and approved Parent
proceeding to execute a Merger Agreement but only if Parent's obligations
thereunder were subject to a financing condition. This result was reported to
Mr. Fulgham in phone conversations on July 8, 1999, with Dr. Obermeier and Dr.
Ressler.
On July 10, 1999, Mr. Fulgham informed Dr. Obermeier of the terms on which
it would be prepared to go forward with a merger agreement that included a
financing condition. From July 9, 1999 through July 12, 1999, the legal and
financial advisors of Parent and the Company discussed the specific terms of the
Merger Agreement, including the terms outlined by Mr. Fulgham on July 9, 1999.
During July 12, 1999, Dr. Obermeier contacted Mr. Fulgham to resolve the
remaining open issues in the Merger Agreement.
On July 12, 1999, after discussion and analysis, the Company Board
determined to approve the Offer and the Merger.
Late in the afternoon of July 12, 1999, the parties signed the Merger
Agreement and publicly announced the transaction.
On July 13, 1999, the WHX Offer expired.
On July 16, 1999, Purchaser commenced the Offer.
17
<PAGE>
11. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; AND THE MERGER
AGREEMENT
PURPOSE OF THE OFFER AND THE MERGER.
The purpose of the Offer and the Merger is to enable Purchaser to acquire,
in one or more transactions, control of the Company and the entire equity
interest in the Company. The Offer is intended to facilitate the acquisition of
all of the Shares and to increase the likelihood that the Merger will be
completed promptly. The acquisition of the entire equity interest in the Company
has been structured as a cash tender offer followed by a cash merger in order to
provide a prompt and orderly transfer of ownership of the Company from
Stockholders to Parent and to provide Stockholders promptly with cash equal to
the Per Share Amount for all of their Shares.
PLANS FOR THE COMPANY.
Following the Merger, the Company will be operated as an indirect, wholly
owned subsidiary of Parent. Except as otherwise described in this Offer To
Purchase (including as may be required under the Merger Agreement if necessary
to obtain antitrust approvals (see "The Merger Agreement--Consents, Approvals
and Filings")), and for possible transactions between the Company and other
subsidiaries of Parent in connection with the integration of business conducted
by the Company with the other businesses of Parent and its subsidiaries,
Purchaser, Parent and the directors and officers of Purchaser and Parent listed
on Schedule I hereto have no current plans or proposals that would result in (i)
an extraordinary corporate transaction, such as a merger, reorganization,
liquidation or sale or transfer of a material amount of assets involving the
Company or any of its subsidiaries, (ii) except as otherwise described in the
Merger Agreement, any change in the present Company Board or management of the
Company, or (iii) any material change in the Company's corporate structure or
business.
Parent intends, from time to time, after completion of the Offer, to
evaluate and review the Company's and its subsidiaries' operations and the
potential opportunities for rationalization and the achievement of synergies
with Parent's operations, and to consider what, if any, changes would be
desirable in light of the results of such evaluations and reviews. After any
such review, Parent will determine what actions or changes, if any, would be
desirable in light of the circumstances that then exist, and it reserves the
right to effect such actions or changes.
THE MERGER AGREEMENT.
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement, which is incorporated by reference and filed with the
Commission as an exhibit to the Schedule 14D-1. The Merger Agreement may be
examined at, and copies obtained from, the offices of the Commission in the
manner set forth in Section 7 above. All terms not defined herein have the
meanings ascribed to such terms in the Merger Agreement.
THE OFFER. The Merger Agreement provides for the commencement of the Offer.
Pursuant to the terms of the Merger Agreement, Parent and Purchaser expressly
reserve the right, in their sole discretion, subject to compliance with the
Exchange Act and the terms of the Merger Agreement, to waive any condition to
the Offer and to make any other changes in the terms and conditions of the
Offer; except that Parent and Purchaser will not (i) amend or waive the Minimum
Condition, (ii) decrease the Per Share Amount, (iii) decrease the maximum number
of Shares to be purchased in the Offer, (iv) waive or satisfy the Financing
Condition unless (a) all of the Company's and its subsidiaries' indebtedness for
borrowed money outstanding and other obligations required to be reflected as
indebtedness in a consolidated balance sheet of the Company ("Indebtedness")
existing at the Effective Time is contemplated to be repaid immediately after
the Effective Time to the extent required by the terms thereof and (b) no less
than $300 million of the total financing currently expected to be approximately
$635 million (based on the assumption that Net Debt at the time Shares are to be
purchased in the Offer is not greater than
18
<PAGE>
$240 million) to be incurred in connection with the Transactions (as defined
below) consists of equity contributed to NARCO or loans from Parent (except that
such loans from Parent will be subordinate to the claims of all creditors of the
Surviving Corporation and no such loans will be payable or guaranteed by the
Company or any of its subsidiaries), or (v) amend any other term or condition of
the Offer in any manner or impose any term or condition that is adverse to the
Stockholders without the written consent of the Company executed by the Chief
Executive Officer of the Company stating that such amended or imposed term or
condition was authorized by the Company Board or a duly authorized committee
thereof. Notwithstanding any other provision of the Merger Agreement, Parent and
Purchaser expressly reserved the right (but have no obligation), in their sole
discretion, subject to compliance with the Exchange Act and the terms of the
Merger Agreement, to waive the Financing Condition.
In the event that any condition to the Offer has not been satisfied or
waived at the Expiration Date, Purchaser will (unless otherwise notified by the
Company in writing), and Purchaser will otherwise be entitled to, extend the
Expiration Date in increments of up to five business days each (unless otherwise
agreed by Parent and the Company) until the earliest to occur of (x) the
satisfaction or waiver of each such condition and (y) the termination of the
Merger Agreement in accordance with its terms; except that Purchaser will not be
required to extend the Offer as provided in this sentence if any such condition
(other than the Financing Condition) is incapable of being satisfied. In
addition, without limiting the foregoing, Purchaser may, without the consent of
the Company, extend the Expiration Date (i) as required by applicable law, (ii)
if Net Debt exceeds $240 million, until such time as Net Debt is $240 million or
less, and (iii) for up to five business days if, on the scheduled or any
extended Expiration Date, the Shares validly tendered pursuant to the Offer and
not withdrawn represent more than 80% but less than 90% of the outstanding
Shares, notwithstanding that all the conditions to the Offer have been
satisfied, so long as Purchaser waives the further satisfaction of any of the
conditions to the Offer (other than the condition set forth in paragraph (A) of
Section 14). Assuming the prior satisfaction or waiver of the Offer Conditions,
Parent will cause Purchaser to accept for payment, and pay for, in accordance
with the terms of the Offer, all Shares validly tendered and not withdrawn
pursuant to the Offer as soon as practicable after the Expiration Date or any
extension thereof.
The Company has represented to Parent in the Merger Agreement that: (i) the
Company Board, by the affirmative vote of a majority of its members, has duly
(a) determined that the Merger Agreement and the Offer, the Merger and the other
transactions contemplated by the Merger Agreement (the "Transactions") are fair
to and in the best interests of the Company and the Stockholders, (b)
authorized, approved, adopted and declared advisable the Merger Agreement and
the Transactions, (c) resolved to recommend that the Stockholders accept the
Offer and tender their Shares to Purchaser pursuant to the Offer and approve and
adopt the Merger Agreement, (d) taken all other action necessary to render the
limitations on business combinations contained in Section 203 of the DGCL (or
any similar provision) and Article VI of the Company's Certificate of
Incorporation inapplicable to the Transactions, and (e) amended the Rights
Agreement, pursuant to which amendment, among other things, neither the
execution, delivery and performance of the Merger Agreement nor the consummation
of the Transactions will (x) result in the distribution of separate certificates
representing Rights, (y) cause the Rights to become exercisable, or (z) result
in the occurrence of a Distribution Date (as defined in the Rights Agreement);
and (ii) J.P. Morgan and WP&Co. have each delivered to the Company Board an
opinion that, as of the date of the Merger Agreement, the consideration to be
received by Stockholders in the Offer and the Merger, taken together, is fair
from a financial point of view to the Stockholders.
BOARD REPRESENTATION. The Merger Agreement requires that promptly upon the
acceptance for payment of Shares pursuant to the Offer, the Company will,
subject to compliance with Section 14(f) of the Exchange Act, take all actions
necessary to cause persons designated by Purchaser to become directors of the
Company so that the total number of such persons equals the product of the total
number of directors on the Company Board multiplied by the percentage that the
aggregate number of Shares beneficially owned by Parent, Purchaser or any of
their affiliates (including such Shares as are accepted for payment
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pursuant to the Offer), bears to the number of Shares then outstanding; except
that if the number of Shares purchased pursuant to the Offer equals or exceeds a
majority of the outstanding Shares, the Board percentage described above will in
all events be a majority of the members of the Company Board.
The Merger Agreement provides that, in the event that Parent's designees are
appointed or elected to the Company Board, until the Effective Time, the Company
Board will have at least two directors who are directors on the date of the
Merger Agreement and who are not executive officers of the Company or, if no
such persons are willing or able to so serve, who qualify as "independent
directors" within the meaning of the NYSE Listed Company Manual (the
"Independent Directors"), the Company will, upon request by Parent, promptly
increase the size of the Company Board or secure the resignations of such number
of directors, or both, as is necessary to enable Parent's designees to be
elected or appointed to the Company Board pursuant to the Merger Agreement and
will cause Parent's designees to be so elected or appointed.
The Merger Agreement provides that, following the election or appointment of
Parent's designees pursuant to the Merger Agreement, and prior to the Effective
Time, the approval of a majority of the Independent Directors will be required
to authorize (i) any amendment of the Merger Agreement or the Certificate of
Incorporation or By-Laws of the Company, (ii) any termination of the Merger
Agreement by the Company, (iii) any consent by the Company to any extension of
the time for performance of any of the obligations or other acts of Parent or
Purchaser, or (iv) any waiver by the Company of compliance with any of the
covenants or conditions contained in the Merger Agreement for the benefit of the
Company or any other rights of the Company under the Merger Agreement.
THE MERGER. Upon the terms of and subject to the conditions set forth in
the Merger Agreement, and in accordance with the DGCL, at the Effective Time
Purchaser will be merged with and into the Company, and the separate corporate
existence of Purchaser will thereupon cease. The Company will be the Surviving
Corporation.
At the Effective Time, the Certificate of Incorporation of the Company then
in effect will be the Certificate of Incorporation of the Surviving Corporation,
except that Article IV of the Company's Certificate of Incorporation will be
amended to read in its entirety as follows: "The aggregate number of shares
which the Corporation shall have the authority to issue is 1,000 shares of
Common Stock, par value $0.01 per share." The By-Laws of the Company will be the
By-Laws of the Surviving Corporation.
The directors of Purchaser immediately prior to the Effective Time will be
the initial directors of the Surviving Corporation. The officers of the Company
immediately prior to the Effective Time will be the initial officers of the
Surviving Corporation. Each director and officer of the Surviving Corporation
will hold office until their respective successors are duly elected or appointed
and qualified.
CONSIDERATION TO BE PAID IN THE MERGER. Pursuant to the Merger Agreement,
at the Effective Time, by virtue of the Merger and without any action on the
part of Parent, Purchaser, the Company or Stockholders, each Share issued and
outstanding immediately prior to the Effective Time (other than any Dissenting
Shares (as defined below) or Shares to be canceled as described below) will be
converted into the right to receive the Merger Consideration, upon surrender of
the certificate formerly representing such Share as provided in the Merger
Agreement. All such Shares, when so converted, will no longer be outstanding and
automatically will be canceled and retired and will cease to exist, and each
holder of a certificate representing any such Shares will cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance with
the Merger Agreement. Notwithstanding the foregoing, if between the date of the
Merger Agreement and the Effective Time the outstanding Shares have been changed
into a different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the Merger Consideration will be correspondingly adjusted on
a per-share basis to reflect such change.
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Immediately prior to the Effective Time, each outstanding Option will be
canceled and will only entitle the holder thereof to receive for each Share with
respect to such Option an amount in cash equal to the difference between (i) the
Merger Consideration and (ii) the per Share exercise price under such Option.
Immediately prior to the Effective Time, the Company will amend the Deferred
Compensation Plan to provide (i) that each Stock Unit credited to accounts of
participants will be canceled and the accounts of each such participant will be
credited for each Stock Unit an amount in cash equal to the Merger Consideration
and (ii) that thereafter such accounts will be credited with a fixed rate of
interest. Prior to the Effective Time, the Company will take all necessary
action with respect to the cancellation of all Options and Stock Units,
including obtaining any necessary consents from the holders of such Options and
Stock Units.
The Merger Agreement further provides that each Share held in the treasury
of the Company and each Share owned by Parent, Purchaser or any direct or
indirect wholly owned subsidiary of the Company or Parent immediately before the
Effective Time will cease to be outstanding, be canceled and retired without
payment of any consideration therefor and cease to exist.
Each share of common stock, no par value, of Purchaser issued and
outstanding immediately prior to the Effective Time will be converted into and
exchanged for one validly issued, fully paid and non-assessable share of common
stock, par value $0.01 per share, of the Surviving Corporation.
All other capital stock of the Company and any options, warrants or other
rights to purchase capital stock of the Company (other than Options and Stock
Units) will be canceled and retired and will cease to exist, and no Merger
Consideration will be issued or delivered in exchange therefor.
DISSENTING SHARES. Notwithstanding any provision of the Merger Agreement to
the contrary, if and to the extent required by the DGCL, any Shares issued and
outstanding immediately prior to the Effective Time and held by a Stockholder
who has not voted in favor of the Merger or consented thereto in writing and who
has demanded properly in writing appraisal for such Shares in accordance with
Section 262 of the DGCL, if such Section 262 provides for appraisal rights for
such Shares in the Merger (the "Dissenting Shares"), will not be converted into
the right to receive the Merger Consideration, and holders of such Dissenting
Shares will be entitled to receive payment of the appraised value of such
Dissenting Shares in accordance with the provisions of Section 262 of the DGCL
unless and until such holders fail to perfect or effectively withdraw or
otherwise lose their rights to appraisal and payment under the DGCL. If, after
the Effective Time, any such holder fails to perfect or effectively withdraws or
otherwise loses such right, such Dissenting Shares will thereupon be treated as
if they had been converted into and become exchangeable for, at the Effective
Time, the right to receive the Merger Consideration, without any interest
thereon. Notwithstanding anything to the contrary, if (i) the Merger is
rescinded or abandoned or (ii) the Stockholders revoke the authority to effect
the Merger, then the right of any Stockholder to be paid the fair value of such
Stockholder's Dissenting Shares pursuant to Section 262 of the DGCL will cease.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties. These include representations and
warranties by the Company with respect to: (i) organization and qualification
and subsidiaries, (ii) the Company's Certificate of Incorporation and By-Laws,
(iii) capitalization, (iv) authority and validity and effect of the Merger
Agreement, (v) material contracts and no conflicts and required filings and
consents, (vi) compliance and permits, (vii) the Rights Agreement, (viii)
Commission filings and financial statements, (ix) absence of certain changes or
events, (x) no undisclosed liabilities, (xi) absence of litigation, (xii)
Company employee benefit plans and employment agreements, (xiii) labor matters,
(xiv) title to property, (xv) taxes, (xvi) environmental matters, (xvii)
brokers, (xviii) intellectual property, (xix) vote required to approve the
Merger, (xx) takeover statutes, (xxi) opinion of financial advisor, and (xxii)
Year 2000 compliance.
Parent and Purchaser have also made certain representations and warranties
with respect to: (i) organization and qualification, (ii) authority and validity
and effect of the Merger Agreement, (iii) no conflicts and required filings and
consents, and (iv) financial structure.
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The representations and warranties in the Merger Agreement will terminate at
the Effective Time (or the time the designees of Parent constitute a majority of
the Board, if earlier) or upon the termination of the Merger Agreement pursuant
to its terms, as the case may be.
STOCKHOLDER MEETING. Under the Merger Agreement, the Company Board will, if
required by applicable law in order to consummate the Merger, duly call, give
notice of, convene and hold a special meeting of the Stockholders (the "Special
Meeting") as promptly as practicable following the acceptance for payment and
purchase of Shares by Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the approval of the Merger and the approval
and adoption of the Merger Agreement. Parent will vote, or cause to be voted,
all of the Shares then beneficially owned by it, Purchaser or any of its other
subsidiaries or affiliates in favor of the approval of the Merger and the
approval and adoption of the Merger Agreement.
Notwithstanding the foregoing, in the event that Parent, Purchaser or any
other subsidiary of Parent shall acquire at least 90% of the outstanding Shares
pursuant to the Offer or otherwise, the parties to the Merger Agreement will,
subject to the satisfaction or waiver of all of the conditions to the Merger,
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
Stockholders, in accordance with Section 253 of the DGCL.
CONDUCT OF BUSINESS PENDING THE MERGER. Pursuant to the Merger Agreement,
during the period from the date of the Merger Agreement and continuing until the
earliest to occur of (i) the termination of the Merger Agreement, (ii) the time
the designees of Parent constitute a majority of the Company Board, or (iii) the
Effective Time, the Company covenants and agrees that, unless Parent shall
otherwise approve in writing (which approval shall not be unreasonably withheld)
and unless otherwise expressly contemplated under the Merger Agreement, the
Company will conduct its business and will cause the businesses of its
subsidiaries to be conducted, and the Company and its subsidiaries will not take
any action except, in the ordinary course of business and in a manner consistent
with past practice and in compliance with applicable laws; and the Company will
use reasonable commercial efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the services
of the present officers, employees and consultants of the Company and its
subsidiaries, and to preserve the present relationships of the Company and its
subsidiaries with customers, suppliers and other persons with which the Company
or any of its subsidiaries has significant business relations; and the Company
will take such actions prior to the Effective Time as are reasonably requested
by Parent to inform employees of the Company of the existence of certain caps on
health benefits currently in effect. By way of amplification and not limitation,
neither the Company nor any of its subsidiaries will, during the period
described above, directly or indirectly do, or propose to do, any of the
following without the prior written approval of Parent, unless expressly
contemplated under the Merger Agreement or disclosed in the Company Disclosure
Schedule (delivered to Parent in connection with the Merger Agreement):
(i) amend or otherwise change the Company's or any of its subsidiaries'
Certificates of Incorporation, By-Laws or other equivalent organizational
documents;
(ii) issue, sell, pledge, dispose of or encumber, or authorize the issuance,
sale, pledge, disposition or encumbrance of, any shares of capital stock of any
class, or any options, warrants, convertible securities or other rights of any
kind to acquire any Shares of capital stock, or any other ownership interest
(including, without limitation, any phantom interest) of the Company or any of
its subsidiaries (except for (a) the issuance of Shares pursuant to the exercise
of Options that are outstanding on the date of the Merger Agreement, (b) the
issuance of Stock Units representing no more than 200,000 Shares in the
aggregate pursuant to the Deferred Compensation Plan, and (c) the sale of
existing ownership interests in any of the Company's subsidiaries (1) having a
book value as of the date of the Company's most recent financial statements
included in the Company filed Commission documents of less than $2.0 million
individually and $6.0 million in the aggregate and (2) the consideration
received therefor is less than $2.0 million
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individually and, together with the proceeds of sales of assets permitted under
the Merger Agreement, $6.0 million in the aggregate);
(iii) sell, pledge, dispose of or encumber any assets of the Company or any
of its subsidiaries (except for (a) sales of assets in the ordinary course of
business and in a manner consistent with past practice and not exceeding $2.0
million individually and, together with the amount of consideration (or book
value, whichever is greater) received in sales of ownership interests permitted
under the Merger Agreement, $6.0 million in the aggregate, (b) sales of
inventory in the ordinary course of business consistent with past practice, and
(c) dispositions of obsolete or worthless assets);
(iv) amend or change the period (or permit any acceleration, amendment or
change) of exercisability of Options granted under the Stock Option Plans or
authorize cash payments in exchange for any such Options;
(v) (a) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, except that a wholly owned subsidiary of the Company
may declare and pay a dividend to its parent, (b) split, combine or reclassify
any of its outstanding capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (c) amend the terms of, repurchase, redeem
or otherwise acquire, or permit any subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of its subsidiaries,
or propose to do any of the foregoing, except in connection with the repurchase
of Options and Stock Units as contemplated by the Merger Agreement;
(vi) sell, transfer, license, sublicense or otherwise dispose of any
material intellectual property of the Company and its subsidiaries or amend or
modify any existing agreements with respect to any material intellectual
property (other than in the ordinary course of business consistent with past
practice);
(vii) (a) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof, (b) incur any indebtedness for borrowed money, issue any debt
securities, assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any person, or make any loans or advances
except in the ordinary course of business consistent with past practice, (c)
enter into any material contract other than in the ordinary course of business,
(d) authorize or make any capital expenditures or purchases of fixed assets that
are not currently budgeted or, if not budgeted, that in the aggregate exceed
$2,000,000, (e) terminate any material contract or amend any of its material
terms (other than amendments to existing credit arrangements designed to remedy
or prevent defaults thereunder and within certain parameters, or (f) enter into
or amend any contract, agreement, commitment or arrangement to effect any of the
matters prohibited by the foregoing;
(viii) except for contracts or amendments that serve to reduce the cost to
the Company of severance arrangements, increase the compensation payable or to
become payable to its employees, officers or directors (except for increases to
employees who are not directors or officers of the Company in the ordinary
course of business in connection with normal periodic performance reviews) or
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any employee, director or officer of the Company or
any of its subsidiaries (other than employees hired by the Company or any of its
subsidiaries after the date of the Merger Agreement in the ordinary course of
business and on terms consistent with those provided to employees of the Company
or any such subsidiary generally) or establish, adopt, enter into, terminate or
amend any employee benefit plan (except as may otherwise be required by
applicable law);
(ix) (a) take any action, other than as required by United States generally
accepted accounting principles ("GAAP"), to change accounting methods,
principles or practices (including, without limitation, procedures with respect
to revenue recognition, capitalization of development costs, payments of
accounts payable and collection of accounts receivable) or (b) revalue any
assets of the Company or any of its
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subsidiaries, including without limitation, any write down of the value of
capitalized software or inventory or writing off of notes or accounts receivable
other than in the ordinary course of business;
(x) make any tax election inconsistent with past practice or settle or
compromise any tax liability, except to the extent the amount of any such
settlement or compromise has been reserved for on the consolidated financial
statements contained in the Company Commission reports or is not reasonably
likely to have a material adverse effect on the Company;
(xi) pay, discharge, settle or satisfy any material lawsuits, claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business and consistent with past practice of liabilities
reflected or reserved against in the financial statements of the Company
included in the Company's filed Commission documents or incurred in the ordinary
course of business and consistent with past practice;
(xii) permit any material increase in the number of employees employed by
the Company or any of its subsidiaries on the date of the Merger Agreement or
hire any executive officer or employee whose total annual compensation is more
than $100,000;
(xiii) authorize, recommend, propose, adopt or announce an intention to
adopt a plan of complete or partial liquidation, dissolution, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its subsidiaries; or
(xiv) take or fail to take, or agree in writing or otherwise to take or fail
to take any of the actions described in (i) through (xiii) above.
NO SOLICITATION. The Merger Agreement provides that the Company will not,
and will not permit or cause any of its subsidiaries or any of the officers and
directors of it or its subsidiaries to, and will 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 or
encourage (including without limitation by way of furnishing information), or
take any other action designed or reasonably likely to facilitate or otherwise
facilitate any inquiries or the making of any proposal or offer with respect to
a merger, reorganization, share exchange, tender offer, consolidation,
liquidation or dissolution or similar transaction involving, or any purchase of
15% or more of the consolidated assets (based on the Company's December 31,
1998, audited consolidated balance sheet) or outstanding shares of capital stock
of, the Company or any of its subsidiaries or any other transaction that is
intended or reasonably could be expected to prevent or materially interfere with
the completion of the Transactions (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal"). The Company will not, and will not
permit or cause any of its subsidiaries or any of the officers and directors of
it or its subsidiaries to, and will direct and use its best efforts to cause it
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, whether made
before or after the date of the Merger Agreement, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal; except that the
Merger Agreement will not prevent the Company or the Company Board (acting
directly or through its employees, agents or representatives) from (i) complying
with Rules 14d-9 and 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal or disclosure obligations under state law, or (ii) at any
time prior to the earlier to occur of (a) payment for the Shares pursuant to the
Offer or (b) the approval of the Merger by the requisite vote of the
Stockholders, (1) providing information in response to a request therefor by a
person who has made an unsolicited bona fide written Acquisition Proposal (so
long as such proposal did not result from a breach of the foregoing) if the
Company Board receives from the person so requesting such information an
executed confidentiality agreement with customary terms (which will not preclude
the making of an Acquisition Proposal); or (2) engaging in any negotiations or
discussions with any person who has made an unsolicited bona fide written
Acquisition Proposal, if and
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only to the extent that, (x) in each such case referred to in clause (1) or (2)
above, the Company Board determines in good faith, after consultation with
outside legal counsel, that such action is necessary in order for its directors
to comply with their fiduciary duties under applicable law and (y) in the case
referred to in clause (2) above, the Company Board determines in good faith
(based on the advice of its financial advisor) that such Acquisition Proposal
would, if consummated, result in a more favorable transaction than the
Transactions; except that the Company may not, except as permitted below,
withdraw or modify, or propose to withdraw or modify, its position with respect
to the Offer or the Merger or approve or recommend, or propose to approve or
recommend, any Acquisition Proposal, or enter into any agreement with respect to
any Acquisition Proposal (other than a confidentiality agreement); it being
understood and agreed that making the determination in clause (y) above (the
"Board Determination") and disclosing such determination will not constitute a
withdrawal or modification, proposed or otherwise, or an approval or
recommendation, proposed or otherwise, in breach of this proviso or result in a
breach of the condition described in paragraph (E) of Section 14 hereof. The
Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations (whether by it or an agent or
representative of the Company) with any parties conducted heretofore with
respect to any of the foregoing. The Company agrees that it will take the
necessary steps to inform promptly the individuals or entities referred to in
the first sentence of this paragraph of the foregoing obligations. The Company
will notify Parent immediately (but in any event within 24 hours) if any such
inquiries, proposals or offers are received by, any such information requested
from, or any such discussions or negotiations are sought to be initiated or
continued with any of its representatives. The Company also will promptly
request each person that has heretofore executed a confidentiality agreement in
connection with its consideration of an Acquisition Proposal to return or
destroy (and certify the destruction of) all confidential information heretofore
furnished to such person by or on behalf of it or any of its subsidiaries and
the Company will use its reasonable efforts consistent with its fiduciary
obligations to enforce the provisions of such confidentiality agreements,
including with limitation, any standstill provisions. Notwithstanding anything
to the contrary in the foregoing, no breach of the foregoing provisions will
result from actions taken by the director elected at the 1999 Annual Meeting of
Stockholders of the Company provided such actions were not caused, authorized,
directed, solicited or encouraged by the Company or any of its subsidiaries or
any of their respective officers and other directors.
So long as the Merger Agreement is in effect, neither the Company Board nor
any committee thereof will (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Purchaser, their approval or
recommendation of the Offer, the Merger Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal by a
third party, or (iii) terminate the Merger Agreement pursuant to its terms in
order to enter into a definitive agreement with respect to any third-party
Acquisition Proposal unless the Company Board shall have (a) determined in good
faith, after consultation with outside counsel, that such action is necessary in
order for its directors to comply with their fiduciary duties under applicable
law and (b) determined in good faith, after receiving the advice of its
financial advisor that an Acquisition Proposal is a Superior Proposal; except
that the Merger Agreement will not prevent the Company or the Company Board from
complying with its disclosure obligations under any federal or state law.
"Superior Proposal" means an Acquisition Proposal that the Company Board
determines in good faith (i) is reasonably likely to be consummated, taking into
account all legal, financial and regulatory aspects of the proposal, the person
making the proposal and all other relevant factors, and (ii) for which
financing, to the extent required, is committed or which, in the good faith
judgment of the Company Board, is reasonably capable of being obtained by the
party making the Acquisition Proposal.
CONSENTS, APPROVALS AND FILINGS. Parent and the Company have agreed that
under the Merger Agreement they will promptly prepare and file as soon as
practicable after the date of the Merger Agreement all documents required to be
filed (i) with the United States Federal Trade Commission (the "FTC") and the
Department of Justice in order to comply with the HSR Act and (ii) any other
documents which are required under any non-United States laws regulating
competition, antitrust, investment or
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exchange controls. Parent and the Company will promptly furnish all materials
thereafter required in connection therewith.
Upon the terms and subject to the provisions of the Merger Agreement, each
of the Company and Parent will cooperate with each other and use (and will cause
its subsidiaries to use) all reasonable efforts (i) to cause to be done all
things necessary, proper or advisable on its part under the Merger Agreement and
applicable laws to consummate and make effective the Transactions as soon as
practicable, including preparing and filing as promptly as practicable all
documentation to effect all necessary notices, reports and other filings and
(ii) to obtain as promptly as practicable all consents, registrations,
approvals, permits and authorizations necessary or advisable to be obtained from
any third party and/or any Governmental Entity in connection with, as a result
of, or in order to consummate any of the Transactions. Subject to applicable
laws relating to the exchange of information, Parent and the Company will have
the right to review in advance, and to the extent reasonably practicable each
will consult the other on, all the information relating to the other and its
subsidiaries, that appear in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
Transactions; except that with respect to documents that one party reasonably
believes should not be disclosed to the other party, such party will instead
furnish those documents to counsel for the other party pursuant to a mutually
satisfactory confidentiality agreement. In exercising the foregoing right, each
of the Company and Parent will act reasonably and as promptly as reasonably
practicable.
The Merger Agreement provides that Parent and the Company will promptly
respond to any request for additional information pursuant to the HSR Act. Upon
the terms and subject to the provisions of the Merger Agreement, Parent and the
Company will each use all reasonable efforts to resolve objections, if any, as
may be asserted by any Governmental Entity with respect to the Transactions
under any antitrust or trade or regulatory laws or regulations of any
Governmental Entity, which, in the case of Parent, will include if necessary to
resolve such objections, offering, and agreeing to enter into necessary
agreements, to sell, license or otherwise dispose of, or hold separate or
otherwise divest itself of, all or any portion of Parent's businesses or assets
or any portion of the businesses or assets of any of its subsidiaries or any
portion of the businesses or assets of the Company or the Company's
subsidiaries. Notwithstanding anything to the contrary in the Merger Agreement,
(i) Parent will not be required to sell or otherwise dispose of, or hold
separate or otherwise divest itself of, businesses or assets located outside of
the United States, Canada and Germany and (ii) with respect to businesses or
assets located in the United States or Canada, Parent will not be required to
sell or otherwise dispose of, or hold separate or otherwise divest itself of,
businesses or assets that accounted for, individually or in the aggregate, more
than $86.0 million (the "Revenue Amount") of revenues of the Company or Parent,
as the case may be, for the year ended December 31, 1998, as set forth in the
respective audited financial statements for the period then ending for Parent or
the Company. Parent will reasonably consult with the Company and, subject to
being permitted by the Governmental Entity to do so, the Company will have the
right to attend and participate in any telephone calls or meetings that Parent
or Purchaser have with any person with respect to the foregoing. The Parent will
use (and cause its subsidiaries to use) all reasonable efforts to obtain all
necessary approvals from the German Federal Cartel Office (the "FCO") in order
to consummate the Transactions, including without limitation, if necessary to
resolve any objections raised by the FCO, offering, and agreeing to enter into
necessary agreements, to sell, license, divest or otherwise dispose of, or hold
separate or otherwise divest itself of, all or any portion of the businesses or
assets of the Company or the Company's subsidiaries located in Germany. Any such
divestitures required by the FCO will not be included in the calculation of the
Revenue Amount.
The Merger Agreement further provides that the Company and Parent will, and
Parent will cause Purchaser to, (i) take all action necessary to ensure that no
state anti-takeover statute or similar statute or regulation is or becomes
applicable to the Transactions and (ii) if any state anti-takeover statute or
similar statute or regulation becomes applicable thereto, take all action
necessary to ensure that the Transactions
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may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise to minimize the effect of such statute or regulation thereon.
The Merger Agreement further provides that the Company and Parent will keep
the other apprised of the status of matters relating to the completion of the
Transactions and that the Company will use all reasonable efforts to give prompt
notice to Purchaser of (i) any notice relating to any environmental matter or a
default under any material contract to which the Company or any of its
subsidiaries is a party or is subject; (ii) any changes or developments relating
to any material pending or threatened legal action; (iii) any new material
pending or threatened legal actions; and (iv) any general denial of insurance
coverage or contractual indemnity for asbestos claims. Parent and Purchaser also
agreed to use all reasonable efforts to give prompt notice to the Company of any
general denial of insurance coverage or contractual indemnity for asbestos
claims. Each of the Company and Purchaser will 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.
EMPLOYEE BENEFITS. The Merger Agreement requires that Parent maintain for a
period of nine months immediately following the Effective Time, employee benefit
plans, programs, policies and arrangements for employees of the Company and its
subsidiaries (other than employees covered by collective bargaining agreements)
as of the Effective Time which provide benefits that in the aggregate are
substantially comparable to the employee benefit plans, programs, policies and
arrangements other than stock option plans, stock purchase plans, stock
appreciation rights and any other stock based incentive and bonus plans provided
by the Company or any subsidiary for such employees immediately prior to the
Effective Time; except that (i) in no event will Parent be obligated under the
Merger Agreement to award options or equity rights to any Employee, (ii) Parent
may cause the Company to adopt, or extend to employees of the Company, benefit
plans, programs, policies and arrangements that are in effect for Parent's other
North American businesses, and to substitute the same for the Company's benefit
plans, programs, policies and arrangements, and (iii) nothing in the Merger
Agreement will prevent the amendment or termination of any specific plan,
program or arrangement, require that the Surviving Corporation provide or permit
investment in the securities of Parent, the Company or the Surviving Corporation
or interfere with the Surviving Corporation's right or obligation to make such
changes as are necessary to comply with applicable law. Parent will cause each
employee benefit plan, program, policy or arrangement of Parent in which
employees of the Company and its subsidiaries are eligible to participate to
take into account for purposes of vesting and eligibility thereunder the service
of such employees with the Company and its subsidiaries to the same extent as
such service was credited for such purpose by the Company and its subsidiaries,
unless such credit would result in a duplication of benefits.
The Merger Agreement further requires that Parent honor, in accordance with
their terms, all benefit obligations and contractual rights to current and
former employees of the Company and its subsidiaries existing as of the
Effective Time the existence of which is expressly disclosed in the Company
Disclosure Schedule including employment or severance agreements, plans or
policies of the Company and its subsidiaries which are previously specifically
disclosed in the Company Disclosure Schedule; except that nothing contained in
the foregoing will or will be deemed to limit the Surviving Corporation's
obligation with respect to all benefit obligations and contractual rights to
current and former employees of the Company and its subsidiaries existing as of
the Effective Time.
The Merger Agreement provides that if employees of the Company and its
subsidiaries become eligible to participate in a medical, dental or health plan
of Parent, Parent will cause such plan to (i) waive any preexisting condition
limitations for conditions covered under the applicable medical, health or
dental plans of the Company and its subsidiaries, to the same extent waived
under such plans of the Company and its subsidiaries and (ii) honor any
deductible and out of pocket expenses incurred by the employees and their
beneficiaries under such plans during the portion of the calendar year prior to
such participation.
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The Merger Agreement further provides that nothing in the foregoing will
require the continued employment of any person.
INDEMNIFICATION. The Merger Agreement provides that, from and after the
Effective Time, Parent will, or may cause the Surviving Corporation to the
extent provided in the Company's Certificate of Incorporation as in effect on
the date of the Merger Agreement, to the fullest extent each corporation is
permitted under applicable law, indemnify and hold harmless each present and
former director and officer of the Company (collectively, the "Indemnified
Parties") against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to any facts or events existing or occurring at or prior to
the Effective Time (including, without limitation, the Transactions) for a
period of six years after the Effective Time.
For a period of six years after the Effective Time (or the time the
designees of Parent constitute a majority of the Company Board, if earlier),
Parent will cause to be maintained in effect the current policies of directors'
and officers' liability insurance maintained by the Company (except that Parent
may substitute therefor policies with reputable and financially sound carriers
of at least the same coverage and amounts containing terms and conditions which
are no less advantageous) with respect to claims arising from or related to
facts or events that occurred at or before the Effective Time; except that
Parent will not be obligated to make annual premium payments for such insurance
to the extent such premiums exceed 200% of the annual premiums paid as of the
date of the Merger Agreement by the Company for such insurance.
In addition, the Merger Agreement provides that if the Surviving Corporation
or any of its successors or assigns (i) consolidates with or merges into any
other corporation or entity and is not the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any individual, corporation or other entity,
then, and in each such case, proper provision must be made so that the
successors and assigns of the Surviving Corporation assume all of the
indemnification obligations set forth in the Merger Agreement.
The indemnification provisions of the Merger Agreement are intended to be
for the benefit of, and will be enforceable by, each of the Indemnified Parties,
their heirs, their representatives and assigns.
PUBLICITY. Under the Merger Agreement, Parent and the Company agree to
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Offer, the Merger or the Merger Agreement
and will not issue any such press release or make any such public statement
without the prior consent of the other party, which shall not be unreasonably
withheld; except that a party may, without the prior consent of the other party,
issue such press release or make such public statement as may upon the advice of
counsel be required by law or the NYSE if it has used all reasonable efforts to
consult with the other party.
FINANCING. The Merger Agreement provides that Parent will use all
reasonable efforts to satisfy the Financing Condition. The sole and exclusive
remedy for any breach by Parent of this covenant is the payment to the Company
of the $15 million described in the next sentence. Pursuant to the Merger
Agreement, unless the Merger Agreement has been terminated in accordance with
its terms and unless the Financing Condition has been irrevocably waived in
writing by Parent prior to (i) 5:00 p.m. (New York City time) on July 30, 1999,
Parent will be obligated to pay the Company $5.0 million, and (ii) 5:00 p.m.
(New York City time) on October 31, 1999, Parent shall pay the Company an
additional $10.0 million; except that Parent will have no obligation to pay such
$10.0 million pursuant to (ii) above (x) unless it has elected to extend the
Financing Termination Time (as defined below) to the Extended Financing
Termination Time (as defined below) and (y) if Net Debt as of the Extended
Financing Termination Time is greater than $250 million.
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CONDITIONS TO THE MERGER. Pursuant to the Merger Agreement, the respective
obligations of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions:
(i) The Merger Agreement and the Merger shall have been approved and adopted
by the requisite vote of the Stockholders to the extent required by the DGCL and
the Certificate of Incorporation of the Company;
(ii) No temporary restraining order, preliminary or permanent injunction or
other order issued by any Governmental Entity preventing the consummation of the
Merger shall be in effect, and there shall not be any statute, rule, regulation
or order enacted by, entered into or enforced by any Governmental Entity that
makes the consummation of the Merger illegal;
(iii) Parent, Purchaser or their affiliates shall have purchased, or caused
to be purchased, Shares pursuant to the Offer; and
(iv) The Company Board shall have received an opinion, in form and substance
and from an independent evaluation firm reasonably satisfactory to the Company
Board, as to solvency matters relating to the Company and to NARCO and its
subsidiaries before and after giving effect to the Transactions, including the
incurrence of indebtedness related thereto.
TERMINATION AND FEES. The Merger Agreement may be terminated and the Merger
contemplated hereby may be abandoned on or following the occurrence of one of
the events set forth below prior to the Effective Time, notwithstanding approval
thereof by the Stockholders (except that any termination by the Company that
results in a payment to Purchaser of fees and expenses will not be effective
unless and until the Company shall have paid to Purchaser any such fees and
expenses):
(i) by mutual written consent duly authorized by the respective boards of
directors of Parent and, subject to any necessary approval by the Independent
Directors, as described above, the Company; or
(ii) by either Parent or the Company if (a) a Governmental Entity shall have
issued a non-appealable final order, decree or ruling, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
acceptance for payment of, or payment for, Shares pursuant to the Offer or the
Merger or (b) any statute, rule or regulation is enacted or enforced by any
Governmental Entity for which there is no administrative or judicial right of
appeal, which in any such case makes the consummation of the Offer or the Merger
illegal; or
(iii) by either Parent or the Company, if the Shares have not been purchased
pursuant to the Offer prior to the Termination Date (except that the right to
terminate the Merger Agreement under the foregoing will not be available to any
party whose failure to fulfill any obligations under the Merger Agreement has
been the cause of or resulted in the failure to consummate the Offer prior to
such date); or
(iv) as long as Shares have not been purchased pursuant to the Offer, by
Parent, if any actions described in paragraph (E) of Section 14 hereof has
occurred; or
(v) as long as Shares have not been purchased pursuant to the Offer, by
Parent, (a) if there has been a breach of any covenant or agreement on the part
of the Company set forth in the Merger Agreement or (b) if any representation or
warranty of the Company (1) shall have been inaccurate or incomplete when made
or (2) shall have become untrue, and in either case under clause (a) or (b) the
applicable event would give rise to the failure of a condition set forth in
paragraph (F) or (G) of Section 14 hereof, as the case may be (a "Company
Terminating Event"); except that, in the event of a Company Terminating Event
arising with respect to clause (a) or (b)(1) above (other than a breach of the
non-solicitation covenant of the Company), if such Company Terminating Event is
curable prior to the expiration of 20 days from notice by Parent to the Company
of its intention to terminate due to its occurrence (but in no event later than
the Termination Date) by the Company through the exercise of its reasonable best
efforts and for so long as the Company continues to exercise such reasonable
best efforts, Parent may not terminate the Merger Agreement under the foregoing
until the expiration of such period without such Company
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Terminating Event having been cured; and provided further that in the event of a
Company Terminating Event arising with respect to clause (b)(2) above, if such
Company Terminating Event may be curable prior to the Termination Date by the
Company through the exercise of its reasonable best efforts and for so long as
the Company continues to exercise such reasonable best efforts, Parent may not
terminate the Merger Agreement under the foregoing; or
(vi) as long as Shares have not been purchased pursuant to the Offer, by the
Company to allow the Company to enter into a definitive agreement in accordance
with the Merger Agreement with respect to a Superior Proposal; except that the
Company shall have complied with the provisions of the Merger Agreement relating
to solicitation and that not less than five business days prior to such
termination, the Company shall have notified Purchaser of its intention to
terminate the Agreement pursuant to the foregoing and shall have caused its
financial and legal advisors to be reasonably available to negotiate in good
faith with Purchaser and Purchaser's financial and legal advisors during such
five-day period if Purchaser offers to make such adjustments in the terms and
conditions of the Merger Agreement as would cause such Acquisition Proposal not
to be a Superior Proposal; or
(vii) as long as Shares have not been purchased pursuant to the Offer, by
the Company, (a) upon a breach of any covenant or agreement on the part of
Parent or Purchaser set forth in the Merger Agreement or (b) if any
representation or warranty of Parent or Purchaser (1) shall have been inaccurate
or incomplete when made or (2) shall have become untrue, and in either case, the
applicable event would materially adversely affect Parent's or Purchaser's
ability to consummate (or materially delay commencement or consummation of) the
Offer (a "Parent Terminating Event"); except that, in the event of a Parent
Terminating Event arising with respect to clause (a) or (b)(1) above, if such
Parent Terminating Event is curable prior to the expiration of 20 days from
notice by the Company to Parent of its intention to terminate due to its
occurrence (but in no event later than the Termination Date) by Parent or
Purchaser through the exercise of its reasonable best efforts and for so long as
Parent or Purchaser continues to exercise such reasonable best efforts, the
Company may not terminate the Merger Agreement under the foregoing until the
expiration of such period without such Parent Terminating Event having been
cured; and provided further that, in the event of a Parent Terminating Event
under clause (b)(2) above, if such Parent Terminating Event is curable prior to
the Termination Date by Parent or Purchaser through the exercise of its
reasonable best efforts and for so long as Parent or Purchaser continues to
exercise such reasonable best efforts, the Company may not terminate the Merger
Agreement under the foregoing; or
(viii) as long as Shares have not been purchased pursuant to the Offer, by
Parent, if any person or group (as defined in Section 13(d)(3) of the Exchange
Act) other than Parent, Purchaser or any of their respective subsidiaries or
affiliates shall have become the beneficial owner of more than 50% of the
outstanding Shares (either on a primary or fully diluted basis); or
(ix) by the Company at any time after 5:00 p.m. (New York City time) on July
30, 1999 (the "Financing Termination Time"), if Parent has not irrevocably
waived in writing the Financing Condition prior to the Financing Termination
Time; except that not less than two business days prior to such termination, the
Company shall have notified Purchaser of its intention to terminate the Merger
Agreement pursuant to the foregoing. The Company will not be entitled to so
terminate the Merger Agreement if Parent shall (i) have paid any amount payable
under the terms described above in clause (a) under "Financing" and (ii) have
notified the Company in writing prior to the Financing Termination Time of its
determination to extend the Financing Termination Time to 5:00 p.m. (New York
City time) on October 31, 1999 (the "Extended Financing Termination Time"); or
(x) by the Company at any time after the Extended Financing Termination
Time, if Parent has extended the Financing Termination Time to the Extended
Financing Termination Time and Parent has not irrevocably waived in writing the
Financing Condition prior to the Extended Financing Termination Time; provided
that not less than two business days prior to such termination, the Company
shall have notified Purchaser of its intention to terminate the Merger Agreement
pursuant to the foregoing. However, the Company will not be entitled to
terminate the Merger Agreement pursuant to the foregoing
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if (a) Parent shall (1) have paid any amount payable under the terms described
above in clause (b) under "Financing" and (2) have irrevocably waived the
Financing Condition prior to such termination by the Company or (b) Net Debt as
of the Extended Financing Termination Time is greater than $250 million.
The Merger Agreement provides that the Company will pay the Parent Fee (as
defined below), plus (x) actual, documented and reasonable out-of-pocket
expenses of Parent not in excess of $1,500,000 relating to the Transactions
(including, but not limited to, fees and expenses of counsel) and (y) after
Parent has entered into one or more definitive agreements with respect to the
Financing, actual, documented and reasonable out-of-pocket expenses of Parent
not in excess of $1,500,000 relating to or incurred in connection with the
Financing (the expenses referred to in clauses (x) and (y) collectively, the
"Expense Amount"), such Parent Fee and Expense Amount to be paid upon the
earliest to occur of the following events:
(A) the termination of the Merger Agreement by Parent pursuant to paragraph
(iv), (v)(a), (v)(b)(1) or (viii) above; or
(B) the termination of the Merger Agreement by Parent or the Company
pursuant to paragraph (iii) above if at the time of termination there has been
publicly announced and not withdrawn an Acquisition Proposal and the Company
Board has withdrawn, modified or changed in a manner adverse to Parent or
Purchaser (including by amendment of the Schedule 14D-9) its approval or
recommendation of the Merger Agreement, the Offer or the Merger or shall have
resolved to do so; or
(C) the termination of the Merger Agreement by Parent or the Company
pursuant to paragraph (iii) above if at the time of termination there has been
publicly announced and not withdrawn an Acquisition Proposal at a price per
Share at or higher than the Per Share Amount and the Company thereafter
consummates a transaction that would constitute an Acquisition Proposal with the
person making such Acquisition Proposal within fifteen months after the
termination of the Merger Agreement at a price per Share at or higher than the
Per Share Amount; or
(D) the termination of the Merger Agreement by the Company pursuant to
paragraph (vi) above.
The "Parent Fee" is $10.0 million, except that such fee will be $5.0 million
unless (i) Parent has irrevocably waived the Financing Condition prior to the
earlier of giving any notice by the Company of an intention to terminate or
actual termination by the Company as described above or prior to any occurrence,
action or event giving rise to Parent's right to terminate as described above or
(ii) Parent has paid the $5.0 million fee that would be payable if the Financing
Condition has not been waived prior to July 30, 1999 under "Financing."
The Merger Agreement provides that the provision thereof relating to the
Parent Fee will survive the termination of the Merger Agreement.
EXPENSES. The Merger Agreement provides that the Surviving Corporation will
pay all charges and expenses, including those of the Paying Agent (as defined in
the Merger Agreement), in connection with the Merger. Except for the Parent Fee
described below, whether or not the Merger is consummated, all other costs and
expenses incurred in connection with the Merger Agreement and the Transactions
will be paid by the party incurring such expense, except that expenses incurred
in connection with the filing fee for the information statement to be mailed to
Stockholders in connection with the Merger and printing and mailing the
information statement will be shared equally by Parent and the Company.
AMENDMENT. The Merger Agreement further provides that, subject to its
provisions relating to the approval by the Independent Directors and applicable
law, the Merger Agreement may be amended by the parties by action taken by or on
behalf of their respective boards of directors at any time prior to the
Effective Time; except that, after approval and adoption of the Merger Agreement
by the Stockholders, no amendment may be made which by law requires further
approval by such Stockholders without such further approval. The Merger
Agreement may not be amended except by an instrument in writing signed by the
parties thereto.
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ASSIGNMENT. The Merger Agreement may not be assigned by operation of law or
otherwise without the prior written consent of the other parties hereto, except
that Parent may designate, by written notice to the Company, another wholly
owned direct or indirect subsidiary to be a constituent corporation in the
Merger in lieu of Purchaser, in the event of which all references therein to
Purchaser will be deemed references to such other subsidiary, except that all
representations and warranties made therein with respect to Purchaser as of the
date of the Merger Agreement will be deemed representations and warranties made
with respect to such other subsidiary as of the date of such designation.
GOVERNING LAW AND CONSENT TO JURISDICTION. The Merger Agreement will be
governed by the internal laws of the State of Delaware, without regard to the
conflict of law principles thereof. Each party to the Merger Agreement has
consented to the jurisdiction of the courts of the State of Delaware and the
federal courts of the United States located in the State of Delaware.
CONFIDENTIALITY AND STANDSTILL AGREEMENTS.
The Company and Parent entered into Confidentiality and Standstill
Agreements ("C/A's") pursuant to which they agreed to furnish to each other
certain confidential non-public information in contemplation of a possible
business combination and they agreed that such information would be kept
confidential and would not be used in any way detrimental to the other party.
Parent and the Company agreed in the C/A's that until April 1, 2001, unless the
other party's board of directors would otherwise request in writing in advance,
the Company and Parent will not, and will cause its representatives and
affiliates not to (i) acquire or offer to acquire, seek, propose or agree to
acquire, by means of a purchase agreement, business combination or in any other
manner, beneficial ownership of any securities or assets of the other party,
(ii) seek or propose to influence, advise, change or control the management,
board of directors, governing instruments or policies or affairs of the other
party, or (iii) make any public disclosure, or take any action which could
require the other party to make any public disclosure, with respect to any of
the matters set forth in the Confidentiality and Standstill Agreements. The
parties further agreed that neither will, directly or indirectly, solicit any
customers or supplier of the other party's business or hire or seek to hire any
employees of the other party until April 1, 2001. Parent and the Company agreed
that, in the event of a breach of either Confidentiality and Standstill
Agreement, the non-breaching party will be entitled to equitable relief. The
Merger Agreement amends these "standstill" provisions of the Company C/A so that
Parent and its affiliates and representatives may take any action described in
the preceding sentence that (i) involves a transaction pursuant to which Parent
offers to acquire all of the Shares at not less than $13.00 per Share or (ii) at
any time following (a) the commencement or public proposal to make a tender
offer or exchange offer for some portion or all of the Shares (other than by
Parent or any of its subsidiaries), (b) the public disclosure (or Parent
learning) that any person or "group" (as defined in Section 13(d)(3) of the
Exchange Act) has acquired beneficial ownership (determined pursuant to Rule
13d-3 promulgated under the Exchange Act) of more than 15% of the outstanding
Shares and (c) the purchase of Shares in the Offer.
12. DIVIDENDS AND DISTRIBUTIONS
The Merger Agreement provides that if, between the date of the Merger
Agreement and the Effective Time, the outstanding Shares are changed into a
different number of shares or a different class by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, the Merger Consideration will be correspondingly adjusted on a per
share basis to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
The Merger Agreement further provides that, during the period from the date
of the Merger Agreement and continuing until the earliest to occur of (i) the
termination of the Merger Agreement, (ii) the time the designees of the Parent
constitute a majority of the Company Board and (iii) the Effective Time, neither
the Company nor any of its subsidiaries will (x) declare, set aside, make or pay
any dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of any of
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its capital stock, except that a wholly owned subsidiary of the Company may
declare and pay a dividend to its parent, (y) split, combine or reclassify any
of its outstanding capital stock or issue or authorize or propose the issuance
of any other securities in respect of, in lieu of or in substitution for shares
of its capital stock, or (z) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any subsidiary to repurchase, redeem or otherwise acquire,
any of its securities or any securities of its subsidiaries, or propose to do
any of the foregoing, except in connection with the repurchase of Options and
Stock Units as contemplated by the Merger Agreement.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the preceding paragraph. Nothing in
this Offer To Purchase shall constitute a waiver by Purchaser or Parent of any
of its rights under the Merger Agreement or a limitation of remedies available
to Purchaser or Parent for any breach of the Merger Agreement, including
termination of the Merger Agreement.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION, AND MARGIN SECURITIES.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of holders
of Shares, both of which could adversely affect the liquidity and market value
of the remaining Shares held by Stockholders other than Purchaser. Purchaser
cannot predict whether the reduction in the number of Shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the Shares or whether such reduction
would cause future market prices to be greater or less than the Per Share
Amount.
STOCK EXCHANGE LISTING. Depending upon the number of Shares purchased
pursuant to the Offer, the Shares may no longer meet the requirements of the
NYSE for continued listing and may, therefore, be delisted from the NYSE.
According to the NYSE's published guidelines, the NYSE would consider delisting
the Shares if, among other things, (i) the total number of round lot
Stockholders should fall below 400, (or 1,200 if the average monthly trading
volume for the most recent 12 months is less than 100,000 Shares), (ii) the
number of publicly held Shares (exclusive of holdings of officer and directors
of the Company and their immediate families and other concentrated holdings of
10 percent or more (the "Excluded Holdings")) should fall below 600,000, or
(iii) the aggregate market value of the publicly held Shares (exclusive of the
Excluded Holdings) should fall below $8,000,000. In the event that the Shares
are no longer listed for quotation on the NYSE, it is possible that the Shares
would continue to trade in the over-the-counter market and that price quotations
would be reported by other sources. The public market for the Shares and the
availability of such quotations would, however, depend on the number of
Stockholders remaining at such time, the interest in maintaining a market for
the Shares on the part of securities firms, the possible termination of
registration of the Shares under the Exchange Act, as described below, and other
factors. If, as a result of the purchase of Shares pursuant to the Offer, the
Shares no longer meet the requirements of the NYSE for continued listing and the
listing of Shares is discontinued, the market for the Shares will be adversely
affected.
The Company has advised Purchaser that, as of July 1, 1999, there were
12,405,129 Shares issued and outstanding. Purchaser intends to cause the Company
to seek to delist the Shares if it acquires control of the Company.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange and there are fewer than 300 record holders of the Shares. The
termination of the registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
holders of Shares and to the Commission and would make certain of the provisions
of the Exchange Act, such as the short-swing profit recovery provisions of
Section 16(b) and the requirement of furnishing a proxy statement in connection
with Stockholders' meetings pursuant to Section 14(a), no longer applicable to
the Shares. Furthermore, if the
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Shares are no longer registered under the Exchange Act, the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions would
no longer be applicable to the Company. In addition, "affiliates" of the Company
and persons holding "restricted securities" of the Company may be deprived of
the ability to dispose of such securities pursuant to Rule 144 promulgated under
the Securities Act of 1933, as amended. Purchaser believes that the purchase of
the Shares pursuant to the Offer may result in the Shares becoming eligible for
termination of registration under the Exchange Act, and it is the intention of
Purchaser to cause the Company to make an application for termination of
registration of the Shares as soon as possible after successful completion of
the Offer if the Shares are then eligible for such termination.
MARGIN REGULATIONS. The Shares are currently "margin securities," as such
term is defined under the rules of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), which has the effect, among other things,
of allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, following the Offer, it is possible that the Shares might no
longer constitute "margin securities" for the purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as collateral
for loans made by brokers.
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be "margin securities." Purchaser intends to seek to
cause the Company to terminate the registration of the Shares under the Exchange
Act as soon after consummation of the Offer as the requirements for termination
of the registration of the Shares are met.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer and subject to (and not in
limitation of) Purchaser's rights or obligations with respect to extending and
amending the Offer pursuant to the terms of the Merger Agreement, Purchaser will
not be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
payment for, any tendered Shares, and subject to the terms of the Merger
Agreement, may amend or terminate the Offer, if (i) any applicable waiting
period under the HSR Act or any applicable laws regulating competition,
antitrust, investment or exchange controls in Germany and Mexico shall not have
expired or not have been terminated prior to the expiration of the Offer, (ii)
the Minimum Condition shall not have been satisfied or waived (pursuant to the
Merger Agreement) prior to the expiration of the Offer, or (iii) at any time on
or after the date of the Merger Agreement and before the time of acceptance of
Shares for payment pursuant to the Offer, any of the following events shall have
occurred and be continuing:
(A) there shall have been entered any judgment, order or injunction
applicable to Parent, Purchaser, the Company or any subsidiary or affiliate of
Parent or the Company, or to the Offer or the Merger, by any United States,
state or foreign governmental, administrative or regulatory authority,
commission, body, agency or other authority, or any court of competent
jurisdiction (each, a "Governmental Entity") that (i) makes illegal or otherwise
directly or indirectly restrains or prohibits the acceptance for payment of, or
payment for, some or all of the Shares by Purchaser or any of its affiliates or
the consummation of the Merger, (ii) renders Purchaser unable to accept for
payment, pay for or purchase some or all of the Shares pursuant to the Offer,
(iii) imposes limitations on the ability of Parent, Purchaser or any other
affiliate of Parent effectively to exercise full rights of ownership of any
Shares, including, without limitation, the right to vote any Shares acquired by
it pursuant to the Offer or otherwise on all matters properly presented to the
Stockholders, including, without limitation, the approval and adoption of the
Merger Agreement and the Merger, (iv) prohibits, limits or otherwise materially
adversely affects the ownership or operation by Parent or any of its
subsidiaries of all or any portion of the business or assets of the Company,
Parent or any of their respective subsidiaries or in the alternative compels the
Company, Parent or any of their
34
<PAGE>
respective subsidiaries to sell or otherwise dispose of, or hold separate or
otherwise divest itself of, all or any portion of the business or assets of the
Company, Parent or any of their respective subsidiaries located in the United
States or Canada, but only if in each case such businesses or assets accounted
for, individually or in the aggregate, revenues of the Company or Parent, as the
case may be, for the year ended December 31, 1998, as set forth in the
respective audited financial statements for the period then ending for Parent or
the Company in excess of the Revenue Amount, or (v) which otherwise would
materially adversely affect the ability of the Company or Parent to consummate
the Offer or the Merger or to perform any of their respective obligations under
the Merger Agreement; or
(B) there shall have been (i) any statute, rule, regulation, executive
order, decree, legislation or interpretation enacted, entered, enforced,
promulgated, amended, issued or deemed applicable by any Governmental Entity to
(x) Parent, the Company or any subsidiary or affiliate of Parent or the Company
or (y) the Offer or the Merger, or (ii) any action, suit or proceeding initiated
by any Governmental Entity, other than the application to the Offer or the
Merger of the applicable waiting periods under the HSR Act or any applicable
non-United States laws regulating competition, antitrust, investment or exchange
controls, that would result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (A) above; or
(C) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the NYSE for a period in excess of 24
hours (excluding suspensions or limitations resulting solely from physical
damage or interference with the NYSE not related to market conditions or
suspensions or limitations triggered on the NYSE by price fluctuations on a
single trading day) (ii) a declaration of a banking moratorium or any suspension
of or material limitation on payments in respect of banks or other lending
institutions by U.S., Austrian, European Community or New York authorities or
any suspension or material limitation on the extension of credit (whether or not
mandatory), (iii) a commencement of a war, insurrection, armed conflict or other
international or national crisis other than the current hostilities in Iraq or
Eastern Europe, or (iv) in the case of any of the foregoing existing at the time
of the commencement of the Offer, a material acceleration or worsening thereof
not contemplated as of the date of the Merger Agreement; or
(D) there shall have occurred any change or effect that, individually or
when taken together with all other such changes or effects, is or is reasonably
likely to be materially adverse to the business, results of operations or
financial condition of the Company and its subsidiaries, taken as a whole; or
(E) the Company Board or any committee thereof shall have (i) withdrawn or
modified in a manner adverse to Parent or Purchaser (including by amendment of
the Schedule 14D-9) its approval or recommendation of the Merger Agreement, the
Offer or the Merger, (ii) recommended or taken a "neutral" position (except in
connection with the determination by the Company Board in good faith (based on
the advice of its financial advisor) that an Acquisition Proposal would, if
consummated, result in a more favorable transaction than the Offer and the
Merger) with respect to the approval or acceptance of an Acquisition Proposal
(as defined in Item 11) from, or similar business combination with, a person or
entity other than Parent, Purchaser or their affiliates, (iii) taken any action
referred to in Section 6.02 of the Merger Agreement that is prohibited thereby,
or (iv) publicly disclosed any intention, or resolved to do, any of the
foregoing; or
(F) any of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified as to Company Material Adverse Effect
(as defined in the Merger Agreement) shall not be true and correct and any such
representations and warranties that are not so qualified shall (i) not be true
and correct and (ii) be reasonably likely to result in a Company Material
Adverse Effect, in each case as if such representations and warranties were made
at a time of such determination; or
(G) the Company shall have breached any material agreement or covenant or
failed to perform any material obligation to be complied with or performed by it
under the Merger Agreement; or
35
<PAGE>
(H) all consents necessary to the consummation of the Offer or the Merger,
including, without limitation, consents from parties to loans, contracts, leases
or other agreements to which the Company or any of its subsidiaries is subject,
and consents from Governmental Entities, shall not have been obtained, other
than consents the failure to obtain which is not reasonably likely to have a
Company Material Adverse Effect; or
(I) the Merger Agreement shall have been terminated in accordance with its
terms; or
(J) the Financing shall not be available to Parent and Purchaser on terms
reasonably satisfactory to Parent given the structure of the Financing
contemplated for the Transactions, including, without limitation, the financing
contemplated to be arranged by Parent.
The foregoing conditions are for the sole benefit of Parent and Purchaser,
and may (subject to the terms of the Merger Agreement) be asserted or waived by
Parent or Purchaser, in whole or in part, regardless of the circumstances
(including any action or inaction by Parent or Purchaser) at any time and from
time to time in the good faith discretion of Parent or Purchaser; except that
nothing contained in the Merger Agreement will relieve Parent or Purchaser of
its obligations thereunder. The failure by Parent or Purchaser at any time to
exercise any of the foregoing rights will not be deemed a waiver of any such
right and each such right will be deemed an ongoing right which may be asserted
at any time and from time to time.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, but without any independent
investigation, neither Purchaser nor Parent is aware of any license or
regulatory permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by
Purchaser's acquisition of Shares as contemplated in this Offer To Purchase.
Purchaser and Parent presently contemplate that any necessary approval, or other
action required to be taken, will be sought or taken, as the case may be, except
as described below under "State Takeover Laws." While Purchaser does not
presently intend to delay the acceptance for payment of or payment for Shares
tendered pursuant to the Offer pending the outcome of any such matter, except as
otherwise expressly described in this Section 15, there can be no assurance that
any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to obtain any such
approval or other action might not result in consequences adverse to the
Company's business or that certain parts of the Company's business might not
have to be disposed of if such approvals were not obtained or other actions were
not taken or in order to obtain any such approval or other action. If certain
types of adverse action are taken with respect to the matters discussed below,
Purchaser could decline to accept for payment or pay for any Shares tendered.
See Section 14 above for certain conditions to the Offer.
STATE TAKEOVER LAWS. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in those states.
In EDGAR V. MITE CORP., the Supreme Court of the United States invalidated on
constitutional grounds the Illinois Business Takeover Act, which, as a matter of
state securities laws, made certain corporate acquisitions more difficult. In
CTS CORP. V. DYNAMICS CORP. OF AMERICA, however, the Supreme Court of the United
States held that a state may, as a matter of corporate law and, in particular,
those laws concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
prior approval of the remaining stockholders, provided that the laws were
applicable only under certain conditions. Subsequently, a number of Federal
courts ruled that various state takeover statutes were unconstitutional insofar
as they apply to corporations incorporated outside the state of enactment.
36
<PAGE>
Based on information supplied by the Company and the Company's
representations in the Merger Agreement, Purchaser does not believe that any
other state takeover statutes apply to the Offer or the Merger. Purchaser
reserves the right to challenge the applicability or validity of any state law
purportedly applicable to the Offer or the Merger, and nothing in this Offer To
Purchase or any action taken in connection with the Offer or the Merger is
intended as a waiver of that right. If it is asserted that any state takeover
statute is applicable to the Offer or the Merger and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer or the
Merger, Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and Purchaser might be
unable to accept for payment or pay for Shares tendered pursuant to the Offer or
be delayed in consummating the Offer or the Merger. In such case, Purchaser may
not be obligated to accept for payment or pay for any Shares tendered pursuant
to the Offer.
APPRAISAL RIGHTS. No appraisal rights are available to Stockholders in
connection with the Offer. However, if the Merger is consummated, a Stockholder
will have certain rights under Section 262 of the DGCL to dissent and demand
appraisal of, and payment in cash for the fair value of, that Stockholder's
Shares. Those rights, if the statutory procedures are complied with, could lead
to a judicial determination of the fair value (excluding any value arising from
the Merger) required to be paid in cash to dissenting Stockholders for their
Shares. Any judicial determination of the fair value of Shares could be based
upon considerations other than or in addition to the Merger Consideration and
the market value of the Shares, including asset values and the investment value
of the Shares. The value so determined could be more or less than the Merger
Consideration.
If a Stockholder who demands appraisal under Section 262 of the DGCL fails
to perfect, or effectively withdraws or loses, his or her right to appraisal as
provided in the DGCL, the Shares of that Stockholder will be converted into the
right to receive the Merger Consideration in accordance with the Merger
Agreement. A Stockholder may withdraw his demand for appraisal by delivering to
Purchaser a written withdrawal of such demand for appraisal and acceptance of
the Merger.
Failure to precisely follow the steps required by Section 262 of the DGCL
for the perfection of appraisal rights may result in the loss of those rights.
GOING PRIVATE TRANSACTIONS. Rule 13e-3 under the Exchange Act is applicable
to certain "going-private" transactions. Purchaser does not believe that Rule
13e-3 will be applicable to the Merger, unless, among other things, the Merger
is completed more than one year after termination of the Offer. If applicable,
Rule 13e-3 would require, among other things, that certain financial information
regarding the Company and certain information regarding the fairness of the
Merger and the consideration offered to minority Stockholders be filed with the
Commission and disclosed to minority Stockholders prior to consummation of the
Merger.
ANTITRUST. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
of a 15 calendar day waiting period following the filing by Purchaser of a
Notification and Report Form with respect to the Offer, unless Purchaser
receives a request for additional information or documentary material from the
Antitrust Division or the FTC or unless early termination of the waiting period
is granted. As of the date of this Offer To Purchase, it was expected that such
filing would be made on or about July 19, 1999 and such waiting period would
expire at 11:59 p.m. on or about August 3, 1999. If, within the initial 15-day
waiting period, either the Antitrust Division or the FTC requests additional
information or documentary material from Purchaser concerning the Offer, the
waiting period will be extended and would expire at 11:59 p.m., New York City
time, on the tenth calendar day after the date of substantial compliance by
Purchaser with such request. Only one extension of the waiting period pursuant
to a request for additional information is authorized by the HSR Act.
Thereafter, the waiting period may be extended only by court order or with the
consent of Purchaser. In practice, complying with a request for additional
information or documentary material can take a significant amount of time. In
addition, if the Antitrust Division or the FTC raises substantive issues in
37
<PAGE>
connection with a proposed transaction, the parties frequently engage in
negotiations with the relevant governmental agency concerning possible means of
addressing those issues and may agree to delay consummation of the transaction
while the negotiations continue. For information regarding the obligations of
the Company, Parent and Purchaser in this regard, see "Purpose of the Offer and
the Merger; Plan for the Company; and the Merger Agreement--The Merger
Agreement--Consents, Approvals and Filings" in Section 11.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of the Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by Purchaser or the divestiture of substantial assets of Purchaser or
its subsidiaries, or the Company or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. There
can be no assurance that a challenge to the Offer on antitrust grounds will not
be made or, if such a challenge is made, of the result of that challenge. See
Section 14 for certain conditions to the Offer, including conditions with
respect to antitrust matters.
The Company has informed Purchaser that the Company conducts certain
operations in Germany. The Transactions are subject to the German Act Against
Restraints of Competition (the "AARC") and the Transactions constitute a merger
subject to merger control by the FCO. Because Parent conducts certain operations
in Germany and because certain financial tests are met, the FCO must be notified
prior to its completion. The appropriate filing is expected to be submitted to
the FCO within the two weeks following the date of this Offer To Purchase. Under
the AARC, the substantive test for clearance is whether the notified merger will
create or strengthen a dominant market position and, if so, whether any such
dominance is likely to be outweighed by any countervailing competitive benefits
from the Merger. After filing the pre-merger notification, completion of the
proposed acquisition will need to be suspended until either (i) the applicable
waiting periods under the AARC have expired without the FCO having prohibited
the acquisition or (ii) the FCO has notified the parties that the conditions for
prohibiting the proposed acquisition are not fulfilled.
The Company has also informed Purchaser that the Company conducts certain
operations in Mexico. The Transactions would therefore be subject to the Federal
Law on Economic Competition (the "FLEC") pursuant to Articles 3 and 16 of the
FLEC and the Transactions constitute a merger subject to merger control by the
Mexican Federal Competition Commission (the "MFCC") pursuant to Article 20 of
the FLEC. A notification must be filed with the MFCC in connection with the
Transactions before consummation of the Transactions in Mexico (Article 17 of
the FLEC's Internal Regulations). The Merger may be consummated after filing the
necessary notification but it is subject to the final ruling to be issued by the
MFCC. Under the FLEC, the substantive test for a non-challenging or conditioning
resolution is whether the notified merger diminishes, damages, or impedes the
competition process by granting power to the acquiror to unilaterally fix prices
or to substantially restrict output in the relevant market, by displacing other
economic agents out of the market or impeding access to the relevant market, and
by substantially allowing parties to incur in monopolistic practices. Once the
notification is filed, the MFCC has 45 calendar days from the date the
notification is filed or the date in which additional information requested by
the MFCC is filed, to issue a final ruling in the case. This period may be
extended for an additional 60 calendar days if the transaction in question
requires additional analysis or review by the MFCC.
16. FEES AND EXPENSES
Deutsche Bank Securities Inc. is acting as Dealer Manager in connection with
the Offer, and affiliates of Deutsche Bank Securities Inc., Deutsche Banc Alex.
Brown and Deutsche Bank AG (together with Deutsche Bank Securities Inc.,
"Deutsche Bank") are providing certain financial advisory services to Purchaser
and Parent in connection with the Offer and the Merger. Pursuant to an
engagement letter
38
<PAGE>
dated May 18, 1999 between Parent and Deutsche Bank, and a Dealer Manager
Agreement dated July 16, 1999 between Parent, Purchaser and Deutsche Bank
Securities Inc. Parent will pay Deutsche Bank customary compensation for its
financial advisory services in connection with the Offer and the Merger. If the
Merger Agreement is terminated and Parent or Purchaser receives a termination
fee as a result of such termination, a fee equal to 20% of such termination fee
will be payable to Deutsche Bank. Parent has also agreed to reimburse Deutsche
Bank for the reasonable fees and disbursements of Deutsche Bank's counsel and
for Deutsche Bank's reasonable travel and other out-of-pocket expenses incurred
in connection with its engagement and to indemnify Deutsche Bank and certain
related persons against certain liabilities and expenses.
In the ordinary course of its business, Deutsche Bank engages in securities
trading, market-making and brokerage activities and may, at any time, hold long
or short positions and may trade or otherwise effect transactions in securities
of the Company or Parent.
Purchaser and Parent have retained Morrow & Co., Inc. to act as the
Information Agent and The Bank of New York to serve as the Depositary in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services, be reimbursed
for certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
and expenses under the Federal securities laws.
Except as set forth above, neither Purchaser nor Parent will pay any fees or
commission to any broker or dealer or other person in connection with the
solicitation of tenders of Shares pursuant to the Offer. Brokers, dealers, banks
and trust companies will be reimbursed by Purchaser upon request for customary
mailing and handling expenses incurred by them in forwarding material to their
customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) Stockholders residing in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities,
blue sky or other laws of the jurisdiction. However, Purchaser may, in its
discretion, take such action as it may deem necessary to make the Offer in any
jurisdiction and extend the Offer to Stockholders in that jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer will be deemed to be made on
behalf of Purchaser by one or more registered brokers or dealers that are
licensed under the laws of the jurisdiction.
Purchaser has filed with the Commission the Schedule 14D-1 pursuant to Rule
14d-1 under the Exchange Act containing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments to the Schedule
14D-1, including exhibits, may be examined and copies may be obtained from the
principal office of the Commission in the manner set forth in Section 7 above
(except that they will not be available at the regional offices of the
Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR PARENT NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, THE INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Neither the delivery of the Offer To Purchase nor any purchase pursuant to
the Offer will under any circumstances create any implication that there has
been no change in the affairs of Parent, Purchaser, the Company or any of their
respective subsidiaries since the date as of which information is furnished or
the date of this Offer To Purchase.
39
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND PARENT
A. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The directors of Purchaser are Georg Obermeier and Jakob Mosser. The
executive officers of Purchaser are Georg Obermeier, Jakob Mosser and John
Stratman. Each of the directors and executive officers of Purchaser other than
John Stratman is also an executive officer of Parent. Information concerning the
name, present principal occupation or employment and material occupation,
positions, offices or employment for the past five years of each director and
executive officer of Purchaser who is an executive officer of Parent is set
forth in the table of the directors and executive officers of Parent. Such
information is set forth below for John Stratman.
<TABLE>
<CAPTION>
AGE PRESENT PRINCIPAL
AS OF OCCUPATION OR PERIOD
NAME AND ADDRESS JULY 1, 1999 CITIZENSHIP EMPLOYMENT HISTORY SERVED
- ---------------------------------- --------------- -------------- ---------------------------------- ------------
<S> <C> <C> <C> <C>
John Stratman 40 U.S.A. Secretary and Treasurer of Since June
1228 Euclid Avenue Purchaser 1999
Cleveland, Ohio 44115 General Counsel and Secretary of Since
NARCO November
1997
Associate General Counsel of July 1989-
Wheeling-Pittsburgh Steel Corp. October 1997
</TABLE>
B. MEMBERS OF THE SUPERVISORY BOARD AND THE MANAGEMENT BOARD OF PARENT
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employment for the
past five years of each director and executive officer of Parent and Purchaser.
Unless otherwise indicated below, (i) each individual has held his or her
positions for more than the past five years and (ii) the business address of
each person is Mommsengasse 35, A-1040, Vienna, Austria 43-1-50213-123. Members
of the Supervisory Board are identified with a single asterisk.
<TABLE>
<CAPTION>
AGE
AS OF PRESENT PRINCIPAL OCCUPATION OR PERIOD
NAME AND ADDRESS JULY 1, 1999 CITIZENSHIP EMPLOYMENT HISTORY SERVED
- ------------------------------- --------------- -------------- ------------------------------- ------------------
<S> <C> <C> <C> <C>
* Walter Ressler 67 Austria Chairman of the Supervisory Since July 1999
Blaasstrasse 21-23 Board of Parent
1190 Vienna
Chief Executive Officer and July 1995-June
Chairman of the Management 1999
Board of Parent
Deputy Chief Executive Officer Until June 1995
and Vice Chairman of Management
Board of Parent
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
AGE
AS OF PRESENT PRINCIPAL OCCUPATION OR PERIOD
NAME AND ADDRESS JULY 1, 1999 CITIZENSHIP EMPLOYMENT HISTORY SERVED
- ------------------------------- --------------- -------------- ------------------------------- ------------------
<S> <C> <C> <C> <C>
* Freidrich Nemec 66 Austria Deputy Chairman of the Since July
Prehausegassse GS Supervisory Board of Parent 1999
A 1130 Wien
Chairman of the Supervisory Until June
Board of Parent 1999
Chief Executive Officer of Until
Veitsch-Radex GmbH December
1994
* Maximilian Ardelt 59 Germany Member of the Management
VIAG AG Board of VIAG AG
Nymphenberger Str. 37
D-80325 Munich
Germany
* Erich Hampel 48 Austria Chairman of the Supervisory Since
Creditanstalt AG Board of Creditanstalt AG February
Schottengasse 6 1997
1010 Vienna
Austria
Governor of Osterreichiche February
Postsparkasse 1996-January
1997
Deputy Governor of January
Osterreichiche 1985-February
Postsparkasse 1996
*Gerd Peskes 54 German Managing Director of Gerd
Inselstrasse 20 Reskes GmbH
40479 Dusseldorf
Germany
* Erhard Schaschl 56 Austria Chief Executive Officer of
Anastasius-grun-Gasse 49 Wienerberger
1180 Vienna, Austria Baustoffindustrie AG
* Max Deitcher 78 Canada Self-employed as an
c/o #2 Westmont Square, International Trade
Apt. 1701 Consultant
Montreal, Quebec H3Z254
Canada
* Andreas Treichl 47 Austria Chief Executive Officer of Since
Metternichgasse 10/8 Easte Bank September
Vienna 1030 1997
Austria
Member of the Board of October
Easte Bank 1994-September
1997
Chief Executive Officer of April
Credit Lyonnais 1993-September
1994
* Georg Eder 52 Austria Employee representative of
ALL Schlossfeld 99 Osterreichiche-Heraklith
9911 Paterhorn GmbH
Austria
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
AGE
AS OF PRESENT PRINCIPAL OCCUPATION OR PERIOD
NAME AND ADDRESS JULY 1, 1999 CITIZENSHIP EMPLOYMENT HISTORY SERVED
- ------------------------------- --------------- -------------- ------------------------------- ------------------
<S> <C> <C> <C> <C>
* Josef Horn 51 Austria Chairman of European
Veitsch-Radex GmbH Workers Counsel of Veitsch-
PO 22 Radex GmbH
A-8784 Trieben
Austria
* Leopold Miedl 53 Austria Chairman of the Workers
Council Managers Technical
Service of Parent
* Karl Prettner 53 Austria Chairman of the Employees
Veitsch-Radex GmbH Works Counsel of Veitsch-
9545 Rodenthein Radex GmbH
Austria
Georg Obermeier 58 Germany Chairman of the Management Since July
Board and Chief Executive 1999
Officer
Chairman of Management August
Board of VIAG AG 1995-June
1998
Member of the Management November
Board 1989-July
1995
Jakob Mosser 38 Austria Member of the Management January
1228 Euclid Avenue Board of Parent 1999
Cleveland, Ohio 44115-1809
Chief Executive Officer and Since
President of NARCO January
1997
Director of Research and Until
Development of Veitsch- December
Radex GmbH 1996
Andreas Meier 36 Austrian Member of the Management Since
Proless 354 Board of Parent January
A-8712 Niklasdorf 1999
Member of the Management Since
Board of Veitsch-Radex GmbH January
1999
Director of Marketing and Since June
Logistics of Veitsch-Radex 1985
GmbH
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
AGE PRESENT PRINCIPAL
AS OF OCCUPATION OR EMPLOYMENT PERIOD
NAME AND ADDRESS JULY 1, 1999 CITIZENSHIP HISTORY SERVED
- --------------------------- --------------- ----------- --------------------------- ----------
<S> <C> <C> <C> <C> <C>
Roland Platzer 48 Austria Chief Financial Officer and Since January 1999
Member of Management Board of
Parent
Chief Financial Officer of January
Heraklith AG 1993-December 1998
Rudolf Kanzi 66 Austria Member of the Management Board Since January 1999
of Parent
Chairman of the Management July 1994-
Board of Heraklith AG December 1998
</TABLE>
I-4
<PAGE>
ANNEX A
RHI AG
AUDITED CONSOLIDATED ACCOUNTS FOR THE
YEAR ENDED DECEMBER 31, 1998
A-1
<PAGE>
CONSOLIDATED BALANCE SHEET 1998
(IN ATS MILLION)
<TABLE>
<CAPTION>
31.12.1998 31.12.1998 31.12.1997 31.12.1997
ATS M. % ATS M. %
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
FIXED ASSETS
Intangible assets................................................. 146 0.8% 118 0.7%
Property, plant and equipment..................................... 6,866 37.8% 6,845 39.6%
Financial assets.................................................. 1,112 6.1% 999 5.8%
----------- ----- ----------- -----
8,124 44.8% 7,962 46.0%
----------- ----- ----------- -----
CURRENT ASSETS
Inventories....................................................... 4,076 22.5% 4,068 23.5%
Receivables and other assets
Trade receivables............................................... 3,640 20.1% 3,741 21.6%
Other receivables and assets.................................... 1,542 8.5% 1,018 5.9%
----------- ----- ----------- -----
5,182 28.6% 4,759 27.5%
----------- ----- ----------- -----
Securities and interests.......................................... 36 0.2% 26 0.2%
Cash and cash equivalents......................................... 603 3.3% 353 2.0%
----------- ----- ----------- -----
9,897 54.5% 9,206 53.2%
----------- ----- ----------- -----
Prepaid expenses and deferred charges............................. 127 0.7% 122 0.7%
----------- ----- ----------- -----
18,148 100.0% 17,290 100.0%
----------- ----- ----------- -----
----------- ----- ----------- -----
STOCKHOLDERS' EQUITY AND LIABILITIES
STOCKHOLDERS' EQUITY
Common stock...................................................... 1,392 7.9% 1,392 8.1%
Group reserves.................................................... 571 3.1% 493 2.9%
Net income after minorities....................................... 680 3.7% 682 3.9%
Minority interests................................................ 763 4.2% 780 4.5%
----------- ----- ----------- -----
3,406 18.8% 3,347 19.4%
----------- ----- ----------- -----
ACCRUALS
Accruals for severance payments and pensions...................... 4,343 23.9% 4,272 24.7%
----------- ----- ----------- -----
Other accruals.................................................... 2,534 14.0% 2,521 14.6%
----------- ----- ----------- -----
6,877 37.9% 6,793 39.3%
----------- ----- ----------- -----
PAYABLES
Financial payables................................................ 4,269 23.5% 3,659 21.2%
Trade payables.................................................... 1,934 10.7% 1,988 11.5%
Other payables.................................................... 1,628 9.0% 1,488 8.6%
----------- ----- ----------- -----
7,831 43.2% 7,135 41.3%
----------- ----- ----------- -----
DEFERRED INCOME................................................... 34 0.2% 15 0.1%
----------- ----- ----------- -----
18,148 100.0% 17,290 100.0%
----------- ----- ----------- -----
Contingent liabilities............................................ 1,126 6.2% 1,070 6.2%
----------- ----- ----------- -----
----------- ----- ----------- -----
</TABLE>
A-2
<PAGE>
CONSOLIDATED BALANCE SHEET 1998
(IN EUR MILLION)
<TABLE>
<CAPTION>
31.12.1998 31.12.1998 31.12.1997 31.12.1997
EUR M. % EUR M. %
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
FIXED ASSETS
Intangible assets................................................. 10.6 0.8% 8.6 0.7%
Property, plant and equipment..................................... 499.0 37.8% 497.4 39.6%
Financial assets.................................................. 80.8 6.1% 72.6 5.8%
----------- ----- ----------- -----
590.4 44.8% 578.6 46.0%
----------- ----- ----------- -----
CURRENT ASSETS
Inventories....................................................... 296.2 22.5% 295.6 23.5%
Receivables and other assets
Trade receivables............................................... 264.5 20.1% 271.9 21.6%
Other receivables and assets.................................... 112.1 8.5% 74.0 5.9%
----------- ----- ----------- -----
376.6 28.6% 345.9 27.5%
----------- ----- ----------- -----
Securities and interests.......................................... 2.6 0.2% 1.9 0.2%
Cash and cash equivalents......................................... 43.8 3.3% 25.7 2.0%
----------- ----- ----------- -----
719.2 54.5% 669.0 53.2%
----------- ----- ----------- -----
PREPAID EXPENSES AND DEFERRED CHARGES............................. 9.2 0.7% 8.9 0.7%
1,318.9 100.0% 1,256.5 100.0%
----------- ----- ----------- -----
----------- ----- ----------- -----
</TABLE>
<TABLE>
<CAPTION>
31.12.1998 31.12.1998 31.12.1997 31.12.1997
EUR M. % EUR M. %
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
STOCKHOLDERS' EQUITY AND LIABILITIES
STOCKHOLDERS' EQUITY
Common stock...................................................... 101.2 7.9% 101.2 8.1%
Group reserves.................................................... 41.5 3.1% 35.8 2.9%
Net income after minorities....................................... 49.4 3.7% 49.6 3.9%
Minority interests................................................ 55.4 4.2% 56.7 4.5%
----------- ----- ----------- -----
247.5 18.8% 243.2 19.4%
----------- ----- ----------- -----
ACCRUALS
Accruals for severance payments and pensions...................... 315.6 23.9% 310.5 24.7%
----------- ----- ----------- -----
Other accruals.................................................... 184.2 14.0% 183.2 14.6%
----------- ----- ----------- -----
499.8 37.9% 493.7 39.3%
----------- ----- ----------- -----
PAYABLES
Financial payables................................................ 310.2 23.5% 265.9 21.2%
Trade payables.................................................... 140.5 10.7% 144.5 11.5%
----------- ----- ----------- -----
Other payables.................................................... 118.3 9.0% 108.1 8.6%
----------- ----- ----------- -----
569.1 43.2% 518.5 41.3%
----------- ----- ----------- -----
DEFERRED INCOME................................................... 2.5 0.2% 1.1 0.1%
----------- ----- ----------- -----
1,318.9 100.0% 1,256.5 100.0%
----------- ----- ----------- -----
Contingent liabilities............................................ 81.8 6.2% 77.8 6.2%
----------- ----- ----------- -----
----------- ----- ----------- -----
</TABLE>
A-3
<PAGE>
INCOME STATEMENT RHI GROUP
IN ATS MILLION
<TABLE>
<CAPTION>
31. 12. 31. 12.
1998 31. 12. 1998 1997 31. 12. 1997
ATS M. % ATS M. %
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
SALES REVENUE................................................ 22,188 100.0% 21,455 100.0%
Changes in inventories and services not yet invoiced......... (260) (1.2%) 204 1.0%
Other own work capitalized................................... 88 0.4% 67 0.3%
----------- ----- ----------- -----
OPERATING PERFORMANCE........................................ 22,016 99.2% 21,726 101.3%
Other operating income....................................... 1,333 6.0% 1,053 4.9%
Cost of material and other production service................ (9,912) (44.7%) (9,587) (44.7%)
Personnel expenses........................................... (6,793) (30.6%) (6,625) (30.9%)
Depreciation and amortization................................ (913) (4.1%) (917) (4.3%)
Other operating expenses..................................... (4,616) (20.8%) (4,535) (21.1%)
OPERATING RESULT............................................. 1,115 5.0% 1,115 5.2%
----------- ----- ----------- -----
Interest result.............................................. (202) (0.9%) (204) (1.0%)
Other financial results...................................... (1) (0.0%) (25) (0.1%)
FINANCIAL RESULTS............................................ (203) (0.9%) (229) (1.1%)
----------- ----- ----------- -----
RESULT FROM ORDINARY ACTIVITIES.............................. 912 4.1% 887 4.1%
----------- ----- ----------- -----
Extraordinary expenses....................................... (103) (0.5%) 0 0.0%
----------- ----- ----------- -----
EXTRAORDINARY RESULTS........................................ (103) (0.5%) 0 0.0%
----------- ----- ----------- -----
Income taxes................................................. (69) (0.3%) (160) (0.7%)
----------- ----- ----------- -----
NET INCOME................................................... 740 3.3% 727 3.4%
----------- ----- ----------- -----
Minority interests........................................... (60) (0.3%) (45) (0.2%)
----------- ----- ----------- -----
NET INCOME AFTER MINORITIES.................................. 680 3.1% 682 3.2%
----------- ----- ----------- -----
----------- ----- ----------- -----
</TABLE>
A-4
<PAGE>
INCOME STATEMENT RHI GROUP
IN EUR MILLION
<TABLE>
<CAPTION>
31. 12. 31. 12.
1998 31. 12. 1998 1997 31. 12. 1997
EUR M. % EUR M. %
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
SALES REVENUE................................................ 1,612.5 100.0% 1,559.2 100.0%
Changes in inventories and services not yet invoiced......... (18.9) (1.2%) 14.8 1.0%
Other own work capitalized................................... 6.4 0.4% 4.9 0.3%
----------- ----- ----------- -----
OPERATING PERFORMANCE........................................ 1,600.0 99.2% 1,578.9 101.3%
Other operating income....................................... 96.9 6.0% 76.5 4.9%
Cost of material and other production service................ (720.3) (44.7%) (696.7) (44.7%)
Personnel expenses........................................... (493.7) (30.6%) (481.5) (30.9%)
Depreciation and amortization................................ (66.4) (4.1%) (66.6) (4.3%)
Other operating expenses..................................... (335.5) (20.8%) (329.6) (21.1%)
OPERATING RESULT............................................. 81.0 5.0% 81.0 5.2%
----------- ----- ----------- -----
Interest result.............................................. (14.7) (0.9%) (14.8) (1.0%)
Other financial results...................................... (0.1) (0.0%) (1.8) (0.1%)
FINANCIAL RESULTS............................................ (14.8) (0.9%) (16.6) (1.1%)
----------- ----- ----------- -----
RESULT FROM ORDINARY ACTIVITIES.............................. 66.3 4.1% 64.5 4.1%
----------- ----- ----------- -----
Extraordinary expenses....................................... (7.5) (0.5%) 0.0 0.0%
----------- ----- ----------- -----
EXTRAORDINARY RESULTS........................................ (7.5) (0.5%) 0.0 0.05%
----------- ----- ----------- -----
Income taxes................................................. (5.0) (0.3%) (11.6) (0.7%)
----------- ----- ----------- -----
NET INCOME................................................... 53.8 3.3% 52.8 3.4%
----------- ----- ----------- -----
Minority interests........................................... (4.4) (0.3%) (3.3) (0.2%)
----------- ----- ----------- -----
NET INCOME AFTER MINORITIES.................................. 49.4 3.1% 49.6 3.2%
----------- ----- ----------- -----
----------- ----- ----------- -----
</TABLE>
A-5
<PAGE>
RHI CONSOLIDATED STATEMENTS OF CASH FLOW
IN ATS MILLION
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income..................................................................................... 740 727
Depreciation, depletion and amortization....................................................... 1,016 918
Write-offs on financial assets................................................................. 7 42
Allocation of long-term accruals............................................................... 97 133
Result from disposal of fixed assets........................................................... (210) (249)
--------- ---------
CASH FLOW FROM RESULTS......................................................................... 1,650 1,571
--------- ---------
CHANGES IN WORKING CAPITAL
Increase in inventories, prepayments and prepaid expenses and deferred charges................. (137) (101)
Increase in prepayments received and deferred income........................................... 97 36
(Increase) / decrease in trade receivables, trade receivables group and other reveivables and
assets....................................................................................... (172) 312
(Increase) / (decrease) of trade payables, notes payable, trade payables group and other
payables..................................................................................... (91) 96
Decrease in short-term accruals................................................................ (29) (277)
Undistributed earnings of affiliates........................................................... 0 (7)
--------- ---------
CASH FLOW FROM OPERATING ACTIVITIES............................................................ 1,318 1,630
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditure............................................................................ (985) (750)
Acquisitions of consolidated companies......................................................... (489) (592)
Proceeds from sale of consolidated companies................................................... 7 57
Acquisitions of unconsolidated companies....................................................... (79) (156)
Proceeds from sale of unconsolidated companies................................................. 0 2
Investments in other financial assets.......................................................... (513) (133)
Proceeds from the disposal of property, plant and equipment, intangible assets and other
financial assets............................................................................. 856 509
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES............................................................ (1,203) (1,063)
CASH FLOW FROM FINANCING ACTIVITIES
Dividends paid to stockholders of RHI.......................................................... (223) (209)
Dividends paid to minorities................................................................... (24) (38)
--------- ---------
DIVIDENDS PAID TO STOCKHOLDERS AND MINORITIES.................................................. (247) (247)
--------- ---------
Revenue from / (repayments of) loans, long term borrowings and subsidies....................... (650) 184
Increase in group financial receivables........................................................ (51) (42)
Changes in short-term borrowings increase / (decrease)......................................... 1,103 (679)
(Decrease) / increase in group financial payables.............................................. (80) 37
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES............................................................ 75 (747)
--------- ---------
CHANGES IN STOCKHOLDERS' EQUITY NOT AFFECTING THE INCOME STATEMENT DUE TO CONSOLIDATION
MEASURES..................................................................................... 44 4
CASH FLOW FROM OPERATING ACTIVITIES............................................................ 1,318 1,630
CASH FLOW FROM INVESTITING ACTIVITIES.......................................................... (1,203) (1,063)
CASH FLOW FROM FINANCING ACTIVITIES............................................................ 75 (747)
CHANGES IN STOCKHOLDERS' EQUITY NOT AFFECTING THE INCOME STATEMENT............................. 44 4
--------- ---------
CHANGES IN CASH AND CASH EQUIVALENTS........................................................... 234 (176)
Cash and cash equivalents at beginning of the year............................................. 353 511
Cash and cash equivalents due to foreign currency translation.................................. 16 18
Cash and cash equivalents at end of year....................................................... 603 353
--------- ---------
--------- ---------
</TABLE>
A-6
<PAGE>
RHI CONSOLIDATED STATEMENTS OF CASH FLOW
IN EUR MILLION
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income........................................................................................ 53.8 52.8
Depreciation, depletion and amortization.......................................................... 73.8 66.7
Write-offs on financial assets.................................................................... 0.5 3.1
Allocation of long-term accruals.................................................................. 7.0 9.7
Result from disposal of fixed assets.............................................................. (15.3) (18.1)
--------- ---------
CASH FLOW FROM RESULTS............................................................................ 119.9 114.2
--------- ---------
CHANGES IN WORKING CAPITAL
Increase in inventories, prepayments and prepaid expenses and deferred charges.................... (10.0) (7.3)
Increase in prepayments received and deferred income.............................................. 7.0 2.6
(Increase) / decrease in trade receivables, trade receivables group and other reveivables and
assets.......................................................................................... (12.5) 22.7
(Increase) / (decrease) of trade payables, notes payable, trade payables group and other
payables........................................................................................ (6.6) 7.0
Decrease in short-term accruals................................................................... (2.1) (20.1)
Undistributed earnings of affiliates.............................................................. 0.0 (0.5)
--------- ---------
CASH FLOW FROM OPERATING ACTIVITIES............................................................... 95.8 118.5
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditure............................................................................... (71.6) (54.5)
Acquisitions of consolidated companies............................................................ (35.5) (43.0)
Proceeds from sale of consolidated companies...................................................... 0.5 4.1
Acquisitions of unconsolidated companies.......................................................... (5.7) (11.3)
Proceeds from sale of unconsolidated companies.................................................... 0.0 0.1
Investments in other financial assets............................................................. (37.3) (9.7)
Proceeds from the disposal of property, plant and equipment, intangible assets and other financial
assets.......................................................................................... 62.2 37.0
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES............................................................... (87.4) (77.3)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Dividends paid to stockholders of RHI............................................................. (16.2) (15.2)
Dividends paid to minorities...................................................................... (1.7) (2.8)
--------- ---------
DIVIDENDS PAID TO STOCKHOLDERS AND MINORITIES..................................................... (18.0) (18.0)
--------- ---------
Revenue from / (repayments of) loans, long term borrowings and subsidies.......................... (47.2) 13.4
Increase in group financial receivables........................................................... (3.7) (3.1)
Changes in short-term borrowings increase / (decrease)............................................ 80.2 (49.3)
(Decrease) / increase in group financial payables................................................. (5.8) 2.7
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES............................................................... 5.5 (54.3)
CHANGES IN STOCKHOLDERS' EQUITY NOT AFFECTING THE INCOME STATEMENT DUE TO CONSOLIDATION
MEASURES........................................................................................ 3.2 0.3
CASH FLOW FROM OPERATING ACTIVITIES............................................................... 95.8 118.5
CASH FLOW FROM INVESTITING ACTIVITIES............................................................. (87.4) (77.3)
CASH FLOW FROM FINANCING ACTIVITIES............................................................... 5.5 (54.3)
CHANGES IN STOCKHOLDERS' EQUITY NOT AFFECTING THE INCOME STATEMENT................................ 3.2 0.3
--------- ---------
CHANGES IN CASH AND CASH EQUIVALENTS.............................................................. 17.0 (12.8)
Cash and cash equivalents at beginning of the year................................................ 25.7 37.1
Cash and cash equivalents due to foreign currency translation..................................... 1.2 1.3
Cash and cash equivalents at end of year.......................................................... 43.8 25.7
--------- ---------
--------- ---------
</TABLE>
A-7
<PAGE>
KEY DATA BY DIVISION
<TABLE>
<CAPTION>
1998 (IN ATS M.) REFRACTORIES ENGINEERING INSULATING WATERPROOFING CONSOLIDATION(1) RHI GROUP
- --------------------------------------- ----------- ------------- ----------- --------------- ----------------- -----------
<S> <C> <C> <C> <C> <C> <C>
External sales......................... 15,745 2,136 2,216 2,087 4 22,188
Internal sales......................... 144 11 47 18 (220)
Sales revenue.......................... 15,889 2,147 2,263 2,105 (216) 22,188
Operating result (EBIT)................ 864 79 129 46 (2) 1,115
EBT.................................... 686 93 108 43 (18) 912
EBIT margin............................ 5.4% 3.7% 5.7% 2.2% 5.0%
ROS.................................... 4.3% 4.3% 4.8% 2.0% 4.1%
Cash flow from results................. 1,218 103 n. a. n. a. n. a. 1,650
Capital expenditure.................... 739 25 134 45 42 985
Employees (average).................... 7,491 423 1,669 739 90 10,412
</TABLE>
<TABLE>
<CAPTION>
1997 (IN ATS M.) REFRACTORIES ENGINEERING INSULATING WATERPROOFING CONSOLIDATION(1) RHI GROUP
- --------------------------------------- ----------- ------------- ----------- --------------- ----------------- -----------
<S> <C> <C> <C> <C> <C> <C>
External sales......................... 15,656 1,790 1,747 2,215 47 21,455
Internal sales......................... 117 8 39 0 (164)
Sales revenue.......................... 15,773 1,798 1,786 2,215 (117) 21,455
Operating result (EBIT)................ 895 2 129 72 17 1,115
EBT.................................... 702 8 111 70 (4) 887
EBIT margin............................ 5.7% 0.1% 7.2% 3.3% 5.2%
ROS.................................... 4.5% 0.4% 6.2% 3.2% 4.1%
Cash flow from results................. 1,229 (14) n. a. n. a. n. a. 1,571
Capital expenditure.................... 592 24 68 45 21 750
Employees (average).................... 7,434 471 1,150 755 98 9,908
</TABLE>
- ------------------------
(1) This column contains the respective sum of other activities, overheads and
consolidation measures.
A-8
<PAGE>
KEY DATA BY DIVISION
<TABLE>
<CAPTION>
1998 (IN EUR M.) REFRACTORIES ENGINEERING INSULATING WATERPROOFING CONSOLIDATION(1) RHI GROUP
- --------------------------------------- ----------- ------------- ----------- --------------- ----------------- -----------
<S> <C> <C> <C> <C> <C> <C>
External sales......................... 1,144.2 155.2 161.0 151.7 0.3 1,612.5
Internal sales......................... 10.5 0.8 3.4 1.3 (16.0)
Sales revenue.......................... 1,154.7 156.0 164.5 153.0 (15.7) 1,612.5
Operating result (EBIT)................ 62.8 5.7 9.4 3.3 (0.2) 81.0
EBT.................................... 49.9 6.8 7.8 3.1 (1.3) 66.3
EBIT margin............................ 5.4% 3.7% 5.7% 2.2% 5.0%
ROS.................................... 4.3% 4.3% 4.8% 2.0% 4.1%
Cash flow from results................. 88.5 7.5 n. a. n. a. n. a. 120.0
Capital expenditure.................... 53.7 1.8 9.7 3.3 3.1 71.6
Employees (average).................... 7,491 423 1,669 739 90 10,412
</TABLE>
<TABLE>
<CAPTION>
1997 (IN EUR M.) REFRACTORIES ENGINEERING INSULATING WATERPROOFING CONSOLIDATION(1) RHI GROUP
- --------------------------------------- ----------- ------------- ----------- --------------- ----------------- -----------
<S> <C> <C> <C> <C> <C> <C>
External sales......................... 1,137.8 130.1 127.0 161.0 3.4 1,559.2
Internal sales......................... 8.5 0.6 2.8 0.0 (11.9)
Sales revenue.......................... 1,146.3 130.7 129.8 161.0 (8.5) 1,559.2
Operating result (EBIT)................ 65.0 0.1 9.4 5.2 1.2 81.0
EBT.................................... 51.0 0.6 8.1 5.1 (0.3) 64.5
EBIT margin............................ 5.7% 0.1% 7.2% 3.3% 5.2%
ROS.................................... 4.5% 0.4% 6.2% 3.2% 4.1%
Cash flow from results................. 89.3 (1.0) n. a. n. a. n. a. 114.2
Capital expenditure.................... 43.0 1.7 4.9 3.3 1.5 54.5
Employees (average).................... 7,434 471 1,150 755 98 9,908
</TABLE>
- ------------------------
(1) This column contains the respective sum of other activities, overheads and
consolidation measures.
A-9
<PAGE>
RHI GROUP--KEY DATA
IN ATS MILLION
<TABLE>
<CAPTION>
EARNINGS 1998 CHANGE 1997 1996 1995 1994
- ------------------------------------------------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sales revenue.................................... 22,188 3.4% 21,455 21,005 21,691 10,626
Cost of material and services.................... 9,912 3.4% 9,587 9,021 9,936 4,596
Personnel expenses............................... 6,793 2.5% 6,625 6,474 6,648 3,410
Depreciation and amortization.................... 913 -0.4% 917 939 933 549
Operating result (EBIT).......................... 1,115 0.0% 1,115 911 722 378
Result from ordinary activities (EBT)............ 912 2.9% 887 674 577 336
Net income / shortfall........................... 740 1.8% 727 582 467 167
Net income after minorities...................... 680 -0.3% 682 508 418 64
</TABLE>
<TABLE>
<CAPTION>
CASH FLOW 1998 CHANGE 1997 1996 1995 1994
- ------------------------------------------------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cash flow from results........................... 1,650 5.0% 1,571 1,548 1,495 886
Cash flow from operating activities.............. 1,318 -19.1% 1,630 2,481 1,664 1,189
</TABLE>
<TABLE>
<CAPTION>
NET WORTH AND FINANCIAL POSITION 1998 CHANGE 1997 1996 1995 1994
- ------------------------------------------------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Capital expenditure.............................. 985 31.3% 750 916 1,038 677
Fixed assets..................................... 8,124 2.0% 7,961 7,914 7,675 5,132
Current assets................................... 10,024 7.5% 9,329 9,245 10,275 5,935
Stockholders' equity............................. 3,406 1.8% 3,347 3,516 3,188 2,096
Loan capital..................................... 14,742 5.7% 13,943 13,643 14,762 8,972
- --short-term(1).................................. 5,999 -9.5% 6,632 6,786 6,797 5,486
- --long-term(2)................................... 8,743 19.6% 7,311 6,857 7,965 3,486
Total balance sheet.............................. 18,148 5.0% 17,290 17,159 17,950 11,068
Financial payables (net)......................... 3,666 10.9% 3,305 3,518 4,042 2,792
</TABLE>
<TABLE>
<CAPTION>
EMPLOYEES 1998 CHANGE 1997 1996 1995 1994
- ------------------------------------------------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Number (average)................................. 10,412 5.1% 9,908 10,752 11,297 5,268
</TABLE>
<TABLE>
<CAPTION>
RATIOS 1998 CHANGE 1997 1996 1995 1994
- ------------------------------------------------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Earnings per share (in ATS)(3)................... 49 -0.3% 49 36 30 9
Cash flow per share (in ATS)(4).................. 95 -19.1% 117 178 120 172
EBIT margin (in %)............................... 5.0 -3.3% 5.2 4.3 3.3 3.6
ROS (in %)(5).................................... 4.1 -0.5% 4.1 3.2 2.7 3.2
Cash flow / sales revenue (in %)................. 5.9 -21.8% 7.6 11.8 7.7 11.2
Return on capital employed (in %)(6)............. 10.3 -4.6% 10.8
Sales revenue per employee (in ATS 1,000)........ 2,131.0 -1.6% 2,165 1,954 1,932 2,017
Personnel expenses per employee (in ATS 1,000)... 652 -2.4% 669 602 588 647
Equity ratio (in %).............................. 18.8 -3.1% 19.4 20.5 17.8 18.9
Net gearing (ratio) (in %)....................... 107.6 9.0% 98.7 100.0 126.8 133.2
</TABLE>
<TABLE>
<CAPTION>
RHI AG 1998 CHANGE 1997 1996 1995 1994
- ------------------------------------------------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Share capital.................................... 1,392 0.0% 1,392 1,392 1,392 693
Dividend payout.................................. 223 0.0% 223 209 195 69
Dividend per share (in ATS)...................... 18 0.0% 16 15 14 10
</TABLE>
A-10
<PAGE>
RHI GROUP--KEY DATA
<TABLE>
<CAPTION>
EARNINGS 1998 CHANGE 1997 1996 1995 1994
- ------------------------------------------------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sales revenue.................................... 1,612.5 3.4% 1,559.2 1,526.5 1,576.4 772.2
Cost of material and services.................... 720.3 3.4% 696.7 655.6 722.1 334.0
Personnel expenses............................... 493.6 2.5% 481.5 470.5 483.1 247.8
Depreciation and amortization.................... 66.4 -0.4% 66.6 68.3 67.8 39.9
Operating result (EBIT).......................... 81.0 0.0% 81.0 66.2 52.5 27.5
Result from ordinary activities (EBT)............ 66.3 2.9% 64.5 49.0 41.9 24.4
Net income / shortfall........................... 53.8 1.8% 52.8 42.3 33.9 12.1
Net income after minorities...................... 49.4 -0.3% 49.6 36.9 30.4 4.7
<CAPTION>
CASH FLOW 1998 CHANGE 1997 1996 1995 1994
- ------------------------------------------------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cash flow from results........................... 119.9 5.0% 114.2 112.5 108.6 64.4
Cash flow from operating activities.............. 95.8 -19.1% 118.5 180.3 120.9 86.4
</TABLE>
<TABLE>
<CAPTION>
NET WORTH AND FINANCIAL POSITION 1998 CHANGE 1997 1996 1995 1994
- ------------------------------------------------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Capital expenditure.............................. 71.6 31.3% 54.5 66.6 75.4 49.2
Fixed assets..................................... 590.4 2.0% 578.5 575.2 557.8 373.0
Current assets................................... 728.5 7.5% 678.0 671.9 746.7 431.3
Stockholders' equity............................. 247.5 1.8% 243.2 255.5 231.7 152.3
Loan capital..................................... 1,071.3 5.7% 1,013.3 991.5 1,072.8 652.0
- --short-term(7).................................. 436.0 -9.5% 482.0 493.2 494.0 398.7
- --long-term(8)................................... 635.4 19.6% 531.3 498.3 578.8 253.3
Total balance sheet.............................. 1,318.9 5.0% 1,256.5 1,247.0 1,304.5 804.3
Financial payables (net)......................... 266.4 10.9% 240.2 255.7 293.7 202.9
</TABLE>
<TABLE>
<CAPTION>
EMPLOYEES 1998 CHANGE 1997 1996 1995 1994
- ------------------------------------------------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Number (average)................................. 10,412 5.1% 9,908 10,752 11,297 5,268
</TABLE>
<TABLE>
<CAPTION>
RATIOS 1998 CHANGE 1997 1996 1995 1994
- ------------------------------------------------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Earnings per share (in EUR)(9)................... 3.55 -0.3% 3.56 2.65 2.18 0.67
Cash flow per share (in EUR)(10)................. 6.88 -19.1% 8.51 12.95 8.69 12.47
EBIT margin (in %)............................... 5.0 -3.3% 5.2 4.3 3.3 3.6
ROS (in %)(11)................................... 4.1 -0.5% 4.1 3.2 2.7 3.2
Cash flow / sales revenue (in %)................. 5.9 -21.8% 7.6 11.8 7.7 11.2
Return on capital employed (in %)(12)............ 10.3 -4.6% 10.8
Sales revenue per employee (in EUR 1,000)........ 154.9 -1.6% 157.4 142.0 139.5 146.6
Personnel expenses per employee (in EUR 1,000)... 47.4 -2.4% 48.6 43.8 42.8 47.0
Equity ratio (in %).............................. 18.8 -3.1% 19.4 20.5 17.8 18.9
Net gearing (ratio) (in %)....................... 107.6 9.0% 98.7 100.0 126.8 133.2
</TABLE>
<TABLE>
<CAPTION>
RHI AG 1998 CHANGE 1997 1996 1995 1994
- ------------------------------------------------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Share capital.................................... 101.2 0.0% 101.2 101.2 101.2 50.4
Dividend payout.................................. 16.2 0.0% 16.2 15.2 14.2 5.0
Dividend per share (in EUR)...................... 1.16 0.0% 1.16 1.09 1.02 0.73
</TABLE>
Exchange rate: 1 EURO = ATS 13.7603
A-11
<PAGE>
RHI GROUP--KEY DATA
(1) loan capital with a term > 1 year
(2) loan capital with a term < 1 year
(3) Earnings per share = net income after minorities/number of shares at
year-end
(4) Cash flow per share = cash flow from operating activities/number of shares
at year-end
(5) Return on sales (ROS) = EBT/sales revenue
(6) Return on capital employed (ROCE) = (Cash flow from results + interest
expenses + cash expenditure for social capital--capital expenditure to
mainatain substance) / DEG. (fixed assets + net current assets + goodwill)
(7) loan capital with a term > 1 year
(8) loan capital with a term < 1 year
(9) Earnings per share = net income after minorities/number of shares at
year-end
(10) Cash flow per share = cash flow from operating activities/number of shares
at year-end
(11) Return on sales (ROS) = EBT/sales revenue
(12) Return on capital employed (ROCE) = (Cash flow from results + interest
expenses + cash expenditure for social capital--capital expenditure to
mainatain substance) / DEG. (fixed assets + net current assets + goodwill)
A-12
<PAGE>
ANNEX B
RHI AG
UNAUDITED INTERIM CONSOLIDATED ACCOUNTS FOR THE
THREE MONTHS ENDED MARCH 31, 1999
B-1
<PAGE>
RHI CONSOLIDATED BALANCE SHEET Q1 / 1999
(SHORT VERSION)
IN ATS MILLION
<TABLE>
<CAPTION>
31.03.1999 31.03.1999 31.03.1998 31.03.1998
ATS M % ATS M %
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Intangible assets and property, plant and equipment............... 7,247 37.5% 6,898 38.2%
Financial assets.................................................. 903 4.7% 996 5.5%
----------- ----- ----------- -----
TOTAL FIXED ASSETS................................................ 8,150 42.1% 7,894 43.7%
----------- ----- ----------- -----
Inventories....................................................... 4,289 22.2% 4,418 24.5%
Receivables and other assets (incl. prepaid expenses and deferred
charges)........................................................ 6,286 32.5% 5,230 29.0%
Securities and interests, cash and cash equivalents............... 621 3.2% 516 2.9%
----------- ----- ----------- -----
TOTAL CURRENT ASSETS (INCL. PREPAID EXPENSES AND DEFERRED
CHARGES)........................................................ 11,196 57.9% 10,164 56.3%
----------- ----- ----------- -----
----------- ----- ----------- -----
STOCKHOLDERS' EQUITY AND LIABILITIES
Common stock, group reserves and net income for the period........ 2,485 12.8% 2,445 13.5%
Minority interests................................................ 749 3.9% 531 2.9%
----------- ----- ----------- -----
TOTAL STOCKHOLDERS' EQUITY........................................ 3,234 16.7% 2,976 16.5%
----------- ----- ----------- -----
Accruals for severance payments and pensions...................... 4,380 22.6% 4,325 24.0%
Other accruals.................................................... 2,817 14.6% 2,759 15.3%
----------- ----- ----------- -----
TOTAL ACCRUALS.................................................... 7,197 37.2% 7,084 39.2%
----------- ----- ----------- -----
Financial payables................................................ 5,567 28.8% 4,525 25.1%
Trade payables and other payables (incl. deferred income)......... 3,348 17.3% 3,473 19.2%
----------- ----- ----------- -----
TOTAL PAYABLES (INCL. DEFERRED INCOME)............................ 8,915 46.1% 7,998 44.3%
----------- ----- ----------- -----
----------- ----- ----------- -----
Balance sheet total............................................... 19,346 100.0% 18,058 100.0%
----------- ----- ----------- -----
</TABLE>
B-2
<PAGE>
RHI CONSOLIDATED BALANCE SHEET Q1 / 1999
(SHORT VERSION)
IN EUR MILLION
<TABLE>
<CAPTION>
31.03.1999 31.03.1999 31.03.1998 31.03.1998
EUR M % EUR M %
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Intangible assets and property, plant and equipment............... 526.7 37.5% 501.3 38.2%
Financial assets.................................................. 65.6 4.7% 72.4 5.5%
----------- ----- ----------- -----
TOTAL FIXED ASSETS................................................ 592.3 42.1% 573.7 43.7%
----------- ----- ----------- -----
Inventories....................................................... 311.7 22.2% 321.1 24.5%
Receivables and other assets (incl. prepaid expenses and deferred
charges)........................................................ 456.9 32.5% 380.1 29.0%
Securities and interests, cash and cash equivalents............... 45.1 3.2% 37.5 2.9%
----------- ----- ----------- -----
TOTAL CURRENT ASSETS (INCL. PREPAID EXPENSES AND DEFERRED
CHARGES)........................................................ 813.6 57.9% 738.6 56.3%
----------- ----- ----------- -----
----------- ----- ----------- -----
STOCKHOLDERS' EQUITY AND LIABILITIES
Common stock, group reserves and net income for the period........ 180.6 12.8% 177.7 13.5%
Minority interests................................................ 54.4 3.9% 38.6 2.9%
----------- ----- ----------- -----
TOTAL STOCKHOLDERS' EQUITY........................................ 235.0 16.7% 216.3 16.5%
----------- ----- ----------- -----
Accruals for severance payments and pensions...................... 318.3 22.6% 314.3 24.0%
Other accruals.................................................... 204.7 14.6% 200.5 15.3%
----------- ----- ----------- -----
TOTAL ACCRUALS.................................................... 523.0 37.2% 514.8 39.2%
----------- ----- ----------- -----
Financial payables................................................ 404.6 28.8% 328.8 25.1%
Trade payables and other payables
(incl. deferred income)......................................... 243.3 17.3% 252.4 19.2%
----------- ----- ----------- -----
TOTAL PAYABLES (INCL. DEFERRED INCOME)............................ 647.9 46.1% 581.2 44.3%
----------- ----- ----------- -----
----------- ----- ----------- -----
Balance sheet total............................................... 1,405.9 100.0% 1,312.3 100.0%
----------- ----- ----------- -----
</TABLE>
B-3
<PAGE>
RHI CONSOLIDATED INCOME STATEMENT Q1 / 1999
(SHORT VERSION)
IN ATS MILLION
<TABLE>
<CAPTION>
31.03.1999 31.03.1999 31.03.1998 31.03.1998
ATS M % ATS M %
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales revenue..................................................... 4,988 100.0% 5,254 100.0%
Change in inventories and own work................................ (105) (2.1%) 152 2.9%
----------- ----- ----------- -----
OPERATING PERFORMANCE............................................. 4,883 97.9% 5,406 102.9%
----------- ----- ----------- -----
Other operating income............................................ 172 3.4% 111 2.1%
Cost of material.................................................. (2,140) (42.9%) (2,306) (439%)
Personnel expenses................................................ (1,632) (32.7%) (1,705) (32.5%)
Depreciation and amortization..................................... (242) (4.9%) (229) (4.4%)
Other operating expenses.......................................... (1,083) (21.7%) (1,152) (21.9%)
----------- ----- ----------- -----
OPERATING RESULT (EBIT)........................................... (42) (0.8%) 125 2.4%
----------- ----- ----------- -----
Interest result................................................... (54) (1.1%) (52) (1.0%)
Investment result and other financial results..................... 0 0.0% 0 0.0%
FINANCIAL RESULT.................................................. (54) (1.1%) (52) (1.0%)
----------- ----- ----------- -----
RESULT FROM ORDINARY ACTIVITIES................................... (96) (1.9%) 73 1.4%
----------- ----- ----------- -----
Extraordinary result.............................................. 0 0.0% 0 0.0%
Income taxes...................................................... (26) (0.5%) (31) (0.6%)
----------- ----- ----------- -----
NET RESULT FOR THE PERIOD......................................... (122) (2.4%) 42 0.8%
----------- ----- ----------- -----
Minority interests................................................ (10) (0.2%) (4) (0.1%)
----------- ----- ----------- -----
NET INCOME/LOSS AFTER MINORITIES.................................. (132) (2.6%) 38 0.7%
----------- ----- ----------- -----
</TABLE>
B-4
<PAGE>
RHI CONSOLIDATED INCOME STATEMENT Q1 / 1999
(SHORT VERSION)
IN EUR MILLION
<TABLE>
<CAPTION>
31.03.1999 31.03.1999 31.03.1998 31.03.1998
EUR M % EUR M %
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales revenue..................................................... 362.5 100.0% 381.8 100.0%
Change in inventories and own work................................ (7.6) (2.1%) 11.0 2.9%
----------- ----- ----------- -----
OPERATING PERFORMANCE............................................. 354.9 97.9% 392.9 102.9%
----------- ----- ----------- -----
Other operating income............................................ 12.5 3.4% 8.1 2.1%
Cost of material.................................................. (155.5) (42.9%) (167.6) (43.9%)
Personnel expenses................................................ (118.6) (32.7%) (123.9) (32.5%)
Depreciation and amortization..................................... (17.6) (4.9%) (16.6) (4.4%)
Other operating expenses.......................................... (78.7) (21.7%) (83.7) (21.9%)
----------- ----- ----------- -----
OPERATING RESULT (EBIT)........................................... (3.1) (0.8%) 9.1 2.4%
----------- ----- ----------- -----
Interest result................................................... (3.9) (1.1%) (3.8) (1.0%)
Investment result and other financial results..................... 0.0 0.0% (0.0) (0.0%)
FINANCIAL RESULT.................................................. (3.9) (1.1%) (3.8) (1.0%)
----------- ----- ----------- -----
Result from ordinary activities................................... (7.0) (1.9%) 5.3 1.4%
----------- ----- ----------- -----
Extraordinary result.............................................. 0.0 0.0% 0.0 0.0%
Income taxes...................................................... (1.9) (0.5%) (2.3) (0.6%)
----------- ----- ----------- -----
NET RESULT FOR THE PERIOD......................................... (8.9) (2.4%) 3.1 0.8%
----------- ----- ----------- -----
Minority interests................................................ (0.7) (0.2%) (0.3) (0.1%)
----------- ----- ----------- -----
NET INCOME/LOSS AFTER MINORITIES.................................. (9.6) (2.6%) 2.8 0.7%
----------- ----- ----------- -----
</TABLE>
B-5
<PAGE>
RHI CONSOLIDATED CASH FLOW STATEMENT Q1 / 1999
(SHORT VERSION)
IN MILLION
<TABLE>
<CAPTION>
Q1/1999 Q1/1999 Q1/1998 Q1/1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ATS EUR ATS EUR
Cash flow from results.................................................... 120 8.7 321 23.3
----- ----- --- -----
Changes in working capital................................................ (783) (56.9) (508) (36.9)
----- ----- --- -----
Cash flow from operating activities....................................... (663) (48.2) (187) (13.6)
----- ----- --- -----
Cash flow from investing activities....................................... (440) (31.9) (525) (38.2)
----- ----- --- -----
Cash flow from financing activities....................................... 1,109 80.6 877 63.7
----- ----- --- -----
</TABLE>
SEGMENT REPORTING RHI GROUP Q1 / 1999
<TABLE>
<CAPTION>
Q1 / 1999 WATER- CONSOLI-
IN ATS MILLION REFRACTORIES ENGINEERING INSULATING PROOFING DATION(1)
- ---------------------------------------------- --------------- --------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
External sales revenue........................ 3,589 546 523 329 1
Internal sales revenue........................ 3 1 12 (16)
----- --- ----- ----- ---
Total sales revenue........................... 3,592 547 535 329 (15)
Operating result (EBIT)....................... 9 25 (10) (63) (3)
EBIT margin................................... 0.3% 4.6% -1.9% -19.1%
----- --- ----- ----- ---
Employees (average)........................... 7,196 414 1,772 719 71
----- --- ----- ----- ---
----- --- ----- ----- ---
<CAPTION>
Q1 / 1999 RHI
IN ATS MILLION GROUP
- ---------------------------------------------- -----------
<S> <C>
External sales revenue........................ 4,988
Internal sales revenue........................
-----------
Total sales revenue........................... 4,988
Operating result (EBIT)....................... (42)
EBIT margin................................... -0.8%
-----------
Employees (average)........................... 10,172
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
Q1 / 1998 WATER- CONSOLI-
IN ATS MILLION REFRACTORIES ENGINEERING INSULATING PROOFING DATION(1)
- ---------------------------------------------- --------------- --------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
External sales revenue........................ 4,134 338 394 395 (7)
Internal sales revenue........................ 15 7 (22)
----- --- ----- ----- ---
Total sales revenue........................... 4,149 345 394 395 (29)
Operating result (EBIT)....................... 213 (30) (7) (51) 0
EBIT margin................................... 5.1% -8.7% -1.8% -12.9%
----- --- ----- ----- ---
Employees (average)........................... 7,464 571 1,166 725 10
----- --- ----- ----- ---
----- --- ----- ----- ---
<CAPTION>
Q1 / 1998 RHI
IN ATS MILLION GROUP
- ---------------------------------------------- -----------
<S> <C>
External sales revenue........................ 5,254
Internal sales revenue........................
-----------
Total sales revenue........................... 5,254
Operating result (EBIT)....................... 125
EBIT margin................................... 2.4%
-----------
Employees (average)........................... 9,936
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
Q1 / 1999 WATER- CONSOLI-
IN EUR MILLION REFRACTORIES ENGINEERING INSULATING PROOFING DATION(1)
- ---------------------------------------------- --------------- --------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
External sales revenue........................ 260.8 39.7 38.0 23.9 0.1
Internal sales revenue........................ 0.2 0.1 0.9 0.0 (1.1)
----- --- ----- ----- ---
Total sales revenue........................... 261.0 39.8 38.9 23.9 (1.1)
Operating result (EBIT)....................... 0.7 1.8 (0.7) (4.6) (0.2)
EBIT margin................................... 0.3% 4.6% -1.9% -19.1%
----- --- ----- ----- ---
----- --- ----- ----- ---
Employees (average)........................... 7,196 414 1,772 719 71
----- --- ----- ----- ---
<CAPTION>
Q1 / 1999 RHI
IN EUR MILLION GROUP
- ---------------------------------------------- -----------
<S> <C>
External sales revenue........................ 362.5
Internal sales revenue........................ 0.0
-----------
Total sales revenue........................... 362.5
Operating result (EBIT)....................... (3.1)
EBIT margin................................... -0.8%
-----------
-----------
Employees (average)........................... 10,172
-----------
</TABLE>
<TABLE>
<CAPTION>
Q1 / 1998 WATER- CONSOLI-
IN EUR MILLION REFRACTORIES ENGINEERING INSULATING PROOFING DATION(1)
- ---------------------------------------------- --------------- --------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
External sales revenue........................ 300.4 24.6 28.6 28.7 (0.5)
Internal sales revenue........................ 1.1 0.5 0.0 0.0 (1.6)
----- --- ----- ----- ---
Total sales revenue........................... 301.5 25.1 28.6 28.7 (2.1)
Operating result (EBIT)....................... 15.5 (2.2) (0.5) (3.7) 0.0
EBIT margin................................... 5.1% -8.7% -1.8% -12.9%
----- --- ----- ----- ---
Employees (average)........................... 7,464 571 1,166 725 10
----- --- ----- ----- ---
----- --- ----- ----- ---
<CAPTION>
Q1 / 1998 RHI
IN EUR MILLION GROUP
- ---------------------------------------------- -----------
<S> <C>
External sales revenue........................ 381.8
Internal sales revenue........................ 0.0
-----------
Total sales revenue........................... 381.8
Operating result (EBIT)....................... 9.1
EBIT margin................................... 2.4%
-----------
Employees (average)........................... 9,936
-----------
-----------
</TABLE>
- ------------------------------
(1) This column contains the respective total of other activities, overheads
and consolidation measures
B-6
<PAGE>
ANNEX C
RHI AG
SUMMARY OF THE SIGNIFICANT DIFFERENCES BETWEEN
U.S. AND AUSTRIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The consolidated financial statements of RHI AG ("Parent") and its
subsidiaries ("The Group") are prepared and presented under the historical cost
convention in accordance with Austrian generally accepted accounting principles
("AT GAAP"). Certain significant differences between AT GAAP and US GAAP as they
relate to the financial statements of Parent are summarized below. Such summary
should not be construed to be exhaustive. Given the inherent differences between
AT GAAP and US GAAP, the financial statements presented under AT GAAP are not
presented fairly, in all material respects under US GAAP. Parent has not
quantified these differences, not prepared consolidated financial statements
under US GAAP, and has not undertaken a reconciliation of AT GAAP and US GAAP
financial statements. Had Parent undertaken any such quantification, preparation
or reconciliation, other potentially significant accounting and disclosure
differences may have come to their attention which are not identified below.
Accordingly, Parent can provide no assurance that the identified differences in
the summary below represent all the principal differences relating to Parent and
The Group. Further, no attempt has been made to identify future differences
between AT GAAP and US GAAP as the result of prescribed changes in accounting
standards. European and Austrian regulators for accounting, professional bodies
that promulgate AT GAAP and professional bodies that promulgate US GAAP have a
number of projects that could affect future comparisons such as this one.
Finally, no attempt has been made to identify all future differences between AT
GAAP and US GAAP that may affect the financial statements as a result of
transactions or events that may occur in the future.
General AT GAAP are stipulated in the AT Commercial Code, which is based on
the 4th and 7th European Union directive. The main principle in AT GAAP is
conservatism, which influences the measurement of assets and the recognition of
liabilities. The Austrian Financial Statements consist of Balance Sheet, Income
Statement and Notes.
GOODWILL AND OTHER INTANGIBLE ASSETS
Under AT GAAP, the Group had written off directly to reserves the cost of
goodwill which had arisen upon acquisitions.
Under US GAAP, the cost of the investment should be assigned to tangible and
identified intangible assets acquired and liabilities assumed on the basis of
their fair value at the date of acquisition. Any excess of cost over the fair
value of the net assets acquired should be capitalized and then amortized to
profit and loss over a period, not exceeding 40 years, except where management
considers that there has been a permanent diminution in the value of goodwill,
where upon this element of the goodwill is charged to profit and loss account
immediately. Identified intangible assets should be amortized to the profit and
loss account over their estimated useful economic lives which may not exceed 40
years.
DEFERRED TAXATION
Under AT GAAP, deferred taxation is only accounted for to the extent that it
is probable that a liability or asset will arise in the foreseeable future. The
calculation of deferred taxation is based upon timing differences between
taxable and accounting income. Under US GAAP, deferred taxation should be
accounted for on all temporary differences, and a valuation allowance
established in respect of deferred taxation assets where it is more likely than
not that some portion would not be realized.
Under AT GAAP there is no deferred tax asset based on tax losses carried
forward recognized.
C-1
<PAGE>
PENSIONS
In respect of defined benefit pension obligations, US GAAP requires the use
of a discount rate which reflects current market conditions in determining the
provision for pension benefits. AT GAAP requires the use of an actuarial method
for the calculation of pension obligations, no detailed guidance is given with
respect to the actuarial calculation. US GAAP applies a corridor approach for
recognizing actuarial gains and losses in the determination of periodic pension
expense. Under AT GAAP, actuarial gains and losses are recognized as income as
incurred without such a corridor approach. Additionally AT GAAP does not require
funding of pension obligations by plan assets.
CURRENT ASSETS AND LIABILITIES
Current assets under AT GAAP include amounts which fall due after more than
one year. Under US GAAP, such assets would be reclassified as non-current
assets. Provisions for liabilities and charges under AT GAAP include amounts due
within one year which would be classified as current liabilities under US GAAP.
CASH FLOW STATEMENTS
Cash Flow statement is not required by AT GAAP.
FINANCIAL INSTRUMENTS
Under AT GAAP, there are no recognition and measurement rules with respect
to financial instruments. According to general recognition and measurement
rules, all assets and liabilities have to be recognized.
Under US GAAP, the applicable accounting practice for financial instruments
depends on managements intention for their disposition and may require
adjustments to their market or fair values. The following conditions must be met
for an item to be accounted for as a hedge: (i) the item to be hedged must
expose Parent to price or interest rate risks; (ii) it must be probable that the
results of the futures contract will substantially offset the effects of price
or interest rate changes on the hedged item and (iii) the futures contract must
be designated by management as a hedge of the item. For futures contracts that
are accounted for as a hedge of items reported at the lower of cost or market,
gains and losses on the futures contracts are deferred and recognized in income
when costs relating to the hedged items are recognized in income. Any unrealized
gains and losses at the balance sheet date are disclosed in the accounts,
together with applicable accounting policies the end of the period fair value of
the forward contract, and the face or contract or notional principal amount.
DISCLOSURE
In general, disclosures required under US GAAP are more extensive than those
required under AT GAAP. For example, under US GAAP more detailed disclosures
would be required with respect to pension expense (actuarial assumptions,
components of pension expense, reconciliation of funded status), taxes (details
of the components of current and deferred income tax expenses and deferred tax
items, including valuation allowances), and equity (a statement of changes in
shareholders equity and associated rights).
C-2
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent or delivered by each Stockholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at one of the addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<S> <C>
BY MAIL: BY HAND AND OVERNIGHT COURIER:
Tender & Exchange Department Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(212) 815-6213
For Information Telephone:
(800) 507-9357
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer To Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent as set forth below and will be furnished promptly at
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
445 Park Avenue, 5th Floor
New York, New York 10022
Call Collect: (212) 754-8000
Banks and Brokerage Firms, please call:
(800) 662-5200
Stockholders Please Call: (800) 566-9061
THE DEALER MANAGER FOR THE OFFER IS:
DEUTSCHE BANK SECURITIES INC.
31 West 52nd Street
New York, New York 10019
(800) 334-1898
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED JULY 16, 1999
BY
HEAT ACQUISITION CORP.
AN INDIRECT, WHOLLY OWNED SUBSIDIARY
OF
RHI AG
----------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 12, 1999, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
The Bank of New York
<TABLE>
<S> <C>
BY MAIL: BY HAND OR OVERNIGHT COURIER:
Tender & Exchange Department Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Delivery Window
New York, New York 10286-1248 New York, New York 10286
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(212) 815-6213
For Information Telephone:
<PAGE>
(800) 507-9357
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
-------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE CERTIFICATE(S) ENCLOSED
APPEAR(S) ON THE CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ---------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
Total Number
of Shares
- ---------------------------------------------------------------------------------------------
* Need not be completed by Stockholders delivering Shares by book-entry transfer through
the Depositary.
** Unless otherwise indicated, it will be assumed that all Shares represented by
Certificates delivered to the Depositary are
being tendered. See Instruction 4.
/ / CHECK HERE IF CERTIFICATES HAVE BEEN LOST OR MUTILATED. SEE SECTION 11.
- ---------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE
DEPOSITARY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE
PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) either if certificates evidencing Shares ("Certificates") are to
be forwarded with this Letter of Transmittal or unless an Agent's Message (as
defined in the Offer To Purchase) is utilized, if delivery of Shares is to be
made by book-entry transfer to an account maintained by The Bank of New York
(the "Depositary") at The Depository Trust Company (the "Book-Entry Transfer
Facility"), pursuant to the procedures set forth in Section 3 of the Offer To
Purchase (as defined below).
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary
prior to the Expiration Date (as defined in the Offer To Purchase) or who cannot
complete the procedures for book-entry transfer on a timely basis, must tender
their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer To Purchase. See Instruction 2 hereof. DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY (AS DEFINED IN THE OFFER TO
PURCHASE) DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER
FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Stockholder(s): ______________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution which Guaranteed Delivery: _____________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
3
<PAGE>
- -------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than the
undersigned, or if Shares delivered by book-entry transfer that are not
accepted for payment are to be returned by credit to an account maintained
at the Book-Entry Transfer Facility other than the account indicated above.
Issue check and/or certificate(s) to:
Name _______________________________________________________________________
(PLEASE TYPE OR PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(RECIPIENT'S TAX IDENTIFICATION
OR SOCIAL SECURITY NO.)
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- ------------------------------------------------------
- ------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned or
to the undersigned at an address other than that shown above.
Mail check and/or certificate(s) to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
- -----------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT:
STOCKHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE
FORM W-9 BELOW
____________________________________________________________________________
____________________________________________________________________________
SIGNATURE(S) OF STOCKHOLDER(S)
Dated: __________________, 1999
(MUST BE SIGNED BY THE REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON
THE CERTIFICATE OR ON A SECURITY POSITION LISTING OR BY PERSON(S) AUTHORIZED
TO BECOME REGISTERED HOLDER(S) BY CERTIFICATES AND DOCUMENTS TRANSMITTED
HEREWITH. IF SIGNATURE IS BY TRUSTEES, EXECUTORS, ADMINISTRATORS, GUARDIANS,
ATTORNEYS-IN-FACT, AGENTS, OFFICERS OR CORPORATIONS OR OTHERS ACTING IN A
FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE PROVIDE THE FOLLOWING
INFORMATION. SEE INSTRUCTION 5.)
Name(s): ___________________________________________________________________
(PLEASE TYPE OR PRINT)
__________________________________________________________________________
Capacity (Full Title): _____________________________________________________
____________________________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE A ZIP CODE)
Area Code and Telephone No.: _______________________________________________
(HOME)
_________________________________________________________________________
(BUSINESS)
Tax Identification or
Social Security No. ________________________________________________________
(COMPLETE SUBSTITUTE FORM W-9 BELOW)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature(s): ___________________________________________________
Name: ______________________________________________________________________
(PLEASE TYPE OR PRINT)
Title: _____________________________________________________________________
Name of Firm: ______________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: _______________________________________________
Dated: __________________, 1999
- --------------------------------------------------------------------------------
5
<PAGE>
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 9)
<TABLE>
<C> <S> <C>
PAYOR'S NAME: THE BANK OF NEW YORK
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN TIN
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY (Social Security Number
DEPARTMENT OF SIGNING AND DATING BELOW. OR Employer
THE TREASURY Identification Number)
INTERNAL PART 2--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING
REVENUE SERVICE (SEE INSTRUCTIONS)
PART 3--CERTIFICATIONS--UNDER PENALTIES OF PERJURY, I
CERTIFY THAT:
(1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to be
issued to me) and (2) I am not subject to backup withholding
PAYER'S REQUEST FOR either because: (a) I am exempt from backup withholding, or
TAXPAYER (b) I have not been notified by the Internal Revenue Service
IDENTIFICATION
NUMBER (TIN)
AND CERTIFICATION (the "IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer subject to
backup withholding.
SIGNATURE DATE , 1999
</TABLE>
You must cross out item (2) above if you have been notified by the IRS that you
are subject to backup withholding because of underreporting interest or
dividends on your tax return.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART 1
OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered
an application to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social Security
Administration Office or (2) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a taxpayer
identification number to the payor within 60 days, 31% of all reportable
payments made to me will be withheld.
<TABLE>
<S> <C>
- --------------------------------------------------- -------------------------------------
Signature Date
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR INSTRUCTIONS.
5
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Heat Acquisition Corp., a Delaware
corporation ("Purchaser") and an indirect, wholly owned subsidiary of RHI AG, an
Austrian stock corporation ("Parent"), the above-described shares of common
stock, par value $0.25 per share (together with the associated preferred share
purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as
of October 31, 1995, as amended, between Global Industrial Technologies, Inc., a
Delaware corporation (the "Company"), and The Bank of New York, the Shares"), of
the Company at a purchase price of $13.00 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 July 16, 1999 (the "Offer To Purchase") and this
related Letter of Transmittal (which, together with any amendments or
supplements thereto or hereto, collectively constitute the "Offer"). The
undersigned understands that the Rights are not applicable to the Offer, the
Merger Agreement or any of the transactions contemplated thereby. The
undersigned understands that Purchaser reserves the right to transfer or assign,
in whole or from time to time in part, to one or more direct or indirect wholly
owned subsidiary of Parent, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer, but no such assignment will relieve
Purchaser of its obligations under the Offer or prejudice the rights of the
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of, or payment for,
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms or conditions of any such extension or amendment), the undersigned hereby
sells, assigns, and transfers to, or upon the order of, Purchaser all right,
title and interest in and to all of the Shares that are being tendered hereby
and any and all dividends on the Shares (including, without limitation, the
issuance of additional Shares pursuant to a stock dividend or stock split, the
issuance of other securities, the issuance of rights for the purchase of any
securities, or any cash dividends) that are declared or paid by the Company on
or after the date of the Offer To Purchase and are payable or distributable to
stockholders of record on a date prior to the transfer into the name of the
Purchaser or its nominees or transferees on the Company's stock transfer records
of the Shares purchased pursuant to the Offer (collectively "Distributions"),
and irrevocably constitutes and appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares (and
any Distributions), with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to (i)
deliver Certificates evidencing such Shares (and any Distributions), or transfer
ownership of such Shares (and any Distributions) on the account books maintained
by the Book-Entry Transfer Facility (as defined in the Offer To Purchase),
together, in any such case, with all accompanying evidences of transfer and
authenticity to, or upon the order of, Purchaser, upon receipt by the Depositary
as the undersigned's agent, of the purchase price with respect to such Shares,
(ii) present such Shares (and any Distributions) for transfer on the books of
the Company, and (iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and any Distributions), all in accordance
with the terms and subject to the conditions of the Offer.
The undersigned hereby irrevocably appoints each designee of Purchaser as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to all Shares tendered herewith and accepted for payment by
Purchaser (and any Distributions), including without limitation the right to
vote such Shares (and any Distributions) in such manner as each such attorney
and proxy or his substitute will, in his sole discretion, deem proper. All such
powers of attorney and proxies, being deemed to be irrevocable, will be
considered coupled with an interest in the Shares tendered with this Letter of
Transmittal. Such appointment will be effective when, and only to the extent
that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior powers of attorney and proxies given by the undersigned with
respect to such Shares (and any Distributions) will be revoked, without further
action, and no subsequent powers of attorney and proxies may be given with
respect thereto (and, if given, will be deemed ineffective). The designees of
6
<PAGE>
Purchaser will, with respect to the Shares (and any Distributions) for which
such appointment is effective, be empowered to exercise all voting and other
rights of the undersigned with respect to such Shares (and any Distributions) as
they in their sole discretion may deem proper. Purchaser reserves the absolute
right to require that, in order for Shares to be deemed validly tendered,
immediately upon the acceptance for payment of such Shares, Purchaser or its
designees be able to exercise full voting rights with respect to such Shares
(and any Distributions), including voting at any meeting of stockholders then
scheduled.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any Distributions) and that, when the same are accepted for payment
and paid for by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and that the Shares tendered hereby (and any Distributions)
will not be subject to any adverse claim. The undersigned, upon request, will
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of Shares tendered hereby (and any Distributions). In addition, the
undersigned will promptly remit and transfer to the Depositary for the account
of Purchaser any and all Distributions in respect of the Shares tendered hereby,
accompanied by appropriate documentation of transfer, and pending such
remittance and transfer or appropriate assurance thereof, Purchaser will be
entitled to all rights and privileges as owner of any such Distributions and may
withhold the entire purchase price or deduct from the purchase price the amount
of value thereof, as determined by Purchaser in its sole discretion.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer To Purchase and in the
instructions to this Letter of Transmittal will constitute a binding agreement
between the undersigned and Purchaser with respect to such Shares upon the terms
and subject to the conditions of the Offer.
All authority herein conferred or herein agreed to be conferred will not be
affected by, and will survive, the death or incapacity of the undersigned and
any obligation of the undersigned hereunder will be binding upon the heirs,
executors, administrators, legal representatives, successors and assigns of the
undersigned. Tenders of Shares pursuant to the Offer are irrevocable, except
that Shares tendered pursuant to the Offer may be withdrawn at any time on or
prior to the Expiration Date.
The undersigned recognizes that, under certain circumstances set forth in
the Offer To Purchase, the Purchaser may not be required to accept for payment
any of the Shares tendered hereby.
Unless otherwise indicated in this Letter of Transmittal under "Special
Payment Instructions," please issue the check for the purchase price and return
any Certificates evidencing Shares not tendered or not accepted for payment in
the name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and return any
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
both the "Special Payment Instructions" and the "Special Delivery Instructions"
are completed, please issue the check for the purchase price and return any such
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and return such Certificates (and accompanying documents, as appropriate)
to, the person(s) so indicated. Unless otherwise indicated herein under "Special
Payment Instructions," in the case of book-entry delivery of Shares, please
credit the account maintained at the Book-Entry Transfer Facility with respect
to any Shares not accepted for payment. The undersigned recognizes that
Purchaser has no obligation pursuant to the "Special Payment Instructions" to
transfer any Shares from the name of the registered holder if Purchaser does not
accept for payment any of the Shares tendered hereby.
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, no signature
guarantee is required on this Letter of Transmittal (a) if this Letter of
Transmittal is signed by the registered holder(s) (which term, for the purposes
of this document, includes any participant in any of the Book-Entry Transfer
Facility systems whose name appears on a security position listing as the owner
of the Shares) of Shares tendered herewith and such registered holder has not
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on this Letter of Transmittal or (b) if
such Shares are tendered for the account of a financial institution (including
most commercial banks, savings and loan associations and brokerage houses) that
is a participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (an "Eligible Institution"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. If the Certificates are registered in the name of a person other
than the signer of this Letter of Transmittal or if payment is to be made or
Certificates for Shares not tendered or not accepted for payment are to be
returned to a person other than the registered holder of the Certificates
tendered, then the tendered Certificates must be endorsed or accompanied by duly
executed stock powers, in either case signed exactly as the name or names of the
registered owner or owners appear on the Certificates, with the signatures on
the Certificates or stock powers guaranteed by an Eligible Institution as
provided in this Letter of Transmittal. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
stockholders if either Certificates evidencing Shares are to be forwarded with
this Letter of Transmittal or, unless an Agent's Message is utilized, if
delivery of Shares is to be made pursuant to the procedures for book-entry
transfer set forth in Section 3 of the Offer To Purchase. For Shares to be
validly tendered pursuant to the Offer, either (a) the appropriate Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees or an Agent's Message in
connection with a book-entry transfer of Shares, and any other documents
required by this Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth in this Letter of Transmittal on or prior to the
Expiration Date and either (i) Certificates representing tendered Shares must be
received by the Depositary at one of those addresses on or prior to the
Expiration Date or (ii) Shares must be delivered pursuant to the procedures for
book-entry transfer set forth in Section 3 of the Offer To Purchase and a
Book-Entry Confirmation (as defined in the Offer To Purchase) must be received
by the Depositary on or prior to the Expiration Date or (b) the tendering
stockholder must comply with the guaranteed delivery procedures set forth below
and in Section 3 of the Offer To Purchase.
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary or
complete the procedures for book-entry transfer on or prior to the Expiration
Date may nevertheless tender their Shares by following the guaranteed delivery
procedures set forth in Section 3 of the Offer To Purchase. Pursuant to such
procedure: (i) such tender must be made by or through an Eligible Institution,
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, must be received by the
Depositary on or prior to the Expiration Date, and (iii) Certificates
representing all tendered Shares in proper form for transfer, or a Book-Entry
Confirmation with respect to all the tendered Shares, together with a Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, and any required signature guarantees (or, in the case of
book-entry transfers, an Agent's Message (as defined in the Offer To Purchase))
and any other documents required by this Letter of Transmittal, must be received
by the Depositary within three New York Stock Exchange trading days after the
date of such Notice of Guaranteed Delivery. If Certificates are forwarded
separately to the Depositary, a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) must accompany each
delivery.
8
<PAGE>
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a manually signed facsimile thereof), waive any
right to receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided in this Letter of Transmittal is
inadequate, the information required under "Description of Shares Tendered"
should be listed on a separate signed schedule attached to this Letter of
Transmittal.
4. PARTIAL TENDERS. If fewer than all of the Shares represented by any
Certificates delivered to the Depositary with this Letter of Transmittal are to
be tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such cases, a new Certificate for the
remainder of the Shares that were evidenced by your old Certificate(s) will be
sent, without expense, to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled "Special Payment Instructions" or
the box entitled "Special Delivery Instructions" on this Letter of Transmittal,
as soon as practicable after the Expiration Date. All Shares evidenced by
Certificate(s) delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all the owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or instruments of transfer
are signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, that person should so indicate when signing, and proper evidence
satisfactory to Purchaser of that person's authority to so act must be
submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on the Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificates for such Shares.
Signatures on the Certificates or instruments of transfer must be guaranteed by
an Eligible Institution.
6. TRANSFER TAXES. Except as set forth in this Instruction 6, Purchaser will
pay or cause to be paid any transfer taxes with respect to the transfer and sale
of Shares to it or its order pursuant to the Offer. If, however, payment of the
purchase price is to be made to, or (in the circumstances permitted hereby) if
Certificates for Shares not tendered or not purchased are to be registered in
the name of, any person other
9
<PAGE>
than the registered holder(s), or if tendered Certificates are registered in the
name of any person other than the person(s) signing this Letter of Transmittal,
the amount of any transfer taxes (whether imposed on the registered holder(s) or
such person) payable on account of the transfer to such person will be deducted
from the purchase price unless satisfactory evidence of the payment of such
taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and Certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal or if a check is to be sent and
Certificates are to be returned to someone other than the signer of this Letter
of Transmittal or to an address other than that shown above, the appropriate
boxes on this Letter of Transmittal should be completed. If any tendered Shares
are not purchased for any reason and the Shares are delivered by book-entry
transfer, the Shares will be credited to an account maintained at the Book-Entry
Transfer Facility.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance may be directed to the Information Agent at its address or telephone
number set forth below. Requests for additional copies of the Offer To Purchase,
this Letter of Transmittal and the Notice of Guaranteed Delivery may be directed
to the Information Agent or to brokers, dealers, commercial banks and trust
companies. Such materials will be furnished at Purchaser's expense.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by
Purchaser (subject to certain limitations in the Merger Agreement (as defined in
the Offer To Purchase)), in whole or in part, at any time or from time to time,
in Purchaser's sole discretion.
10. BACKUP WITHHOLDING TAX. Each tendering stockholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which is provided under "Important Tax Information" below
and to certify that the stockholder is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
tendering stockholder to a penalty and 31% federal income tax backup withholding
on the payment of the purchase price for the Shares. If the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future, the tendering stockholder should follow the
instructions set forth in Part III of the Substitute Form W-9 and sign and date
both the Substitute Form W-9 and the "Certificate of Awaiting Taxpayer
Identification." If the stockholder has indicated in Part III that a TIN has
been applied for and the Depositary is not provided with a TIN by the time of
payment, the Depositary will withhold 31% of all payments of the purchase price,
if any, made thereafter pursuant to the Offer until a TIN is provided to the
Depositary.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing
Shares has been lost or destroyed, the holders should promptly notify the
Depositary, The Bank of New York, at (800) 507-9357. The holders will then be
instructed as to the procedure to be followed in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed Certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF,
TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF BOOK-ENTRY
TRANSFER, AN AGENT'S MESSAGE (TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY
CONFIRMATION FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY
THE DEPOSITARY, OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE
DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
10
<PAGE>
IMPORTANT TAX INFORMATION
Under current federal income tax law, a stockholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payor) with
such stockholder's correct TIN on Substitute Form W-9 below. If such stockholder
is an individual, the TIN is such stockholder's social security number. If the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future, the stockholder should so
indicate on the Substitute Form W-9. See Instruction 10. If the Depositary is
not provided with the correct TIN, the stockholder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that are
made to the stockholder with respect to Shares purchased pursuant to the Offer
may be subject to backup federal income tax withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements and should indicate their status by writing "exempt" across the
face of, and by signing and dating, the Substitute Form W-9. In order for a
foreign individual to qualify as an exempt recipient, that stockholder must
submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. Forms for such statements can be obtained from the
Depositary. See the enclosed Guidelines for Certificates of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a stockholder
must provide the Depositary with his correct TIN by completing the Substitute
Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that the stockholder is awaiting a TIN) and that (i) such
stockholder is exempt from backup withholding, (ii) the stockholder has not been
notified by the Internal Revenue Service that he is subject to backup
withholding as a result of failure to report all interest or dividends, or (iii)
the Internal Revenue Service has notified the stockholder that he is no longer
subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are registered in more than one name or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
MANUALLY SIGNED FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL, PROPERLY
COMPLETED AND DULY EXECUTED, WILL BE ACCEPTED. THE LETTER OF TRANSMITTAL,
CERTIFICATES FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR
DELIVERED BY EACH STOCKHOLDER OF THE COMPANY OR HIS BROKER, DEALER, COMMERCIAL
BANK, TRUST COMPANY OR OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES
SET FORTH ON THE FIRST PAGE.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of the Offer To Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent or the Dealer Manager as set forth below, and will be
furnished promptly at Purchaser's expense. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
11
<PAGE>
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
445 Park Avenue, 5th Floor
New York, New York 10022
(212) 754-8000 (call collect)
Banks and Brokerage Firms, Please call:
(800) 662-5200
Shareholders, Please Call:
(800) 566-9061
THE DEALER MANAGER FOR THE OFFER IS:
DEUTSCHE BANK SECURITIES INC.
31 West 52nd Street
New York, New York 10019
(800) 334-1898
12
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Offer (as defined below) if certificates
representing shares of common stock, par value $0.25 per share (together with
the associated preferred share purchase rights issued pursuant to the Rights
Agreement, dated as of October 31, 1995, as amended, between Global Industrial
Technologies, Inc., a Delaware corporation (the "Company"), and The Bank of New
York, the "Shares"), of the Company are not immediately available or time will
not permit all required documents to reach The Bank of New York (the
"Depositary") on or prior to the Expiration Date (as defined in the Offer To
Purchase), or the procedures for delivery by book-entry transfer cannot be
completed on a timely basis. This Notice of Guaranteed Delivery may be delivered
by hand, transmitted by telegram, facsimile transmission or mailed to the
Depositary. See Section 3 of the Offer To Purchase.
THE DEPOSITARY FOR THE OFFER IS:
The Bank of New York
<TABLE>
<S> <C>
BY MAIL: BY HAND AND OVERNIGHT COURIER:
Tender & Exchange Department Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(212) 815-6213
For Information Telephone:
(800) 507-9357
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If the instructions to the Letter of Transmittal require a signature
to be guaranteed by an "Eligible Institution," such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Heat Acquisition Corp., a Delaware
corporation and an indirect, wholly owned subsidiary of RHI AG, an Austrian
stock corporation, upon the terms and subject to the conditions set forth in the
Offer To Purchase, dated July 16, 1999 (the "Offer To Purchase"), and the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), receipt of which is
hereby acknowledged, the number of Shares indicated below pursuant to the
guaranteed delivery procedures set forth in Section 3 of the Offer To Purchase.
Number of Shares: _______________
Certificate No(s). (if
available): _____________________
If Share(s) will be tendered by book-entry transfer, check the box.
/ / The Depository Trust Company
Account Number: _________________
Date: __________________ Area Code and Telephone Number(s): __________________
Name(s) of Record Holder(s): _________________ Signature(s): _________________
(Please Print)
Address(es): _________________________________________________________________
(Zip Code)
2
<PAGE>
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm that is a bank, broker, dealer, credit union,
savings association or other entity which is a member at the Securities
Transfer Agents Medallion Program, hereby guarantees to deliver to the
Depositary at one of its addresses set forth above (i) the certificates
representing all tendered Shares, in proper form for transfer, or a Book Entry
Confirmation (as defined in Section 3 of the Offer To Purchase) with respect
to such Shares, together with the properly completed and duly executed Letter
of Transmittal (or a manually signed facsimile thereof), with all required
signature guarantees, or, (ii) in the case of a book-entry transfer of Shares,
an Agent's Message (as defined in Section 2 of the Offer To Purchase), and all
other documents required by the Letter of Transmittal, all within three New
York Stock Exchange ("NYSE") trading days after the date hereof. A NYSE
trading day is any day on which the NYSE is open for business.
Name of Firm: ________________________________________________________________
Authorized Signature
<TABLE>
<S> <C>
Address: Name:
Title:
Please Type or Print
Zip Code Dated: , 1999
Area Code and
Tel. No.:
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE DELIVERED ONLY WITH THE
LETTER OF TRANSMITTAL.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
AT
$13.00 NET PER SHARE
BY
HEAT ACQUISITION CORP.
AN INDIRECT, WHOLLY OWNED SUBSIDIARY
OF
RHI AG
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, AUGUST 12, 1999, UNLESS THE OFFER IS EXTENDED.
July 16, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Heat Acquisition Corp., a Delaware corporation
("Purchaser") and an indirect, wholly owned subsidiary of RHI AG, an Austrian
stock corporation ("Parent"), to act as Dealer Manager in connection with the
Purchaser's offer to purchase all the outstanding shares of common stock, par
value $0.25 per share (together with the associated preferred share purchase
rights (the "Rights") issued pursuant to the Rights Agreement, dated as of
October 31, 1995, as amended, between Global Industrial Technologies, Inc., a
Delaware corporation (the "Company"), and The Bank of New York, the "Shares"),
of the Company at a purchase price of $13.00 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 July 16, 1999 (the "Offer To Purchase") and
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), enclosed herewith. We
have been advised that the Rights are not applicable to the Offer, the Merger
Agreement (as defined in the Offer To Purchase) or any of the transactions
contemplated thereby. Please furnish copies of the enclosed materials to those
of your clients for whose accounts you hold Shares in your name or in the name
of your nominee.
Enclosed herewith for your information and for forwarding to your clients
are copies of the following documents:
1. Offer To Purchase, dated July 16, 1999.
2. Letter of Transmittal to tender Shares for your use and for the
information of your clients, together with Guidelines of the Internal
Revenue Service for Certification of Taxpayer Identification Number on
Substitute Form W-9 providing information relating to backup federal income
tax withholding. Manually signed facsimile copies of the Letter of
Transmittal may be used to tender Shares.
3. A letter to stockholders of the Company (the "Stockholders") from
Rawles Fulgham, Chairman of the Board and Chief Executive Officer of the
Company, together with a Solicitation/ Recommendation Statement on Schedule
14D-9.
4. Notice of Guaranteed Delivery for Tender of Shares of Common Stock to
be used to accept the Offer if neither of the two procedures for tendering
Shares set forth in the Offer To Purchase can be completed on a timely
basis.
<PAGE>
5. A form of letter which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer.
6. Return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, AUGUST 12, 1999,
UNLESS THE OFFER IS EXTENDED.
Please note the following:
1. The tender price is $13.00 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.
2. The Offer is conditioned upon, among other things: (i) there being
validly tendered and not withdrawn prior to the Expiration Date (as defined
in the Offer To Purchase) that number of Shares of the Company that
(together with any Shares owned by Parent or any of its subsidiaries)
constitutes at least a majority of the outstanding Shares, calculated on a
fully diluted basis on the date of purchase, (ii) any applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and any
applicable laws regulating competition, antitrust, investment or exchange
controls in Germany and Mexico having expired or been terminated, and (iii)
the Financing Condition (as defined in the Offer To Purchase). The Offer is
also subject to certain other conditions. See Introduction and Sections 1,
9, 11 and 14 of the Offer To Purchase.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering Stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant
to the Offer. However, federal income tax backup withholding at a rate of
31% may be required, unless an exemption is provided or unless the required
tax identification information is provided. See Instruction 10 of the Letter
of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Thursday, August 12, 1999, unless the Offer is extended.
6. The Board of Directors of the Company (the "Company Board") has duly
approved the Merger Agreement and the transactions contemplated thereby and
determined that the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger (as defined in the Offer To
Purchase), are fair to and in the best interests of the Company and the
Stockholders. The Company Board recommends that the Stockholders accept the
Offer, tender their Shares pursuant to the Offer and approve and adopt the
Merger Agreement.
7. In all cases, payment for Shares purchased pursuant to the Offer will
be made only after timely receipt by the Depositary of (i) certificates for
the Shares (the "Certificates") or a timely Book-Entry Confirmation (as
defined in the Offer To Purchase) with respect to such Shares, (ii) the
appropriate Letters of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed with any required signature guarantees
(or, in the case of a book-entry transfer of shares, an Agent's Message (as
defined in the Offer To Purchase)), and (iii) all other documents required
by the Letter of Transmittal. Accordingly, payments may not be made to all
tendering Stockholders at the same time, and will depend upon when
Certificates for, or confirmations of book-entry transfer of, such Shares
are actually received by the Depositary.
In order to take advantage of the Offer, the appropriate Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or an Agent's Message in
connection with book-entry transfer of Shares, and any other documents required
by
2
<PAGE>
the Letter of Transmittal must be sent to the Depositary at one of the addresses
set forth in the Offer To Purchase prior to the Expiration Date, and either (a)
Certificates representing tendered Shares must be received by the Depositary at
any one of those addresses prior to the Expiration Date, or (b) the Shares must
be delivered pursuant to the procedures for book-entry transfer set forth below
and a Book-Entry Confirmation must be received by the Depositary prior to the
Expiration Date.
If Stockholders wish to tender their Shares, but it is impracticable for
them to forward the Certificates for such Shares or other required documents or
complete the procedures for book-entry transfer prior to the Expiration Date, a
tender may be effected by following the guaranteed delivery procedures specified
in Section 3 of the Offer To Purchase. No alternative, conditional or contingent
tenders will be accepted.
Neither Purchaser nor Parent will pay any fees or commissions to any broker
or dealer or other person (other than the Dealer Manager, the Information Agent
or the Depositary, as described in the Offer To Purchase) for soliciting tenders
of Shares pursuant to the Offer. Purchaser will, however, upon request,
reimburse you for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients. Purchaser will pay or
cause to be paid any stock transfer taxes payable on the transfer of the Shares
to it, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Deutsche Bank Securities Inc., the Dealer Manager, or Morrow & Co., Inc., the
Information Agent, at their respective addresses and telephone numbers set forth
on the back cover of the Offer To Purchase. Additional copies of the enclosed
materials may be obtained from Information Agent or the Dealer Manager or from
brokers, dealers, commercial banks or trust companies.
Very truly yours,
Deutsche Bank Securities Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF PURCHASER, PARENT, THE COMPANY, THE DEALER
MANAGER, THE INFORMATION AGENT, THE DEPOSITARY OR ANY AFFILIATE OF ANY OF THEM,
OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT
ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
AT
$13.00 NET PER SHARE
BY
HEAT ACQUISITION CORP.
AN INDIRECT, WHOLLY OWNED SUBSIDIARY
OF
RHI AG
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON THURSDAY, AUGUST 12, 1999, UNLESS THE OFFER IS EXTENDED.
July 16, 1999
To Our Clients:
Enclosed for your consideration are the Offer To Purchase, dated July 16,
1999 (the "Offer To Purchase"), the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") and other materials relating to the offer by Heat Acquisition Corp., a
Delaware corporation ("Purchaser") and an indirect, wholly owned subsidiary of
RHI AG, an Austrian stock corporation ("Parent"), to purchase all the
outstanding shares of common stock, par value $0.25 per share (together with the
associated preferred share purchase rights (the "Rights") issued pursuant to the
Rights Agreement, dated as of October 31, 1995, as amended, between Global
Industrial Technologies, Inc., a Delaware corporation (the "Company"), and The
Bank of New York, the "Shares"), of the Company at a purchase price of $13.00
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 and the related
Letter of Transmittal enclosed herewith. We have been advised that the Rights
are not applicable to the Offer, the Merger Agreement (as defined in the Offer
To Purchase) or any of the transactions contemplated thereby. Holders of Shares
("Stockholders") whose certificates for such Shares (the "Certificates") are not
immediately available or who cannot deliver their Certificates and all other
required documents to the Depositary or complete the procedures for book-entry
transfer on or prior to the Expiration Date (as defined in the Offer To
Purchase) must tender their Shares according to the guaranteed delivery
procedures set forth in Section 3 of the Offer To Purchase.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL ACCOMPANYING
THIS LETTER IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY
YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer To Purchase.
Your attention is directed to the following:
1. The tender price is $13.00 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.
<PAGE>
2. The Offer is conditioned upon, among other things: (i) there being
validly tendered and not withdrawn prior to the Expiration Date that
number of Shares of the Company that (together with any Shares then owned
by Parent or any of its subsidiaries) constitutes at least a majority of
the outstanding Shares, calculated on a fully diluted basis on the date
of purchase, (ii) any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and any applicable
laws regulating competition, antitrust, investment or exchange controls
in Germany and Mexico having expired or been terminated, and (iii) the
Financing Condition (as defined in the Offer To Purchase). The Offer is
also subject to certain other conditions. See Introduction and Sections
1, 9, 11 and 14 of the Offer To Purchase.
3. The Offer is being made for all outstanding Shares.
4. Tendering Stockholders will not be obligated to pay brokerage fees or
commissions to the Dealer Manager, the Depositary or the Information
Agent, or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. However, federal income tax backup withholding at
a rate of 31% may be required, unless an exemption is provided or unless
the required taxpayer identification information is provided. See
Instruction 10 of the Letter of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on Thursday, August 12, 1999, unless the Offer is extended.
6. The Board of Directors of the Company (the "Company Board") has duly
approved the Merger Agreement and the transactions contemplated thereby
and determined that the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, are fair to and
in the best interests of the Company and the Stockholders. The Company
Board recommends that the Stockholders accept the Offer, tender their
Shares pursuant to the Offer and approve and adopt the Merger Agreement.
7. In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates for
the Shares (the "Certificates") or a timely Book-Entry Confirmation (as
defined in the Offer To Purchase) with respect to the Shares, (ii) the
appropriate Letter(s) of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed with any required
signature guarantees (or, in the case of a book-entry transfer of Shares,
an Agent's Message (as defined in the Offer To Purchase)), and (iii) all
other documents required by the Letter of Transmittal. Accordingly,
payments may not be made to all tendering Stockholders at the same time,
and will depend upon when Certificates for, or confirmations of
book-entry transfer of, such Shares are actually received by the
Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth below. Please forward your instructions to
us in ample time to permit us to submit a tender on your behalf prior to the
Expiration Date. An envelope to return your instructions to us is enclosed. IF
YOU AUTHORIZE THE TENDER OF YOUR SHARES, ALL SUCH SHARES WILL BE TENDERED UNLESS
OTHERWISE SPECIFIED ON THE INSTRUCTION FORM SET FORTH BELOW.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
BY
HEAT ACQUISITION CORP.
AN INDIRECT, WHOLLY OWNED SUBSIDIARY
OF
RHI AG
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer To
Purchase, dated July 16, 1999, and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") in connection with the offer by Heat Acquisition Corp., a Delaware
corporation (the "Purchaser") and an indirect, wholly owned subsidiary of RHI
AG, an Austrian stock corporation, to purchase all of the outstanding shares of
common stock, par value $0.25 per share (together with the associated preferred
share purchase rights issued pursuant to the Rights Agreement, dated as of
October 31, 1995, as amended, between Global Industrial Technologies, Inc., a
Delaware corporation (the "Company"), and The Bank of New York, the "Shares"),
of the Company, at a purchase price of $13.00 per share without interest
thereon, upon the terms and subject to the conditions set forth in the Offer.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares to be Tendered: ______________________________________ Shares
Date: ________________ , 1999
SIGN HERE
Signature(s): ________________________________________________________________
Print Name(s):________________________________________________________________
Print Address(es):____________________________________________________________
______________________________________________________________________________
Area Code and Telephone Number(s):____________________________________________
Taxpayer Identification or Social Security Number(s):_________________________
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
THIS FORM MUST BE RETURNED TO THE BROKERAGE FIRM MAINTAINING YOUR ACCOUNT.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. The taxpayer identification number for an individual is the individual's
Social Security number. Social Security numbers have nine digits separated by
two hyphens: e.g., 000-00-0000. The taxpayer identification number for an entity
is the entity's Employer Identification number. Employer Identification numbers
have nine digits separated by only one hyphen: e.g., 00-0000000. The table below
will help determine the number to give the payer.
<TABLE>
<CAPTION>
- -------------------------------------------------------------
GIVE THE NAME AND SOCIAL
FOR THIS TYPE OF ACCOUNT: SECURITY NUMBER OF--
- -------------------------------------------------------------
<S> <C> <C>
1. Individual The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name The ward, minor or
guardian or committe for incompetent person(3)
a designated ward, minor
or incompetent person
7 a. The usual revocable The grantor-trustee(1)
savings trust
(grantor is also
trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under state law.
- -------------------------------------------------------------
<CAPTION>
GIVE THE NAME AND
EMPLOYER IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
<S> <C> <C>
- -------------------------------------------------------------
8. Sole proprietorship The owner(4)
9. A valid trust, estate or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or
trustee unless the legal
entity itself is not
designated in the
account title.)(5)
10. Corporate The corporation
11. Association, club, The organization
religious, charitable,
educational or other
tax-exempt organization
12. Partnership The partnership
13. A broker or registered The broker or nominee
nominee
14. Account with the The public entity
Department of
Agriculture in the name
of a public entity (such
as a state or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL
BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service (the "IRS") and
apply for a number.
To complete the Substitute Form W-9, if you do not have a taxpayer
identification number, write "Applied For" in the space for the taxpayer
identification number in Part 1, sign and date the Form, and give it to the
requester. If the requester does not receive your taxpayer identification number
within 60 days, backup withholding, if applicable, will begin and will continue
until you furnish your taxpayer identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in (1)
through (13) and a person registered under the Investment Advisers Act of 1940
who regularly acts as a broker are exempt. Payments subject to reporting under
sections 6041 and 6041A are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except that a corporation
that provides medical and health care services or bills and collects payments
for such services is not exempt from backup withholding or information
reporting. Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends and payments
by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under 403(b)(7), if the
account satisfies the requirements of section 401(f)(2).
(3) The United States or any of its agencies or instrumentalities.
(4) A State, the District of Columbia, a possession of the United States or any
of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States, the District of Columbia or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends generally not subject to backup
withholding also include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest generally not subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
Note: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR
MORE AND IS PAID IN THE COURSE OF THE PAYER'S TRADE OR BUSINESS AND YOU HAVE
NOT PROVIDED YOUR CORRECT TAXPAYER IDENTIFICATION NUMBER TO THE PAYER.
- - Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details see sections 6041, 6041A(a), 6042, 6044, 6045,
6049, 6050A and 6050N and the regulations under such sections.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. ENTER YOUR TAXPAYER IDENTIFICATION NUMBER. WRITE "EXEMPT" ON
THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
PRIVACY ACT NOTICE
Section 6109 requires you to give your correct taxpayer identification number to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. You must provide
your taxpayer identification number whether or not you are qualified to file a
tax return. Payers must generally withhold 31% of taxable interest, dividend,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail
to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
Exhibit 99(a)7
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN
OFFER TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE
DATED JULY 16,1999 AND THE RELATED LETTER OF TRANSMITTAL AND IS NOT BEING
MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF
SHARES RESIDING IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR
ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH
JURISDICTION. IN ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER
LAWS REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER
SHALL BE DEEMED TO BE MADE ON BEHALF OF PURCHASER BY DEUTSCHE BANK
SECURITIES INC., THE DEALER MANAGER OF THE OFFER, OR ONE OR MORE REGISTERED
BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Global Industrial Technologies, Inc.
by
Heat Acquisition Corp.
An Indirect, Wholly Owned Subsidiary
of
RHI AG
at
$13.00 Net Per Share
Heat Acquisition Corp., a Delaware corporation ( "Purchaser") and an
indirect, wholly owned subsidiary of RHI AG, an Austrian stock corporation
("Parent"), is offering to purchase all of the outstanding shares of common
stock, par value $0.25 per share (such shares, together with the associated
preferred share purchase rights (the "Rights") issued pursuant to the Rights
Agreement, dated as of October 31, 1995, as amended, between Global Industrial
Technologies, Inc., a Delaware corporation (the "Company"), and The Bank of New
York, the "Shares"), of the Company at $13.00 per Share, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in the Offer To Purchase dated July 16, 1999 (the "Offer To Purchase") and in
the related Letter of Transmittal (which together constitute the "Offer").
Parent and Purchaser have been advised that the Rights are not applicable to the
Offer, the Merger Agreement or any of the transactions contemplated thereby.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, AUGUST 12, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
THAT (TOGETHER WITH ANY SHARES THEN OWNED BY PARENT OR ANY OF ITS SUBSIDIARIES)
CONSTITUTES AT LEAST A MAJORITY OF THE OUTSTANDING SHARES, CALCULATED ON A FULLY
DILUTED BASIS ON THE DATE OF PURCHASE (THE "MINIMUM CONDITION"), (B) ANY
APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT
OF 1976 AND ANY APPLICABLE LAWS REGULATING COMPETITION, ANTITRUST, INVESTMENT OR
EXCHANGE CONTROLS IN GERMANY AND MEXICO, HAVING EXPIRED OR BEEN TERMINATED, AND
(C) THE FINANCING CONDITION (AS DEFINED IN THE OFFER TO PURCHASE). THE OFFER IS
ALSO SUBJECT TO CERTAIN OTHER CONDITIONS SET FORTH IN THE OFFER TO PURCHASE. SEE
INTRODUCTION AND SECTIONS 1, 9, 11 AND 14 OF THE OFFER TO PURCHASE.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 12, 1999 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, for the commencement
of the Offer by Purchaser and that, after the purchase of Shares pursuant to the
Offer, subject to the satisfaction or waiver of certain conditions, Purchaser
will be merged with and into the Company (the "Merger"), with the Company
surviving the Merger as an indirect, wholly owned subsidiary of Parent. In the
Merger, each Share (other than Shares owned by the Company or any of its
subsidiaries, or by Parent, Purchaser or any other subsidiary of Parent, or
Shares that are held by the Company's stockholders exercising their appraisal
rights pursuant to Section 262 of the Delaware General Corporation Law (the
"DGCL")) issued and outstanding immediately prior to the Effective Time (as
defined in the Offer To Purchase) will, by virtue of the Merger and
<PAGE>
without any action on the part of the holder thereof, be converted at the
Effective Time into the right to receive the Per Share Amount (as defined in the
Offer To Purchase) (or any greater per share amount paid for Shares pursuant to
the Offer), in cash payable to the holder thereof without interest and less any
required withholding taxes and, in certain circumstances, less any required
stock transfer taxes. The Merger Agreement is more fully described in Section 11
of the Offer To Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS DULY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND
DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY AND THE COMPANY'S STOCKHOLDERS. THE COMPANY BOARD RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER, TENDER THEIR SHARES PURSUANT TO THE
OFFER AND APPROVE AND ADOPT THE MERGER AGREEMENT.
For purposes of the Offer, Purchaser shall be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to the Depositary (as defined in
the Offer To Purchase) of its acceptance of such Shares for payment pursuant to
the Offer. In all cases, payment for Shares purchased pursuant to the Offer will
be made only after timely receipt by the Depositary of (i) certificates for the
Shares (or a timely Book-Entry Confirmation (as defined in the Offer To
Purchase) with respect to the Shares), (ii) the appropriate Letter(s) of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed with any required signature guarantees (or in the case of
book-entry transfer of Shares, an Agent's Message (as defined in the Offer To
Purchase)), and (iii) any other documents required by the Letter of Transmittal.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions set forth in the Merger Agreement, including, if required,
the approval of the Merger by the requisite vote of the stockholders of the
Company. The stockholder vote necessary to approve the Merger will be the
affirmative vote of a majority of the outstanding Shares. If the Minimum
Condition is satisfied and Purchaser purchases Shares pursuant to the Offer,
Purchaser will be able to effect the Merger without the affirmative vote of any
other stockholder of the Company. If Purchaser acquires at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, Purchaser will be able to
effect the Merger pursuant to the "short-form" merger provisions of Section 253
of the DGCL, without prior notice to, or any action by, any other stockholder of
the Company.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE CONSIDERATION TO BE
PAID FOR SHARES PURSUANT TO THE OFFER, REGARDLESS OF ANY EXTENSION OF THE OFFER
OR ANY DELAY IN MAKING SUCH PAYMENT. SIMILARLY, NO INTEREST WILL BE PAID ON THE
CONSIDERATION TO BE PAID IN THE MERGER TO STOCKHOLDERS WHO FAIL TO TENDER THEIR
SHARES PURSUANT TO THE OFFER, REGARDLESS OF ANY DELAY IN EFFECTING THE MERGER OR
MAKING SUCH PAYMENT.
The term "Expiration Date" shall mean 12:00 Midnight, New York City time,
on Thursday, August 12, 1999, unless and until Purchaser (in accordance with the
terms of the Merger Agreement) shall have extended the period of time during
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by Purchaser, shall
expire.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission, Purchaser may, under
certain circumstances, (i) extend the period of time during which the Offer is
open and thereby delay acceptance for payment of and the payment for any Shares,
by giving oral or written notice of such extension to the Depositary and (ii)
amend the Offer in any other respect by giving oral or written notice of such
amendment to the Depositary. Any extension, delay, waiver, amendment or
termination of the Offer will be followed as promptly as practicable by a public
announcement thereof, the announcement in the case of an extension to be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not properly withdrawn will remain subject to the Offer,
subject to the right of a tendering stockholder to withdraw such stockholder's
Shares.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn at any time after September 13, 1999, unless
theretofore accepted for payment as provided in the Offer To Purchase. For a
withdrawal to be effective, a
<PAGE>
written, telegraphic, telex or facsimile transmission notice of withdrawal must
be timely received by the Depositary at one of its addresses set forth in the
Offer To Purchase and must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holders of the Shares, if different from the person who tendered the
Shares. If the Shares to be withdrawn have been delivered to the Depositary, a
signed notice of withdrawal with (except in the case of Shares tendered by an
Eligible Institution (as defined in the Offer To Purchase)) signatures
guaranteed by an Eligible Institution must be submitted prior to the release of
such Shares. In addition, such notice must specify, in the case of Shares
tendered by delivery of certificates, the name of the registered holder (if
different from that of the tendering stockholder) and the serial numbers shown
on the particular certificates evidencing the Shares to be withdrawn or, in the
case of the Shares tendered by book-entry transfer, the name and number of the
account at the Book-Entry Transfer Facility (as defined in the Offer To
Purchase) to be credited with the withdrawn Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer To Purchase and is incorporated
herein by reference.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer To Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Requests for copies of the Offer To Purchase, the related Letter of
Transmittal and other tender offer materials may be directed to the Information
Agent or the Dealer Manager as set forth below, and copies will be furnished
promptly at Purchaser's expense. Purchaser will not pay any fees or commissions
to any broker or dealer or any other person (other than the Dealer Manager and
the Information Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, New York 10022
Collect Call: (212) 754-8000
Banks and Brokerage Firms, please call:
(800) 662-5200
Stockholders Please Call: (800) 566-9061
The Dealer Manager for the Offer is:
Deutsche Bank Securities Inc.
31 West 52nd street
New York, New York 10019
(800) 334-1898
July 19, 1999
<PAGE>
Exhibit 99(a)8
Global Press Release
Contacts
- --------
RHI AG Global Industrial Technologies, Inc.
Peter Hofmann George Pasley
(+43) (1) 50213-123 V.P. Communications
214-953-4510
RHI AG AND GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
ANNOUNCE DEFINITIVE AGREEMENT FOR
ACQUISITION OF GLOBAL FOR $13 CASH PER SHARE
VIENNA AND DALLAS, July 12, 1999 - RHI AG (Vienna Stock Exchange: RHI) and
Global Industrial Technologies, Inc. (NYSE: GIX) today announced the signing of
a definitive agreement under which a subsidiary of RHI AG will make a cash
tender offer to purchase all outstanding shares of Global for $13 per share, or
approximately $300 million, in cash. The total transaction value, including
Global's indebtedness, will be over $500 million. The definitive agreement has
been approved by the parties' boards of directors.
The tender offer will commence no later than Friday, July 16, 1999. The
completion of the tender offer is conditioned on at least a majority of the
outstanding Global shares having been tendered and not withdrawn, RHI's
obtaining arrangement of financing and regulatory and other customary
conditions.
The definitive agreement also provides that, following completion of the tender
offer, the RHI subsidiary will merge with and into Global. When the merger
becomes effective, each outstanding share of Global will be converted into the
right to receive $13 per share and Global will become a subsidiary of RHI.
Page 1
<PAGE>
The Americas operations of RHI's refractories subsidiary, VRD
(Veitsch-Radex-Didier), are conducted by North American Refractories Company
(NARCO), a Cleveland-based subsidiary of RHI.
Dr. Georg Obermeir, RHI's Chairman, said, "The acquisition of Global will permit
us to operate more efficiently, thereby permitting us to better serve our
customers around the world. We are delighted that Global, including its
Harbison-Walker business, will be joining our group of companies."
Rawles Fulgham, Chairman and Chief Executive Officer of Global, stated,"We are
pleased the process Global's Board initiated in March to evaluate strategic
alternatives has achieved our goal of enhancing shareholder value. We are also
very pleased we will be combining Global with RHI, a very strong company highly
experienced in worldwide industrial manufacturing. Our customers will be well
served by this combination, and our employees will be part of a larger and more
diverse organization."
Global was advised by and received fairness opinions from Wasserstein Perella &
Co., Inc. and J. P. Morgan & Co., Inc. in connection with the transaction.
Deutsche Banc Alex. Brown and Jones, Day, Reavis & Pogue are RHI's financial and
legal advisors in the transaction.
RHI is a global operator in the refractories, engineering, insulating and
waterproofing sectors with over 10,000 employees at more than 50 locations
spanning all five continents. With VRD, RHI is the world market leader for
refractories and a vital partner to all industries whose activities require high
Page 2
<PAGE>
temperature production processes. RHI's customers include the steel, cement,
glass and nonferrous metal industries. In 1998 RHI reported earnings before tax
of (U.S.) $68.0 million on sales of (U.S.) $1.6 billion.
Global is a major manufacturer of technologically advanced industrial products
that support high-growth markets around the world. Products include modular
cells for refining nonferrous metals; premium refractories for lining
heat-containing industrial vessels such as steel furnaces; raw materials used to
make refractory products; processing and recycling equipment. For the first
quarter ended March 31, 1999, Global reported operating earnings from continuing
operations of $14.0 million on revenues of $141.8 million.
Forward-looking statements in this press release involve risks and uncertainties
that could cause actual results to differ from those contemplated. Factors which
could cause those differences include the terms and availability of financing,
actions by other persons, legal and regulatory requirements and other factors.
# # #
Page 3
<PAGE>
Exhibit 99
AGREEMENT AND PLAN OF MERGER
AMONG
RHI AG
HEAT ACQUISITION CORP.
AND
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
DATED: JULY 12, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I
THE OFFER
SECTION 1.01. The Offer................................................ 2
SECTION 1.02. Company Action........................................... 4
SECTION 1.03. Directors................................................ 5
ARTICLE II
THE MERGER
SECTION 2.01. The Merger............................................... 6
SECTION 2.02. Effective Time........................................... 7
SECTION 2.03. Effect of the Merger..................................... 7
SECTION 2.04. Certificate of Incorporation; By-Laws.................... 7
SECTION 2.05. Closing.................................................. 7
SECTION 2.06. Directors and Officers................................... 7
SECTION 2.07. Stockholders' Meeting.................................... 8
SECTION 2.08. Merger Without Meeting of Stockholders................... 8
ARTICLE III
CONVERSION OF SECURITIES
SECTION 3.01. Effect on Capital Stock.................................. 8
SECTION 3.02. Exchange of Certificates................................. 10
SECTION 3.03. Dissenting Shares........................................ 11
SECTION 3.04. Lost, Stolen or Destroyed Certificates................... 12
SECTION 3.05. Further Action........................................... 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Organization and Qualification; Subsidiaries............. 12
SECTION 4.02. Certificate of Incorporation and By-Laws................. 13
SECTION 4.03. Capitalization........................................... 13
SECTION 4.04. Authority Relative to This Agreement..................... 14
SECTION 4.05. Material Contracts; No Conflict, Required Filings
and Consents............................................. 14
SECTION 4.06. Compliance, Permits...................................... 15
SECTION 4.07. Rights Agreement......................................... 16
SECTION 4.08. SEC Filings, Financial Statements........................ 16
SECTION 4.09. Absence of Certain Changes or Events..................... 17
SECTION 4.10. No Undisclosed Liabilities............................... 18
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 4.11. Absence of Litigation.................................... 18
SECTION 4.12. Employee Benefit Plans; Employment Agreements............ 18
SECTION 4.13. Labor Matters............................................ 20
SECTION 4.14. Title to Property........................................ 21
SECTION 4.15. Taxes.................................................... 21
SECTION 4.16. Environmental Matters.................................... 23
SECTION 4.17. Brokers.................................................. 24
SECTION 4.18. Intellectual Property.................................... 24
SECTION 4.19. Vote Required............................................ 25
SECTION 4.20. Takeover Statutes, Etc................................... 25
SECTION 4.21. Opinion of Financial Advisor............................. 25
SECTION 4.22. Year 2000 Compliance..................................... 25
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 5.01. Organization and Qualification........................... 25
SECTION 5.02. Authority Relative to this Agreement..................... 26
SECTION 5.03. No Conflict, Required Filings and Consents............... 26
SECTION 5.04. Financial Structure...................................... 27
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01. Conduct of Business by the Company Pending the Merger.... 27
SECTION 6.02. No Solicitation.......................................... 30
SECTION 6.03. Information Supplied..................................... 32
SECTION 6.04. The Company Rights Agreement............................. 32
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Filings, Other Actions; Notification..................... 32
SECTION 7.02. Access to Information; Confidentiality................... 35
SECTION 7.03. Stock Options and Stock Units............................ 35
SECTION 7.04. Employee Benefits. ..................................... 36
SECTION 7.05. Indemnification.......................................... 37
SECTION 7.06. Further Action........................................... 38
SECTION 7.07. Public Announcements..................................... 38
SECTION 7.08. De-listing............................................... 39
SECTION 7.09. Expenses................................................. 39
SECTION 7.10. Financing................................................ 39
SECTION 7.11. Payment to the Company................................... 39
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to Obligation of Each Party to Effect
the Merger ............................................ 40
ARTICLE IX
TERMINATION
SECTION 9.01. Termination.............................................. 40
SECTION 9.02. Effect of Termination.................................... 43
SECTION 9.03. Fees and Expenses........................................ 43
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Effectiveness of Representations, Warranties and
Agreements ............................................ 45
SECTION 10.02. Notices.................................................. 45
SECTION 10.03. Amendment................................................ 46
SECTION 10.04. Waiver................................................... 46
SECTION 10.05. Headings................................................. 46
SECTION 10.06. Severability............................................. 46
SECTION 10.07. Entire Agreement......................................... 47
SECTION 10.08. Assignment, Purchaser.................................... 47
SECTION 10.09. Parties in Interest...................................... 47
SECTION 10.10. Failure or Indulgence Not Waiver; Remedies Cumulative.... 47
SECTION 10.11. Governing Law............................................ 48
SECTION 10.12. Counterparts............................................. 48
SECTION 10.13. Waiver of Jury Trial; Consent of Jurisdiction............ 48
SECTION 10.14. Certain Definitions...................................... 49
SECTION 10.15. Additional Definitions/Interpretative Matters............ 49
SECTION 10.16. Enforcement of Agreement................................. 53
</TABLE>
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 12, 1999 (the "AGREEMENT"),
by and among RHI AG, a corporation organized under the laws of Austria
("PARENT"), Heat Acquisition Corp., a Delaware corporation and a wholly-owned
indirect subsidiary of Parent ("PURCHASER"), and Global Industrial Technologies,
Inc., a Delaware corporation (the "COMPANY"). Certain capitalized terms used in
this Agreement have the meanings ascribed to them in Section 10.14 hereof.
WHEREAS, the Boards of Directors of each of Parent, Purchaser and the
Company have approved and deem it advisable and in the best interests of their
respective companies and stockholders for Parent to enter into a business
combination with the Company upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance of such combination, it is proposed that Purchaser
make a cash tender offer (the "OFFER") to acquire all of the outstanding Common
Stock, par value $0.25 per share, of the Company (the "COMPANY COMMON STOCK") at
a price of $13.00 per share, net to the seller in cash, upon the terms and
subject to the conditions set forth herein;
WHEREAS, prior to the approval of the business combination, the Company
Board approved the amendment to the Rights Agreement (as defined herein) to
permit the Offer, the Merger and the other transactions contemplated by this
Agreement (the "TRANSACTIONS") to proceed without resulting in a distribution of
Rights (as defined herein) under the Rights Agreement;
WHEREAS, the Boards of Directors of each of Parent and the Company have
approved this Agreement and the merger (the "MERGER"), following the
consummation of the Offer, of Purchaser with and into the Company in accordance
with the DGCL and upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company Board, by the affirmative vote of a majority of the
members of the Company Board, has (i) determined that this Agreement and the
Transactions are fair to and in the best interests of the Company and the
holders of the Shares (as defined herein), (ii) authorized, approved, adopted
and declared advisable this Agreement and the Transactions and (iii) resolved to
recommend that the stockholders of the Company accept the Offer and tender their
Shares to Purchaser pursuant to the Offer and approve and adopt this Agreement;
- 1 -
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with Article IX and none of the events set forth
in ANNEX A shall have occurred and be existing, as promptly as reasonably
practicable (but in no event later than five business days from the public
announcement of the execution of this Agreement), Purchaser shall commence
(within the meaning of Rule 14d-2 promulgated under the Exchange Act) the Offer
to acquire all the outstanding Shares at a price of $13.00 per Share, net to the
seller in cash, subject to applicable withholding of taxes, without interest
(such price, or such higher price per Share as may be paid in the Offer, being
referred to herein as the "OFFER PRICE"). Subject to (i) the satisfaction of the
Minimum Condition and (ii) the satisfaction or waiver of the other conditions
set forth in ANNEX A, Purchaser shall consummate the Offer in accordance with
its terms and promptly accept for payment and pay for Shares validly tendered
pursuant to the Offer and not withdrawn as soon as Purchaser is legally
permitted to do so under applicable law. The Offer shall be made by means of an
offer to purchase (the "OFFER TO PURCHASE") and shall be subject to the Minimum
Condition and the other conditions set forth in ANNEX A hereto, and shall
reflect, as appropriate, the other terms set forth in this Agreement. Parent and
Purchaser expressly reserve the right, in their sole discretion, subject to
compliance with the Exchange Act and the terms of this Agreement, to waive any
such condition and to make any other changes in the terms and conditions of the
Offer; PROVIDED, HOWEVER, that Parent and Purchaser shall not (i) amend or waive
the Minimum Condition, (ii) decrease the Offer Price, (iii) decrease the maximum
number of Shares to be purchased in the Offer, (iv) waive or satisfy the
Financing Condition (as defined herein) unless the representation set forth in
Section 5.04 shall be true and correct, or (v) amend any other term or condition
of the Offer in any manner or impose any term or condition that is adverse to
the holders of the Shares without the written consent of the Company executed by
the Chief Executive Officer of the Company stating that it was authorized by the
Company Board or a duly authorized committee thereof. Notwithstanding any other
provision hereof, Parent and Purchaser expressly reserve the right (but will
have no obligation to), in their sole discretion, subject to compliance with the
Exchange Act and the terms of this Agreement, to waive the Financing Condition.
Unless otherwise stated, all references in this Agreement to Company Common
Stock and Shares shall be deemed to include the associated preferred stock
purchase rights (the "RIGHTS") issued pursuant to the Rights Agreement.
(b) Notwithstanding the foregoing, in the event that any condition to the
Offer set forth in ANNEX A shall not have been satisfied or waived at the
scheduled or any extended expiration date of the Offer, Purchaser shall (unless
otherwise notified by the Company in writing), and Purchaser shall
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otherwise be entitled to, extend the expiration date of the Offer in increments
of up to 5 business days each (unless otherwise agreed by Parent and the
Company) until the earliest to occur of (x) the satisfaction or waiver of each
such condition and (y) the termination of this Agreement in accordance with its
terms; PROVIDED, HOWEVER, that Purchaser shall not be required to extend the
Offer as provided in this sentence if any such condition (other than the
Financing Condition) is incapable of being satisfied. In addition, without
limiting the foregoing, Purchaser may, without the consent of the Company,
extend the expiration date of the Offer (i) as required by applicable law, (ii)
pursuant to Section 7.10, and (iii) for up to 5 business days if, on the
scheduled or any extended expiration date of the Offer, the Shares validly
tendered pursuant to the Offer and not withdrawn represent more than 80% but
less than 90% of the outstanding Shares, notwithstanding that all the conditions
to the Offer set forth in ANNEX A have been satisfied, so long as Purchaser
waives the further satisfaction of any of the conditions to the Offer (other
than the condition set forth in paragraph (a) of Annex A).
(c) As soon as practicable on the date the Offer is commenced (the "Offer
Commencement Date"), Parent and Purchaser shall file with the SEC a Tender Offer
Statement on Schedule 14D-1 (together with all amendments and supplements
thereto, the "SCHEDULE 14D-1") with respect to the Offer. The Schedule 14D-1
shall contain or shall incorporate by reference the Offer to Purchase and forms
of the related letter of transmittal and any related summary advertisement (the
Schedule 14D-1, the Offer to Purchase and such other documents, together with
all supplements and amendments thereto, being referred to herein collectively as
the "OFFER DOCUMENTS"). Parent and Purchaser shall mail the applicable Offer
Documents to the stockholders of the Company as soon as practicable after filing
with the SEC. The Offer Documents shall comply in all material respects with the
provisions of applicable federal securities laws. Each of Parent and Purchaser,
on the one hand, and the Company, on the other hand, shall correct promptly any
information provided by it for use in the Offer Documents which shall have
become false or misleading in any material respect, and Parent and Purchaser
further agree to take all steps necessary to cause the Schedule 14D-1, as so
corrected, to be filed with the SEC and the other Offer Documents, as so
corrected, to be disseminated to holders of the Shares, in each case as and to
the extent required by applicable federal securities laws. Parent and Purchaser
shall give the Company and its counsel reasonable opportunity to review and
comment upon the Offer Documents prior to their being filed with, or sent to,
the SEC. Parent and Purchaser agree to provide the Company and its counsel any
comments Parent, Purchaser or their counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after the receipt of such
comments.
(d) Parent shall provide or cause to be provided to Purchaser on a timely
basis the funds necessary to purchase all the Shares that Purchaser becomes
obligated to purchase pursuant to the Offer.
(e) Purchaser shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to the Offer such amounts as be
required to be deducted and withheld with respect to the making of such payment
under the Code or under any provision of state, local or foreign tax law;
PROVIDED, HOWEVER, that Purchaser shall promptly pay any amounts deducted and
withheld hereunder to
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the applicable Governmental Entity, shall promptly file all Tax Returns and
reports required to be filed in respect of such deductions and withholdings, and
shall promptly provide to the Company proof of such payment and a copy of all
such Tax Returns and reports.
SECTION 1.02. COMPANY ACTION. (a) The Company hereby approves of and
consents to the Offer and represents that the Company Board, at a meeting duly
called and held on July 12, 1999 by the affirmative vote of a majority of the
members of the Company Board, has duly (i) determined that the Transactions are
fair to and in the best interests of the Company and the holders of the Shares,
(ii) authorized, approved, adopted and declared advisable this Agreement and the
Transactions, (iii) resolved to recommend that the stockholders of the Company
accept the Offer and tender their Shares to Purchaser pursuant to the Offer and
approve and adopt this Agreement, (iv) took all other action necessary to render
the limitations on business combinations contained in Section 203 of the DGCL
(or any similar provision) and Article VI of the Company's Certificate of
Incorporation inapplicable to the Transactions and (v) amended the Rights
Agreement as described in Section 4.07. J.P. Morgan & Co., Inc. and Wasserstein
Perella & Co., Inc., the Company's financial advisors, have each delivered to
the Company Board the opinion described in Section 4.21. The Company will use
its best efforts to obtain the consent of each of J.P. Morgan & Co., Inc. and
Wasserstein Perella & Co., Inc. to permit the inclusion of the opinions referred
to in Section 4.21 in the Schedule 14D-9 and the Information Statement. The
Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Company Board described in the immediately preceding
sentence, subject to Section 6.02(b).
(b) On the date that Parent and Purchaser file the Schedule 14D-1 with the
SEC, the Company shall file with the SEC a Solicitation/Recommendation Statement
on Schedule 14D-9 (together with all amendments and supplements thereto, the
"SCHEDULE 14D-9") containing the recommendation of the Company Board described
in Section 1.02(a) and shall disseminate the Schedule 14D-9 to the holders of
the Shares to the extent required by Rule 14d-9 promulgated under the Exchange
Act and any other applicable federal securities laws. The Schedule 14D-9 shall
comply in all material respects with the provisions of applicable federal
securities laws. Each of the Company, on the one hand, and Parent and Purchaser,
on the other hand, shall correct promptly any information provided by it for use
in the Schedule 14D-9 which 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 holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. The Company shall give Parent,
Purchaser and their counsel reasonable opportunity to review and comment upon
the Schedule 14D-9 prior to it being filed with, or sent to, the SEC. The
Company agrees to provide Parent, Purchaser and their counsel any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) The Company shall cause its transfer agent to promptly furnish
Purchaser with mailing labels containing the names and addresses of all record
holders of the Shares and with security position
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listings of Shares held in stock depositories, each as of a recent date,
together with all other available listings and computer files containing names,
addresses and security position listings of record holders and beneficial owners
of Shares. The Company shall furnish Purchaser with such additional information,
including, without limitation, updated listings and computer files of
stockholders, mailing labels and security position listings, and such other
assistance as Parent, Purchaser or their agents may reasonably request. Subject
to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer or the Merger, Parent and Purchaser shall (i) hold in
confidence the information contained in such labels, listings and files, (ii)
use such information only in connection with the Offer and the Merger and (iii)
if this Agreement is terminated in accordance with Article IX, upon request of
the Company, promptly deliver or cause to be delivered to the Company (or
destroy and certify to the Company the destruction of) all copies of such
information then in their possession or the possession of their affiliates,
agents or representatives.
SECTION 1.03. DIRECTORS. (a) Promptly upon the acceptance for payment by
Parent or any of its subsidiaries of Shares pursuant to the Offer, the Company
will, subject to compliance with Section 14(f) of the Exchange Act, take all
actions necessary to cause persons designated by Purchaser to become directors
of the Company so that the total number of such persons equals the product of
the total number of directors on the Company Board (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Parent, Purchaser or any of
their affiliates (including for purposes of this Section 1.03, such Shares as
are accepted for payment pursuant to the Offer, but excluding Shares held by the
Company or any of its affiliates, which would not include Parent, Purchaser or
any of their respective affiliates) bears to the number of Shares then
outstanding; PROVIDED, HOWEVER, that if the number of Shares purchased pursuant
to the Offer equals or exceeds a majority of the outstanding Shares, the Board
percentage described above will in all events be a majority of the members of
the Company Board. Notwithstanding any other provision hereof, in the event that
Parent's designees are appointed or elected to the Company Board, until the
Effective Time (as defined in Section 2.02), the Company Board shall have at
least two directors who are directors on the date of this Agreement and who are
not executive officers of the Company or, if no such persons are willing or able
so to serve, who qualify as "independent directors" within the meaning of the
New York Stock Exchange ("NYSE") LISTED COMPANY MANUAL (the "INDEPENDENT
DIRECTORS"). At such times, the Company will use its best efforts to cause (i)
each committee of the Company Board, (ii) if requested by Parent, the board of
directors of each of the Company's subsidiaries and (iii) if requested by
Parent, each committee of such subsidiaries' boards to include persons
designated by Parent constituting the same percentage of each such committee or
board as Parent's designees are of the Company Board. The Company shall, upon
request by Parent, promptly increase the size of the Company Board or secure the
resignations of such number of directors, or both, as is necessary to enable
Parent's designees to be elected or appointed to the Company Board pursuant to
this Section 1.03(a) and shall cause Parent's designees to be so elected or
appointed. The Company Board shall approve, and by approving the execution and
delivery of this Agreement by the Company, hereby does
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approve the taking of action by stockholders of the Company, by written consent,
to amend the By-Laws of the Company as may be necessary or desirable to effect
the provisions of this Section 1.03.
(b) Following the election or appointment of Parent's designees pursuant to
this Section 1.03, and prior to the Effective Time, the approval of a majority
of the Independent Directors shall be required to authorize (i) any amendment of
this Agreement or the Certificate of Incorporation or ByLaws of the Company,
(ii) any termination of this Agreement by the Company, (iii) any consent by the
Company to any extension of the time for performance of any of the obligations
or other acts of Parent or Purchaser or (iv) any waiver by the Company of
compliance with any of the covenants or conditions contained in this Agreement
for the benefit of the Company or any other rights of the Company under this
Agreement. Any person who is a director on the date of this Agreement, but who,
in order to carry out the provisions of this Section 1.03, is not a director at
the Effective Time, shall be entitled to receive all payments (other than
attendance fees) at the time such director resigns as he or she otherwise would
have been entitled to receive under policies or programs in effect on the date
hereof if he or she had been a director as of the Effective Time.
(c) Subject to applicable law, the Company shall promptly take all action
necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.03 and shall include in the Schedule 14D-9 mailed to stockholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if Parent has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.03. Parent and Purchaser shall furnish to
the Company in a timely manner so as to permit the Company to fulfill its
obligations under this Section 1.03 and be solely responsible for any
information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1. Subject to clause (b) of
this Section 1.03, the provisions of this Section 1.03 are in addition to and
shall not limit any rights that Parent, Purchaser or any of their respective
affiliates may have as a holder or beneficial owner of Shares as a matter of law
with respect to the election of directors or otherwise.
ARTICLE II
THE MERGER
SECTION 2.01. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, at the Effective Time
Purchaser shall be merged with and into the Company. As a result of the Merger,
(i) the separate corporate existence of Purchaser shall cease and the Company
shall continue as the surviving corporation of the Merger (the "SURVIVING
CORPORATION"), (ii) the Company shall succeed to and assume all the rights and
obligations of Purchaser in accordance with the DGCL and (iii) the separate
corporate existence of the Company with all its
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rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in Section 2.04.
SECTION 2.02. EFFECTIVE TIME. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VIII, the parties
hereto shall cause the Merger to be consummated by filing this Agreement or a
certificate of merger (in either case, the "CERTIFICATE OF MERGER") with the
Secretary of State of the State of Delaware in such form as required by, and
executed in accordance with, the relevant provisions of the DGCL. The parties
hereto shall make all other filings, recordings or publications required by the
DGCL in connection with the Merger. The Merger shall become effective at such
time as the Certificate of Merger is duly filed with such Secretary of State, or
at such later time as Parent and the Independent Directors of the Company shall
agree and specify in the Certificate of Merger (the time the Merger becomes
effective being the "EFFECTIVE TIME").
SECTION 2.03. EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, immunities, powers and franchises of the Company and Purchaser shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Purchaser shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 2.04. CERTIFICATE OF INCORPORATION; BY-LAWS. At the Effective Time
and without any further action on the part of the Company and Purchaser, the
Certificate of Incorporation of the Company in effect at the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation, until
thereafter amended as provided by the DGCL and such Certificate of
Incorporation, except that Article IV of the Company's Certificate of
Incorporation shall be amended to read in its entirety as follows: "The
aggregate number of shares which the Corporation shall have the authority to
issue is 1,000 shares of Common Stock, par value $0.01 per share.". The By-Laws
of the Company shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by the DGCL, the Certificate of Incorporation of
the Surviving Corporation and such By-Laws.
SECTION 2.05. CLOSING. Unless this Agreement has been terminated and the
Transactions have been abandoned pursuant to Article IX, and subject to the
satisfaction or waiver of the conditions set forth in Article VIII, the closing
of the Merger (the "CLOSING") will take place at 10:00 AM (EST) as promptly as
practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article VIII, at the offices of Jones,
Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York 10022, unless
another date, time or place is agreed to in writing by the parties hereto.
SECTION 2.06. DIRECTORS AND OFFICERS. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the
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officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
SECTION 2.07. STOCKHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the Merger,
the Company, acting through the Company Board, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special meeting
of its stockholders (the "SPECIAL MEETING") as promptly as practicable following
the acceptance for payment and purchase of Shares by Purchaser pursuant to the
Offer for the purpose of considering and taking action upon the approval of the
Merger and the approval and adoption of this Agreement; and
(ii) prepare and file with the SEC a preliminary Information
Statement relating to the Merger and this Agreement, use its best efforts to
obtain and furnish the information required to be included by the SEC in the
Information Statement and, after consultation with Parent, respond promptly to
any comments made by the SEC with respect to the preliminary Information
Statement and cause a definitive Information Statement to be mailed to its
stockholders, provided that the Information Statement shall not be filed, and no
amendment or supplement to the Information Statement shall be made, by the
Company without consultation with Parent and its counsel.
(b) Parent shall provide the Company with the information concerning
Parent and Purchaser required to be included in the Information Statement.
Parent shall vote, or cause to be voted, all of the Shares then beneficially
owned by it, Purchaser or any of its other subsidiaries or affiliates in favor
of the approval of the Merger and the approval and adoption of this Agreement.
SECTION 2.08. MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding
Section 2.07 hereof, in the event that Parent, Purchaser or any other subsidiary
of Parent shall acquire at least 90 percent of the outstanding Shares pursuant
to the Offer or otherwise, the parties hereto shall, subject to Article VIII,
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
ARTICLE III
CONVERSION OF SECURITIES
SECTION 3.01. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Purchaser, the Company
or the holders of any of the following securities:
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(a) CANCELLATION. Each Share held in the treasury of the Company and each
Share owned by Parent, Purchaser or any direct or indirect wholly-owned
subsidiary of the Company or Parent immediately prior to the Effective Time
(other than Shares in trust accounts, managed accounts and the like that are
beneficially owned by third parties) ("INELIGIBLE SHARES") shall, by virtue of
the Merger and without any action on the part of the holder thereof, cease to be
outstanding, be canceled and retired without payment of any consideration
therefor and cease to exist.
(b) CONVERSION OF SECURITIES. Each Share issued and outstanding immediately
prior to the Effective Time, other than Dissenting Shares and Ineligible Shares,
shall be converted into the right to receive the Offer Price (the "MERGER
CONSIDERATION"), upon surrender of the certificate formerly representing such
Share in the manner provided in Section 3.02. All such Shares, when so
converted, shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 3.02. Notwithstanding
the foregoing, if between the date of this Agreement and the Effective Time the
outstanding Shares shall have been changed into a different number of shares or
a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Merger Consideration will be correspondingly adjusted on a per-share basis
to reflect such stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares.
(c) STOCK OPTIONS AND STOCK UNITS. All options to purchase Company Common
Stock granted under the Stock Option Plans to directors, officers or employees
of the Company (in any such case, an "OPTION") and all stock units ("STOCK
UNITS") issued under the Global Industrial Technologies, Inc. Deferred
Compensation Plan (the "DEFERRED COMPENSATION PLAN") then outstanding shall be
subject to the provisions of Section 7.03.
(d) CAPITAL STOCK OF PURCHASER. Each share of Purchaser Common Stock issued
and outstanding immediately prior to the Effective Time shall be converted into
and exchanged for one validly issued, fully paid and non-assessable share of
common stock, par value $.01 per share, of the Surviving Corporation. Each stock
certificate of Purchaser evidencing ownership of any such shares shall continue
to evidence ownership of such shares of capital stock of the Surviving
Corporation.
(e) ALL OTHER CAPITAL STOCK OF THE COMPANY. All other capital stock of the
Company and any options, warrants or other rights to purchase capital stock of
the Company (other than Options and Stock Units) shall be canceled and retired
and shall cease to exist, and no Merger Consideration or other consideration
shall be issued or delivered in exchange therefor.
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SECTION 3.02. EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Prior to the Effective Time, Parent shall designate
a bank or trust company to act as agent for holders of the Shares in connection
with the Merger (the "PAYING AGENT") to receive in trust the funds to which
holders of the Shares shall become entitled pursuant to Section 3.01(b). At the
Effective Time, Parent shall take all steps necessary to deposit or cause to be
deposited with the Paying Agent such funds for timely payment thereunder. Such
funds shall be invested by the Paying Agent as directed by Parent pending
payment thereof by the Paying Agent to holders of the Shares. Any net profit
resulting from, or interest or income produced by, such investments shall be the
sole and exclusive property of Parent and shall be payable at the direction of
Parent, and no part of such earnings shall accrue to the benefit of holders of
the Shares. No interest will accrue or be paid on any cash payable upon the
surrender of a Certificate or Certificates which immediately before the
Effective Time represented outstanding Shares.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time, Parent
shall cause the Paying Agent to mail to each holder of record of a certificate
or certificates, which immediately prior to the Effective Time represented
outstanding Shares (the "CERTIFICATES"), whose Shares were converted pursuant to
Section 3.01(b) into the right to receive the Merger Consideration, (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall, subject to the immediately following sentence
and Section 3.02(e), be entitled to receive in exchange therefor the Merger
Consideration for each Share formerly represented by such Certificate and the
Certificate so surrendered shall forthwith be canceled. If payment of the Merger
Consideration is to be made to a person other than the person in whose name the
surrendered Certificate is registered, it shall be a condition to payment that
the Certificate so surrendered shall be properly endorsed or shall be otherwise
in proper form for transfer and that the person requesting such payment shall
have paid any transfer and other taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of Parent
that such tax either has been paid or is not applicable. Until surrendered as
contemplated by this Section 3.02(b), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive the Merger
Consideration in cash as contemplated by this Section 3.02.
(c) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON
STOCK. At the Effective Time, the stock transfer books of the Company shall be
closed and thereafter there shall be no further registration of transfers of
Shares on the records of the Company. From and after the Effective Time, the
holders of Certificates evidencing ownership of the Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares,
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except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article III.
(d) TERMINATION OF FUND; NO LIABILITY. At any time following six
months after the Effective Time, Parent shall be entitled to require the Paying
Agent to deliver to it any funds (including any interest received with respect
thereto) which had been made available to the Paying Agent and which have not
been disbursed to holders of Certificates, and thereafter such holders shall be
entitled to look to Parent (subject to abandoned property, escheat or other
similar laws) only as general creditors thereof with respect to the payment of
any Merger Consideration that may be payable upon surrender of any Certificates
such stockholder holds, as determined pursuant to this Agreement, without any
interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving
Corporation or the Paying Agent shall be liable to any holder of a Certificate
for Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(e) WITHHOLDING RIGHTS. Parent, the Surviving Corporation and the
Paying Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as Parent, the Surviving Corporation or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under
the Code or any provision of state, local, provincial or foreign tax law. To the
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the Shares
in respect of which such deduction and withholding was made.
SECTION 3.03. DISSENTING SHARES. Notwithstanding any provision of this
Agreement to the contrary, if and to the extent required by the DGCL, Dissenting
Shares shall not be converted into the right to receive the Merger
Consideration, and holders of such Dissenting Shares shall be entitled to
receive payment of the appraised value of such Dissenting Shares in accordance
with the provisions of Section 262 of the DGCL unless and until such holders
fail to perfect or effectively withdraw or otherwise lose their rights to
appraisal and payment under the DGCL. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or otherwise loses such right,
such Dissenting Shares shall thereupon be treated as if they had been converted
into and become exchangeable for, at the Effective Time, the right to receive
the Merger Consideration, without any interest thereon. Notwithstanding anything
to the contrary contained in this Section 3.03, if (i) the Merger is rescinded
or abandoned or (ii) the stockholders of the Company revoke the authority to
effect the Merger, then the right of any stockholder to be paid the fair value
of such stockholder's Dissenting Shares pursuant to Section 262 of the DGCL
shall cease. The Company shall give Parent prompt notice of any demands received
by the Company for appraisals of Dissenting Shares and the opportunity to direct
all negotiations and proceedings with respect to appraisal rights under the
DGCL. The Company shall not, except with the prior written consent of Parent,
make any payment with respect to any demands for appraisals or offer to settle
or settle any such demands.
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SECTION 3.04. LOST, STOLEN OR DESTROYED CERTIFICATES. If any Certificates
shall have been lost, stolen or destroyed, the Paying Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such Merger Consideration as may
be required pursuant to Section 3.01(b); PROVIDED, HOWEVER, that Parent may, in
its discretion and as a condition precedent to the issuance and delivery
thereof, require the owner of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Parent or the Paying Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
SECTION 3.05. FURTHER ACTION. If, at any time after the Effective Time, any
such further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
the Company and Purchaser, the officers and directors of the Company and
Purchaser are fully authorized in the name of their respective corporations or
otherwise to take, and will take, all such lawful and necessary action.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule, the Company hereby
represents and warrants to Parent and Purchaser that:
SECTION 4.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the requisite corporate power and authority and is in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders ("APPROVALS") necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority and
Approvals is not reasonably likely to have a Company Material Adverse Effect.
Each of the Company and its subsidiaries is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that is not reasonably likely to have a Company Material Adverse
Effect. A true and complete list of all of the Company's subsidiaries, together
with the jurisdiction of incorporation of each subsidiary and the percentage of
each subsidiary's outstanding capital stock owned by the Company or another
subsidiary, is set forth in Section 4.01 of the Company Disclosure Schedule. The
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, joint venture or other
business association or entity.
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SECTION 4.02. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has
heretofore furnished or made available to Parent a complete and correct copy of
its Certificate of Incorporation and By-Laws, as amended to date, and a complete
and correct copy of the equivalent organizational documents of each of A.P.
Green Industries, Inc., Corrosion Technology International, Inc.,
Harbison-Walker Refractories Company, Inc. and Shred-Tech Capital Corp. The
Certificate of Incorporation, By-Laws and equivalent organizational documents of
each of the Company's subsidiaries are in full force and effect. The Company is
not in violation of any of the provisions of its Certificate of Incorporation or
By-Laws. None of the Company's subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or By-Laws or equivalent
organizational documents.
SECTION 4.03. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 100,000,000 shares of Company Common Stock and 10,000,000
shares of preferred stock, par value $0.25 per share. As of July 1, 1999 (the
"Measurement Date"), (i) 22,412,961 shares of Company Common Stock were issued
and outstanding (including 651,297 Shares held under the Company's 401(k) Plan),
all of which have been duly authorized and validly issued and are fully paid and
non-assessable, (ii) no shares of preferred stock were issued or outstanding or
had been designated, (iii) 4,950,736 Shares were held in the treasury of the
Company, (iv) 2,276,535 Shares were reserved for future issuance pursuant to
outstanding Options granted under the 1992 Stock Compensation Plan and the Stock
Option Plan for Non-Employee Directors and 120,760 Stock Units were outstanding
under the Deferred Compensation Plan, and (v) 222,956 shares of preferred stock
were reserved for issuance pursuant to the Rights Agreement. Except as expressly
contemplated hereunder, no change in such capitalization, including without
limitation, any issuance of Shares or grants of Options or Stock Units, has
occurred between January 1, 1998 and the date hereof other than any change
associated with the exercise of vested Options. Except as set forth in this
Section 4.03 or Section 4.12 hereof and except for the Rights, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of the Company or
any of its subsidiaries or obligating the Company or any of its subsidiaries to
issue or sell any shares of capital stock of, or other equity interests in, the
Company or any of its subsidiaries. All shares subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly issued, fully paid
and non-assessable. There are no obligations, contingent or otherwise, of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or the capital stock of any
subsidiary or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any such subsidiary or any other entity
other than guarantees of bank obligations of subsidiaries entered into in the
ordinary course of business. All of the outstanding shares of capital stock of
each of the Company's subsidiaries are duly authorized, validly issued, fully
paid and non-assessable and are owned by the Company or another subsidiary free
and clear of all security interests, liens, claims, pledges, agreements,
limitations in the Company's voting rights, charges or other encumbrances of any
nature whatsoever. The Company has delivered or made available to Parent a
complete, true and correct copy of the Rights Agreement and the forms of option
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agreements for Options. Section 4.03 of the Company Disclosure Schedule contains
a list of existing Options, including the number of option shares, exercise
price, vesting terms and grant date thereof.
(b) There are no voting trusts or other agreements or understandings
to which the Company or any of its subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the subsidiaries. None of
the Company or its subsidiaries is required to redeem, repurchase or otherwise
acquire shares of capital stock of the Company or any of its subsidiaries,
respectively, as a result of the Transactions.
SECTION 4.04. AUTHORITY RELATIVE TO THIS AGREEMENT. (a) The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the Transactions have been duly and validly authorized by all
necessary corporate action on the part 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 (other than the approval and adoption of this
Agreement by stockholders as contemplated by Section 2.07). This Agreement has
been duly and validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery of this Agreement by Parent and
Purchaser, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(b) The Company Board, at a meeting duly called and held on July 12,
1999 by the affirmative vote of a majority of the members of the Company Board,
has duly (i) determined that this Agreement and the Transactions are fair to and
in the best interests of the Company and the holders of the Shares, (ii)
authorized, approved, adopted and declared advisable this Agreement and the
Transactions and (iii) recommended that the stockholders of the Company accept
the Offer and tender their Shares to Purchaser pursuant to the Offer and approve
and adopt this Agreement, and as of the date hereof none of the aforesaid
actions by the Company Board has been amended, rescinded or modified.
SECTION 4.05. MATERIAL CONTRACTS; NO CONFLICT, REQUIRED FILINGS AND
CONSENTS. (a) Subject to such exceptions that are not reasonably likely to have
a Company Material Adverse Effect or otherwise prevent or materially delay the
Company from performing its obligations under this Agreement or the consummation
of the Transactions, all of the Material Contracts are valid, binding and in
full force and effect, and neither the Company nor any of its subsidiaries is in
default of any of its obligations under any of the Material Contracts. As of the
date hereof, no contracting party to any Material Contract has notified (whether
orally or in writing) the Company or any of its subsidiaries of its intention to
terminate, cancel or modify such Material Contract or otherwise to reduce or
change its
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activity thereunder so as to materially adversely affect the benefits derived,
or currently expected to be derived, by the Company or any of its subsidiaries.
(b) Except as set forth in Section 4.05(c) hereof, the execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement and the consummation of the Transactions by the Company will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws or
equivalent organizational documents of the Company or any of its subsidiaries,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective assets or properties is bound or affected or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or impair the Company's or
any of its subsidiaries' rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any Material Contract, or result in the
creation of a lien or encumbrance on any of the assets or properties of the
Company or any of its subsidiaries pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its or any of their
respective assets or properties is bound or affected except, in the case of
clauses (ii) and (iii), for such conflicts, breaches, violations, defaults or
other occurrences that are not reasonably likely to have a Company Material
Adverse Effect or otherwise prevent or materially delay the Company from
performing its obligations under this Agreement or the consummation of the
Transactions.
(c) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement and the consummation of the Transactions by
the Company will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Entity, except (i) for
applicable requirements, if any, of the Exchange Act, state securities laws
("BLUE SKY LAWS"), state anti-takeover laws, the pre-merger notification
requirements of the HSR Act, the laws regulating competition, antitrust,
investment or exchange controls in Germany and Mexico, and the filing of the
Certificate of Merger or other documents as required by the DGCL and (ii) where
the failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or materially delay
consummation of the Transactions, or otherwise prevent or materially delay the
Company from performing its obligations under this Agreement, or is not
otherwise reasonably likely to have a Company Material Adverse Effect.
SECTION 4.06. COMPLIANCE, PERMITS. (a) Except for such conflicts, defaults
and violations as are not reasonably likely to have a Company Material Adverse
Effect or otherwise prevent or materially delay the Company from performing its
obligations under this Agreement or the consummation of the Transactions, since
December 31, 1998, neither the Company nor any of its subsidiaries is in
conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its subsidiaries
or by which its or any of their respective assets or properties is bound or
affected or (ii) any note, bond, mortgage, indenture, contract,
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agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective assets or
properties is bound or affected.
(b) The Company and its subsidiaries hold all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
Governmental Entities necessary for the operation of the business of the Company
and its subsidiaries taken as a whole (collectively, the "COMPANY PERMITS"),
except to the extent that the failure to have any such Company Permit is not
reasonably likely to have a Company Material Adverse Effect or otherwise prevent
or materially delay the Company from performing its obligations under this
Agreement or the consummation of the Transactions. The Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply is not reasonably likely to have a Company
Material Adverse Effect or otherwise prevent or materially delay the Company
from performing its obligations under this Agreement or the consummation of the
Transactions.
SECTION 4.07. RIGHTS AGREEMENT. The Company has taken all necessary action
so that neither the execution, delivery and performance of this Agreement nor
the consummation of the Transactions shall (i) cause Parent, Purchaser or any of
their respective affiliates to become an Acquiring Person or (ii) result in the
occurrence of a Stock Acquisition Date (as such terms are defined in the Rights
Agreement). The Company Board has approved, and the Company and The Bank of New
York, as Rights Agent, have entered into, an amendment to the Rights Agreement a
copy of which has been delivered to Parent (the "RIGHTS AMENDMENT"). Pursuant to
the Rights Amendment, among other things, neither the execution, delivery and
performance of this Agreement nor the consummation of the Transactions will (x)
result in the distribution of separate certificates representing Rights, (y)
cause the Rights to become exercisable or (z) result in the occurrence of a
Distribution Date (as defined in the Rights Agreement).
SECTION 4.08. SEC FILINGS, FINANCIAL STATEMENTS. (a) The Company has filed
all forms, reports and documents required to be filed by it with the SEC since
January 1, 1998. The Company has delivered or made available to Parent, in the
form filed with the SEC, the Company SEC Reports. The Company SEC Reports
(including any financial statements or schedules included therein) filed prior
to the Measurement Date ("Company Filed SEC Documents") and all reports or other
filings permitted or required to be filed with the SEC thereafter (i) were
prepared or will be prepared, as the case may be, in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) did not or will not, as the case may be, at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or 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, not misleading. None of the Company's subsidiaries is required to file any
forms, reports or other documents with the SEC.
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(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each of the
consolidated balance sheets (including the related notes and schedules) included
or incorporated in such financial statements fairly presents in all material
respects the consolidated financial position of the Company and its subsidiaries
as at the respective dates thereof and each of the consolidated statements of
income and of cash flows (including the related notes and schedules) included or
incorporated in such financial statements fairly presents in all material
respects the consolidated results of their operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments and such statements
do not contain notes thereto.
(c) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any amendments or modifications, which have not yet
been filed with the SEC but which are required to be filed, to agreements,
documents or other instruments which previously had been filed by the Company
with the SEC pursuant to the Securities Act or the Exchange Act.
SECTION 4.09. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Company Filed SEC Documents or as expressly contemplated by this Agreement,
since December 31, 1998 and prior to the date hereof, the Company and its
subsidiaries have conducted their business in the ordinary course and there has
not occurred: (i) any amendments or changes to the Certificate of Incorporation,
By-Laws or equivalent organizational documents of the Company or any of its
subsidiaries; (ii) any change, condition or event that is reasonably likely to
have a Company Material Adverse Effect or otherwise prevent or materially delay
the Company from performing its obligations under this Agreement or the
consummation of the Transactions; (iii) any declaration, setting aside or
payment of any dividend or other distribution with respect to the capital stock
of the Company; (iv) any change by the Company in its accounting methods,
principles or practices; (v) any revaluation by the Company or any of its
subsidiaries of any of its assets, including, without limitation, writing down
the value of capitalized software or inventory or writing off notes or accounts
receivable other than in the ordinary course of business; (vi) any sale of a
material amount of assets of the Company or any of its subsidiaries, except for
the sale of inventory in the ordinary course of business; (vii) any split,
combination or reclassification of any of the Company's capital stock or any
issuance or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for any shares of the Company's capital stock;
(viii) any granting by the Company or any of its subsidiaries to any director,
executive officer or other employee of the Company of any material increase in
compensation (except for increases to employees who are not directors or
officers in the ordinary course of business); (ix) any granting by the Company
or any of its subsidiaries to any such director, executive officer or employee
of any severance or termination pay, except as was required under any
employment, severance or termination agreements in effect as of the date of the
most recent financial statements included in the Company Filed SEC Documents; or
(x) any entry by the Company or any of
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its subsidiaries into any employment, severance or termination agreement with
any such director, executive officer or employee.
SECTION 4.10. NO UNDISCLOSED LIABILITIES. (a) Except as is disclosed in the
Company Filed SEC Documents, neither the Company nor any of its subsidiaries has
any liabilities (absolute, accrued, contingent or otherwise) of the type that
are required to be disclosed in financial statements, including the notes
thereto, prepared in accordance with GAAP, that are, in the aggregate, material
to the business, operations or financial condition of the Company and its
subsidiaries taken as a whole, except liabilities (i) adequately provided for or
referred to in the Company's balance sheet and the related notes thereto as of
December 31, 1998 included in the Company's Form 10-K for the year ended
December 31, 1998 (which is part of the Company SEC Reports) or (ii) incurred
since December 31, 1998 (A) in the ordinary course of business and consistent
with past practice, or (B) that are not reasonably likely to have a Company
Material Adverse Effect.
(b) Set forth in Section 4.10(b) of the Company Disclosure Schedule is a
true and complete listing of all of the Company's and its subsidiaries'
indebtedness for borrowed money outstanding and other obligations required to be
reflected as indebtedness on a consolidated balance sheet of the Company
("INDEBTEDNESS"), and capitalized leases required to be reflected on a
consolidated balance sheet of the Company, in each case as of the date
immediately preceding the date hereof and in each case setting forth the
principal amount thereof. No payment defaults have occurred and are continuing
under the agreements and instruments governing the terms of such obligations or
any agreements and instruments governing the terms of any Indebtedness arising
after the date hereof and no other events have occurred which, with the giving
of notice, the passage of time, or both could constitute an event of default
thereunder.
SECTION 4.11. ABSENCE OF LITIGATION. Except as set forth in the Company
Filed SEC Documents, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries, or any properties or rights of the
Company or any of its subsidiaries, before any arbitrator or Governmental Entity
that is reasonably likely to have a Company Material Adverse Effect.
SECTION 4.12. EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS. (a) All
benefit and compensation plans, contracts, policies or arrangements covering
current 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 "EMPLOYEE PLANS"), other than
Employee Plans maintained outside of the United States primarily for the benefit
of Employees working outside of the United States, are listed on Section 4.12(a)
of the Company Disclosure Schedule. True and complete copies of all Employee
Plans listed on Section 4.12(a) of the Company Disclosure Schedule, including,
but not limited to, any trust
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instruments and insurance contracts forming a part of any Employee Plans, and
all amendments thereto, together with (if applicable) the most recent favorable
determination letter from the Internal Revenue Service, the three most recent
Form 5500 Annual Return/Reports and the most recent summary plan description and
subsequent summaries of material modifications, have been provided or made
available to Parent.
(b) All Employee Plans, other than "multiemployer plans" within the meaning
of Section 3(37) of ERISA, covering Employees and maintained in the United
States (the "PLANS") are in substantial compliance with their terms and all
applicable laws. 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 the Company is not aware of any circumstances likely to result
in revocation of any such favorable determination letter. There is no material
pending or, to the knowledge of the Company threatened, litigation or
governmental investigation relating to the Plans. Neither 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 Plan (i) is a "plan maintained by more than one employer", within
the meaning of Section 413(c) of the Code, (ii) provides benefits to any
individual who is not a current or former Employee or director of the Company,
or the dependent or beneficiary of such current or former Employee or director,
(iii) is, or during the preceding 36 months was, funded through a "welfare
benefit fund", within the meaning of Section 419(e) of the Code, (iv) provides,
or during the preceding 36 months provided, benefits through (A) a "voluntary
employees' beneficiary association", within the meaning of Section 501(c)(9) of
the Code or (B) except as set forth on Section 4.12(a) of the Company Disclosure
Schedule, a trust forming part of a plan providing for the payment of
"supplemental unemployment compensation benefits", within the meaning of Section
501(c)(17) of the Code.
(d) 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 or extended,
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other than pursuant to PBGC Reg. Section 4043.66, has been required to be filed
for any Pension Plan or by any ERISA Affiliate since January 1, 1998.
(e) All contributions required to be made under the terms of any Plan have
been timely made or have been reflected on the audited financial statements
included in the Company Filed SEC Documents. 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 neither the Company nor any 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 nor has any lien in favor of any such Pension Plan arisen under Section
412(n) of the Code or Section 302(f) of ERISA.
(f) 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 fair market value of the assets of such Plan, and 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 Plan which is a multiemployer plan to which the
Company, any of its subsidiaries or an ERISA Affiliate has contributed during
the preceding 36 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.
(g) Neither the Company nor any of its subsidiaries has any obligations for
retiree health and life benefits under any Plan, except as set forth on Section
4.12(g) of the Company Disclosure Schedule. The Company or the subsidiaries may
amend or terminate any such Plan at any time without incurring any liability
thereunder.
(h) 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, or (y) accelerate the time of payment or vesting or trigger any
payment or funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any of the Employee Plans.
(i) All Employee Plans maintained outside of the United States (which are
listed in Section 4.12(i) of the Company Disclosure Schedule) comply in all
material respects with applicable local law and there is no material litigation
or governmental investigation pending, or to the knowledge of the Company,
threatened against or relating to any such Plan. The Company and its
subsidiaries have no material unfunded liabilities with respect to any such
Employee Plan.
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SECTION 4.13. LABOR MATTERS. There are no labor disputes pending or, to the
best knowledge of the Company, threatened, between the Company or any of its
subsidiaries and any of their respective employees, which disputes are
reasonably likely to have a Company Material Adverse Effect. Neither the Company
nor any of its subsidiaries is involved in or, to the best knowledge of the
Company, threatened with any labor dispute, grievance or litigation relating to
labor, safety or discrimination matters involving any persons employed by the
Company or any of its subsidiaries, including, without limitation, charges of
unfair labor practices or discrimination complaints which is reasonably likely
to have a Company Material Adverse Effect. Neither the Company nor any of its
subsidiaries is presently or has been in the past a party to, or bound by, any
collective bargaining agreement or union contract with respect to any persons
employed by the Company or any of its subsidiaries and no collective bargaining
agreement is being negotiated by the Company or any of its subsidiaries. Neither
the Company nor any of its subsidiaries has any knowledge of any strikes,
slowdowns, work stoppages or lockouts, or threats thereof, by or with respect to
any employees of the Company or any of its subsidiaries, and there have been no
such strikes, slowdowns, work stoppages or lockouts within the past three years.
SECTION 4.14. TITLE TO PROPERTY. The Company and each of its subsidiaries
have good, marketable and defensible title to all of their properties and
assets, free and clear of all liens, charges and encumbrances, except liens for
Taxes not yet due and payable and such liens or other imperfections of title, if
any, as do not detract from the value of or interfere with the present use of
the property affected thereby or which is not reasonably likely to have a
Company Material Adverse Effect.
SECTION 4.15. TAXES.
(a) Except as is not reasonably likely to have a Company Material Adverse
Effect: The Company and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which the Company or
any of its subsidiaries is or has been a member, have timely filed all United
States federal income Tax Returns and all other material Tax Returns required to
be filed by them or any of them (taking into account applicable extensions), and
have timely paid and discharged all Taxes shown to be due, and all other
material Taxes due except with respect to Taxes which the Company is maintaining
reserves in accordance with GAAP in its financial statements included in the
Company Filed SEC Documents that are adequate for their payment. All federal
income Tax Returns and all other Tax Returns filed by the Company and each of
its subsidiaries with respect to Taxes were true, complete and correct as of the
date on which they were filed or as subsequently amended to the date hereof.
Neither the IRS nor any other taxing authority or agency is now asserting or, to
the best knowledge of the Company, threatening to assert against the Company or
any of its subsidiaries any deficiency or claim for additional Taxes. There are
no requests for information from the IRS or any other taxing authority or agency
currently outstanding. No Tax Return of either the Company or any of its
subsidiaries is currently being audited by any taxing authority nor are any
proceedings (whether administrative or judicial) currently being conducted with
respect to any
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issues relating to Taxes. No Tax claim has become a lien on any assets of the
Company or any subsidiary thereof (ignoring for this purpose liens for Taxes not
yet due and payable). Neither the Company nor any of its subsidiaries is
required to include in income (i) any items in respect of any change in
accounting principles or any material deferred intercompany transactions or (ii)
any installment sale gain, where the inclusion in income would result in a Tax
liability in excess of the reserves therefor.
(b) (i) Neither the Company nor any of its subsidiaries is a party to any
agreement, contract or arrangement, or maintains or sponsors any Employee Plans,
that will result, separately or in the aggregate, in the payment of (A) any
"excess parachute payment" within the meaning of Section 280G(b)(1) of the Code,
determined without regard to Section 280G(b)(4) of the Code, and no Employee
Plan provides for the reimbursement of excise taxes under Section 4999 of the
Code or any income taxes under the Code or (B) amounts that will be disallowed
as a deduction under Section 162(m) of the Code; (ii) neither the Company nor
any of its subsidiaries has been subject to any accumulated earnings tax or
personal holding company tax; (iii) none of the Company's foreign subsidiaries
has any investments in United States property within the meaning of Section 956
of the Code or, for taxable years beginning after September 30, 1994 and before
January 1, 1998, has "excess passive assets" as defined in former Section
956A(c) of the Code; (iv) neither the Company nor any of its subsidiaries is
obligated under any agreement with respect to industrial development bonds or
other obligations with respect to which the excludability from gross income of
the holder for United States federal or state income tax purposes could be
affected by the Transactions; (v) neither the Company nor any of its
subsidiaries has entered into any deferred intercompany transaction within the
meaning of section 1.1502-13 of the United States Treasury Regulations as to
which items of deferred gain or loss have not been restored; (vi) no excess loss
account within the meaning of section 1.1502-19 of the United States Treasury
Regulations exists with respect to the stock of any of the Company's
subsidiaries; (vii) no extension of time within which to file any material Tax
Return that relates to the Company or any of its subsidiaries has been requested
which Tax Return has not since been filed; (viii) there are no waivers or
extensions of any applicable statute of limitations for the assessment or
collection of Taxes with respect to any material Tax Return that relates to the
Company or any of its subsidiaries which remain in effect; (ix) there are no tax
rulings, closing agreements or changes of accounting method relating to the
Company or any of its subsidiaries which would affect their liability for Taxes
for any period after the Effective Time; (x) all of the Tax Returns referred to
in Section 4.16(a) have been examined by the IRS or the appropriate state, local
or foreign taxing authorities, which examinations have been concluded with a
final determination and payment of adjustments, if any, or the period for
assessment of the Taxes in respect of which such Tax Returns were required to be
filed has expired (unless the period for assessment is still open pursuant to
the normal statute of limitations), and no extensions or waivers of the statute
of limitations with respect to any Tax Returns have been executed by the Company
or any of its subsidiaries and are currently in effect; (xi) neither the Company
nor any of its subsidiaries has filed a consent under Section 341(f) of the Code
or any comparable provision of state revenue statutes; (xii) no property of the
Company or any of its subsidiaries is "tax-exempt use property" within the
meaning of Section 168(h) of the Code; (xiii) neither the Company nor any of its
subsidiaries is a party to any lease made pursuant to
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Section 168(f) of the Code; (xiv) to the extent applicable, the Company and its
subsidiaries have properly and in a timely manner documented their material
transfer pricing methodology in compliance with Section 482 and related
provisions of the Code; and (xv) neither the Company nor any of its subsidiaries
was a member of a consolidated, combined, unitary or similar group of
corporations other than such a group of which the Company is the common parent
corporation.
(c) Neither the Company nor any of its subsidiaries is a party to any
agreement or arrangement (written or oral) providing for the allocation or
sharing of Taxes.
SECTION 4.16. ENVIRONMENTAL MATTERS. Except as is not reasonably likely to
have a Company Material Adverse Effect:
(a) All of the operations of the Company and each of its subsidiaries and
their respective assets, businesses and real property, including any of its
operations at or from any real property presently or formerly owned, leased or
operated by the Company or any of its subsidiaries (collectively, the "REAL
PROPERTY"), comply with all applicable Environmental Laws.
(b) None of the assets of the Company or any of its subsidiaries, or any of
the Real Property, are contaminated with any Hazardous Substances in, on, over,
under or at it, in concentrations which would violate any applicable
Environmental Laws or would result in the imposition of Environmental
Liabilities or obligations on the Company or any of its subsidiaries under any
applicable Environmental Laws, including any obligations for the investigation,
corrective action, remediation or monitoring of Hazardous Substances in, on,
over, under or at the Real Property.
(c) None of the Real Property is listed or proposed for listing on the
National Priorities List pursuant to CERCLA or any similar inventory of sites
requiring investigation or remediation maintained by any state or locality.
Neither the Company nor any of its subsidiaries has received any written notice
or oral claim from any Governmental Entity or third party alleging any
Environmental Liabilities.
(d) Each of the Company and its subsidiaries has all the permits, licenses,
authorizations and approvals necessary for the present conduct of their
businesses and for the present operations on, in or at the Real Property which
are required under applicable Environmental Laws (the "ENVIRONMENTAL PERMITS")
and they are in compliance with the terms and conditions of all such
Environmental Permits.
(e) Neither the Company nor any of its subsidiaries, nor any other person
or entity, has engaged in, authorized or consented to any operations or
activities upon any of the Real Property for the purpose of or in any way
involving the handling, manufacture, treatment, processing, storage, use,
generation, release, discharge, spilling, emission, dumping or disposal of any
Hazardous Substances at, on, under or from the Real Property, except in
compliance with all applicable Environmental Laws.
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(f) There are no conditions existing at any Real Property or with respect
to any of the assets of the Company or its subsidiaries that require, or which
with the giving of notice or the passage of time or both would require, remedial
or corrective action pursuant to the Environmental Laws or have resulted in the
imposition of Environmental Liabilities on the Company or any of its
subsidiaries.
(g) The Company and its subsidiaries have provided or made available to
Parent all environmental reports, assessments, audits, studies, investigations,
data and Environmental Permits in their custody, possession or control
concerning the Real Property or the assets of the Company or any of its
subsidiaries.
(h) Neither the Company nor any of its subsidiaries has received any claims
for Environmental Liabilities arising out of any indemnity agreement or sale
agreement.
SECTION 4.17. BROKERS. No broker, finder or investment banker (other than
Wasserstein Perella & Co., Inc. and J.P. Morgan & Co., Inc.) is entitled to any
brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company. The
Company has delivered to Parent a true, correct and complete copy of the
engagement letters and any other agreements or arrangements between the Company
and Wasserstein Perella & Co., Inc. and J.P. Morgan & Co., Inc. with respect to
the Transactions. The Company or, if the Effective Time occurs, the Surviving
Corporation, will pay all amounts owed pursuant to the foregoing arrangements.
SECTION 4.18. INTELLECTUAL PROPERTY. (a) Schedule 4.18 of the Company
Disclosure Schedule sets forth a list of (i) all material patents, patent
applications, registered trademarks, trademark applications, registered
copyrights and copyright applications that are owned by the Company or its
subsidiaries (collectively, "COMPANY INTELLECTUAL PROPERTY") and (ii) all
agreements under which the Company or its subsidiaries are licensed or otherwise
permitted, or license or otherwise permit a third party, to use patents,
trademarks and copyrights that are material to the business of the Company and
its subsidiaries.
(b) (i) The Company and its subsidiaries directly or indirectly own, or are
licensed or otherwise possess valid rights to use, all Company Intellectual
Property, with such exceptions as have not had and is not reasonably likely to
have a Company Material Adverse Effect, (ii) no person is challenging or, to the
knowledge of the Company, infringing or otherwise violating the Company
Intellectual Property, except in each case for challenges, infringements or
violations which are not reasonably likely to have a Company Material Adverse
Effect, and (iii) neither the Company nor any of its subsidiaries is, or will be
as a result of the execution and delivery of this Agreement or the performance
of its obligations hereunder, infringing or otherwise violating any patents,
registered trademarks or registered copyrights that are owned by any third party
(collectively, "THIRD PARTY INTELLECTUAL PROPERTY RIGHTS"), except in each case
for infringements or violations which are not reasonably likely to have a
Company Material Adverse Effect.
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SECTION 4.19. VOTE REQUIRED. The affirmative vote of the holders of at
least a majority of the outstanding shares of Company Common Stock is the only
vote of the holders of any class or series of the Company's capital stock
necessary to approve the Merger.
SECTION 4.20. TAKEOVER STATUTES, ETC. (a) No "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
(including, without limitation, Section 203 of the DGCL) (each, a "TAKEOVER
STATUTE") is applicable to the Company, the Shares, this Agreement or the
Transactions.
(b) The Company has taken such actions as are required to render Article VI
of the Company's Certificate of Incorporation inapplicable to the Transactions.
SECTION 4.21. OPINION OF FINANCIAL ADVISOR. The Company Board has been
advised by its financial advisors that in their opinion, as of the date hereof,
the consideration to be received by holders of the Shares in the Offer and the
Merger, taken together, is fair from a financial point of view to such holders.
SECTION 4.22. YEAR 2000 COMPLIANCE. The Company has conducted a review of
each item of software, hardware and firmware ("SYSTEM") used in the conduct of
its business and operations to determine whether such System is Year 2000
Compliant, and is currently implementing a compliance plan that is intended to
result in each System being Year 2000 Compliant no later than January 1, 2000.
Each action to have been taken prior to the date hereof under such plan has been
substantially completed and as of the date hereof the Company has no knowledge
indicating that any action to be taken under such plan after the date hereof
will be materially delayed (and in any event not beyond January 1, 2000) or will
fail to accomplish its purpose under the plan. Achieving Year 2000 Compliance is
not reasonably likely to have a Company Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Except as set forth in the Parent Disclosure Schedule, Parent and Purchaser
each hereby represent and warrant to the Company that:
SECTION 5.01. ORGANIZATION AND QUALIFICATION. Each of Parent and Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority and is in possession of all Approvals necessary to own,
lease and operate the properties it purports to own, operate or lease and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power, authority
and Approvals is not reasonably likely to have a Parent Material Adverse Effect.
Each of Parent and Purchaser is duly qualified or licensed as a foreign
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corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that is not
reasonably likely to have a Parent Material Adverse Effect.
SECTION 5.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Parent and
Purchaser and the consummation by Parent and Purchaser of the Transactions have
been duly and validly authorized by all necessary corporate action on the part
of Parent and Purchaser, and no other corporate proceedings on the part of
Parent or Purchaser are necessary to authorize this Agreement or to consummate
the Transactions. This Agreement has been duly and validly executed and
delivered by Parent and Purchaser and, assuming the due authorization, execution
and delivery of this Agreement by the Company, constitutes a legal, valid and
binding obligation of Parent and Purchaser, enforceable against Parent and
Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
SECTION 5.03. NO CONFLICT, REQUIRED FILINGS AND CONSENTS. (a) Except as set
forth in Section 5.03(b) hereof, the execution and delivery of this Agreement by
Parent and Purchaser do not, and the performance of this Agreement and the
consummation of the Transactions by Parent and Purchaser will not, (i) conflict
with or violate the Certificate of Incorporation or By-Laws or comparable
constituent documents of Parent or Purchaser, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Parent or
Purchaser or by which their respective assets or properties are bound or
affected or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair Parent's or Purchaser's rights or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any contracts material to the business of
Parent and Purchaser taken as a whole, or result in the creation of a lien or
encumbrance on any of the assets or properties of Parent or Purchaser pursuant
to any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or Purchaser
is a party or by which Parent or Purchaser or any of their respective assets or
properties are bound or affected except, in the case of clauses (ii) and (iii),
for such conflicts, breaches, violations, defaults or other occurrences that is
not reasonably likely to have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and Purchaser do
not, and the performance of this Agreement and the consummation of the
Transactions by Parent and Purchaser will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity, except (i) for applicable requirements, if any, of the Securities Act,
the Exchange Act, Blue Sky Laws, state anti-takeover laws, the pre-merger
notification requirements of the HSR Act, the laws regulating competition,
antitrust, investment or exchange controls in Germany and
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Mexico, and the filing of the Certificate of Merger or other documents as
required by the DGCL and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
is not reasonably likely to have a Parent Material Adverse Effect.
SECTION 5.04. FINANCIAL STRUCTURE. Parent and Purchaser hereby represent
that all outstanding Indebtedness of the Company existing at the Effective Time
shall be repaid immediately after the Effective Time to the extent required by
the terms thereof and that no less than $300 million of the total financing
currently expected to be approximately $635 million (based on the assumption
that total Indebtedness less cash ("NET DEBT") at the time Shares are to be
purchased in the Offer is not greater than $240 million) to be incurred in
connection with the Transactions (the "Financing") will consist of equity
contributed to North American Refractories Company or loans from Parent,
provided that such loans from Parent are subordinate to the claims of all
creditors of the Surviving Corporation and no such loans will be payable or
guaranteed by the Company and its subsidiaries.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. During
the period from the date of this Agreement and continuing until the earliest to
occur of (i) the termination of this Agreement, (ii) the time the designees of
Parent constitute a majority of the Company Board or (iii) the Effective Time,
the Company covenants and agrees that, unless Parent shall otherwise approve in
writing (which approval shall not be unreasonably withheld) and unless otherwise
expressly contemplated hereunder, the Company shall conduct its business and
shall cause the businesses of its subsidiaries to be conducted, and the Company
and its subsidiaries shall not take any action except, in the ordinary course of
business and in a manner consistent with past practice and in compliance with
applicable laws; and the Company shall use reasonable commercial efforts to
preserve substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers, employees
and consultants of the Company and its subsidiaries, and to preserve the present
relationships of the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries has significant
business relations; and the Company shall take such actions prior to the
Effective Time as are reasonably requested by Parent to inform employees of the
Company of the existence of certain caps on health benefits currently in effect.
By way of amplification and not limitation, neither the Company nor any of its
subsidiaries shall, during the period from the date of this Agreement and
continuing until the earliest to occur of (i) the termination of this Agreement,
(ii) the time the designees of Parent constitute a majority of the Company Board
or (iii) the Effective Time, directly or indirectly do, or propose to do, any of
the following without the prior written approval of Parent, unless expressly
contemplated hereunder or disclosed in the Company Disclosure Schedule:
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(a) amend or otherwise change the Company's or any of its subsidiaries'
Certificates of Incorporation, By-Laws or other equivalent organizational
documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize the issuance,
sale, pledge, disposition or encumbrance of, any shares of capital stock of any
class, or any options, warrants, convertible securities or other rights of any
kind to acquire any shares of capital stock, or any other ownership interest
(including, without limitation, any phantom interest) of the Company or any of
its subsidiaries (except for (i) the issuance of Shares pursuant to the exercise
of Options that are outstanding on the date hereof, (ii) the issuance of Stock
Units representing no more than 200,000 Shares in the aggregate pursuant to the
Deferred Compensation Plan, and (iii) the sale of existing ownership interests
in any of its subsidiaries (A) having a book value as of the date of the
Company's most recent financial statements included in the Company Filed SEC
Documents of less than $2.0 million individually and $6.0 million in the
aggregate and (B) the consideration received therefor is less than $2.0 million
individually and, together with the proceeds of sales of assets permitted under
Section 6.01(c), $6.0 million in the aggregate);
(c) sell, pledge, dispose of or encumber any assets of the Company or any
of its subsidiaries (except for (i) sales of assets in the ordinary course of
business and in a manner consistent with past practice and not exceeding $2.0
million individually and, together with the amount of consideration (or book
value, whichever is greater) received in sales of ownership interests permitted
under Section 6.01(b), $6.0 million in the aggregate, (ii) sales of inventory in
the ordinary course of business consistent with past practice, and (iii)
dispositions of obsolete or worthless assets);
(d) amend or change the period (or permit any acceleration, amendment or
change) of exercisability of Options granted under the Stock Option Plans or
authorize cash payments in exchange for any such Options;
(e) (i) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, except that a wholly-owned subsidiary of the Company
may declare and pay a dividend to its parent, (ii) split, combine or reclassify
any of its outstanding capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (iii) amend the terms of, repurchase, redeem
or otherwise acquire, or permit any subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of its subsidiaries,
or propose to do any of the foregoing, except in connection with the repurchase
of Options and Stock Units as contemplated by Section 7.03;
(f) sell, transfer, license, sublicense or otherwise dispose of any
material Company Intellectual Property or amend or modify any existing
agreements with respect to any material Company Intellectual Property or Third
Party Intellectual Property Rights (other than in the ordinary course of
business consistent with past practice);
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(g) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) incur any indebtedness for borrowed money, issue any debt
securities, assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any person, or make any loans or advances
except in the ordinary course of business consistent with past practice; (iii)
enter into any Material Contract other than in the ordinary course of business;
(iv) authorize or make any capital expenditures or purchases of fixed assets
that are not currently budgeted or, if not budgeted, that in the aggregate
exceed $2,000,000; (v) terminate any Material Contract or amend any of its
material terms (other than amendments to existing credit arrangements designed
to remedy or prevent defaults thereunder and within the parameters described in
Schedule 6.01 of the Company Disclosure Schedule); or (vi) enter into or amend
any contract, agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 6.01(g);
(h) except for contracts or amendments that serve to reduce the cost to the
Company of severance arrangements, increase the compensation payable or to
become payable to its employees, officers or directors (except for increases to
employees who are not directors or officers of the Company in the ordinary
course of business in connection with normal periodic performance reviews) or
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any employee, director or officer of the Company or
any of its subsidiaries (other than employees hired by the Company or any of its
subsidiaries after the date hereof in the ordinary course of business and on
terms consistent with those provided to employees of the Company or any such
subsidiary generally) or establish, adopt, enter into, terminate or amend any
Employee Plan (except as may otherwise be required by applicable law);
(i) (i) take any action, other than as required by GAAP, to change
accounting methods, principles or practices (including, without limitation,
procedures with respect to revenue recognition, capitalization of development
costs, payments of accounts payable and collection of accounts receivable) or
(ii) revalue any assets of the Company or any of its subsidiaries, including
without limitation, any write down of the value of capitalized software or
inventory or writing off of notes or accounts receivable other than in the
ordinary course of business;
(j) make any Tax election inconsistent with past practice or settle or
compromise any Tax liability, except to the extent the amount of any such
settlement or compromise has been reserved for on the consolidated financial
statements contained in the Company SEC Reports or is not reasonably likely to
have a Company Material Adverse Effect;
(k) pay, discharge, settle or satisfy any material lawsuits, claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business and consistent with past practice of liabilities
reflected or reserved against in the financial statements of the Company
included in the Company Filed SEC Documents or incurred in the ordinary course
of business and consistent with past practice;
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(l) permit any material increase in the number of employees employed by the
Company or any of its subsidiaries on the date hereof or hire any executive
officer or employee whose total annual compensation is more than $100,000;
(m) authorize, recommend, propose, adopt or announce an intention to adopt
a plan of complete or partial liquidation, dissolution, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its subsidiaries; or
(n) take or fail to take, or agree in writing or otherwise to take, or fail
to take any of the actions described in Section 6.01(a) through (l) above.
SECTION 6.02. NO SOLICITATION. (a) The Company will not, and will not
permit or cause any of its subsidiaries or any of the officers and directors of
it or its subsidiaries to, and 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 or encourage
(including without limitation by way of furnishing information), or take any
other action designed or reasonably likely to facilitate or otherwise facilitate
any inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, tender offer, consolidation, liquidation or
dissolution or similar transaction involving, or any purchase of 15% or more of
the consolidated assets (based on the Company's December 31, 1998 audited
consolidated balance sheet) or outstanding shares of capital stock of, the
Company or any of its subsidiaries or any other transaction that is intended or
reasonably could be expected to prevent or materially interfere with the
completion of the Transactions (any such proposal or offer being hereinafter
referred to as an "ACQUISITION PROPOSAL"). The Company will not, and will not
permit or cause any of its subsidiaries or any of the officers and directors of
it or its subsidiaries to, and 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, whether made
before or after the date of this Agreement, 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 the Company
Board (acting directly or through its employees, agents or representatives) from
(i) complying with Rules 14d-9 and 14e-2 promulgated under the Exchange Act with
regard to an Acquisition Proposal or disclosure obligations under state law or
(ii) at any time prior to the earlier to occur of (x) payment for shares of
Company Common Stock pursuant to the Offer or (y) the approval of the Merger by
the requisite vote of the stockholders of the Company, (A) providing information
in response to a request therefor by a person who has made an unsolicited bona
fide written Acquisition Proposal (so long as such proposal did not result from
a breach of this Section 6.02) if the Company Board receives from the person so
requesting such information an executed confidentiality agreement with customary
terms (which shall not preclude the making of an Acquisition Proposal); or (B)
engaging in any negotiations or discussions with any person who has made an
unsolicited bona fide written
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Acquisition Proposal, if and only to the extent that, (x) in each such case
referred to in clause (A) or (B) above, the Company Board determines in good
faith, after consultation with outside legal counsel, that such action is
necessary in order for its directors to comply with their fiduciary duties under
applicable law and (y) in the case referred to in clause (B) above, the Company
Board determines in good faith (based on the advice of its financial advisor)
that such Acquisition Proposal would, if consummated, result in a more favorable
transaction than the Transactions; PROVIDED, HOWEVER, that the Company may not,
except as permitted by Section 6.02(b) below, withdraw or modify, or propose to
withdraw or modify, its position with respect to the Offer or the Merger or
approve or recommend, or propose to approve or recommend, any Acquisition
Proposal, or enter into any agreement with respect to any Acquisition Proposal
(other than a confidentiality agreement); it being understood and agreed that
making the determination in clause (y) above (the "SECTION 6.02 DETERMINATION")
and disclosing such determination shall not constitute a withdrawal or
modification, proposed or otherwise, or an approval or recommendation, proposed
or otherwise, in breach of this proviso or result in a breach of paragraph (e)
to Annex A. The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations (whether by it or an agent or
representative of the Company) with any parties conducted heretofore with
respect to any of the foregoing. The Company agrees that it will take the
necessary steps to inform promptly the individuals or entities referred to in
the first sentence hereof of the obligations undertaken in this Section 6.02.
The Company will notify Parent immediately (but in any event within 24 hours) if
any such inquiries, proposals or offers are received by, any such information
requested from, or any such discussions or negotiations are sought to be
initiated or continued with any of its representatives. The Company also will
promptly request each person that has heretofore executed a confidentiality
agreement in connection with its consideration of an Acquisition Proposal to
return or destroy (and certify the destruction of) all confidential information
heretofore furnished to such person by or on behalf of it or any of its
subsidiaries and the Company will use its reasonable efforts consistent with its
fiduciary obligations to enforce the provisions of such confidentiality
agreements, including without limitation, any standstill provisions.
Notwithstanding anything to the contrary in this Section 6.02(a), no breach of
this Section 6.02(a) will result from actions taken by the director elected at
the 1999 Annual Meeting of Stockholders of the Company provided such actions
were not caused, authorized, directed, solicited or encouraged by the Company or
any of its subsidiaries or any of their respective officers and other directors.
(b) So long as the Agreement is in effect, neither the Company Board nor
any committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation of the Offer, this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal by a
third party or (iii) terminate this Agreement pursuant to Section 9.01(f) in
order to enter into a definitive agreement with respect to any third-party
Acquisition Proposal unless the Company Board shall have (A) determined in good
faith, after consultation with outside counsel, that such action is necessary in
order for its directors to comply with their fiduciary duties under applicable
law and (B) determined in good faith, after receiving the advice of its
financial advisor that an Acquisition Proposal is a Superior
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Proposal; PROVIDED, HOWEVER, that nothing herein shall prevent the Company or
the Company Board from complying with its disclosure obligations under any
federal or state law.
SECTION 6.03. INFORMATION SUPPLIED. Each of the Company and Parent agrees,
as to itself and its subsidiaries, that (i) none of the information supplied or
to be supplied by it or its subsidiaries for inclusion or incorporation by
reference in the Offer Documents and the Schedule 14D-9 will, at the time of
distribution thereof, 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, and (ii) the Information Statement, if any, will, at the
date of mailing to stockholders of the Company, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6.04. THE COMPANY RIGHTS AGREEMENT. The Company Board will take all further
action (in addition to that referred to in Section 4.07) reasonably requested in
writing by Parent (including redeeming the Rights immediately prior to the
Effective Time or amending the Rights Agreement) in order to render the Rights
inapplicable to any of the Transactions. Except as provided above with respect
to the Transactions, the Company Board will not (a) amend the Rights Agreement
or (b) take any action with respect to, or make any determination under, the
Rights Agreement, including a redemption of the Rights or any action to
facilitate an Acquisition Proposal, PROVIDED, HOWEVER, that this Section 6.04
will not prevent the Company Board from taking such actions as it determines are
necessary to prevent the occurrence of a Distribution Date following the
commencement of a tender or exchange offer unless doing so is intended or could
reasonably be expected to facilitate an Acquisition Proposal.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. FILINGS, OTHER ACTIONS; NOTIFICATION.
(a) Parent and the Company shall promptly prepare and file as soon as
practicable after the date hereof all documents required to be filed (i) with
the United States Federal Trade Commission and the Department of Justice in
order to comply with the HSR Act and (ii) any other documents which are required
under any non-United States laws regulating competition, antitrust, investment
or exchange controls. Parent and the Company shall promptly furnish all
materials thereafter required in connection therewith.
(b) Upon the terms and subject to the provisions hereof, each of the
Company and Parent shall cooperate with each other and use (and shall cause its
subsidiaries to use) all reasonable efforts
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(i) to cause to be done all things necessary, proper or advisable on its part
under this Agreement and applicable laws to consummate and make effective the
Transactions as soon as practicable, including preparing and filing as promptly
as practicable all documentation to effect all necessary notices, reports and
other filings and (ii) to obtain as promptly as practicable all consents,
registrations, approvals, permits and authorizations necessary or advisable to
be obtained from any third party and/or any Governmental Entity in connection
with, as a result of or in order to consummate any of the Transactions. Subject
to applicable laws relating to the exchange of information, Parent and the
Company shall have the right to review in advance, and to the extent reasonably
practicable each will consult the other on, all the information relating to the
other and its subsidiaries, that appear in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in connection
with the Transactions; PROVIDED, HOWEVER, that with respect to documents that
one party reasonably believes should not be disclosed to the other party, such
party shall instead furnish those documents to counsel for the other party
pursuant to a mutually satisfactory confidentiality agreement. In exercising the
foregoing right, each of the Company and Parent shall act reasonably and as
promptly as reasonably practicable.
(c) Parent and the Company shall promptly respond to any request for
additional information pursuant to the HSR Act. Upon the terms and subject to
the provisions hereof, Parent and the Company shall each use all reasonable
efforts to resolve objections, if any, as may be asserted by any Governmental
Entity with respect to the Transactions under any antitrust or trade or
regulatory laws or regulations of any Governmental Entity, which, in the case of
Parent, will include if necessary to resolve such objections, offering, and
agreeing to enter into necessary agreements, to sell, license or otherwise
dispose of, or hold separate or otherwise divest itself of, all or any portion
of Parent's businesses or assets or any portion of the businesses or assets of
any of its subsidiaries or any portion of the businesses or assets of the
Company or the Company's subsidiaries. Notwithstanding anything to the contrary
in this Agreement, (i) Parent shall not be required to sell or otherwise dispose
of, or hold separate or otherwise divest itself of, businesses or assets located
outside of the United States, Canada and Germany and (ii) with respect to
businesses or assets located in the United States or Canada, Parent shall not be
required to sell or otherwise dispose of, or hold separate or otherwise divest
itself of, businesses or assets that accounted for, individually or in the
aggregate, more than $86.0 million (the "REVENUE AMOUNT") of revenues of the
Company or Parent, as the case may be, for the year ended December 31, 1998, as
set forth in the respective audited financial statements for the period then
ending for Parent or the Company. Parent shall reasonably consult with the
Company and, subject to being permitted by the Governmental Entity to do so, the
Company shall have the right to attend and participate in any telephone calls or
meetings that Parent or Purchaser have with any person with respect to the
foregoing. The Parent shall use (and cause its subsidiaries to use) all
reasonable efforts to obtain all necessary approvals from the German Federal
Cartel Office (the "FCO") in order to consummate the Transactions, including
without limitation, if necessary to resolve any objections raised by the FCO,
offering, and agreeing to enter into necessary agreements, to sell, license,
divest or otherwise dispose of, or hold separate or otherwise divest itself of,
all or any portion of the businesses or assets of the Company or the Company's
subsidiaries located in Germany (the "GERMAN ASSETS").
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Any such divestitures required by the FCO shall not be included in the
calculation of the Revenue Amount. The provisions of Section 7.01(a) - (d)
constitute the sole covenants of the parties with respect to the subject matter
hereof and no other provision of this Agreement will be interpreted as
obligating any party to take or fail to take any action in respect of any matter
referred to in Section 7.01(a) - (d) that is not required by Section 7.01(a) -
(d).
(d) Upon the terms and subject to the provisions hereof, Parent and the
Company each shall use all reasonable efforts (and cause their respective
subsidiaries) to lift or rescind or appeal any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
Transactions and use their best efforts to defend any action, suit or proceeding
seeking to enjoin, prevent or delay the consummation of the transactions
contemplated hereby or seeking material damages.
(e) Each of the Company and Parent shall keep the other apprised of the
status of matters relating to completion of the Transactions, including promptly
furnishing the other with copies of notices or other communications received by
Parent or the Company, as the case may be, or any of their respective
subsidiaries, from any third party or any Governmental Entity with respect to
the Transactions.
(f) In connection with and without limiting the foregoing, the Company and
Parent will, and Parent will cause Purchaser to, (i) take all action necessary
to ensure that no state anti-takeover statute or similar statute or regulation
is or becomes applicable to the Transactions, and (ii) if any state
anti-takeover statute or similar statute or regulation becomes applicable
thereto, take all action necessary to ensure that the Transactions may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise to minimize the effect of such statute or regulation thereon.
(g) The Company will use all reasonable efforts to give prompt notice to
Purchaser of (i) any notice of, or other communication relating to, any
environmental matter, a default or event that, with notice or lapse of time or
both, would become a default, received by an executive officer of the Company
concerning the Company or any of its subsidiaries subsequent to the date of this
Agreement and prior to the Effective Time, under any Material Contract to which
the Company or any of its subsidiaries is a party or is subject; (ii) any
changes or developments relating to any material legal action pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries existing as of the date hereof; (iii) any new material legal
actions pending or, to the knowledge of the General Counsel of the Company,
threatened against the Company or any of its subsidiaries since the date hereof;
and (iv) any general denial of insurance coverage or contractual indemnity for
asbestos claims. Each of the Company and Purchaser 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.
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(h) The Parent and Purchaser will each use all reasonable efforts to give
prompt notice to the Company of any general denial of insurance coverage or
contractual indemnity for asbestos claims.
SECTION 7.02. ACCESS TO INFORMATION; CONFIDENTIALITY. The Company shall
(and shall cause each of its subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of Parent reasonable access,
consistent with applicable law, at all reasonable times during the period prior
to the Appointment Date, to all its properties, books, contracts, commitments
and records, and, during such period, the Company shall (and shall cause each of
its subsidiaries to) furnish, consistent with applicable law, promptly to Parent
all information concerning the Company's business, properties and personnel as
Parent may reasonably request and shall make available, consistent with
applicable law, to Parent the appropriate individuals (including attorneys,
accountants and other professionals) for discussion of the Company's business,
properties and personnel as Parent may reasonably request. After the Appointment
Date, the Company shall provide Parent and such persons as Parent shall
designate with all such information, at any time as Parent shall request. Any
such information obtained by Parent or Purchaser shall be governed by the terms
of the Confidentiality Agreement. Notwithstanding the foregoing, (i) no review,
inquiry or investigation by Parent shall affect any representations or
warranties of the Company contained herein or the conditions to the obligations
of Parent or Purchaser and (ii) nothing contained in this Agreement shall
require the Company to permit any inspection, or to disclose any information,
that in the reasonable judgment of the Company would result in the disclosure of
any trade secrets of it or third parties or violate any of its obligations with
respect to confidentiality if the Company shall have used reasonable efforts to
obtain the consent of such third party to such inspection or disclosure. All
requests for information made pursuant to this Section shall be directed to an
executive officer of the Company or such person as may be designated by any of
its officers, as the case may be.
SECTION 7.03. STOCK OPTIONS AND STOCK UNITS. (a) Immediately prior to the
Effective Time, each outstanding Option under the Stock Option Plans shall be
canceled and only entitle the holder thereof to receive for each Share with
respect to such Option an amount in cash equal to the difference between (i) the
Merger Consideration and (ii) the price per share exercise price under such
Option. Prior to the Effective Time, the Company shall take all necessary action
with respect to such cancellation, including obtaining any necessary consents
from the holders of such Options.
(b) Immediately prior to the Effective Time, the Company will amend the
Deferred Compensation Plan to provide (i) that each Stock Unit credited to
accounts of participants will be canceled and the accounts of each such
participant will be credited for each Stock Unit an amount in cash equal to the
Merger Consideration and (ii) that thereafter such accounts will be credited
with a fixed rate of interests. Prior to the Effective Time, the Company shall
take all necessary action with respect to such cancellation, including obtaining
any necessary consents from the holders of such Stock Units.
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SECTION 7.04. EMPLOYEE BENEFITS. (a) Parent shall maintain for a period of
nine months immediately following the Effective Time, employee benefit plans,
programs, policies and arrangements for employees of the Company and its
subsidiaries (other than employees covered by collective bargaining agreements)
as of the Effective Time which provide benefits that in the aggregate are
substantially comparable to the employee benefit plans, programs, policies and
arrangements other than stock option plans, stock purchase plans, stock
appreciation rights and any other stock based incentive and bonus plans provided
by the Company or any subsidiary for such employees immediately prior to the
Effective Time; PROVIDED, HOWEVER, that (i) in no event will Parent be obligated
hereunder to award options or equity rights to any Employee, (ii) Parent may
cause the Company to adopt, or extend to employees of the Company, benefit
plans, programs, policies and arrangements that are in effect for the Parent's
other North American businesses, and to substitute the same for the Company's
benefit plans, programs, policies and arrangements, and (iii) nothing herein
will prevent the amendment or termination of any specific plan, program or
arrangement, require that the Surviving Corporation provide or permit investment
in the securities of Parent, the Company or the Surviving Corporation or
interfere with the Surviving Corporation's right or obligation to make such
changes as are necessary to comply with applicable law. Parent shall cause each
employee benefit plan, program, policy or arrangement of Parent in which
employees of the Company and its subsidiaries are eligible to participate to
take into account for purposes of vesting and eligibility thereunder the service
of such employees with the Company and its subsidiaries to the same extent as
such service was credited for such purpose by the Company and its subsidiaries,
unless such credit would result in a duplication of benefits.
(b) Parent shall honor, in accordance with their terms, all benefit
obligations and contractual rights to current and former employees of the
Company and its subsidiaries existing as of the Effective Time the existence of
which is expressly disclosed in the Company Disclosure Schedule, including
employment or severance agreements, plans or policies of the Company and its
subsidiaries which are previously specifically disclosed in the Company
Disclosure Schedule; PROVIDED, HOWEVER, that nothing contained in this Section
7.04(b) shall or shall be deemed to limit the Surviving Corporation's obligation
with respect to all benefit obligations and contractual rights to current and
former employees of the Company and its subsidiaries existing as of the
Effective Time.
(c) If employees of the Company and its subsidiaries become eligible to
participate in a medical, dental or health plan of Parent, Parent shall cause
such plan to (i) waive any preexisting condition limitations for conditions
covered under the applicable medical, health or dental plans of the Company and
its subsidiaries to the same extent waived under such plans of the Company and
its subsidiaries and (ii) honor any deductible and out of pocket expenses
incurred by the employees and their beneficiaries under such plans during the
portion of the calendar year prior to such participation.
(d) Nothing in this Section 7.04 will require the continued employment of
any person.
SECTION 7.05. INDEMNIFICATION. (a) From and after the Effective Time,
Parent shall, or may cause the Surviving Corporation to the extent provided in
the Company's Certificate of
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Incorporation as in effect on the date hereof, to the fullest extent each
corporation is permitted under applicable law, indemnify and hold harmless each
present and former director and officer of the Company (collectively, the
"INDEMNIFIED PARTIES") against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any facts or events existing or
occurring at or prior to the Effective Time (including, without limitation, the
Transactions) for a period of six years after the Effective Time. Parent or the
Surviving Corporation shall advance expenses to an Indemnified Party, as
incurred, to the fullest extent permitted under applicable law; PROVIDED that
the Indemnified Party to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such Indemnified Party
is not entitled to indemnification. In the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the Effective
Time), (i) the Indemnified Parties shall promptly notify Parent or the Surviving
Corporation thereof, (ii) any counsel retained by the Indemnified Parties for
any period after the Effective Time must be reasonably satisfactory to Parent
and the Surviving Corporation, (iii) neither Parent nor the Surviving
Corporation shall be obligated to pay for more than one firm of counsel for all
Indemnified Parties, except to the extent that (A) an Indemnified Party has been
advised by counsel that there are conflicting interests between it and any other
Indemnified Party or (B) local counsel, in addition to such other counsel, is
required to effectively defend against such action or proceeding, and (iv)
neither Parent nor the Surviving Corporation shall be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld). Neither Parent nor the Surviving Corporation shall have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine (and such determination shall have
become final) that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
(b) For a period of six years after the Effective Time (or the time the
designees of Parent constitute a majority of the Company Board, if earlier),
Parent shall cause to be maintained in effect the current policies of directors'
and officers' liability insurance maintained by the Company (provided that
Parent may substitute therefor policies with reputable and financially sound
carriers of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims arising from
or related to facts or events that occurred at or before the Effective Time;
PROVIDED, HOWEVER, that Parent shall not be obligated to make annual premium
payments for such insurance to the extent such premiums exceed 200% of the
annual premiums paid as of the date hereof by the Company for such insurance
(such 200% amount, the "MAXIMUM PREMIUM"). If such insurance coverage cannot be
obtained at all, or can only be obtained at an annual premium in excess of the
Maximum Premium, Parent shall maintain the most advantageous policies of
directors' and officers' insurance obtainable for an annual premium equal to the
Maximum Premium; PROVIDED, FURTHER, if such insurance coverage cannot be
obtained at all, Parent shall purchase all available extended reporting periods
with respect to pre-existing insurance in an amount that, together with all
other insurance purchased pursuant to this Section 7.05(b), does not exceed the
Maximum Premium. The Company represents to Parent that the annual premiums paid
as of the date hereof are $525,000. Parent agrees, and will cause the Surviving
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Corporation, not to take any action that would have the effect of limiting the
aggregate amount of insurance coverage required to be maintained for the
individuals referred to in this Section 7.05(b). Notwithstanding the foregoing,
during the period from the date of this Agreement and continuing until the time
the designees of Parent constitute a majority of the Company Board, the Company
shall be permitted to purchase a "tail" insurance policy with respect to the
foregoing and a similar policy covering ERISA obligations, as long as the cost
of both policies (on an annualized basis) does not exceed the Maximum Premium.
(c) If the Surviving Corporation or any of its successors or assigns (i)
shall consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then, and in each such
case, proper provision shall be made so that the successors and assigns of the
Surviving Corporation shall assume all of the obligations set forth in this
Section.
(d) The provisions of this Section are intended to be for the benefit of,
and shall be enforceable by, each of the Indemnified Parties, their heirs, their
representatives and assigns.
SECTION 7.06. FURTHER ACTION. Upon the terms and subject to the conditions
hereof, each of the parties hereto in good faith shall use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the Transactions, to obtain in a timely
manner all necessary waivers, consents and approvals and to effect all necessary
registrations and filings, and to otherwise satisfy or cause to be satisfied all
conditions precedent to its obligations under this Agreement.
SECTION 7.07. PUBLIC ANNOUNCEMENTS. The initial press release with respect
to the execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
Parent and the Company shall consult with each other before issuing any press
release or otherwise making any public statements with respect to the Offer, the
Merger or this Agreement and shall not issue any such press release or make any
such public statement without the prior consent of the other party, which shall
not be unreasonably withheld; PROVIDED, HOWEVER, that a party may, without the
prior consent of the other party, issue such press release or make such public
statement as may upon the advice of counsel be required by law or the NYSE if it
has used all reasonable efforts to consult with the other party.
SECTION 7.08. DE-LISTING. The Surviving Corporation shall use its best
efforts to cause the Shares to be de-listed from the NYSE and de-registered
under the Exchange Act as soon as practicable following the Effective Time.
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SECTION 7.09. EXPENSES. The Surviving Corporation shall pay all charges and
expenses, including those of the Paying Agent, in connection with the
transactions contemplated in Article III. Except as otherwise provided in
Section 9.03, whether or not the Merger is consummated, all other costs and
expenses incurred in connection with this Agreement and the Transactions shall
be paid by the party incurring such expense, except that expenses incurred in
connection with the filing fee for the Information Statement and printing and
mailing the Information Statement shall be shared equally by Parent and the
Company.
SECTION 7.10. FINANCING. Parent shall use all reasonable efforts to satisfy
the Financing Condition; PROVIDED, HOWEVER, that notwithstanding the fact that
all of the conditions to the Offer set forth in ANNEX A have been satisfied,
Parent may extend the expiration date of the Offer if Net Debt exceeds $240
million until such time as Net Debt is $240 million or less. The provisions of
this Section 7.10 constitute the sole covenant of Parent with respect to the
subject matter hereof and no other provision of this Agreement will be
interpreted as obligating Parent to take or fail to take any action in respect
of any matter referred to in this Section 7.10 that is not required by this
Section 7.10.
SECTION 7.11. PAYMENT TO THE COMPANY. Unless this Agreement has heretofore
been terminated in accordance with Section 9.01 and unless the Financing
Condition has been irrevocably waived in writing by Parent prior to (a) 5:00
p.m. (New York City time) on July 30, 1999, Parent shall pay the Company $5.0
million, and (b) 5:00 p.m. (New York City time) on October 31, 1999, Parent
shall pay the Company an additional $10.0 million; PROVIDED, HOWEVER, that
Parent will have no obligation to pay such $10.0 million pursuant to this
Section 7.11(b) (i) unless it has elected to extend the Financing Termination
Time to the Extended Financing Termination Time pursuant to Section 9.01(i) and
(ii) if Net Debt as of the Extended Financing Termination Time is greater than
$250 million. The payments to be made to the Company pursuant to clauses (a) and
(b) of this Section 7.11 shall be made by wire transfer of same day funds and
shall be paid by Parent within two business days of the date set forth in clause
(i) or (ii), as the case may be. The letter agreement, dated June 6, 1999,
addressed to Parent from the Company and amending the Confidentiality Agreement,
is of no further force and effect and the parties agree that no Termination Fee
(as defined in such letter agreement) is payable thereunder. Parent acknowledges
that the agreements contained in this Section 7.11 are an integral part of the
Transactions and that, without these agreements, the Company would not enter
into this Agreement. Accordingly, if Parent fails to pay any amounts when due
pursuant to this Section 7.11 and, in order to obtain such payment, the Company
commences a suit that results in a judgment against Parent for such amounts,
Parent shall pay the Company's costs and expenses (including reasonable
attorneys' fees) in connection with such suit, together with interest on such
amounts at the prime rate of Bankers Trust Company on the date such amounts were
required to be paid.
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ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of each of the following
conditions:
(a) STOCKHOLDER APPROVALS. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the Company to
the extent required by the DGCL and the Certificate of Incorporation of the
Company;
(b) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
Governmental Entity preventing the consummation of the Merger shall be in
effect, and there shall not be any statute, rule, regulation or order enacted,
entered or enforced by any Governmental Entity which makes the consummation of
the Merger illegal; and
(c) OFFER. Parent, Purchaser or their affiliates shall have purchased, or
caused to be purchased, Shares pursuant to the Offer.
(d) SOLVENCY OPINION. The Company Board shall have received an opinion, in
form and substance and from an independent evaluation firm reasonably
satisfactory to the Company Board, as to solvency matters relating to the
Company and to North American Refractories Company and its subsidiaries before
and after giving effect to the Transactions, including the incurrence of
indebtedness related thereto; PROVIDED, HOWEVER, that this condition will in all
events be deemed satisfied if the Company Board receives an opinion as to such
matters from the same firm as provides such opinion to the lenders in respect of
the Financing; provided such firm agrees with the Company within 20 business
days hereof to provide the services required in order to render the opinion
required by this Section 8.01(d). Parent and the Company will, and will cause
their respective subsidiaries and employees to, cooperate with the evaluation
firm in performing the services required hereby, by, among other things,
providing relevant information and access to employees and data.
ARTICLE IX
TERMINATION
SECTION 9.01. TERMINATION. Upon notice given by the appropriate parties in
accordance with this Agreement, this Agreement may be terminated and the Merger
contemplated hereby may be abandoned on or following the occurrence of one of
the events set forth below prior to the Effective Time, notwithstanding approval
thereof by the stockholders of the Company; PROVIDED, HOWEVER, that any
termination by the Company pursuant to Section 9.01(c) or Section 9.01(f) shall
not be effective
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unless and until the Company shall have paid to Purchaser any fees and expenses
payable pursuant to Section 9.03:
(a) by mutual written consent duly authorized by the respective boards of
directors of Parent and, subject to Section 1.03(b), the Company; or
(b) by either Parent or the Company if (i) a Governmental Entity shall have
issued a non-appealable final order, decree or ruling, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
acceptance for payment of, or payment for, Shares pursuant to the Offer or the
Merger or (ii) any statute, rule or regulation is enacted or enforced by any
Governmental Entity for which there is no administrative or judicial right of
appeal, which in any such case makes the consummation of the Offer or the Merger
illegal; or
(c) by either Parent or the Company, if the Company Common Stock has not
been purchased pursuant to the Offer prior to December 31, 1999 (the
"TERMINATION DATE") (provided that the right to terminate this Agreement under
this Section 9.01(c) shall not be available to any party whose failure to
fulfill any obligations under this Agreement has been the cause of or resulted
in the failure to consummate the Offer prior to such date); or
(d) as long as Company Common Stock has not been purchased pursuant to the
Offer, by Parent, if any actions described in paragraph (e) to ANNEX A has
occurred; or
(e) as long as Company Common Stock has not been purchased pursuant to the
Offer, by Parent, (i) if there has been a breach of any covenant or agreement on
the part of the Company set forth in this Agreement or (ii) if any
representation or warranty of the Company (A) shall have been inaccurate or
incomplete when made or (B) shall have become untrue, and in either case under
clause (i) or (ii) the applicable event would give rise to the failure of a
condition set forth in paragraph (f) or (g) of ANNEX A, as the case may be (a
"COMPANY TERMINATING EVENT"); PROVIDED that, in the event of a Company
Terminating Event arising with respect to clause (i) or (ii)(A) above (other
than a breach of Section 6.02), if such Company Terminating Event is curable
prior to the expiration of 20 days from notice by Parent to the Company of its
intention to terminate due to its occurrence (but in no event later than the
Termination Date) by the Company through the exercise of its reasonable best
efforts and for so long as the Company continues to exercise such reasonable
best efforts, Parent may not terminate this Agreement under this Section 9.01(e)
until the expiration of such period without such Company Terminating Event
having been cured; PROVIDED, FURTHER, that, in the event of a Company
Terminating Event arising with respect to clause (ii)(B) above, if such Company
Terminating Event may be curable prior to the Termination Date by the Company
through the exercise of its reasonable best efforts and for so long as the
Company continues to exercise such reasonable best efforts, Parent may not
terminate this Agreement under this Section 9.01(e); or
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(f) as long as Company Common Stock has not been purchased pursuant to the
Offer, by the Company to allow the Company to enter into a definitive agreement
in accordance with Section 6.02(b) with respect to a Superior Proposal;
PROVIDED, HOWEVER, that the Company shall have complied with the provisions of
Section 6.02; and PROVIDED, FURTHER, HOWEVER, that not less than five business
days prior to such termination, the Company shall have notified Purchaser of its
intention to terminate the Agreement pursuant to this Section 9.01(f) and shall
have caused its financial and legal advisers to be reasonably available to
negotiate in good faith with Purchaser and Purchaser's financial and legal
advisers during such five-day period if Purchaser offers to make such
adjustments in the terms and conditions of this Agreement as would cause such
Acquisition Proposal not to be a Superior Proposal; or
(g) as long as Company Common Stock has not been purchased pursuant to the
Offer, by the Company, (i) upon a breach of any covenant or agreement on the
part of Parent or Purchaser set forth in this Agreement or (ii) if any
representation or warranty of Parent or Purchaser (A) shall have been inaccurate
or incomplete when made or (B) shall have become untrue, and in either case, the
applicable event would materially adversely affect Parent's or Purchaser's
ability to consummate (or materially delays commencement or consummation of) the
Offer (a "PARENT TERMINATING EVENT"); PROVIDED that, in the event of a Parent
Terminating Event arising with respect to clause (i) or (ii)(A) above, if such
Parent Terminating Event is curable prior to the expiration of 20 days from
notice by the Company to Parent of its intention to terminate due to its
occurrence (but in no event later than the Termination Date) by Parent or
Purchaser through the exercise of its reasonable best efforts and for so long as
Parent or Purchaser continues to exercise such reasonable best efforts, the
Company may not terminate this Agreement under this Section 9.01(g) until the
expiration of such period without such Parent Terminating Event having been
cured; PROVIDED, FURTHER, that, in the event of a Parent Terminating Event under
clause (ii)(B) above, if such Parent Terminating Event is curable prior to the
Termination Date by Parent or Purchaser through the exercise of its reasonable
best efforts and for so long as Parent or Purchaser continues to exercise such
reasonable best efforts, the Company may not terminate this Agreement under this
Section 9.01(g); or
(h) as long as Company Common Stock has not been purchased pursuant to the
Offer, by Parent, if any person or group (as defined in Section 13(d)(3) of the
Exchange Act) other than Parent, Purchaser or any of their respective
subsidiaries or affiliates shall have become the beneficial owner of more than
50% of the outstanding Shares (either on a primary or fully diluted basis); or
(i) by the Company at any time after 5:00 p.m. (New York City time) on July
30, 1999 (the "FINANCING TERMINATION TIME"), if Parent has not irrevocably
waived in writing the Financing Condition prior to the Financing Termination
Time; PROVIDED, HOWEVER, that not less than two business days prior to such
termination, the Company shall have notified Purchaser of its intention to
terminate the Agreement pursuant to this Section 9.01(i); PROVIDED, FURTHER,
HOWEVER, that the Company shall not be entitled to terminate this Agreement
pursuant to this Section 9.01(i) if Parent shall (i) have paid any amount
payable under Section 7.11(a) and (ii) have notified the Company in writing
prior to the
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Financing Termination Time of its determination to extend the Financing
Termination Time to 5:00 p.m. (New York City time) on October 31, 1999 (the
"EXTENDED FINANCING TERMINATION TIME");
(j) by the Company at any time after the Extended Financing Termination
Time, if Parent has extended the Financing Termination Time to the Extended
Financing Termination Time pursuant to Section 9.01(i) and Parent has not
irrevocably waived in writing the Financing Condition prior to the Extended
Financing Termination Time; PROVIDED, HOWEVER, that not less than two business
days prior to such termination, the Company shall have notified Purchaser of its
intention to terminate the Agreement pursuant to this Section 9.01(j); PROVIDED,
FURTHER, HOWEVER, that the Company shall not be entitled to terminate this
Agreement pursuant to this Section 9.01(j) if (A) Parent shall (i) have paid any
amount payable pursuant to Section 7.11(b) and (ii) have irrevocably waived the
Financing Condition prior to such termination by the Company pursuant to this
Section 9.01(j) or (B) Net Debt as of the Extended Financing Termination Time is
greater than $250 million.
SECTION 9.02. EFFECT OF TERMINATION. In the event of the termination of
this Agreement and the abandonment of the Merger pursuant to Section 9.01, this
Agreement shall forthwith become void and there shall be no liability on the
part of any party hereto (or any of its affiliates, directors, officers,
employees, agents, legal and financial advisors or other representatives),
except (i) as set forth in Sections 7.09, 7.11(but only to the extent any fee
thereunder has become payable but has not been paid), 9.03 and 10.01, (ii)
nothing shall relieve Parent, Purchaser or any of their affiliates from
liability or damages resulting from any breach of this Agreement and (iii)
nothing herein shall relieve the Company from liability or damages resulting
from any willful breach of this Agreement.
SECTION 9.03. FEES AND EXPENSES. (a) Except as set forth in Section 7.09
and this Section 9.03, all fees and expenses incurred in connection with this
Agreement and the Transactions shall be paid by the party incurring such
expenses, whether or not the Merger is consummated.
(b) The Company shall pay the Parent Fee (as defined herein), plus (x)
actual, documented and reasonable out-of-pocket expenses of Parent not in excess
of $1,500,000 relating to the Transactions (including, but not limited to, fees
and expenses of counsel) plus (y) after Parent has entered into one or more
definitive agreements with respect to the Financing, actual, documented and
reasonable out-of-pocket expenses of Parent not in excess of $1,500,000 relating
to or incurred in connection with the Financing (the expenses referred to in
clauses (x) and (y) collectively, the "EXPENSE AMOUNT"), upon the earliest to
occur of the following events:
(i) the termination of this Agreement by Parent pursuant to Section
9.01(d), 9.01(e)(i), 9.01(e)(ii)(A) or 9.01(h); or
(ii) the termination of this Agreement by Parent or the Company
pursuant to Section 9.01(c) if at the time of termination there has been
publicly announced and not withdrawn an Acquisition Proposal and the
Company Board has withdrawn, modified or
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changed in a manner adverse to Parent or Purchaser (including by amendment
of the Schedule 14D-9) its approval or recommendation of this Agreement,
the Offer or the Merger or shall have resolved to do so;
(iii) the termination of this Agreement by Parent or the Company
pursuant to Section 9.01(c) if at the time of termination there has been
publicly announced and not withdrawn an Acquisition Proposal at a price per
Share at or higher than the Offer Price and the Company thereafter
consummates a transaction that would constitute an Acquisition Proposal
with the person making such Acquisition Proposal within fifteen months
after the termination of this Agreement at a price per Share at or higher
than the Offer Price; or
(iv) the termination of this Agreement by the Company pursuant to
Section 9.01(f).
(c) The Parent Fee payable pursuant to Section 9.03(b) shall be paid by the
Company within two business days after being notified of such by Parent or if
earlier, the time herein specified.
(d) The Company acknowledges that the agreements contained in this Section
9.03 are an integral part of the Transactions and that, without these
agreements, Parent and Purchaser would not enter into this Agreement.
Accordingly, if the Company fails to pay any amounts when due pursuant to this
Section 9.03 and, in order to obtain such payment, Parent commences a suit that
results in a judgment against the Company for such amounts, the Company shall
pay Parent's costs and expenses (including reasonable attorneys' fees) in
connection with such suit, together with interest on such amounts at the prime
rate of Bankers Trust Company on the date such amounts were required to be paid.
(e) The payment of the Parent Fee and the reimbursement of any expenses
pursuant to this Section 9.03 shall be made by wire transfer of same day funds.
Except as otherwise provided in Section 9.02, such payment and reimbursement by
the Company shall be the sole and exclusive remedy of Parent and Purchaser
against the Company and any of its subsidiaries and their respective directors,
officers, employees, agents, advisors or other representatives with respect to a
breach of any representation, warranty, covenant or agreement of the Company.
The payment by Parent to the Company of an aggregate amount of $15 million
pursuant to Section 7.11 shall be the sole and exclusive remedy of the Company
against Parent and any of its subsidiaries and their respective directors,
officers, employees, agents, advisors or other representatives with respect to a
breach (other than a willful breach) of Section 5.04 or Section 7.10; PROVIDED,
HOWEVER, that nothing herein shall relieve such persons from liability or
damages resulting from any breach of Section 5.04 or Section 7.10 unless the
entire $15 million is paid to the Company pursuant to Section 7.11.
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ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Except as otherwise provided in this Section 10.01, the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time (or the time the designees of Parent
constitute a majority of the Board, if earlier) or upon the termination of this
Agreement pursuant to Section 9.01, as the case may be, except that the
agreements set forth in Article III and in Sections 7.03 (Stock Options and
Stock Units), 7.04 (Employee Benefits), 7.05 (Indemnification), 7.06 (Further
Action), 7.08 (De-listing) and 7.09 (Expenses) shall survive the consummation of
the Merger and those set forth in Section 9.02 (Effect of Termination) and
Section 9.03 (Fees and Expenses) shall survive termination of this Agreement.
SECTION 10.02. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or mailed if delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by such party by notice given pursuant to this provision) or
sent by electronic transmission, with confirmation received, to the telecopy
number specified below:
(a) If to Parent or Purchaser:
RHI AG
c/o North American Refractories Company
500 Halle Building
1228 Euclid Avenue
Cleveland, Ohio 44115-1809
Telecopier No.: (216) 621-8446
Attention: General Counsel
With a copy to:
Jones, Day, Reavis & Pogue
901 Lakeside Avenue
Cleveland, Ohio 44114-1190
Telecopier No.: (216) 579-0212
Attention: John P. Dunn, Esq.
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(b) If to the Company:
Global Industrial Technologies, Inc.
2121 San Jacinto Street
Dallas, Texas 75201
Telecopier No.: (214) 953-4597
Attention: General Counsel
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telecopier No.: (212) 558-3588
Attention: James C. Morphy, Esq.
SECTION 10.03. AMENDMENT. Subject to Section 1.03(b) and applicable law,
this Agreement may be amended by the parties hereto by action taken by or on
behalf of their respective boards of directors at any time prior to the
Effective Time; PROVIDED, HOWEVER, that, after approval and adoption of this
Agreement by the stockholders of the Company, no amendment may be made which by
law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 10.04. WAIVER. Subject to Section 1.03(b), at any time prior to the
Effective Time, any party hereto may with respect to any other party hereto (a)
extend the time for the performance of any of the obligations or other acts, (b)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto or (c) waive compliance with any of
the agreements or conditions contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 10.05. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.06. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
Transactions are fulfilled to the fullest extent possible.
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SECTION 10.07. ENTIRE AGREEMENT. (a) This Agreement (including any exhibits
hereto) and the Company Disclosure Schedule, together with the Confidentiality
Agreement, constitute the entire agreement and supersede all prior agreements
and undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
(b) The Confidentiality Agreement is hereby amended so as to permit
Parent, Purchaser or any of its respective affiliates or Representatives (as
defined therein) to (i) effect the Transactions, (ii) take any action otherwise
prohibited by the fourth paragraph of the Confidentiality Agreement (A)
involving a transaction pursuant to which Parent offers to acquire all of the
shares of Company Common Stock at not less than $13.00 per share or (B) at any
time following (1) a tender offer or exchange offer (other than a tender offer
that has been commenced but has not expired prior to the date hereof) for some
portion or all of the Shares shall have been commenced or publicly proposed to
be made by a person other than Parent or any of its subsidiaries, including by
the Company or its subsidiaries, or it shall have been publicly disclosed or
Parent shall have otherwise learned that any person or "group" (as defined in
Section 13(d)(3) of the Exchange Act), other than Parent or its affiliates or
any group of which any of them is a member or any affiliates controlled by it,
shall have acquired beneficial ownership (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of more than 15% of the outstanding Shares
and (2) the purchase of Shares pursuant to the Offer, and (iii) take any action
otherwise prohibited by the sixth paragraph of the Confidentiality Agreement at
any time following the purchase of Shares pursuant to the Offer.
SECTION 10.08. ASSIGNMENT, PURCHASER. This Agreement shall not be assigned
by operation of law or otherwise without the prior written consent of the other
parties hereto; PROVIDED, HOWEVER, that Parent may designate, by written notice
to the Company, another wholly owned direct or indirect subsidiary to be a
constituent corporation in the Merger in lieu of Purchaser, in the event of
which all references herein to Purchaser shall be deemed references to such
other subsidiary, except that all representations and warranties made herein
with respect to Purchaser as of the date of this Agreement shall be deemed
representations and warranties made with respect to such other subsidiary as of
the date of such designation.
SECTION 10.09. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their successors and
assigns, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, other than Article III and
Sections 7.03 (Stock Options and Stock Units) and 7.05 (Indemnification).
SECTION 10.10. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further
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exercise thereof or of any other right. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
SECTION 10.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 10.12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 10.13. WAIVER OF JURY TRIAL; CONSENT OF JURISDICTION. (a) EACH OF
PARENT, PURCHASER AND THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS.
(b) THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION
OF THE COURTS OF THE STATE OF DELAWARE AND THE FEDERAL COURTS OF THE UNITED
STATES OF AMERICA LOCATED IN THE STATE OF DELAWARE SOLELY IN RESPECT OF THE
INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND OF THE
DOCUMENTS REFERRED TO IN THIS AGREEMENT, AND IN RESPECT OF THE TRANSACTIONS
CONTEMPLATED HEREIN, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN
ANY ACTION FOR THE INTERPRETATION OR ENFORCEMENT HEREOF OR OF ANY SUCH DOCUMENT,
THAT IT IS NOT SUBJECT THERETO OR THAT SUCH ACTION MAY NOT BE BROUGHT OR IS NOT
MAINTAINABLE IN SAID COURTS OR THAT THE VENUE THEREOF MAY NOT BE APPROPRIATE OR
THAT THIS AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO
SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH A DELAWARE STATE
OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT
JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH
DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY
SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 10.02 HEREOF OR IN
SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT
SERVICE THEREOF.
SECTION 10.14. CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
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(a) "affiliate" shall mean, with respect to any specified person, any
person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the person
specified, including, without limitation, any partnership or joint venture in
which the person specified (either alone, or through or together with any other
subsidiary) has, directly or indirectly, an interest of 10 percent or more.
(b) "Appointment Date" shall mean the time the persons designated by Parent
have been elected to, and shall constitute a majority of, the Company Board
pursuant to Section 1.03.
(c) "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Company Board" shall mean the Board of Directors of the Company.
(f) "Company Disclosure Schedule" shall mean the written disclosure
schedule prepared and signed by the Company and previously delivered to Parent.
(g) "Company Material Adverse Effect" shall mean any change or effect that,
individually or when taken together with all other such changes or effects, is
reasonably likely to be materially adverse to the business, results of
operations or financial condition of the Company and its subsidiaries, taken as
a whole; PROVIDED, HOWEVER, that in determining whether there has been a Company
Material Adverse Effect, to the extent that any adverse effect is attributable
to the following it shall be disregarded: (i) general economic, business or
financial market conditions; (ii) general industry conditions; (iii) the taking
of any action expressly permitted or required by this Agreement; (iv) the breach
by Parent or Purchaser of this Agreement; or (v) any change in any law, rule or
regulation or GAAP or interpretations thereof that directly apply to the
Company.
(h) "Company SEC Reports" shall mean each form, report, schedule, statement
and other document filed by the Company since January 1, 1998 under the Exchange
Act or the Securities Act, including any amendment to such document.
(i) "Confidentiality Agreement" shall mean the confidentiality agreement,
dated April 1, 1999, between Parent and the Company.
(j) "control" (including the terms "controlled by" and "under common
control with") shall mean the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
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(k) "DGCL" shall mean the Delaware General Corporation Law.
(l) "Dissenting Shares" shall mean any Shares issued and outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has demanded
properly in writing appraisal for such Shares in accordance with Section 262 of
the DGCL, if such Section 262 provides for appraisal rights for such Shares in
the Merger.
(m) "Environment" shall mean any surface or subsurface physical medium or
natural resources, including air, land, soil, surface waters, ground waters,
stream and river sediments, biota and any indoor area, surface or physical
medium.
(n) "Environmental Laws" shall mean federal, foreign, state and local laws
(including the common law), rules, regulations, ordinances, codes, orders and
judgments (including any judicial or administrative interpretations, guidances,
directives, policy statements or opinions) relating to the injury to, or the
pollution or protection of, human health and safety or the Environment.
(o) "Environmental Liabilities" shall mean any claims, judgments, damages
(including punitive damages), losses, penalties, fines, liabilities,
encumbrances, liens, violations, costs and expenses (including attorneys' and
consultants' fees) of any required investigation, remediation, monitoring or
defense of any matter relating to human health, safety as it relates to
Hazardous Substances or the Environment of whatever kind or nature by any party,
entity or authority (A) which are incurred as a result of (i) the existence of
Hazardous Substances in, on, under, at or emanating from any Real Property, (ii)
the Company's or any of its subsidiaries' offsite transportation, treatment,
storage or disposal of Hazardous Substances or (iii) the violation of or
non-compliance with any Environmental Laws or (B) which arise under any
Environmental Laws.
(p) "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
(q) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(r) "fully diluted basis" shall mean the aggregate number of issued and
outstanding shares of Company Common Stock, shares of Company Common Stock
subject to issuance under vested Options and shares of Company Common Stock
subject to issuance upon exercise of outstanding warrants, calls, subscriptions
or other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of the Company or securities
convertible or exchangeable for such capital stock, but shall not include
unvested Options.
(s) "GAAP" shall mean United States Generally Accepted Accounting
Principles.
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(t) "Governmental Entity" shall mean any United States, state or foreign
governmental, administrative or regulatory authority, commission, body, agency
or other authority, or any court of competent jurisdiction.
(u) "Hazardous Substances" shall mean any regulated quantities of
petroleum, petroleum products, petroleum-derived substances, radioactive
materials, hazardous wastes, polychlorinated biphenyls, lead-based paint, radon,
urea formaldehyde, asbestos or any materials containing asbestos, and any
chemicals, contaminants, materials or substances regulated or defined as, or
included in the definition of, "hazardous substances," "extremely hazardous
substances," "hazardous wastes," "hazardous materials," "hazardous
constituents," "toxic substances," "pollutants" or "contaminants" or regulated
by reason of toxicity, carcinogenicity, ignitability, corrosivity or reactivity
or other characteristics under any Environmental Law.
(v) "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
(w) "Information Statement" shall mean the information statement to be
filed by the Company with the SEC pursuant to Section 2.07 hereof, together with
all amendments and supplements thereto and including the exhibits thereto.
(x) "IRS" shall mean the United States Internal Revenue Service.
(y) "Material Contracts" shall mean any agreement, arrangement, bond,
commitment, contract, franchise, indemnity, indenture, instrument, lease,
license, understanding or undertaking, and any amendment or supplement thereto,
in each case, not otherwise terminable on 90 days' or less notice by the
terminating party, that (i) obligates the Company or any of its subsidiaries to
pay, or entitles the Company or any of its subsidiaries to receive, an amount of
$2,500,000 or more annually (including any amounts payable as a result of the
termination thereof), (ii) involves an extension of credit other than relating
to customer accounts receivable having normal credit terms, (iii) contains
non-competition, no solicitation, no hire or change-in-control provisions or
(iv) is otherwise required to be described in or filed as an exhibit to the
Company SEC Reports.
(z) "Minimum Condition" shall mean at least a majority of the outstanding
shares of Company Common Stock (together with the shares of Company Common
Stock, if any, then owned by Parent, Purchaser or their subsidiaries) on a fully
diluted basis shall have been validly tendered and not withdrawn prior to the
expiration of the Offer.
(aa) "Parent Fee" shall mean a termination fee of $10.0 million; PROVIDED,
HOWEVER, that such fee shall be $5.0 million unless (i) Parent has irrevocably
waived the Financing Condition prior to the earlier of giving any notice by the
Company of an intention to terminate or actual termination under Section 9.01 by
the Company or prior to any occurrence, action or event giving rise to Parent's
right to
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terminate under Section 9.01 or (ii) Parent has paid the $5.0 million fee in
accordance with Section 7.11(a).
(bb) "Parent Material Adverse Effect" shall mean any change or effect that,
individually or when taken together with all other such changes or effects, is
reasonably likely to prevent or delay Parent or Purchaser from performing their
obligations under this Agreement or the consummation of the Transactions.
(cc) "person" shall mean an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act);
(dd) "Purchaser Common Stock" shall mean the common stock, par value $.01
per share, of Purchaser.
(ee) "Rights Agreement" shall mean that certain Rights Agreement dated as
of October 31, 1995 between the Company and The Bank of New York, as Rights
Agent, as amended.
(ff) "SEC" shall mean the United States Securities and Exchange Commission.
(gg) "Securities Act" shall mean the Securities Act of 1933, as amended.
(hh) "Shares" shall mean shares of Company Common Stock.
(ii) "Stock Option Plans" shall mean the 1992 Stock Compensation Plan, as
amended, and the Stock Option Plan for Non-Employee Directors, as amended and
restated.
(jj) "subsidiary" or "subsidiaries" of any person shall mean any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary) owns,
directly or indirectly, more than 50% of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity;
(kk) "Superior Proposal" shall mean an Acquisition Proposal that the
Company Board determines in good faith (A) is reasonably likely to be
consummated, taking into account all legal, financial and regulatory aspects of
the proposal, the person making the proposal and all other relevant factors, (B)
for which financing, to the extent required, is then committed or which, in the
good faith judgment of the Company Board, is reasonably capable of being
obtained by the party making the Acquisition Proposal, and (C) would, if
consummated, result in a more favorable transaction, from a financial point of
view, than the Transactions.
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(ll) "Tax" shall mean taxes, fees, levies, duties, tariffs, imposts and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, provincial, local or foreign taxing
authority, including, without limitation, (i) income, franchise, profits, gross
receipts, ad valorem, net worth, value added, sales, use, service, real or
personal property, special assessments, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes and (ii) interest,
penalties, additional taxes and additions to tax imposed with respect thereto.
(mm) "Tax Returns" shall mean returns, reports and information statements
with respect to Taxes required to be filed with the IRS or any other taxing
authority, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns.
(nn) "Year 2000 Compliant" shall mean that the computer systems (i) are
capable of recognizing, processing, managing, representing, interpreting and
manipulating correctly date- related data for dates earlier and later than
January 1, 2000; (ii) have the ability to function automatically into and beyond
the year 2000 without human intervention and without any change in operations
associated with the advent of the year 2000; and (iii) have the ability to
recognize all "leap years," including February 29, 2000.
SECTION 10.15. ADDITIONAL DEFINITIONS/INTERPRETIVE MATTERS. Whenever the
words "include," "includes" or "including" are used in this Agreement, they will
be deemed to be followed by the words "without limitation." The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
will refer to this Agreement as a whole, including the Company Disclosure
Schedule, and not to any particular provision of this Agreement. All terms used
herein with initial capital letters have the meanings ascribed to them herein
and all terms defined in this Agreement will have such defined meanings when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term.
SECTION 10.16. ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties will be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
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<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
RHI AG
By:
--------------------------------------
Name: Dr. Georg Obermeir
Title: Chief Executive Officer
HEAT ACQUISITION CORP.
By:
--------------------------------------
Name: Dr. Georg Obermeir
Title: Chief Executive Officer
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
By:
--------------------------------------
Name: Rawles Fulgham
Title: Chairman of the Board and Chief
Executive Officer
- 54 -
<PAGE>
ANNEX A
CERTAIN CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer and subject to (and not
in limitation of) Purchaser's rights or obligations with respect to extending
and amending the Offer pursuant to the terms of this Agreement, Purchaser shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, payment for,
any tendered Shares, and may terminate the Offer or amend the Offer, but only to
the extent permitted by this Agreement, if (i) any applicable waiting period
under the HSR Act or any applicable laws regulating competition, antitrust,
investment or exchange controls in Germany and Mexico shall not have expired or
not have been terminated prior to the expiration of the Offer, (ii) the Minimum
Condition shall not have been satisfied or waived (pursuant to this Agreement)
prior to the expiration of the Offer or (iii) at any time on or after the date
of this Agreement and before the time of acceptance of Shares for payment
pursuant to the Offer, any of the following events shall have occurred and be
continuing:
a. there shall have been entered any judgment, order or injunction
applicable to Parent, Purchaser, the Company or any subsidiary or affiliate of
Parent or the Company, or to the Offer or the Merger, by any Governmental Entity
that (i) makes illegal or otherwise directly or indirectly restrains or
prohibits the acceptance for payment of, or payment for, some of or all the
Shares by Purchaser or any of its affiliates or the consummation of the Merger,
(ii) renders Purchaser unable to accept for payment, pay for or purchase some or
all of the Shares pursuant to the Offer, (iii) imposes limitations on the
ability of Parent, Purchaser or any other affiliate of Parent effectively to
exercise full rights of ownership of any Shares, including, without limitation,
the right to vote any Shares acquired by it pursuant to the Offer or otherwise
on all matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of this Agreement and the Merger,
(iv) prohibits, limits or otherwise materially adversely affects the ownership
or operation by Parent or any of its subsidiaries of all or any portion of the
business or assets of the Company, Parent or any of their respective
subsidiaries located in the United States or Canada or in the alternative
compels the Company, Parent or any of their respective subsidiaries to sell or
otherwise dispose of, or hold separate or otherwise divest itself of, all or any
portion of the business or assets of the Company, Parent or any of their
respective subsidiaries located in the United States or Canada, but only if in
each case such businesses or assets accounted for, individually or in the
aggregate, revenues of the Company or Parent, as the case may be, for the year
ended December 31, 1998 as set forth in the respective audited financial
statements for the period then ending for Parent or the Company in excess of the
Revenue Amount; or (v) which otherwise would materially adversely affect the
ability of the Company or Parent to consummate the Offer or the Merger or to
perform any of their respective obligations under this Agreement; or
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b. there shall have been (i) any statute, rule, regulation, executive
order, decree, legislation, interpretation, enacted, entered, enforced,
promulgated, amended, issued or deemed applicable by any Governmental Entity to
(x) Parent, the Company or any subsidiary or affiliate of Parent or the Company
or (y) the Offer or the Merger, or (ii) any action, suit or proceeding initiated
by any Governmental Entity, other than the application to the Offer or the
Merger of the applicable waiting periods under the HSR Act or any applicable
non-United States laws regulating competition, antitrust, investment or exchange
controls, that would result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above; or
c. there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the NYSE for a period in excess of 24
hours (excluding suspensions or limitations resulting solely from physical
damage or interference with the NYSE not related to market conditions or
suspensions or limitations triggered on the NYSE by price fluctuations on a
single trading day), (ii) a declaration of a banking moratorium or any
suspension of or material limitation on payments in respect of banks or other
lending institutions by United States, Austrian, European Community or New York
authorities or any suspension or material limitation on the extension of credit
(whether or not mandatory), (iii) a commencement of a war, insurrection, armed
conflict or other international or national crisis other than the current
hostilities in Iraq or Eastern Europe or (iv) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof not contemplated as of the date hereof; or
d. there shall have occurred any change or effect that, individually or
when taken together with all other such changes or effects, is or is reasonably
likely to be materially adverse to the business, results of operations or
financial condition of the Company and its subsidiaries, taken as a whole;
e. the Company Board or any committee thereof shall have (i) withdrawn or
modified in a manner adverse to Parent or Purchaser (including by amendment of
the Schedule 14D-9) its approval or recommendation of this Agreement, the Offer
or the Merger, (ii) recommended or taken a "neutral" position (except in
connection with a Section 6.02 Determination) with respect to the approval or
acceptance of an Acquisition Proposal from, or similar business combination
with, a person or entity other than Parent, Purchaser or their affiliates, (iii)
taken any action referred to in Section 6.02 of this Agreement that is
prohibited thereby, or (iv) publicly disclosed any intention, or resolved, to do
any of the foregoing; or
f. any of the representations and warranties of the Company set forth in
this Agreement that are qualified as to Company Material Adverse Effect shall
not be true and correct and any such representations and warranties that are not
so qualified shall (i) not be true and correct and (ii) be reasonably likely to
result in a Company Material Adverse Effect, in each case as if such
representations and warranties were made at the time of such determination; or
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g. the Company shall have breached any material agreement or covenant or
failed to perform any material obligation to be complied with or performed by it
under this Agreement; or
h. all consents necessary to the consummation of the Offer or the Merger,
including, without limitation, consents from parties to loans, contracts, leases
or other agreements to which the Company or any of its subsidiaries is subject,
and consents from Governmental Entities, shall not have been obtained, other
than consents the failure to obtain which is not reasonably likely to have a
Company Material Adverse Effect; or
i. this Agreement shall have been terminated in accordance with its terms;
or
j. the Financing shall not be available to Parent and Purchaser on terms
reasonably satisfactory to Parent given the structure of the Financing
contemplated for the Transactions, including, without limitation, the financing
contemplated to be arranged by Parent (the "FINANCING CONDITION").
The foregoing conditions are for the sole benefit of Parent and Purchaser,
and may (subject to the terms of the Merger Agreement) be asserted or waived by
Parent or Purchaser, in whole or in part, regardless of the circumstances
(including any action or inaction by Parent or Purchaser) at any time and from
time to time in the good faith discretion of Parent or Purchaser; PROVIDED,
HOWEVER, that nothing contained herein shall relieve Parent or Purchaser of its
obligations under the Agreement. The failure by Parent or Purchaser at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
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