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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
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A.P. GREEN INDUSTRIES, INC.
(NAME OF SUBJECT COMPANY)
BGN ACQUISITION CORP.
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
(BIDDERS)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(INCLUDING THE ASSOCIATED RIGHTS)
(TITLE OF CLASS OF SECURITIES)
393059100
(CUSIP NUMBER OF CLASS OF SECURITIES)
GRAHAM L. ADELMAN, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
2121 SAN JACINTO, SUITE 2500
DALLAS, TEXAS 75201
(214) 953-4500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPIES TO:
JAMES C. MORPHY, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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$190,783,156 $38,156.63
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* For purposes of calculating the amount of filing fee only. The amount
assumes the purchase of (i) 8,068,665 shares of Common Stock, par value
$1.00 per share, issued and outstanding as of February 26, 1998, according
to the Subject Company, and (ii) 919,150 options on the Common Stock issued
and outstanding as of February 26, 1998, according to the Subject Company,
with an average exercise price of $7.56.
** 1/50 of 1% of the transaction value.
[_]Checkbox 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.
Amount Previously Paid: None Filing Party: N/A Page 1 of 5
Pages
Form of Registration No.: N/A Date filed: N/A Exhibit Index on
page 5
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<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is A.P. Green Industries, Inc., a
Delaware corporation (the "Company"), and the address of its principal
executive offices is Green Boulevard, Mexico, Missouri 65265.
(b) The class of securities to which this statement relates is the Common
Stock, par value $1.00 per share (the "Common Stock"), including the
associated rights to purchase Series B Junior Participating Preferred Stock
(the "Rights" and together with the Common Stock, the "Shares"), of the
Company. The information set forth in the Introductory Section and Section 1
of the Offer to Purchase (the "Offer to Purchase") annexed hereto as Exhibit
(a)(1) is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) The information set forth in Section 9 of the Offer to Purchase
is incorporated herein by reference. The name, business address, present
principal occupation or employment, the material occupations, positions,
offices or employments for the past five years and citizenship of each
director and executive officer of Global Industrial Technologies, Inc., a
Delaware corporation ("Purchaser") and of BGN Acquisition Corp., a Delaware
corporation (the "Merger Sub") and a direct wholly owned subsidiary of
Purchaser, and the name, principal business and address of any corporation or
other organization in which such occupations, positions, offices and
employments are or were carried on are set forth in Schedule A to the Offer to
Purchase and incorporated herein by reference.
(e); (f) During the last five years, neither Purchaser nor the Merger Sub,
nor, to the best of Purchaser's knowledge, any of the directors or executive
officers of the Purchaser or the Merger Sub has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which any such person 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 law.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introductory Section and Sections
10 and 11 of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 12 of the Offer to Purchase is
incorporated herein by reference. See also Exhibits (b)(1) and (b)(2).
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
The information set forth in the Introductory Section and Sections 7 and 11
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 in Sections 9 and 11 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 in the Introductory Section and Sections 9, 10 and
11 of the Offer to Purchase is incorporated herein by reference.
2
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ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 16 of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference. Purchaser is subject to the periodic
reporting requirements of Section 13(a) of the Exchange Act. The financial
statements of Purchaser set forth in Item 8 of Purchaser's Annual Report on
Form 10-K for the fiscal year ended October 31, 1997 and in Item 1 of
Purchaser's Quarterly Report on Form 10-Q for the quarter ended January 31,
1998, are hereby incorporated by reference, which reports may be obtained from
the Securities and Exchange Commission in the manner set forth with respect to
information concerning the Company in Section 8 of the Offer to Purchase and
should also be available for inspection at the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
ITEM 10. ADDITIONAL INFORMATION.
(a)-(c) The information set forth in Section 15 of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
(e) Not applicable.
(f) Not applicable.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
(a)(1) Offer to Purchase, dated March 6, 1998.
(a)(2) Letter of Transmittal with respect to the Shares.
(a)(3) Form of letter, dated March 6, 1998, to brokers, dealers, commercial banks, trust
companies
and nominees.
(a)(4) Form of letter, dated March 6, 1998, to clients to be used by brokers, dealers,
commercial
banks, trust companies and nominees.
(a)(5) Press Release, dated March 4, 1998.
(a)(6) Press Release, dated March 6, 1998.
(a)(7) Form of newspaper advertisement, dated March 6, 1998.
(a)(8) Notice of Guaranteed Delivery.
(a)(9) IRS Guidelines to Substitute Form W-9.
(b)(1) Credit Agreement, dated as of September 23, 1994, among Indresco Inc., Various
Financial Institutions and Bank of America Illinois, as Agent.
(b)(2) Seventh Amendment to Credit Agreement, dated as of February 19, 1998, among
Purchaser, GPX Corp. and Bank of America National Trust and Savings Association.
(c)(1) Agreement and Plan of Merger, dated as of March 3, 1998, among the Company,
Purchaser and
the Merger Sub.
Confidentiality Agreement, dated December 12, 1997, between Purchaser and the
(c)(2) Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
3
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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.
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
/s/ Graham L. Adelman
By: _________________________________
Name: Graham L. Adelman
Title:
Senior Vice President,
General Counsel and Secretary
BGN ACQUISITION CORP.
/s/ Graham L. Adelman
By: _________________________________
Name: Graham L. Adelman
Title:
Senior Vice President
Dated: March 6, 1998
4
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
------- ------------ ------
<C> <S> <C>
(a)(1) Offer to Purchase, dated March 6, 1998. ......................
(a)(2) Letter of Transmittal with respect to the Shares. ............
(a)(3) Form of letter, dated March 6, 1998, to brokers, dealers,
commercial banks, trust companies and nominees. .............
(a)(4) Form of letter to clients to be used by brokers, dealers,
commercial banks, trust companies and nominees. .............
(a)(5) Press Release, dated March 4, 1998. ..........................
(a)(6) Press Release, dated March 6, 1998. ..........................
(a)(7) Form of newspaper advertisement, dated March 6, 1998. ........
(a)(8) Notice of Guaranteed Delivery. ...............................
(a)(9) IRS Guidelines to Substitute Form W-9. .......................
(b)(1) Credit Agreement, dated as of September 23, 1994, among
Indresco Inc., Various Financial Institutions and Bank of
America Illinois, as Agent. .................................
(b)(2) Seventh Amendment to Credit Agreement, dated as of February
19, 1998, among Purchaser, GPX Corp. and Bank of America
National Trust and Savings Association. .....................
(c)(1) Agreement and Plan of Merger, dated as of March 3, 1998, among
the Company, Purchaser and the Merger Sub....................
(c)(2) Confidentiality Agreement, dated December 12, 1997, between
Purchaser and the Company. ..................................
(d) None. ........................................................
(e) Not applicable. ..............................................
(f) None. ........................................................
</TABLE>
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EXHIBIT 99(a)(1)
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK)
OF
A.P. GREEN INDUSTRIES, INC.
AT
$22.00 NET PER SHARE
BY
BGN ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING A NUMBER
OF SHARES OF COMMON STOCK, PAR VALUE $1.00 (THE "COMMON STOCK") (INCLUDING THE
ASSOCIATED RIGHTS TO PURCHASE SERIES B JUNIOR PARTICIPATING PREFERRED STOCK)
(THE "RIGHTS" AND COLLECTIVELY WITH THE COMMON STOCK, THE "SHARES") OF A.P.
GREEN INDUSTRIES, INC. (THE "COMPANY") REPRESENTING AT LEAST A MAJORITY OF THE
OUTSTANDING SHARES OF COMMON STOCK ON A FULLY DILUTED BASIS BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, AND (2) ANY
WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976,
AS AMENDED, AND THE REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF
SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED. CERTAIN OTHER
CONDITIONS TO CONSUMMATION OF THE OFFER ARE DESCRIBED IN SECTION 13.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
IMPORTANT
Any stockholder desiring to tender all or any portion of his Shares should
either (1) complete and sign the Letter of Transmittal or a facsimile thereof
in accordance with the instructions in the Letter of Transmittal, including
any required signature guarantees, and mail or deliver the Letter of
Transmittal or such facsimile with such stockholder's certificate(s) for the
tendered Shares and any other required documents to the Depositary, (2) follow
the procedure for book-entry tender of Shares set forth in Section 3, or (3)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. Stockholders
having Shares registered in the name of a broker, dealer, commercial bank,
trust company or other nominee are urged to contact such broker, dealer,
commercial bank, trust company or other nominee if they desire to tender
Shares so registered. Unless the context requires otherwise, all references to
Shares herein shall include the associated Rights.
The Rights are presently evidenced by the certificates for the Common Stock
and a tender by a stockholder of such stockholder's shares of Common Stock
will also constitute a tender of the associated Rights. A stockholder who
desires to tender Shares and whose certificates for such Shares are not
immediately available, or who cannot comply with the procedure for book-entry
transfer on a timely basis, may tender such Shares by following the procedures
for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent (as defined herein) or to the Dealer Manager (as defined herein) 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 and the Letter of Transmittal may be directed to the Information
Agent or to brokers, dealers, commercial banks or trust companies.
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The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
The date of this Offer to Purchase is March 6, 1998.
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<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<C> <S> <C>
Introduction..................................................... 1
1. Terms of the Offer............................................... 2
2. Acceptance for Payment and Payment for Shares.................... 3
3. Procedure for Tendering Shares................................... 4
4. Rights of Withdrawal............................................. 7
5. Certain Federal Income Tax Consequences of the Offer............. 8
6. Price Range of Shares; Dividends................................. 8
7. Effect of the Offer on Market for the Shares, Stock Exchange
Listing, and Exchange Act Registration.......................... 9
8. Certain Information Concerning the Company....................... 10
9. Certain Information Concerning Purchaser and the Merger Sub...... 12
10. Background of the Offer; Contacts with the Company............... 14
11. Purpose of the Offer; Plans for the Company; The Merger.......... 16
12. Source and Amount of Funds....................................... 24
13. Certain Conditions of the Offer.................................. 25
14. Dividends and Distributions...................................... 27
15. Certain Legal Matters............................................ 28
16. Fees and Expenses................................................ 30
17. Miscellaneous.................................................... 30
Schedule A. Information concerning the Directors and Executive Offi-
cers of Purchaser and the Merger Sub........................ 31
</TABLE>
<PAGE>
TO THE HOLDERS OF SHARES OF
A.P. GREEN INDUSTRIES, INC.:
INTRODUCTION
BGN Acquisition Corp., a Delaware corporation (the "Merger Sub") and wholly
owned subsidiary of Global Industrial Technologies, Inc., a Delaware
corporation ("Purchaser"), hereby offers to purchase all of the outstanding
shares of Common Stock, par value $1.00 per share (the "Common Stock"), of
A.P. Green Industries, Inc., a Delaware corporation (the "Company"), including
the associated rights to purchase Series B Junior Participating Preferred
Stock (the "Rights") issued pursuant to the Rights Agreement, dated as of
November 13, 1997 (the "Rights Agreement"), between the Company and Harris
Trust and Savings Bank, as Rights Agent (the Common Stock and the Rights
together are referred to herein as the "Shares"), at $22.00 per Share, net to
the seller in cash, on the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which,
together with any amendments or supplements hereto or thereto, collectively
constitute the "Offer"). Tendering stockholders will not be obligated to pay
brokerage fees or commissions or, subject to Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by the Merger Sub
pursuant to the Offer. The Merger Sub will pay all charges and expenses of
Harris Trust and Savings Bank (the "Depositary") and Georgeson & Company Inc.
(the "Information Agent"). Unless the context requires otherwise, all
references to Shares herein shall include the associated Rights, and all
references to the Rights shall include all benefits that may inure to the
holders of the Rights pursuant to the Rights Agreement.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING A NUMBER
OF SHARES REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A
FULLY DILUTED BASIS BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE
EXPIRATION OF THE OFFER, AND (2) ANY WAITING PERIOD UNDER THE HART-SCOTT-
RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS
THEREUNDER (THE "HSR ACT") APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO
THE OFFER HAVING EXPIRED OR BEEN TERMINATED. CERTAIN OTHER CONDITIONS TO
CONSUMMATION OF THE OFFER ARE DESCRIBED IN SECTION 13.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of March 3, 1998, among the Company, Purchaser
and the Merger Sub, pursuant to which, after the completion of the Offer, the
Merger Sub will be merged with and into the Company (the "Merger") and each
issued and outstanding Share (other than Shares owned by Purchaser, the Merger
Sub or any other subsidiary of Purchaser (collectively, the "Purchaser
Companies") or Shares that are held by stockholders exercising appraisal
rights ("Dissenting Stockholders") pursuant to Section 262 of the Delaware
General Corporation Law (the "DGCL")), shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive, without interest, an amount in cash equal to $22.00 (the
"Merger Consideration"). As a result of the Merger, the Company (sometimes
referred to herein as the "Surviving Corporation") will become a wholly owned
subsidiary of Purchaser.
According to the Company, as of February 26, 1998 there were 8,068,665
Shares outstanding and there were 919,150 Shares reserved for issuance under
then-current outstanding stock options pursuant to the Company's stock option
and incentive plans.
1
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THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY
DECISION IS MADE WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER.
On the terms and subject to the conditions set forth in the Offer (including
the terms and conditions set forth in Section 13 (the "Offer Conditions") and,
if the Offer is extended or amended, the terms and conditions of such
extension or amendment), the Merger Sub will accept for payment, and pay for,
any and all Shares validly tendered on or prior to the Expiration Date (as
defined herein) and not withdrawn as permitted by Section 4. The term
"Expiration Date" means 12:00 Midnight, New York City time, on April 2, 1998,
unless and until the Merger Sub shall, in its sole discretion, have extended
the period for which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date on which the Offer, as so extended
by the Merger Sub, shall expire.
Rights are presently evidenced by the certificates for the Common Stock and
the tender by a stockholder of his shares of Common Stock will also constitute
a tender of the associated Rights. Pursuant to the Offer, no separate payment
will be made by the Merger Sub for the Rights pursuant to the Offer. Pursuant
to the Merger Agreement, the Board of Directors of the Company, at its meeting
on March 2, 1998, took all necessary action under the Rights Agreement to
provide that the execution of the Merger Agreement and the consummation of the
transactions contemplated thereby will not cause (i) the Merger Sub and/or
Purchaser to become an Acquiring Person (as defined herein) or (ii) a
Distribution Date (as defined herein) or a Stock Acquisition Date (as such
term is defined in the Rights Agreement) to occur, irrespective of the number
of Shares acquired pursuant to the Offer. See Section 11.
Subject to the applicable rules and regulations of the Securities and
Exchange Commission (the "SEC"), the Merger Sub expressly reserves the right,
in its sole discretion, at any time or from time to time, to extend the period
of time during which the Offer is open by giving oral or written notice of
such extension to the Depositary. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer,
subject to the right of a tendering stockholder to withdraw such stockholder's
Shares. See Section 4. Subject to the applicable regulations of the SEC, the
Merger Sub also expressly reserves the right, in its sole discretion, at any
time or from time to time, (i) to delay acceptance for payment of or,
regardless of whether such Shares were theretofore accepted for payment,
payment for any tendered Shares or to terminate or amend the Offer as to any
Shares not then paid for, on the occurrence of any of the conditions specified
in Section 13 and (ii) to waive any condition or otherwise amend the Offer in
any respect, by giving oral or written notice of such delay, termination or
amendment to the Depositary and by making a public announcement thereof. If
the Merger Sub accepts any Shares for payment pursuant to the terms of the
Offer, it will accept for payment all Shares validly tendered prior to the
Expiration Date and not withdrawn, and, subject to (i) above, will promptly
pay for all Shares so accepted for payment. The Merger Sub confirms that its
reservation of the right to delay payment for Shares which it has accepted for
payment is limited by Rule 14e-1(c) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), which requires that a tender offeror pay the
consideration offered or return the tendered securities promptly after the
termination or withdrawal of a tender offer.
Any extension, delay, termination or amendment of the Offer will be followed
as promptly as practicable by public announcement thereof, such 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. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under
the Exchange Act, which require that any material change in the information
published, sent or given to stockholders in connection with the Offer be
promptly disseminated to stockholders in a manner reasonably designed to
inform stockholders of such change) and without limiting the manner in which
the Merger Sub may choose to make any public announcement, the Merger Sub
shall have no obligation to publish, advertise or otherwise communicate any
such public announcement other than by issuing a press release or other
announcement.
2
<PAGE>
The Merger Sub confirms that if it makes a material change in the terms of
the Offer or the information concerning the Offer, or if it waives a material
condition of the Offer, the Merger Sub will extend the Offer to the extent
required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act.
If, prior to the Expiration Date, the Merger Sub, in its sole discretion,
shall decrease the percentage of Shares being sought or the consideration
offered to holders of Shares, such decrease shall be applicable to all holders
whose Shares are accepted for payment pursuant to the Offer and, if at the
time notice of any increase or decrease is first published, sent or given to
holders of Shares, the Offer is scheduled to expire at any time earlier than
the tenth business day from and including the date that such notice is first
so published, sent or given, the Offer will be extended until the expiration
of such ten business day period. For purposes of the Offer, a "business day"
means any day other than a Saturday, Sunday or federal holiday and consists of
the time period from 12:01 A.M. through 12:00 Midnight, New York City time.
The Offer is being mailed to holders of Shares from a list provided to the
Merger Sub by the Company.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
On the terms and subject to the conditions of the Offer (including the Offer
Conditions and, if the Offer is extended or amended, the terms and conditions
of any such extension or amendment), the Merger Sub will accept for payment,
and will pay for, Shares validly tendered and not withdrawn as promptly as
practicable after the later of (i) the expiration or termination of the
waiting period under the HSR Act applicable to the purchase of Shares pursuant
to the Offer, and any similar waiting periods under any foreign statutes or
regulations that are applicable to the Offer and the Merger having expired or
been terminated and the date all required filings, consents, approvals, and
authorizations of any Governmental Entity (as defined in the Merger Agreement)
shall have been obtained on terms satisfactory to Purchaser in its reasonable
discretion and (ii) the Expiration Date, if at the time of the later of the
occurrence of (i) and (ii) above, the Minimum Condition (as defined herein)
has been satisfied or waived, provided that the Merger Sub reserves the right,
in its sole discretion, to extend the Offer from time to time notwithstanding
the prior satisfaction of the Offer Conditions. See Sections 13 and 15.
Purchaser filed a Notification and Report Form under the HSR Act on March 4,
1998, and, accordingly, unless earlier terminated or extended by a request for
additional information, the waiting period under the HSR Act is scheduled to
expire at 11:59 p.m., New York City time, on March 19, 1998. See Section 15.
In addition, subject to applicable rules of the SEC, the Merger Sub 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 applicable law. See Section 13.
In all cases, payment for Shares tendered and accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of
certificates for such Shares (or a confirmation of a book-entry transfer of
such Shares (a "Book-Entry Confirmation") into the Depositary's account at The
Depository Trust Company or the Philadelphia Depository Trust Company (each a
"Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer
Facilities")), a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other required documents.
For purposes of the Offer, the Merger Sub will be deemed to have accepted
for payment Shares validly tendered and not withdrawn as, if and when the
Merger Sub gives oral or written notice to the Depositary of its acceptance
for payment of such Shares pursuant to the Offer. Payment for Shares accepted
for payment pursuant to the Offer will be made by deposit of the purchase
price therefor with the Depositary, which will act as agent for the tendering
stockholders for the purpose of receiving payments from the Merger Sub and
transmitting such payments to the tendering stockholders. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID,
REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted
for more Shares than are tendered, certificates for such unpurchased Shares
will be returned, without expense to the tendering stockholder (or, in the
case of Shares tendered by book-entry transfer of such Shares into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the
3
<PAGE>
procedures set forth in Section 3, such Shares will be credited to an account
maintained with such Book-Entry Transfer Facility), as soon as practicable
following expiration or termination of the Offer.
The Merger Sub reserves the right to transfer or assign in whole or in part
from time to time to one or more direct or indirect subsidiaries of Purchaser
the right to purchase all or any portion of the Shares tendered pursuant to
the Offer, but any such transfer or assignment will not relieve the Merger Sub
of its obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tender. To tender Shares pursuant to the Offer, either (a) a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions of the Letter of Transmittal, with any
required signature guarantees, certificates for Shares to be tendered, and any
other documents required by the Letter of Transmittal, must be received by the
Depositary prior to the Expiration Date at one of its addresses set forth on
the back cover of this Offer to Purchase, (b) such Shares must be delivered
pursuant to the procedures for book-entry transfer described below (and a
Book-Entry Confirmation of such delivery received by the Depositary, including
an Agent's Message (as defined herein) if the tendering stockholder has not
delivered a Letter of Transmittal), prior to the Expiration Date, or (c) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth below. The term "Agent's Message" means a message, transmitted by a
Book-Entry Transfer Facility to, and received by, the Depositary and forming a
part of a Book-Entry Confirmation, which states that such Book-Entry Transfer
Facility has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering the Shares and, if applicable, Rights
which are the subject of such Book-Entry Confirmation, that such participant
has received and agrees to be bound by the terms of the Letter of Transmittal
and that the Merger Sub may enforce such agreement against the participant.
Pursuant to the Rights Agreement, until the close of business on the
Distribution Date, the Rights will be transferred with and only with the
certificates for Shares and the surrender for transfer of any certificates for
Common Stock will also constitute the transfer of the Rights associated with
the Shares represented by such certificate. Pursuant to the Rights Agreement,
the Company has taken all necessary action to ensure that no Distribution Date
will occur by reason of the commencement or consummation of the Offer or any
of the transactions contemplated by the Merger Agreement. See Section 11.
If separate certificates representing the Rights are issued to holders of
Shares prior to the time a holder's Shares are tendered pursuant to the Offer,
certificates representing a number of Rights equal to the number of shares of
Common Stock tendered must be delivered to the Depositary, or, if available, a
Book-Entry Confirmation received by the Depositary with respect thereto, in
order for such shares of Common Stock to be validly tendered. If the
Distribution Date occurs and separate certificates representing the Rights are
not distributed prior to the time Shares are tendered pursuant to the Offer,
Rights may be tendered prior to a stockholder receiving the certificates for
Rights by use of the guaranteed delivery procedure described below. A tender
of shares of Common Stock constitutes an agreement by the tendering
stockholder to deliver certificates representing all Rights formerly
associated with the number of shares of Common Stock tendered pursuant to the
Offer to the Depositary prior to expiration of the period permitted by such
guaranteed delivery procedures for delivery of certificates for, or a Book-
Entry Confirmation with respect to, Rights (the "Rights Delivery Period").
However, after expiration of the Rights Delivery Period, the Merger Sub may
elect to reject as invalid a tender of shares of Common Stock with respect to
which certificates for, or a Book-Entry Confirmation with respect to, the
number of Rights required to be tendered with such Common Stock have not been
received by the Depositary. Nevertheless, the Merger Sub will be entitled to
accept for payment shares of Common Stock tendered by a stockholder prior to
receipt of the certificates for the Rights required to be tendered with such
shares of Common Stock, or a Book-Entry Confirmation with respect to such
Rights, and either (a) subject to complying with applicable rules and
regulations of the SEC, withhold payment for such shares of Common Stock
pending receipt of the certificates for, or a Book-Entry Confirmation with
respect to, such Rights or (b) make
4
<PAGE>
payment for shares of Common Stock accepted for payment pending receipt of the
certificates for, or a Book-Entry Confirmation with respect to, such Rights in
reliance upon the agreement of a tendering stockholder to deliver Rights and
such guaranteed delivery procedures. Any determination by the Merger Sub to
make payment for shares of Common Stock in reliance upon such agreement and
such guaranteed delivery procedures or, after expiration of the Rights
Delivery Period, to reject a tender as invalid will be made in the sole and
absolute discretion of the Merger Sub.
Book-Entry Delivery. The Depositary will establish accounts with respect to
the Shares at the Book-Entry Transfer Facilities for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make a book-entry transfer of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with such Book-Entry Transfer Facility's procedures for
such transfer. Although delivery of Shares may be effected through book-entry
transfer, either the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, together with any required signature guarantees,
or an Agent's Message in lieu of the Letter of Transmittal, and any other
required documents, must, in any case, be transmitted to and received by the
Depositary by the Expiration Date at one of its addresses set forth on the
back cover of this Offer to Purchase, or the tendering stockholder must comply
with the guaranteed delivery procedures described below. If the Distribution
Date occurs, the Depositary will also make a request to establish an account
with respect to the Rights at each of the Book-Entry Transfer Facilities, but
no assurance can be given that book-entry transfer of Rights will be
available. If book-entry transfer of Rights is available, the foregoing book-
entry transfer procedures will also apply to Rights. If book-entry transfer of
Rights is not available and the Distribution Date occurs, a tendering
stockholder will be required to tender Rights by means of physical delivery of
certificates for Rights to the Depositary (in which event references in this
Offer to Purchase to Book-Entry Confirmations with respect to Rights will be
inapplicable). DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARES, RIGHTS, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT THE STOCKHOLDER USE PROPERLY
INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. Except as otherwise provided below, all signatures on
a Letter of Transmittal must be guaranteed by 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"). Signatures
on a Letter of Transmittal need not be guaranteed (a) if the Letter of
Transmittal is signed by the registered holders (which term, for purposes of
this section, includes any participant in any of the Book-Entry Transfer
Facilities' systems whose name appears on a security position listing as the
owner of the Shares or Rights) of Shares (or Rights, if applicable) and such
registered holder has not completed the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on the
Letter of Transmittal, or (b) if such Shares and Rights are tendered for the
account of an Eligible Institution. See Instructions 1 and 5 of the Letter of
Transmittal. If the certificates for Shares or Rights 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 certificates for Shares or Rights 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 must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered holders or owners
5
<PAGE>
appear on the certificates, with the signatures on the certificates or stock
powers guaranteed as described above. See Instructions 1 and 5 of the Letter
of Transmittal.
Guaranteed Delivery. A stockholder who desires to tender Shares (or Rights,
if applicable) pursuant to the Offer and whose certificates for Shares (or
Rights, if applicable) are not immediately available (including because
certificates for Rights have not yet been distributed by the Rights Agent), or
who cannot comply with the procedure for book-entry transfer on a timely
basis, or who cannot deliver all required documents to the Depositary prior to
the Expiration Date, may tender such Shares (and/or Rights, if applicable) by
following all of the procedures set forth below:
(i) such 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 the Merger Sub, is received
by the Depositary (as provided below) prior to the Expiration Date; and
(iii) the certificates for all tendered Shares and/or Rights, in proper
form for transfer (or a Book-Entry Confirmation with respect to all such
Shares and/or Rights), together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message in
lieu of the Letter of Transmittal), and any other required documents, are
received by the Depositary (a) in the case of Shares, within three trading
days after the date of execution of such Notice of Guaranteed Delivery or
(b) in the case of Rights, within a period ending on the later of (1) three
trading days after the date of execution of such Notice of Guaranteed
Delivery or (2) three trading days after the date certificates for Rights
are distributed to stockholders by the Rights Agent. A "trading day" is any
day on which the New York Stock Exchange (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
Other Requirements. Notwithstanding any provision hereof, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares and, if the Distribution
Date occurs, certificates for (or a timely Book-Entry Confirmation, if
available, with respect to) the associated Rights, unless the Merger Sub
elects to make payment for such shares of Common Stock pending receipt of the
certificates for, or a Book-Entry Confirmation with respect to, such Rights as
described above, (b) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees (or, in
the case of a book-entry transfer, an Agent's Message in lieu of the Letter of
Transmittal), and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different
times depending upon when certificates for Shares (or Rights, if applicable)
or Book-Entry Confirmations with respect to Shares (or Rights, if available)
are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST
ON THE PURCHASE PRICE OF THE SHARES BE PAID BY THE MERGER SUB, REGARDLESS OF
ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Tender Constitutes an Agreement. The valid tender of Shares and, if
applicable, Rights pursuant to one of the procedures described above will
constitute a binding agreement between the tendering stockholder and the
Merger Sub on the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder irrevocably appoints designees of the Merger Sub as such
stockholder's proxies, each with full power of substitution, to the full
extent of such stockholder's rights with respect to the Shares tendered by
such stockholder and accepted for payment by the Merger Sub and with respect
to any and all cash dividends, distributions, rights, other Shares or other
securities issued or issuable in respect of such Shares on or after the date
of this Offer to Purchase. All such proxies will be considered coupled with an
interest in the tendered Shares, including the associated Rights. Such
appointment is effective when, and only to the extent that, the Merger Sub
deposits the
6
<PAGE>
payment for such Shares with the Depositary. Upon the effectiveness of such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder will be revoked, and no subsequent powers of attorney, proxies and
consents may be given (and, if given, will not be deemed effective). The
Merger Sub's designees will, with respect to the Shares for which the
appointment is effective, be empowered to exercise all voting and other rights
of such stockholder as they, in their sole discretion, may deem proper at any
annual, special or adjourned meeting of the stockholders of the Company, by
written consent in lieu of any such meeting or otherwise. The Merger Sub
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon the Merger Sub's payment for such Shares, the
Merger Sub must be able to exercise full voting rights with respect to such
Shares.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
or Rights will be determined by the Merger Sub in its sole discretion, which
determination will be final and binding. The Merger Sub reserves the absolute
right to reject any and all tenders determined by it not to be in proper form
or the acceptance for payment of or payment for which may, in the opinion of
the Merger Sub's counsel, be unlawful. The Merger Sub also reserves the
absolute right to waive any defect or irregularity in the tender of any Shares
or Rights of any particular stockholder whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of
Shares or Rights will be deemed to have been validly made until all defects
and irregularities relating thereto have been cured or waived. None of the
Merger Sub, the Depositary, the Information Agent, the Dealer Manager 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. The Merger Sub's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal and Instructions thereto) will
be final and binding.
Backup Withholding. In order to avoid "backup withholding" of Federal income
tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to
provide the certifications described above, the Internal Revenue Service (the
"IRS") may impose a penalty on such stockholder and payment of cash to such
stockholder pursuant to the Offer may be subject to backup withholding of 31%.
All stockholders surrendering Shares pursuant to the Offer should complete and
sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists
and is proved in a manner satisfactory to the Merger Sub and the Depositary).
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding. Non-
corporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See
Instruction 9 to the Letter of Transmittal.
4. RIGHTS OF WITHDRAWAL.
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment by the Merger
Sub pursuant to the Offer, may also be withdrawn at any time after May 4,
1998.
For a withdrawal to be effective, a written, telegraphic, telex 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 having
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the names in which the certificate(s) evidencing the Shares to be withdrawn
are registered, if different from that of the person who tendered such Shares.
The signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Shares have been tendered for the account of any
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry tender as set forth in Section 3, any notice of withdrawal must
specify the name and number of the account at
7
<PAGE>
the Book-Entry Transfer Facility to be credited with the withdrawn Shares. If
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, the name of the registered holder and the serial
numbers of the particular certificates evidencing the Shares to be withdrawn
must also be furnished to the Depositary as aforesaid prior to the physical
release of such certificates. All questions as to the form and validity
(including time of receipt) of any notice of withdrawal will be determined by
the Merger Sub, in its sole discretion, which determination shall be final and
binding. None of Purchaser, the Merger Sub, 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 failure to give such notification.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by following one of the
procedures described in Section 3 at any time prior to the Expiration Date.
If the Merger Sub extends the Offer, is delayed in its acceptance for
payment of Shares, or is unable to accept for payment Shares pursuant to the
Offer, for any reason, then, without prejudice to the Merger Sub's rights
under this Offer, the Depositary may, nevertheless, on behalf of the Merger
Sub, retain tendered Shares, and such Shares may not be withdrawn except to
the extent that tendering stockholders are entitled to withdrawal rights as
set forth in this Section 4.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER.
Sales of Shares pursuant to the Offer and the exchange of Shares for cash
pursuant to the Merger will be taxable transactions for Federal income tax
purposes and may also be taxable under applicable state, local and other tax
laws. For Federal income tax purposes, a stockholder whose Shares are
purchased pursuant to the Offer or who receives cash as a result of the Merger
will realize gain or loss equal to the difference between the adjusted basis
of the Shares sold or exchanged and the amount of cash received therefor. Such
gain or loss will be capital gain or loss if the Shares are held as capital
assets by the stockholder and generally will be long-term capital gain or loss
for stock held for more than one year. Long-term capital gain of a non-
corporate stockholder is generally subject to a maximum tax rate of 28% in
respect of property held for more than one year and to a maximum rate of 20%
in respect of property held in excess of 18 months.
THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE TO STOCKHOLDERS IN SPECIAL
SITUATIONS SUCH AS STOCKHOLDERS WHO RECEIVED THEIR SHARES UPON THE EXERCISE OF
EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION AND STOCKHOLDERS WHO ARE
NOT UNITED STATES PERSONS. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS
WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND THE
MERGER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN
OR OTHER TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are traded on the NYSE under the symbol "APK". Prior to October
1, 1997, the Shares were traded on The Nasdaq Stock Market's National Market
(the "Nasdaq National Market") under the symbol "APGI." The following table
sets forth, based upon public sources, for the calendar quarters indicated,
the high and low quoted sale prices for the Shares on the NYSE and the Nasdaq
National Market and the amount of cash dividends paid per share:
8
<PAGE>
<TABLE>
<CAPTION>
SALES PRICE
-------------
CALENDAR YEAR HIGH LOW DIVIDENDS
------------- ------ ------ ---------
<S> <C> <C> <C>
1996:
First Quarter................................... $10.00 $ 8.25 $0.035
Second Quarter.................................. 10.75 8.00 0.035
Third Quarter................................... 12.00 9.81 0.040
Fourth Quarter.................................. 11.50 9.25 0.040
1997:
First Quarter................................... 10.25 8.25 0.040
Second Quarter.................................. 10.50 7.75 0.040
Third Quarter................................... 14.25 9.00 0.040
Fourth Quarter.................................. 14.19 10.88 0.040
1998:
First Quarter (through March 5, 1998)........... 21.69 10.13 0.040
</TABLE>
The Rights trade together with the Common Stock. On March 3, 1998, the last
full trading day prior to the public announcement of the terms of the Offer
and the Merger, the quoted closing price on the NYSE was $17.69 per Share. On
March 5, 1998, the last full trading day prior to commencement of the Offer,
the reported closing price on the NYSE was $21.63 per Share. STOCKHOLDERS ARE
URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. EFFECT OF THE OFFER ON MARKET FOR THE SHARES, STOCK EXCHANGE LISTING, AND
EXCHANGE ACT REGISTRATION.
Market for Shares. The purchase of Shares by the Merger Sub pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
may reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
Stock Quotation. The Shares are quoted on the NYSE. According to the NYSE's
published guidelines, the NYSE would consider delisting the shares of Common
Stock if, among other things, the number of record holders of at least 100
shares of Common Stock should fall below 1,200, the number of publicly held
shares of Common Stock (exclusive of holdings of officers and directors of the
Company and their immediate families and other concentrated holdings of 10% or
more ("NYSE Excluded Holdings'')) should fall below 600,000, or the aggregate
market value of the publicly held shares of Common Stock (exclusive of NYSE
Excluded Holdings) should fall below $5,000,000. According to information
furnished to Purchaser by the Company, as of the close of business on February
26, 1998, there were 3,600 holders of record of shares of Common Stock not
including beneficial holders of Common Stock held in street name, and there
were 8,068,665 Shares outstanding. If the Common Stock were to be delisted,
the associated Rights would be delisted as well.
If the NYSE were to delist the Shares, the market for the Shares could
therefor be adversely affected. It is possible that the Shares would be traded
or quoted on other securities exchanges or in the over-the-counter market, and
that price quotations would be reported by such exchanges, or other sources.
The extent of the public market for the shares of Common Stock and associated
Rights and the availability of such quotations would, however, depend upon the
number of stockholders and/or the aggregate market value of the shares of
Common Stock and associated Rights remaining at such time, the interest in
maintaining a market in the shares of Common Stock and associated Rights on
the part of securities firms, the possible termination of registration of the
Shares under the Exchange Act and other factors.
Margin Regulations. The shares of Common Stock are presently "margin
securities" under the regulations 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
shares of Common Stock. Depending upon factors similar to those described
above regarding listing and market
9
<PAGE>
quotations, the shares of Common Stock might no longer constitute "margin
securities" for the purposes of the Federal Reserve Board's margin regulations
in which event the shares of Common Stock would be ineligible as collateral
for margin loans made by brokers.
Exchange Act Registration. The shares of Common Stock and associated Rights
are currently registered under the Exchange Act. Such registration may be
terminated by the Company upon application to the SEC if the outstanding
shares of Common Stock and associated Rights are not listed on a national
securities exchange and if there are fewer than 300 holders of record of
shares of Common Stock and associated Rights. Termination of registration of
the shares of Common Stock and associated Rights under the Exchange Act would
reduce the information required to be furnished by the Company to its
stockholders and to the SEC and would make certain provisions of the Exchange
Act, such as the short-swing profit recovery provisions of Section 16(b) and
the requirement to furnish a proxy statement in connection with stockholders'
meetings pursuant to Section 14(a) and the related requirement to furnish an
annual report to stockholders, no longer applicable with respect to the shares
of Common Stock and Rights. Furthermore, the ability of "affiliates" of the
Company and persons holding "restricted securities" of the Company to dispose
of such securities pursuant to Rule 144 under the Securities Act of 1933, as
amended, may be impaired or eliminated. If registration of the shares of
Common Stock under the Exchange Act were terminated, the shares of Common
Stock would no longer be eligible for listing on the NYSE or for continued
inclusion on the Federal Reserve Board's list of "margin securities". The
Merger Sub intends to seek to cause the Company to apply for termination of
registration of the shares of Common Stock and associated Rights as soon as
possible after consummation of the Offer if the requirements for termination
of registration are met.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a Delaware corporation with its principal executive offices
located at Green Boulevard, Mexico, Missouri 65265. The Company has described
its business in publicly available information in the manner set forth below.
The Company, until the acquisition of APG Lime Corp., a Delaware
corporation, in 1987, operated under the name A.P. Green Refractories Co. The
Company mines, processes, manufactures and distributes specialty minerals and
mineral-based products, including industrial lime and refractories products,
in the United States and international markets. The Company operates 23 plants
in the United States, Canada, Mexico, the United Kingdom and Indonesia.
10
<PAGE>
Set forth below is certain summary consolidated financial information for
each of the Company's three fiscal years in the period ended December 31, 1996
and for the nine months ended September 30, 1997 and 1996. The consolidated
financial information presented below reflects historical financial
information for the three fiscal years ended December 31, 1996 reported in the
Company's 1996 Annual Report on Form 10-K/A and historical unaudited financial
information for the nine months ended September 30, 1997 and 1996 as reported
in the Company's Quarterly Report on Form 10-Q/A for the third quarter ended
September 30, 1997. More comprehensive financial information is included in
such reports (including management's discussion and analysis of financial
condition and results of operation) and other documents filed by the Company
with the SEC, and the following summary is qualified in its entirety by
reference to such reports and other documents and all of the financial
information and notes contained therein. Copies of such reports and other
documents may be examined at or obtained from the SEC and the NYSE in the
manner set forth below.
THE COMPANY
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
----------------- --------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF
EARNINGS DATA
Net sales........................ $207,365 $195,720 $258,461 $249,715 $195,918
Cost of sales.................... 170,160 161,511 214,353 208,309 161,420
-------- -------- -------- -------- --------
Gross profit..................... 37,205 34,209 44,108 41,406 34,498
Selling and administrative ex-
penses.......................... 27,846 27,015 36,087 31,312 25,707
Net earnings..................... 5,163 4,337 4,673 8,800 6,418
Net earnings per common share.... $0.64 $0.54 $0.58 $1.09 $0.80
Weighted average number of common
shares.......................... 8,035 8,043 8,038 8,060 8,050
CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION DATA
Current assets................... $113,710 $113,266 $119,537 $123,246 $128,612
Total assets..................... 319,901 355,129 355,129 373,568 373,122
Current liabilities.............. 44,118 43,996 43,996 43,423 50,047
Total liabilities................ 195,072 235,331 235,331 257,554 266,084
Total stockholders' equity....... $122,210 $117,710 $ 17,710 $113,999 $107,038
</TABLE>
Except as otherwise set forth herein, the information concerning the Company
contained in this Offer to Purchase has been taken from or based upon publicly
available documents and records on file with the SEC and other public sources
and is qualified in its entirety by reference thereto. Although Purchaser, the
Merger Sub, the Information Agent and the Dealer Manager have no knowledge
that would indicate that any statements contained herein based on such
documents and records are untrue, Purchaser, the Merger Sub, the Information
Agent and the Dealer Manager cannot take responsibility for the accuracy or
completeness of the information contained in such documents and records, or
for any failure by the Company to disclose events which may have occurred or
may affect the significance or accuracy of any such information but which are
unknown to Purchaser, the Merger Sub, the Information Agent or the Dealer
Manager.
In the course of the discussions between Company management and Purchaser,
Purchaser was provided with certain financial information and projections
prepared by Company management. The projections indicate estimated primary
earnings per share for the Company of $1.12, $1.24 and $1.38, for 1998, 1999
and 2000, respectively.
11
<PAGE>
The Company has advised Purchaser that (i) it does not, as a matter of course,
make public forecasts as to future revenues or profits and (ii) the foregoing
projections were based on estimates and assumptions that are inherently
subject to significant economic and competitive uncertainties, all of which
are difficult to predict and many of which are beyond the Company's control.
Accordingly, there can be no assurance that the projected results can be
realized or that actual results will not be materially higher or lower than
those projected. The projections were not prepared with a view to public
disclosure or compliance with the published guidelines of the SEC or the
guidelines established by the American Institute of Certified Public
Accountants regarding projections or forecasts. None of the Company, Purchaser
or the Merger Sub or their respective advisors assumes any responsibility for
the accuracy of the projections. The inclusion of the foregoing projections
should not be regarded as an indication that the Company, Purchaser, the
Merger Sub or any other person who received such information considers it an
accurate prediction of future events. Neither the Company nor Purchaser
intends to update, revise or correct such projections if they become
inaccurate (even in the short term).
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is obligated to file reports and
other information with the SEC relating to its business, financial condition
and other matters. 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, any material
interests of such persons in transactions with the Company and other matters
is required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the SEC. Such reports, proxy statements and other
information should be available for inspection at the public reference room at
the SEC's offices at 450 Fifth Street, N.W., Washington, DC 20549, and also
should be available for inspection and copying at the regional offices of the
SEC located at Seven World Trade Center, 13th Floor, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies may be obtained, by mail, upon payment of the SEC's customary
charges, by writing to its principal office at 450 Fifth Street, N.W.,
Washington, DC 20549 and can be assessed electronically on the SEC's Website
at http://www.sec.gov. Such material should also be available for inspection
at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND THE MERGER SUB.
The Merger Sub is a Delaware corporation and to date has engaged in no
activities other than those incident to its formation and the commencement of
the Offer. The Merger Sub is a direct wholly owned subsidiary of Purchaser.
The principal executive offices of Purchaser and the Merger Sub are located at
2121 San Jacinto Street, Dallas, Texas 75201.
Purchaser is a major manufacturer of technologically advanced industrial
products that support high-growth markets worldwide. Purchaser conducts its
business in five segments. Refractory Products manufactures a broad line of
refractory products through its wholly owned subsidiary, Harbison-Walker
Refractories Company. Minerals manufactures refractory products and the raw
materials needed to produce them. Industrial Tool produces pneumatic, electric
and fixturized tools used in auto, aircraft and light industrial assembly;
automated assembly systems; and tube cleaners and expanders. Specialty
Equipment Products manufactures a variety of equipment for various industrial
applications. Forged Products manufactures forged steel flanges used to
connect components of closed systems for processing and transporting liquids
and gases, and has undertaken the manufacture of undercarriage parts and
components for track-mounted vehicles. Purchaser has entered into an agreement
to sell its Industrial Tool division. Purchaser was incorporated in Delaware
in 1972 under the name Dresser Finance Corporation, a wholly owned subsidiary
of Dresser Industries, Inc. In 1992, Dresser Industries, Inc. distributed the
stock of Dresser Finance Corporation to its stockholders in a tax-free spinoff
and Purchaser changed its name to INDRESCO Inc. As a result of a
reorganization on November 1, 1995 into a holding company structure, all
issued shares of INDRESCO Inc. common stock were converted on that date on a
share-for-share basis into shares of Common Stock, $0.25 par value, of Global
Industrial Technologies, Inc. The corporate headquarters is located at 2121
San Jacinto Street, Dallas, Texas 75201 and the telephone number is (214) 953-
4500.
12
<PAGE>
Additional information concerning Purchaser is set forth in Purchaser's
Annual Report on Form 10-K for the year ended October 31, 1997 and subsequent
Quarterly Reports on Form 10-Q, which reports may be obtained from the SEC and
the NYSE in the manner set forth with respect to information concerning the
Company in Section 8.
Set forth below is certain summary consolidated financial information for
each of Purchaser's three fiscal years in the period ended October 31, 1997
and for the three months ended January 31, 1998 and 1997. The consolidated
financial information presented below reflects historical financial
information for the three fiscal years ended October 31, 1997 reported in
Purchaser's 1997 Annual Report on Form 10-K except with respect to earnings
per share data which have been restated to conform with Statement of
Accounting Standards No. 128, which was adopted by Purchaser during the
quarter ended January 31, 1998, and historical unaudited financial information
for the three months ended January 31, 1998 and 1997 as reported in
Purchaser's Quarterly Report on Form 10-Q for the first fiscal quarter ended
January 31, 1997. More comprehensive financial information is included in such
reports (including management's discussion and analysis of financial condition
and results of operation) and other documents filed by the Company with the
SEC, and the following summary is qualified in its entirety by reference to
such reports and other documents and all of the financial information and
notes contained therein. Copies of such reports and other documents may be
examined at or obtained from the SEC and the NYSE in the manner set forth
below.
PURCHASER
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31, YEARS ENDED OCTOBER 31,
------------------- ----------------------------
1998 1997 1997 1996 1995
--------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS
OF EARNINGS DATA:
Net sales and operating reve-
nues........................ $ 137,100 $ 132,000 $ 601,200 $646,300 $594,300
Total costs and expenses..... 136,400 147,500 609,100 592,500 554,600
Earnings (loss) before income
taxes....................... 800 (11,400) (6,700) 55,400 42,500
Earnings (loss) per common
share--basic................ $0.04 $(0.50) $(0.20) $2.01 $1.70
Earnings (loss) per common
share--diluted.............. $0.04 $(0.50) $(0.20) $1.98 $1.69
<CAPTION>
THREE MONTHS ENDED
JANUARY 31, YEARS ENDED OCTOBER 31,
------------------- ----------------------------
1998 1997 1997 1996 1995
--------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEETS
DATA
Current assets............... $ 367,000 $ 369,700 $ 356,100 $375,500 $318,800
Total assets................. 837,600 739,300 807,000 752,600 584,400
Current liabilities.......... 261,700 194,700 245,400 207,200 217,700
Total liabilities............ 555,300 445,000 522,900 452,700 322,800
Shareholders' equity......... $ 282,300 $ 294,300 $ 284,100 $299,900 $261,600
</TABLE>
Statements Purchaser may publish, including those in this Offer to Purchase,
that are not strictly historical are "forward-looking" statements under the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Although Purchaser believes the expectations reflected in such forward-
looking statements are based on reasonable assumptions, it can give no
assurance that its expectations will be realized. Forward-looking statements
involve known and unknown risks which may cause Purchaser's actual results and
corporate developments to differ materially from those expected. Factors that
could cause results and developments to differ materially from Purchaser's
expectations include, without limitation, changes in manufacturing and
shipment schedules, delays in completing plant construction and acquisitions,
currency exchange rates, new product and technology developments, competition
within each business segment, cyclicity of the markets for the products of a
major segment, litigation, significant cost variances, the effects of
acquisitions and divestitures, and other risks described from time to time in
Purchaser's SEC reports including quarterly reports on Form 10-Q, annual
reports on Form 10-K and reports on Form 8-K.
13
<PAGE>
The name, citizenship, business address, present principal occupation, and
material positions held during the past five years of each of the directors
and executive officers of Purchaser and the Merger Sub are set forth in
Schedule A to this Offer to Purchase.
Neither Purchaser nor the Merger Sub, nor, to the best of their knowledge,
any of the persons listed in Schedule A hereto nor any associate or majority-
owned subsidiary of any of the foregoing, beneficially owns or has a right to
acquire any equity securities of the Company. Neither Purchaser nor the Merger
Sub, nor, to the best of their knowledge, any of the persons or entities
referred to above, nor any director, executive officer or subsidiary of any of
the foregoing, has effected any transaction in such equity securities during
the past 60 days.
Neither Purchaser nor the Merger Sub nor, to the best of their knowledge,
any of the persons listed in Schedule A hereto, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, 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, guaranties of loans, guaranties against loss or the giving or
withholding of proxies. Except as set forth in Sections 10 and 11, there have
been no contacts, negotiations or transactions since November 1, 1994 between
Purchaser or the Merger Sub, or, to the best of their knowledge, any of the
persons listed in Schedule A hereto, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors, or a sale or other transfer of a material amount of assets. Except
as described in Sections 10 and 11, neither Purchaser nor the Merger Sub, nor,
to the best of their knowledge, any of the persons listed in Schedule A
hereto, has since November 1, 1994 had any transaction with the Company or any
of its executive officers, directors or affiliates that would require
disclosure under the rules and regulations of the SEC applicable to the Offer.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
In connection with the preparation of its 1998 strategic plan, in September
1997 Purchaser hired Beach Consulting Partners to provide certain management
consulting services, including reviewing Purchaser's strategic position and
opportunities for earnings growth in each of its lines of business. Purchaser
also engaged Wasserstein Perella & Co., Inc. ("Wasserstein Perella") on
November 14, 1997 to provide certain financial advisory services in connection
with the preparation of Purchaser's 1998 long term strategic plan.
On November 19, 1997, Mr. Jackson received a telephone call from Mr. Hummer
in which Mr. Hummer inquired about Purchaser's interest in discussing a
possible acquisition of the Company. Mr. Jackson and Mr. Hummer agreed to meet
to discuss preliminarily a possible transaction between the two parties. The
meeting was scheduled for December 1, 1997 at the offices of Purchaser.
In preparation for the December 1, 1997 meeting, Juan M. Bravo, the
President of Harbison-Walker Refractories Company ("H-W Refractories"), the
refractory subsidiary of Purchaser, traveled to the Company's headquarters in
Mexico, Missouri and met with representatives of the Company to discuss the
concept of merging the Company with Purchaser or a subsidiary of Purchaser.
On December 1, 1997, Mr. Hummer and Michael B. Cooney, Senior Vice President
Law/Administration and Secretary of the Company, met with Mr. Jackson, Graham
L. Adelman, Senior Vice President, General Counsel and Secretary of Purchaser,
Mr. Bravo and Dirk H. Hilkmann, Vice President--Planning and Development of H-
W Refractories at Purchaser's offices in Dallas, Texas. At this meeting the
parties discussed the perceived benefits that would accrue from a combination
of the two companies. The parties also discussed a number of transaction
structuring issues on a preliminary basis. As the parties had not yet executed
a confidentiality agreement at this date, no proprietary information with
respect to the respective businesses was discussed and no nonpublic financial
information was exchanged. Both parties agreed that further discussions should
continue with respect to a possible business combination.
On December 5, 1997, management of the Company selected Credit Suisse First
Boston Corporation ("Credit Suisse First Boston") as its financial advisor.
Commencing on December 4, 1997, a number of telephone calls were exchanged
between management of the Company and management of Purchaser with respect to
the negotiation and execution of a confidentiality
14
<PAGE>
agreement between the parties. The definitive Confidentiality Agreement was
executed by the parties on December 12, 1997.
At a December 17, 1997 meeting of the Purchaser's Board of Directors, Mr.
Jackson informed the Board regarding Purchaser's discussions to date with the
Company. Wasserstein Perella presented a preliminary analysis of a potential
acquisition of the Company in the context of a possible use of proceeds from
the proposed sale of Purchaser's Industrial Tool business.
On January 7, 1998, Mr. Hummer, Mr. Cooney, John L. Kelsey, Vice President,
Refractory Marketing and Gary L. Roberts, Vice President and Chief Financial
Officer of the Company, met with Messrs. Jackson, Adelman, Bravo and Hilkmann
at the offices of Purchaser in Dallas, Texas. At this meeting the parties
discussed potential structures for a transaction. Purchaser advised the
Company at this meeting that its preferred structure for acquisition of the
Company was a complete acquisition of the Company for cash or an establishment
of a joint venture in which Purchaser would control at least 80% of the equity
interest. Mr. Jackson and Mr. Hummer also met privately to discuss personnel
and operational matters in the context of an acquisition transaction.
At a meeting of the Board of Directors of Purchaser on January 18 and 19,
1998, management presented its proposed strategic plan. Beach Consulting
Partners made a presentation to the Board regarding the results of its
management consulting study and the proposed strategic plan and Wasserstein
Perella presented a valuation analysis relating to the proposed strategic
plan. After extensive discussion, the Board of Directors of Purchaser adopted
the proposed 1998 long term strategic plan and authorized management to pursue
a potential acquisition of the Company. Purchaser engaged Wasserstein Perella
effective January 18, 1998 to provide financial advisory services related to
the possible acquisition of the Company.
Following the meeting and over the next several weeks, Purchaser made
various due diligence requests of the Company and conducted meetings with
respect to operational issues and tours of the Company's facilities.
Discussions were also held between representatives of Credit Suisse First
Boston and Wasserstein Perella regarding the scope of due diligence required
and the timetable for making written proposals to the Company with respect to
the structure and financial terms of a proposed transaction.
On February 9, 1998, Mr. Hummer met with Mr. Jackson at Purchaser's offices
in Dallas to discuss the business of Purchaser and the possibility of Mr.
Hummer and certain other of the Company's executive officers continuing with
the combined operations. The terms of the Termination Compensation Agreements
between the Company and Messrs. Hummer, Cooney and Roberts and Mr. Max C.
Aiken, Executive Vice President Refractory Operations of the Company, were
discussed in the context of the proposed structure of an acquisition
transaction by Purchaser. Mr. Jackson also inquired as to the interest of
certain executive officers in converting a portion of their Company Options to
Purchaser Options.
On February 18, 1998, Mr. Hummer met again with Mr. Jackson in Dallas. At
this meeting, Mr. Jackson expressed Purchaser's strong interest in acquiring
the Company. Mr. Hummer also disclosed to Mr. Jackson a grant of the severance
enhancement agreements to five additional officers and one other employee of
the Company by which each such person would receive a severance payment equal
to six months' salary, in addition to the Company's normal severance benefits,
if the officer or employee were terminated by an acquiring company within one
year after the date of consummation of the acquisition.
On February 23, 1998, a telephonic meeting of the Board of Directors was
held to consider extending a non-binding proposal to the Company to acquire
all of its outstanding Common Stock for cash. After discussions with
Purchaser's counsel and consideration of a valuation analysis by Wasserstein
Perella, the Board of Directors of Purchaser authorized its management to make
a non-binding written proposal to the Company to acquire all of the Company's
outstanding Common Stock (on a fully diluted basis) for $22.00 per Share in
cash. The proposal was conveyed later in the day to the Company through Credit
Suisse First Boston and was conditioned upon the completion of several items
of due diligence, the negotiation of a definitive agreement with respect to a
tender offer and merger and the approval of the transaction by the Boards of
Directors of both companies.
On February 24, 1998, a telephonic meeting of the Board of Directors of the
Company was held to discuss, among other items, the written proposal that had
been submitted by Purchaser to the Company. With the advice
15
<PAGE>
and assistance of Credit Suisse First Boston and the Company's outside legal
counsel, there was a consensus of the Company's Board that the Purchaser's
proposal should be pursued. If negotiations resulted in a definitive
agreement, the Company's Board of Directors instructed management to report
back to it with management's recommendation.
On February 25, 1998, Purchaser requested an exclusivity agreement by which
the Company would agree to pursue negotiations with respect to a definitive
acquisition agreement solely with Purchaser during an agreed-upon period of
time. The Company indicated its agreement to enter into such an agreement and
the parties negotiated and executed an exclusivity letter which extended
through midnight on March 4, 1998.
On February 26 and 27, 1998, representatives of management of Purchaser and
the Company met in St. Louis, Missouri with their respective legal and
financial advisors to negotiate a definitive Merger Agreement.
The form of the Merger Agreement, pursuant to which Purchaser agreed to
initiate the Offer for all of the Shares for a price of $22.00, net to the
seller in cash, and to consummate the Merger for the balance of the Shares not
purchased in the Offer at $22.00 in cash, was presented to their respective
Boards of Directors for approval in the afternoon and evening of March 2,
1998.
On March 2, 1998, the Board of Directors of Purchaser met, at which meeting
Mr. Jackson and other officers of Purchaser updated the Board of Directors of
Purchaser concerning the discussions with the Company. Purchaser's counsel
advised the Purchaser's Board concerning the proposed Merger Agreement, and
Purchaser's financial advisors, Wasserstein Perella, advised the Board of
Directors of Purchaser concerning the financial terms of the proposed
transaction. Wasserstein Perella orally delivered its opinion to the Board of
Directors of Purchaser that as of March 2, 1998, the $22.00 per Share cash
consideration to be paid by Purchaser pursuant to the Merger and Offer is fair
to Purchaser from a financial point of view. Wasserstein Perella subsequently
delivered to Purchaser its written opinion, subject to the assumptions,
limitations and other matters described therein, confirming its oral opinion
delivered at the March 2, 1998, meeting of the Board of Directors of
Purchaser. The Board of Directors of Purchaser unanimously approved the Offer
and the Merger Agreement.
On March 2, 1998, the Board of Directors of the Company met, at which
meeting Mr. Hummer and other officers of the Company updated the Board of
Directors of the Company concerning the discussions with Purchaser. The
Company's counsel advised the Company's Board concerning the proposed Merger
Agreement, and the Company's financial advisors, Credit Suisse First Boston,
advised the Board of Directors of the Company concerning the financial terms
of the proposed transaction. Credit Suisse First Boston delivered its opinion
to the Board of Directors of the Company that as of March 2, 1998, the $22.00
per Share cash consideration to be received by stockholders of the Company
pursuant to the Merger and Offer is fair to such stockholders from a financial
point of view. The Board of Directors of the Company unanimously determined
that the Offer and the Merger is fair to and in the best interests of the
Company and its stockholders and unanimously approved the Offer and the Merger
Agreement and unanimously recommended that the Company's stockholders accept
the Offer and tender their Shares pursuant to the Offer.
The final terms of the definitive Merger Agreement were agreed to and the
Merger Agreement was executed on March 3, 1998 and a public announcement of
the execution of the Merger Agreement was made prior to the opening of trading
on the NYSE on March 4, 1998.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; THE MERGER.
Purpose. The purpose of the Offer is to acquire for cash as many outstanding
Shares as possible as a first step in acquiring the entire equity interest in
the Company.
If the Merger Sub acquires a majority of the outstanding Shares pursuant to
the Offer, it will have the vote necessary under the DGCL to approve the
Merger. Under the DGCL, if the Merger Sub owns at least 90% of the outstanding
Shares, the Merger may be effected without the vote of the Company's
stockholders. Therefore, if 7,261,799 Shares (or such greater number as may be
necessary if options are exercised) are acquired pursuant to the Offer or
otherwise, the Merger Sub will be able to and intends to effect the Merger
without a meeting of holders of Shares. The Merger Agreement provides that,
promptly after expiration of the Offer and receipt of any required approval by
the Company's stockholders of the Merger Agreement and the satisfaction or
waiver of certain other conditions, the Merger Sub will be merged into the
Company. Upon consummation of the
16
<PAGE>
Merger, each then outstanding Share (other than Shares owned by the Purchaser
Companies or Shares that are held by Dissenting Stockholders) shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into the right to receive the Merger Consideration.
The respective obligations of the Company, Purchaser and the Merger Sub to
consummate the Merger are subject to the fulfillment of certain conditions set
forth in the Merger Agreement, any or all of which may be waived in whole or
in part by Purchaser or the Merger Sub, as the case may be, to the extent
permitted by applicable law, including (i) if required by the DGCL, the
approval by the holders of a majority of the Shares of the Merger Agreement,
in accordance with applicable law and the certificate of incorporation and by-
laws of the Company, (ii) the purchase by the Merger Sub (or one of the
Purchaser Companies) of Shares pursuant to the Offer, and (iii) there being no
statute, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) enacted, issued, promulgated,
enforced or entered by any United States or state court or other Governmental
Entity of competent jurisdiction or regulatory authority in effect which
prohibits consummation of the transactions contemplated by the Merger
Agreement (collectively, an "Order").
Termination Provisions. According to its terms, the Merger Agreement may be
terminated and the transactions contemplated thereby abandoned at any time
prior to the Effective Time, before or after approval by holders of Shares, by
the mutual consent of Purchaser and the Company, by action of their respective
Boards of Directors. In addition, the Merger Agreement may be terminated and
the transactions contemplated thereby abandoned at any time prior to the
Effective Time, before or after approval by holders of Shares, by action of
the Board of Directors of either Purchaser or the Company if (i) the Merger
Sub, or any Purchaser Company, shall have terminated the Offer without
purchasing any Shares pursuant thereto; or (ii) the Merger shall not have been
consummated by August 31, 1998, whether or not such date is before or after
the approval by holders of Shares; or (iii) if required, the approval of
stockholders of the Company shall not have been obtained at a meeting duly
convened therefor; or (iv) any court of competent jurisdiction or other
Governmental Entity located or having jurisdiction within the United States or
any country in which either the Company or Purchaser, directly or indirectly,
has material assets or operations, shall have issued a final order, decree or
ruling or taken any other final action restraining, enjoining or otherwise
prohibiting the Offer or the Merger and such order, decree, ruling or other
action is or shall have become final and nonappealable. The Merger Agreement
may also be terminated and the transactions contemplated thereby may be
abandoned at any time prior to the Effective Time, before or after the
approval by holders of Shares, by action of the Board of Directors of
Purchaser if (i) the Company shall have breached or failed to perform in any
material respect any of the covenants or agreements contained in the Merger
Agreement to be complied with or performed by the Company prior to such date
of termination which breach or failure shall not have been cured prior to the
earlier of (A) five business days following the giving of written notice to
the Company of such breach or failure and (B) two business days prior to the
date on which the Offer is then scheduled to expire, or any representation or
warranty of the Company set forth in the Merger Agreement shall have been
inaccurate or incomplete when made except for such failures to be complete or
accurate that, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the financial condition,
properties, business or results of operations of the Company and its
subsidiaries taken as a whole or could prevent or materially delay the
transactions contemplated by the Merger Agreement or impair the ability of
Purchaser, the Merger Sub, the Company or any of their respective affiliates,
following consummation of the Offer or the Merger, to conduct any material
business or operations in any jurisdiction where they are now being conducted,
(ii) the Board of Directors of the Company (or a special committee thereof)
shall have amended, modified or withdrawn in a manner adverse to Purchaser or
the Merger Sub its approval or recommendation of the Offer, the Merger
Agreement or the Merger or the Board of Directors of the Company, upon request
by Purchaser, shall fail to reaffirm such approval or recommendation, or shall
have endorsed, approved or recommended any other Acquisition Proposal (as
defined in the Merger Agreement), or shall have resolved to do any of the
foregoing, or (iii) the Company or any of the other persons or entities
described in Section 7.2 of the Merger Agreement shall take any actions that
would be proscribed by Section 7.2 of the Merger Agreement but for the
exception therein allowing certain actions to be taken if required by
fiduciary obligations under applicable law as advised in writing by counsel.
The Merger Agreement may be terminated and the transactions contemplated
thereby may be abandoned at any time prior to the Effective Time, before or
after the approval by holders of Shares, by action of the Board of Directors
of the Company, (i) if Purchaser or
17
<PAGE>
the Merger Sub (or another Purchaser Company) (x) shall have breached or
failed to perform in any material respect with any of the covenants or
agreements contained in the Merger Agreement to be complied with or performed
by Purchaser or the Merger Sub prior to such date of termination which shall
not have been cured prior to the earlier of (A) five business days following
the giving of written notice to Purchaser of such breach or failure and (B)
two business days prior to the date on which the Offer is then scheduled to
expire, or (y) shall have failed to commence the Offer within the time
required in Section 1.1 of the Merger Agreement, or (ii) if (w) the Company is
not in material breach of any of the terms of the Merger Agreement, (x) the
Board of Directors of the Company authorizes the Company, subject to complying
with the terms of the Merger Agreement, to enter into a binding written
agreement concerning a transaction that constitutes a Superior Proposal (as
defined in the Merger Agreement) and the Company notifies Purchaser in writing
that it intends to enter into such an agreement, attaching the most current
version of such agreement (which shall include all of the material terms,
including the price proposed to be paid for Shares pursuant thereto) to such
notice, (y) Purchaser does not make, within two business days of receipt of
the Company's written notification of its intention to enter into a binding
agreement for a Superior Proposal, an offer that the Board of Directors of the
Company determines, in good faith after consultation with its financial
advisors, is at least as favorable, from a financial point of view, to the
stockholders of the Company as the Superior Proposal and (z) the Company,
prior to such termination, pays to Purchaser in immediately available funds
the fees required to be paid pursuant to Section 9.5(b) of the Merger
Agreement.
In the event of the termination of the Merger Agreement, no party to the
Merger Agreement (or any of its directors or officers) shall have any
liability or further obligation to any other party to the Merger Agreement,
except as provided in Sections 9.5(b) and 10.2 therein and except that nothing
therein will relieve any party from liability for any willful breach of the
Merger Agreement; provided, however, that if the Merger Agreement is
terminated by Purchaser pursuant to Section 9.3(i) or the Company pursuant to
Section 9.4(i) therein, the terminating party's rights to pursue all legal
remedies will survive such termination unimpaired.
If (i) (x) the Offer shall have remained open for a minimum of at least 20
business days, (y) after the date of the Merger Agreement any corporation,
partnership, person, other entity or group (as defined in Section 13(d)(3) of
the Exchange Act) other than Purchaser or the Merger Sub or any of their
respective subsidiaries or affiliates (collectively, a "Person") shall have
become the beneficial owner of 20% or more of the outstanding Shares or shall
have publicly announced a proposal or intention to make an Acquisition
Proposal or any Person shall have commenced, or shall have publicly announced
an intention to commence, a tender offer or exchange offer for 20% or more of
the outstanding Shares, and (z) the Minimum Condition shall not have been
satisfied and the Offer is terminated without the purchase of any Shares
thereunder, or (ii) Purchaser shall have terminated the Merger Agreement
pursuant to Section 9.3(ii) or Section 9.3(iii) thereof or (iii) the Company
shall have terminated the Merger Agreement pursuant to Section 9.4(ii)
thereof; then the Company shall promptly, but in no event later than two days
after the date of such termination, pay Purchaser a fee of $8,000,000 and
shall reimburse Purchaser and the Merger Sub (not later than one business day
after request by Purchaser or the Merger Sub) for all of the out-of-pocket
charges and expenses, including financing fees, incurred by Purchaser or the
Merger Sub in connection with the Merger Agreement and the transactions
contemplated by the Merger Agreement up to a maximum amount of $1,500,000, in
each case payable by wire transfer in same day funds. The Company thereby
acknowledged that the agreements described above are an integral part of the
transactions contemplated in the Merger Agreement, and that, without these
agreements, Purchaser and the Merger Sub would not have entered into the
Merger Agreement; accordingly, if the Company fails to promptly pay the amount
due pursuant to Section 9.5(b) of the Merger Agreement, and, in order to
obtain such payment, Purchaser or the Merger Sub commences a suit which
results in a judgment against the Company for the fee set forth in such
Section, the Company shall pay to Purchaser or the Merger Sub its costs and
expenses (including attorneys' fees) in connection with such suit, together
with interest on the amount of the fee at the prime rate of Bank of America
National Trust and Savings Association on the date such payment was required
to be made. The payments made by the Company pursuant to Section 9.5(b) of the
Merger Agreement are the sole and exclusive remedy of Purchaser and the Merger
Sub for any claim that Purchaser or the Merger Sub may have arising from or
relating to the events set forth in Section 9.5(b)(i), (ii) or (iii) of the
Merger Agreement.
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Amendment. Subject to the applicable provisions of the DGCL, at any time
prior to the Effective Time, the Merger Agreement may be modified or amended
by written agreement executed and delivered by duly authorized officers of the
respective parties.
Treatment of Options. The Merger Agreement provides that, immediately prior
to the Effective Time, the Company shall take such actions as may be necessary
such that immediately prior to the Effective Time each stock option
outstanding and unexercised (the "Option") pursuant to the Company's stock
option and incentive plans (the "Stock Plans"), whether or not then
exercisable, shall be canceled and shall cease to be exercisable. In
consideration for such cancellation, the holder thereof, upon surrender of
such Option, will receive an amount in cash from the Company equal to the
result of multiplying the number of shares of Common Stock previously subject
to such Option by the difference between the Merger Consideration and the per
share exercise price of such Option.
The Merger Agreement provides that Paul F. Hummer II may, by written notice
to Purchaser received by Purchaser not less than ten (10) business days prior
to the Effective Time, elect to convert the 75,000 Options held by him, into
options ("Purchaser Options") to purchase Purchaser common stock ("Purchaser
Common Stock"). Any such election shall identify the Options to be converted
into Purchaser Options and shall become irrevocable upon receipt by Purchaser
of the notice of election. If such election is made, at the Effective Time,
each Option to be converted shall be deemed to constitute an option to acquire
Purchaser Common Stock on the same terms of the applicable Stock Plan and the
stock option agreement by which it is evidenced. From and after the Effective
Time, (A) each such Option may be exercised solely for shares of Purchaser
Common Stock, (B) the number of shares of Purchaser Common Stock subject to
such Option shall be equal to the result (rounded down to the nearest whole
share) of multiplying the number of shares of Common Stock subject to such
Option immediately prior to the Effective Time by a fraction (the "Conversion
Fraction"), where (x) the numerator is equal to the Merger Consideration and
(y) the denominator is equal to the average of the last reported sales prices
of the Purchaser Common Stock on the five business days immediately prior to
the date of the Merger Agreement and (C) the per share exercise price under
each such Option shall be equal to the result (rounded up to the nearest cent)
of dividing the per share exercise price under each such Option by the
Conversion Fraction; provided, however, that with respect to any Option which
is an "incentive stock option", within the meaning of Section 422 of the
Internal Revenue Code, the adjustments provided by the Merger Agreement shall
be effected in a manner consistent with the requirements of Section 424(a) of
the Internal Revenue Code. No payment shall be made pursuant to the Merger
Agreement with respect to any portion of an Option that is converted into a
Purchaser Option.
Pursuant to the Merger Agreement, at or prior to the Effective Time,
Purchaser shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of Purchaser Common Stock for delivery upon
exercise of Options assumed by it in accordance with the Merger Agreement as
soon as administratively feasible following the Effective Time, file a
registration statement on Form S-8 (or any successor or other appropriate
form) with respect to the Purchaser Common Stock subject to such Options (or
shall cause such Option to be deemed an option issued pursuant to a Purchaser
stock option plan for which Purchaser Common Stock have previously been
registered pursuant to an appropriate registration form). Purchaser shall use
its best efforts to maintain the effectiveness of such registration statement
(and maintain the current status of the prospectus or prospectuses contained
therein) for so long as the Options remain outstanding.
Indemnification of Officers and Directors. The Merger Agreement provides
that, from and after the Effective Time, Purchaser agrees that it will cause
the Surviving Corporation to indemnify and hold harmless each present and
former director and officer of the Company, determined as of the Effective
Time (the "Indemnified Parties"), against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring
at or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent that the Company is permitted
to do so under Delaware law and the Company
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Certificate or Company By-Laws in effect on the date of the Merger Agreement
(and Purchaser shall also advance expenses as incurred to the fullest extent
permitted under applicable law provided the person to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification); provided that
any determination required to be made with respect to whether an officer's or
director's conduct complies with the standards set forth under Delaware law
and the Company Certificate and Company By-Laws shall be made by independent
counsel selected by the Surviving Corporation.
Pursuant to the Merger Agreement, any Indemnified Party wishing to claim
indemnification, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Purchaser thereof. In the event of any
such claim, action, suit, proceeding or investigation (whether arising before
or after the Effective Time), (i) Purchaser or the Surviving Corporation shall
have the right to assume the defense thereof and Purchaser shall not be liable
to such Indemnified Parties for any legal expenses of other counsel or any
other expenses subsequently incurred by such Indemnified Parties in connection
with the defense thereof, except that if Purchaser or the Surviving
Corporation elects not to assume such defense or counsel for the Indemnified
Parties advises that, in such counsel's reasonable judgment, there are
material issues that constitute conflicts of interest between Purchaser or the
Surviving Corporation and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and Purchaser or the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided,
however, that Purchaser shall be obligated to pay for only one firm of counsel
for all Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties
will cooperate in the defense of any such matter and (iii) Purchaser shall not
be liable for any settlement effected without its prior written consent; and
provided, further, however, that Purchaser shall not 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 by the Merger Agreement is prohibited by applicable law.
Pursuant to the Merger Agreement, the Surviving Corporation shall be
permitted to maintain the Company's existing officers' and directors'
liability insurance ("D&O Insurance") for a period of two years after the
Effective Time so long as the annual premium therefor is not in excess of 150%
of the last annual premium paid prior to the date of the Merger Agreement (the
"D&O Premium"); provided, however, if the existing D&O Insurance expires, is
terminated or canceled during such two-year period, the Surviving Corporation
will use its best efforts to obtain as much D&O Insurance as can be obtained
for the remainder of such period for a premium not in excess (on an annualized
basis) of the D&O Premium.
Treatment of Employee Benefits. Pursuant to the Merger Agreement, Purchaser
agrees that during the period commencing at the Effective Time and ending on
the first anniversary thereof, the employees of the Company will continue to
be provided with benefits under employee benefit plans (other than stock
options or other plans involving the issuance of securities of the Company or
Purchaser) which in the aggregate are substantially comparable to those
currently provided by the Company to such employees; provided, however, that
employees covered by collective bargaining agreements need not be provided
with such benefits. Purchaser will cause each employee benefit plan of
Purchaser in which employees of the Company are eligible to participate to
take into account for purposes of eligibility and vesting thereunder the
service of such employees with the Company as if such service were with
Purchaser. Purchaser will, and will cause the Surviving Corporation to, honor
without modification all employee benefit obligations to current and former
employees of the Company accrued as of the Effective Time and, to the extent
set forth in the Disclosure Letter, all employee severance plans in existence
on the date of the Merger Agreement and all employment or severance agreements
entered into prior to the date of the Merger Agreement.
ESOP Distributions and Termination. As soon as practicable following the
Effective Time, Purchaser and the Company shall take all actions necessary or
appropriate to cause the A.P. Green Industries, Inc. Employee Stock Ownership
Trust, which implements and forms part of the A.P. Green Investment Plan
(collectively, the "ESOP"), to provide for the use of all proceeds received
pursuant to the Offer from the tender of Shares allocated to the suspense
account of the ESOP, as follows: first, such proceeds shall be applied to
repay any
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outstanding loan incurred by the ESOP; and secondly, the balance of such
proceeds shall be allocated to participants' Employer Match ESOP account in
proportion to the total aggregate value of such accounts of the participants
as of the accounting date immediately preceding the Effective Time, except to
the extent such allocations could exceed the limits on annual contributions
pursuant to Section 415 of the Code. In addition, as soon as is reasonably
practicable following the Effective Time (or, if deemed appropriate by
Purchaser and the Company, after receipt of a favorable determination letter
from the Internal Revenue Service on the effect of termination of the ESOP)
Purchaser and the Company shall terminate the ESOP and distribute all proceeds
to the participants in accordance therewith. Notwithstanding the foregoing,
Purchaser shall have no obligation to implement this Section 7.8(d) if such
implementation would violate the terms of the ESOP or jeopardize the tax-
qualified status of the ESOP.
Composition of the Board of Directors. Pursuant to the Merger Agreement, if
requested by Purchaser, the Company will, subject to compliance with
applicable law and promptly following the purchase by the Merger Sub of Shares
pursuant to the Offer, 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 not less than the product of (i) the total number of
directors on the Board of Directors of the Company (giving effect to the
directors elected pursuant to the Merger Agreement) and (ii) a fraction the
numerator of which is the aggregate number of Shares beneficially owned by the
Merger Sub or any affiliate of the Merger Sub and the denominator of which is
the total number of Shares then outstanding. In furtherance thereof, the
Company will increase the size of the Board of Directors of the Company, or
use its reasonable efforts to secure the resignation of directors, or both, as
is necessary to permit Purchaser's designees to be elected to the Board of
Directors of the Company. At such time, the Company, if so requested, will use
its reasonable efforts to cause persons designated by Purchaser to constitute
the same proportionate representation of each committee of the Board of
Directors of the Company, each board of directors of each subsidiary of the
Company and each committee of each such board (in each case to the extent of
the Company's ability to elect such persons). No directors appointed by
Purchaser shall be entitled to receive any compensation or benefits currently
in effect for the Company's non-employee directors. The Company's obligations
to appoint designees to the Board of Directors of the Company shall be subject
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder.
The Company shall promptly take all actions required pursuant to such Section
and Rule in order to fulfill its obligations under the Merger Agreement and
shall include in the Schedule 14D-9, or in a separate Rule 14f-1 information
statement provided to stockholders, such information with respect to the
Company and its officers and directors as is required under Section 14(f) and
Rule 14f-1 to fulfill its obligations under the Merger Agreement. Purchaser
and the Merger Sub will supply to the Company and will be solely responsible
for any information with respect to either of them and their nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Acquisition Proposals. Pursuant to the Merger Agreement, the Company has
agreed that neither it nor its affiliates and its and their respective
officers, directors, employees, representatives and agents (including, without
limitation, any investment banker, attorney or accountant retained by the
Company or any of its subsidiaries) shall immediately cease all existing
discussions or negotiations, if any, with any parties conducted before the
date of the Merger Agreement with respect to any acquisition or exchange of
all or any material portion of the assets of, or more than 15% of the equity
interest in, the Company or any of its subsidiaries (by direct purchase from
the Company, tender or exchange offer or otherwise) or any business
combination, merger, consolidation or similar transaction (including an
exchange of stock or assets) with or involving the Company or any subsidiary
or division of the Company (an "Acquisition Transaction"). Neither the Company
nor any of its affiliates, nor any of its or their respective officers,
directors, employees, representatives or agents (including, without
limitation, any investment banker, attorney or accountant retained by the
Company or any of its subsidiaries) shall, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or
provide any information to, any corporation, partnership, person or other
entity or group (other than Purchaser and the Merger Sub, any affiliate or
associate of Purchaser and the Merger Sub or any designees of Purchaser and
the Merger Sub) with respect to any inquiries or the making of any offer or
proposal (including, without limitation, any offer or proposal to the
stockholders of the Company) concerning an Acquisition Transaction (an
"Acquisition Proposal"), unless (i) the Board of Directors of the Company
determines in good faith after consultation with outside legal counsel that
such action is necessary in order for its directors to comply with
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their respective fiduciary duties under applicable law and (ii) the Board of
Directors of the Company determines in good faith (after consultation with its
financial advisor) that such Acquisition Proposal, if accepted, 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 would, if consummated, result in a transaction
more favorable to the Company's stockholders from a financial point of view
than the transaction contemplated by the Merger Agreement (any such more
favorable Acquisition Proposal being referred to in the Merger Agreement as a
"Superior Proposal"). The Company will take the necessary steps to inform the
individuals or entities referred to in the first sentence of this paragraph of
the obligations undertaken pursuant to the Merger Agreement. The Company will
notify Purchaser immediately if any such inquiries or proposals are received
by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with the Company, the name
of the person making such proposals, the material terms and conditions of such
proposals and thereafter shall keep Purchaser informed, on a current basis, of
the status and terms of such proposals and the status of such negotiations or
discussions. The Company agreed not to release any third party from, or waive
any provisions of, any confidentiality or standstill agreement to which the
Company is a party, unless the Board of Directors of the Company shall have
determined in good faith, based upon the advice of outside counsel to the
Company, that failing to release such third party or waive such provisions
would constitute a breach of the fiduciary duties of the Board of Directors of
the Company under applicable law.
Covenants. The Merger Agreement also contains certain other restrictions as
to the conduct of business by the Company pending the Merger, as well as
representations and warranties of each of the parties customary in
transactions of this kind.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, each stockholder of the Company
who has neither voted in favor of the Merger nor consented thereto in writing
will be entitled to an appraisal by the Delaware Court of Chancery of the fair
value of his Shares, exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair rate of
interest, if any, to be paid. In determining such fair value, the Court may
consider all relevant factors. The value so determined could be more or less
than the consideration to be paid in the Offer and the Merger. Any judicial
determination of the fair value could be based upon considerations other than
or in addition to the market value of the Shares, including, among other
things, asset values and earning capacity.
Rule 13e-3. Rule 13e-3 under the Exchange Act, which Purchaser does not
believe would be applicable to the Merger, would require, among other things,
that certain financial information concerning the Company and certain
information relating to the fairness of the proposed transaction and the
consideration offered to stockholders of the Company therein, be filed with
the SEC and disclosed to stockholders of the Company prior to consummation of
the transaction.
Rights Agreement. Set forth below is a summary description of the Rights as
filed with the Company's Registration Statement on Form 8-A dated November 13,
1997, relating to the Rights. On November 13, 1997, the Board of Directors of
the Company declared a dividend of one Right for each outstanding share of
Common Stock. The dividend was payable on January 7, 1998 (the "Record Date")
to the stockholders of record on that date. Each Right entitles the registered
holder to purchase from the Company one one-hundredth of a share of a
Preferred Share of the Company at a price of $45.00 per one one-hundredth of a
Preferred Share (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in the Rights Agreement.
Initially, the Rights will be evidenced by the stock certificates
representing shares of Common Stock then outstanding, and no separate Right
Certificates, as defined in the Rights Agreement, will be distributed. Until
the earlier to occur of (i) 10 days following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person")
have acquired beneficial ownership of 20% or more of the outstanding shares of
Common Stock or (ii) 10 business days (or such later date as may be determined
by action of a majority of the Continuing Directors prior to such time as any
person or group of affiliated persons becomes an Acquiring Person) following
the commencement of, or announcement of an intention to make, without the
prior written
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approval of a majority of the Continuing Directors, a tender offer or exchange
offer the consummation of which would result in the beneficial ownership by a
person or group of 20% or more of the voting power of the Company (the earlier
of such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the shares of Common Stock certificates
outstanding as of the Record Date, by such share of Common Stock certificate
to which a copy of this Summary of Rights may be attached.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with
and only with the Common Stock. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after the Record Date upon transfer or new issuance of Common Stock will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights) the
surrender for transfer of any certificates for Common Stock outstanding as of
the Record Date will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on January 6, 2008 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination of reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion
price, less than the then-current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preferred Shares) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a stock
dividend on the Common Stock payable in shares of Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an
aggregate dividend of 100 times the dividend declared per share of Common
Stock. In the event of liquidation, the holders of the Preferred Shares will
be entitled to a minimum preferential liquidation payment of $100 per share
but will be entitled to an aggregate payment of 100 times the payment made per
share of Common Stock. Each Preferred Share will have 100 votes, voting
together with the shares of Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 100 times the amount received per
share of Common Stock. These rights are protected by customary anti-dilution
provisions. Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth interest in
a Preferred Share purchasable upon exercise of each Right should approximate
the value of one share of Common Stock. The Preferred Shares rank junior to
all other series of the Company's preferred stock.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the
then current exercise price of the Right, that number of shares of common
stock of the acquiring company which at the time of such transaction will have
a market value of two times the exercise price of the Right. In the event that
any person or group of affiliated or associated persons becomes an Acquiring
Person, proper provision shall be made so that each holder
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of a Right, other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the right to receive
upon exercise that number of shares of Common Stock having a market value of
two times the exercise price of the Right (or, if such number of shares of
Common Stock is not authorized, the Company may issue cash, debt, stock or a
combination thereof in exchange for the Rights).
At any time after any Person becomes an Acquiring Person and prior to the
acquisition by such person or group of 50% or more of the outstanding Common
Stock, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by such person or group which will have become void) in
whole or in part, at an exchange ratio of one shares of Common Stock, or one
one-hundredth of a Preferred Share (or of a share of a class or series of the
Company's preferred stock having equivalent rights, preferences and privileges
or the Company may issue cash, debt or other property or any combination
thereof), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the earliest of (i) the time that a person has become
an Acquiring Person or (ii) the final Expiration Date, the Board of Directors
of the Company may redeem the Rights in whole, but not in part, at a price of
$.001 per Right (the "Redemption Price"). The redemption of the Rights may be
made effective at such time on such basis with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an
amendment to lower certain thresholds described above to any percentage which
is (i) greater than the largest percentage of the outstanding shares of Common
Stock then known to the Company to be beneficially owned by any person or
group of affiliated or associated persons (other than the Company, any
Subsidiary of the Company, employee benefit plans of the Company or any
Subsidiary, or any entity holding shares of Common Stock pursuant to the terms
of any such plan) and (ii) not less than 10%, except that from and after such
time as any person or group of affiliated or associated persons becomes an
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
Pursuant to the Merger Agreement, the Board of Directors of the Company, at
its meeting on March 2, 1998, took all necessary action under the Rights
Agreement to provide that the execution of the Merger Agreement and the
consummation of the transactions contemplated thereby will not cause (i) the
Merger Sub and/or Purchaser to become an Acquiring Person or (ii) a
Distribution Date or a Stock Acquisition Date (as defined in the Rights
Agreement) to occur, irrespective of the number of Shares acquired pursuant to
the Offer. In addition, pursuant to the Merger Agreement, the Board of
Directors of the Company approved the amendment of the Rights Agreement on
March 2, 1998 so that (i) the consummation of the transactions contemplated
thereby will not cause (x) the Merger Sub and/or Purchaser to become an
Acquiring Person or (y) a Distribution Date or a Stock Acquisition Date (as
defined in the Rights Agreement) to occur, irrespective of the number of
Shares acquired pursuant to the Offer and (ii) all outstanding Rights will
expire upon the acceptance of Shares for payment pursuant to the Offer,
whether or not tendered and purchased pursuant to the Offer, and neither the
Company, the Merger Sub nor Purchaser shall have any obligations under the
Rights Agreement to any holder (or former holder) of Rights following
consummation of the Offer.
12. SOURCE AND AMOUNT OF FUNDS.
The Merger Sub estimates that the total amount of funds required to purchase
all of the outstanding Shares pursuant to the Offer and the Merger and to pay
related fees and expenses will be approximately $192,000,000.
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The Merger Sub expects to obtain these funds from capital contributions or
advances made by Purchaser. Purchaser currently plans to obtain the funds for
such capital contributions or advances from the sale of its Industrial Tool
business to Cooper Industries for $217.5 million. Purchaser has been notified
that the waiting period under the HSR Act applicable to the Industrial Tool
transaction expired on March 5, 1998. Accordingly, Purchaser believes that the
sale of its Industrial Tool business will be consummated prior to the
Expiration Date and that it will have the necessary funds to make the above-
referenced capital contributions or advances.
If the consummation of the Industrial Tool transaction is delayed beyond the
Expiration Date, Purchaser plans to obtain the funds for such capital
contributions or advances from a combination of its working capital and
borrowings under the Credit Agreement, dated as of September 23, 1994, as
amended by the Seventh Amendment to Credit Agreement, dated as of February 19,
1998, among Purchaser and Bank of America National Trust and Savings
Association (the "Credit Facility") which provides a commitment of
$200,000,000, which can only be drawn in connection with the undertaking
described herein, and to the extent utilized, will be a term loan due August
31, 1998. The Credit Facility is provided by Bank of America National Trust
and Savings Association as agent (the "Agent") and lender (the "Lender").
Under the Credit Agreement, Purchaser may request that the Lender make a
loan which bears interest by reference to a rate that, according to the terms
of the Credit Facility, and at the discretion of Purchaser, varies according
to rates offered for eurodollar deposits, the federal funds rate, or the
reference rate announced from time to time by Bank of America. Further,
Purchaser has agreed to pay a facility fee to the Lender, the amount of which
is conditioned to amounts borrowed related to this undertaking.
The covenants in the Credit Facility restrict or limit, among other things,
(i) the incurrence of certain debt by Purchaser's subsidiaries, (ii) liens on
the assets of Purchaser and its subsidiaries, (iii) certain mergers,
consolidations and sales of assets by Purchaser and its subsidiaries and (iv)
the use of proceeds of the loans made under the Credit Facility. In addition,
the Credit Facility requires that Purchaser and its restricted subsidiaries,
on a consolidated basis, satisfy an indebtedness/capitalization ratio, an
indebtedness/net cash flow ratio and an interest coverage ratio.
The foregoing description is qualified in its entirety by reference to the
Credit Facility, which is incorporated herein by reference and a copy of which
has been filed with the SEC as an exhibit to Purchaser's Tender Offer
Statement on Schedule 14D-1. The Credit Facility may be examined and copies
may be obtained at the place and in the manner set forth in Section 8.
It is anticipated that the indebtedness incurred by Purchaser in connection
with the Offer and the Merger will be paid from funds generated internally by
Purchaser and its subsidiaries (including, after the Merger, if consummated,
dividends paid by the Surviving Corporation and its subsidiaries), through
additional borrowings, through application of proceeds of dispositions or
through a combination of two or more such sources. No final decisions have
been made, however, concerning the method Purchaser will employ to repay such
indebtedness. Such decisions, when made, will be based on Purchaser's review
from time to time of the advisability of particular actions, as well as on
prevailing interest rates and financial and other economic conditions.
13. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Merger Sub 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 the Merger Sub's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, or may delay
the acceptance for payment of or payment for, any tendered Shares, or may, in
its sole discretion, terminate or amend the Offer as to any Shares not then
paid for if, (i) prior to the expiration of the Offer, (x) a number of Shares
which, together with any Shares owned by Purchaser or the Merger Sub,
constitutes more than 50% of the voting power (determined on a fully-diluted
basis) of all the securities of the Company entitled to vote generally in the
election of directors or in connection with a merger shall not have been
validly tendered and not withdrawn prior to the expiration of the Offer (the
"Minimum Condition") or (y) any waiting periods under the HSR Act applicable
to the purchase of Shares
25
<PAGE>
pursuant to the Offer and any applicable waiting periods under any foreign
statutes or regulations that are applicable to the Offer or the Merger shall
not have expired or been terminated, or any required filings, consents,
approvals, and authorizations of any Governmental Entity applicable to the
Offer or the Merger shall not have been obtained on terms satisfactory to
Purchaser in its reasonable judgment, or (ii) on or after March 3, 1998 and at
or before the time of payment for any of such Shares (whether or not any
Shares have theretofore been accepted for payment), any of the following
events shall occur:
(a) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the NYSE, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) a commencement or escalation
of a war, armed hostilities or other international or national calamity
directly or indirectly involving the United States, (iv) any limitation
(whether or not mandatory) by any Governmental Entity on, or any other
event that might affect, the extension of credit by banks or other lending
institutions, (v) a material change in United States or any other currency
exchange rates or a suspension of, or limitation on, the markets therefor,
(vi) or in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof,
(vii) any extraordinary or material adverse change in the market price of
the Shares or in the United States securities or financial markets
generally, including, without limitation, a decline of at least 20% in
either the Dow Jones Average of Industrial Stocks or the Standard & Poor's
500 index from the date of the Merger Agreement, or (viii) any material
adverse change in the relevant financial markets that could reasonably be
expected to materially and adversely affect the debt facilities related to
the financing of the Offer;
(b) the Company shall have breached or failed to perform in any material
respect any of its obligations, covenants or agreements contained in the
Merger Agreement or any representation or warranty of the Company set forth
in the Merger Agreement shall have been inaccurate or incomplete in any
material respect when made or thereafter shall become inaccurate or
incomplete in any material respect;
(c) there shall be threatened, instituted or pending any action,
litigation, proceeding, investigation or other application (an "Action")
before any court or other Governmental Entity by any Governmental Entity or
instituted or pending any Action by any other person, domestic or foreign:
(i) challenging the acquisition by Purchaser or the Merger Sub of Shares,
seeking to restrain or prohibit the consummation of the transactions
contemplated by the Offer or the Merger or other subsequent business
combination, seeking to obtain any material damages or otherwise directly
or indirectly relating to the transactions contemplated by the Offer or the
Merger or other subsequent business combination; (ii) seeking to prohibit,
or impose any material limitations on, Purchaser's or the Merger Sub's
ownership or operation of all or any portion of their or the Company's
business or assets (including the business or assets of their respective
affiliates and subsidiaries), or to compel Purchaser or the Merger Sub to
dispose of or hold separate all or any portion of Purchaser's or the Merger
Sub's or the Company's business or assets (including the business or assets
of their respective affiliates and subsidiaries) as a result of the
transactions contemplated by the Offer or the Merger or other subsequent
business combination; (iii) seeking to make the acceptance for payment,
purchase of, or payment for, some or all of the Shares illegal or render
the Merger Sub unable to, or result in a material delay in, or restrict,
the ability of the Merger Sub to, accept for payment, purchase or pay for
some or all of the Shares; (iv) seeking to impose material limitations on
the ability of Purchaser or the Merger Sub effectively to acquire or hold
or to exercise full rights of ownership of the Shares including, without
limitation, the right to vote the Shares purchased by them on an equal
basis with all other Shares on all matters properly presented to the
stockholders; or (v) that, in any event, in the judgment of Purchaser is
reasonably likely to have a material adverse effect on the financial
condition, properties, business or operations of the Company or Purchaser
or the Merger Sub (or any of their respective affiliates or subsidiaries)
or the value of the Shares to Purchaser or the Merger Sub or the benefits
expected to be derived by Purchaser or the Merger Sub as a result of
consummation of the transactions contemplated by the Offer and the Merger;
(d) any statute, rule, regulation, order or injunction shall be sought,
proposed, enacted, promulgated, entered, enforced or deemed or become
applicable to the Offer, the Merger, the Merger Agreement or other
subsequent business combination or any other action shall have been taken,
proposed or threatened by any
26
<PAGE>
court or other Governmental Entity other than the application to the Offer,
the Merger, the Merger Agreement or other subsequent business combination
of waiting periods under the HSR Act, that, in the judgment of Purchaser,
could be expected to, directly or indirectly, result in any of the effects
of, or have any of the consequences sought to be obtained or achieved in,
any Action referred to in clauses (i) through (v) of paragraph (c) above;
(e) a tender or exchange offer for some portion or all of the Shares
shall have been commenced or publicly proposed to be made by another person
(including the Company or its subsidiaries), or it shall have been publicly
disclosed or Purchaser shall have learned that (i) any person (including
the Company or its subsidiaries), entity or "group" (as defined in Section
13(d) of the Exchange Act and the rules promulgated thereunder) shall have
become the beneficial owner (as defined in Section 13(d) of the Exchange
Act and the rules promulgated thereunder) of more than 20% of any class or
series of capital stock of the Company (including the Shares) other than
for bona fide arbitrage purposes or (ii) any person, entity or group shall
have entered into a definitive agreement or an agreement in principle or
made a proposal with respect to a tender offer or exchange offer for some
portion or all of the Shares or a merger, consolidation or other business
combination with or involving the Company;
(f) any change shall have occurred (or any development shall have
occurred involving a prospective change) or Purchaser or the Merger Sub
shall have become aware of any fact (including, but not limited to, any
such change) that has had, or is reasonably likely to have, a material
adverse effect on the Company and its subsidiaries taken as a whole;
(g) the Board of Directors of the Company (or a special committee
thereof) shall have amended, modified or withdrawn its approval or
recommendation of the Offer, the Merger Agreement or the Merger, or shall
have failed to publicly reconfirm such approval or recommendation upon
request by Purchaser or the Merger Sub, or shall have endorsed, approved or
recommended any other Acquisition Proposal, or shall have resolved to do
any of the foregoing; or
(h) the Merger Agreement shall have been terminated by the Company or
Purchaser or the Merger Sub in accordance with its terms or Purchaser or
the Merger Sub shall have reached an agreement or understanding in writing
with the Company providing for termination or amendment of the Offer or
delay in payment for the Shares;
which, in the sole judgment of Purchaser and the Merger Sub, in any such case,
and regardless of the circumstances (including any action or inaction by
Purchaser or the Merger Sub) giving rise to any such conditions, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
of or payment for Shares.
The foregoing conditions are for the sole benefit of Purchaser and the
Merger Sub and may be asserted by Purchaser or the Merger Sub regardless of
the circumstances (including any action or inaction by Purchaser or the Merger
Sub) giving rise to such condition or may be waived by Purchaser or the Merger
Sub, by express and specific action to that effect, in whole or in part at any
time and from time to time in its sole discretion. Any determination by
Purchaser and the Merger Sub concerning any event described in this section
will be final and binding upon all parties. The failure by the Merger Sub at
any time to exercise any of the foregoing rights will not be deemed a waiver
of any such right, the waiver of any such right with respect to particular
facts and other circumstances will not be deemed a waiver with respect to any
other facts and circumstances, and each such right will be deemed an ongoing
right that may be asserted at any time and from time to time.
A public announcement will be made of a material change in, or waiver of,
such conditions, and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver.
14. DIVIDENDS AND DISTRIBUTIONS.
If, on or after March 3, 1998, the Company should split, combine or
otherwise change the Shares or its capitalization or shall disclose that it
has taken any such action, then the Merger Sub, in its discretion, may make
such adjustments in the Merger Consideration and other terms of the Offer as
it deems appropriate to reflect such split, combination or other change.
27
<PAGE>
If, on or after March 3, 1998, the Company should declare or pay any cash or
stock dividend (other than the regular quarterly cash dividends not in excess
of $0.04 per share of Common Stock at the normal time at which such dividends
are declared and paid) or other distribution on or issue any rights with
respect to the shares of Common Stock, payable or distributable to
stockholders of record on a date occurring on or after March 3, 1998 and prior
to the transfer to the name of the Merger Sub or its nominees or transferees
on the Company's stock transfer records of the shares of Common Stock
purchased pursuant to the Offer, then, without prejudice to the Merger Sub's
rights under Section 13, (i) the price payable by the Merger Sub pursuant to
the Offer will be reduced by the amount of any such cash dividend or
distribution and (ii) the whole of any non-cash dividend or distribution
(including additional shares of Common Stock or rights as aforesaid) received
by a tendering stockholder shall be required to be promptly remitted and
transferred by the tendering stockholder to the Depositary for the account of
the Merger Sub, accompanied by appropriate documentation of transfer. Pending
such remittance or appropriate assurance thereof, the Merger Sub will be,
subject to applicable law, entitled to all rights and privileges as owner of
any such non-cash dividend, distribution or right and may withhold the entire
purchase price or deduct from the purchase price the amount or value thereof,
as determined by the Merger Sub in its sole discretion.
15. CERTAIN LEGAL MATTERS
General. Except as otherwise disclosed herein, based upon an examination of
publicly available filings with respect to the Company, Purchaser and the
Merger Sub are not aware of any licenses or other regulatory permits which
appear to be material to the business of the Company and which might be
adversely affected by the acquisition of Shares by the Merger Sub pursuant to
the Offer or of any approval or other action by any governmental,
administrative or regulatory agency or authority which would be required for
the acquisition or ownership of Shares by the Merger Sub pursuant to the
Offer. Should any such approval or other action be required, it is currently
contemplated that such approval or action would be sought or taken. There can
be no assurance that any such approval or action, if needed, would be obtained
or, if obtained, that it will be obtained without substantial conditions or
that adverse consequences might not result to the Company's or Purchaser's
business or that certain parts of the Company's or Purchaser's business might
not have to be disposed of in the event that such approvals were not obtained
or such other actions were not taken, any of which could cause the Merger Sub
to elect to terminate the Offer without the purchase of the Shares thereunder.
The Merger Sub's obligation under the Offer to accept for payment and pay for
Shares is subject to certain conditions. See Section 13.
Antitrust Compliance. Under the HSR Act, certain acquisition transactions
may not be consummated unless certain information has been furnished to the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
the Federal Trade Commission (the "FTC") and certain waiting period
requirements have been satisfied. The acquisition of Shares by the Merger Sub
is subject to these requirements. See Section 2 of this Offer to Purchase as
to the effect of the HSR Act on the timing of the Merger Sub's obligation to
accept Shares for payment.
Pursuant to the HSR Act, Purchaser filed a Notification and Report Form with
respect to the acquisition of Shares pursuant to the Offer and the Merger with
the Antitrust Division and the FTC on March 4, 1998. Under the provisions of
the HSR Act applicable to the purchase of Shares pursuant to the Offer, such
purchases may not be made until the expiration of a 15-calendar day waiting
period following the filing by Purchaser. Accordingly, the waiting period
under the HSR Act will expire at 11:59 p.m., New York City time, on March 19,
1998, unless early termination of the waiting period is granted or Purchaser
receives a request for additional information or documentary material prior
thereto. Pursuant to the HSR Act, Purchaser has requested early termination of
the waiting period applicable to the Offer. There can be no assurances given,
however, that the 15-day HSR Act waiting period will be terminated early. If
either the FTC or the Antitrust Division were to request additional
information or documentary material from Purchaser, the waiting period 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. Thereafter, the
waiting period could be extended only by agreement or by court order. If the
acquisition of Shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the purchase of and payment for Shares will be
28
<PAGE>
deferred until ten calendar days after the request is substantially complied
with unless the waiting period is sooner terminated by the FTC or the
Antitrust Division. See Section 2. Only one extension of such waiting period
pursuant to a request for additional information is authorized by the HSR Act,
except by agreement or by court order. Any such extension of the waiting
period will not give rise to any withdrawal rights not otherwise provided for
by applicable law. See Section 4. Although the Company is required to file
certain information and documentary material with the Antitrust Division and
the FTC in connection with the Offer, neither the Company's failure to make
such filings nor a request from the Antitrust Division or the FTC for
additional information or documentary material made to the Company will extend
the waiting period.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares
by the Merger Sub pursuant to the Offer. At any time before or after the
Merger Sub's purchase of Shares, 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 acquisition of Shares
pursuant to the Offer or seeking divestiture of Shares acquired by the Merger
Sub or the divestiture of substantial assets of Purchaser, the Company or any
of their respective 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 a challenge is made, what the result will be. See Section 13 of this
Offer to Purchase for certain conditions to the Offer that could become
applicable in the event of such a challenge.
Foreign Approvals. The Company owns property or conducts business in various
foreign countries and jurisdictions. In connection with the acquisition of the
Shares pursuant to the Offer, the laws of certain of those foreign countries
and jurisdictions may require the filing of information with, or the obtaining
of the approval of governmental authorities in such countries and
jurisdictions, including the Regulatory Approvals. The governments in such
countries and jurisdictions might attempt to impose additional conditions on
the Company's operations conducted in such countries and jurisdictions as a
result of the acquisition of the Shares pursuant to the Offer. There can be no
assurance that Purchaser will be able to cause the Company or its subsidiaries
to satisfy or comply with such laws or that compliance or non-compliance will
not have a material adverse effect on the financial condition, properties,
business or results of operations of the Company and its subsidiaries taken as
a whole or impair Purchaser, the Merger Sub or the Company or any of their
respective affiliates, following consummation of the Offer or Merger, to
conduct any material business or operations in any jurisdiction where they are
now being conducted. See Section 13.
State Takeover Laws. A number of states have adopted laws and regulations
applicable to offers to acquire securities of corporations which are
incorporated in such states and/or which have substantial assets,
stockholders, principal executive offices or principal places of business
therein. In Edgar v. MITE Corporation, the Supreme Court of the United States
held that the Illinois Business Takeover Statute, which made the takeover of
certain corporations more difficult, imposed a substantial burden on
interstate commerce and was therefore unconstitutional. In CTS Corporation v.
Dynamics Corporation of America, the Supreme Court held that as a matter of
corporate law, and in particular, those laws concerning corporate governance,
a state may constitutionally disqualify an acquiror of "Control Shares" (ones
representing ownership in excess of certain voting power thresholds (e.g. 20%,
33% or 50%) of a corporation incorporated in its state and meeting certain
other jurisdictional requirements from exercising voting power with respect to
those shares without the approval of a majority of the disinterested
stockholders.
Purchaser does not believe that any state takeover laws apply to the Offer
and it has not complied with any state takeover laws. See Section 11. Should
any government official or third party seek to apply any state takeover law to
the Offer, Purchaser will take such action as then appears desirable.
If it is asserted that one or more state takeover laws applies to the Offer
and it is not determined by an appropriate court that such act or acts do not
apply or are invalid as applied to the Offer, the Merger Sub might be required
to file certain information with, or receive approvals from, the relevant
state authorities. In addition, if enjoined, the Merger Sub might be unable to
accept for payment any Shares tendered pursuant to the Offer, or be delayed in
consummating the Offer. In such case, the Merger Sub may not be obligated to
accept for payment any Shares tendered. See Section 13.
29
<PAGE>
Federal Reserve Board Regulations. Regulations G, T, U and X (the "Margin
Regulations") promulgated by the Federal Board place restrictions on the
amount of credit that may be extended for the purpose of purchasing margin
stock (including the Shares) if such credit is secured directly or indirectly
by margin stock. Purchaser and the Merger Sub will attempt to ensure that the
financing of the acquisition of the Shares will be in compliance with the
Margin Regulations.
16. FEES AND EXPENSES.
Purchaser and the Merger Sub have retained Wasserstein Perella to act as the
Dealer Manager and to provide certain financial advisory services in
connection with the proposed acquisition of the Company. In connection with
such services Purchaser has agreed to pay Wasserstein Perella a transaction
fee of $1,650,000 upon consummation of the Offer. Purchaser and the Merger Sub
have agreed to reimburse Wasserstein Perella for its reasonable out-of-pocket
expenses, including the fees and expenses of its counsel, for acting as
financial advisor and Dealer Manager, and have agreed to indemnify Wasserstein
Perella against certain liabilities and expenses for acting as financial
advisor and Dealer Manager, including liabilities under the federal securities
laws.
The Merger Sub has also retained Georgeson & Company Inc. to act as the
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interviews and may request brokers, dealers and other nominee stockholders to
forward materials relating to the Offer to beneficial owners of Shares. The
Information Agent will receive reasonable and customary compensation for such
services, plus reimbursement of out-of-pocket expenses and the Merger Sub will
indemnify the Information Agent against certain liabilities and expenses in
connection with the Offer, including liabilities under the federal securities
laws.
The Merger Sub will pay the Depositary reasonable and customary compensation
for its services in connection with the Offer, plus reimbursement for out-of-
pocket expenses, and will indemnify the Depositary against certain liabilities
and expenses in connection therewith, including liabilities under the federal
securities laws. Brokers, dealers, commercial banks and trust companies will
be reimbursed by the Merger Sub 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) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, the Merger Sub may, in its sole discretion, take
such action as it may deem necessary to make the Offer in any such
jurisdiction and extend the Offer to holders of Shares in such jurisdiction.
Neither Purchaser nor the Merger Sub is aware of any jurisdiction in which
the making of the Offer or the acceptance of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction.
Purchaser and the Merger Sub have filed with the SEC a Statement on Schedule
14D-1 pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, furnishing certain additional information with respect to the
Offer, and may file amendments thereto. Such Statement and any amendments
thereto, including exhibits, may be examined and copies may be obtained from
the principal office of the SEC in the manner set forth in Section 8.
No person has been authorized to give any information or make any
representation on behalf of Purchaser or the Merger Sub 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.
BGN Acquisition Corp.
March 6, 1998
30
<PAGE>
SCHEDULE A
INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF PURCHASER AND THE MERGER SUB
The following tables set forth the name, business address, present principal
occupation and material positions held within the past five years of each
director and executive officer of Purchaser and the Merger Sub. Unless
otherwise specified, each person listed below is a citizen of the United States
and has his or her principal business address at 2121 San Jacinto Street, Suite
2500, Dallas, Texas 75201.
PURCHASER
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT, MATERIAL POSITIONS
NAME AND BUSINESS ADDRESS HELD DURING THE PAST FIVE YEARS
--------------------------------- -------------------------------------------
<C> <S>
David H. Blake................... Director since 1992. Dean, Graduate School
of Management, University of California,
Irvine, since 1997; Dean, Edwin L. Cox
School of Business, Southern Methodist
University, from January 1990 to December
1996; Dean and Professor, Graduate School
of Management, Rutgers-The State University
of New Jersey, January 1983 to December
1989, Director, Procom Technology Inc.
Richard W. Vieser................ Director since 1992. Chairman of the Board,
President and Chief Executive Officer, FL
Industries, Inc., electrical equipment and
high efficiency industrial and commercial
heating and cooling equipment, June 1985
until retirement November 1989; Chairman of
the Board, President and Chief Executive
Officer, Lear Siegler, Inc., March 1987
until retirement November 1989; Chairman
and Chief Executive Officer, FL Aerospace
Corp., September 1986 until retirement
November 1989. Director, Ceridian
Corporation (formerly Control Data
Corporation), Dresser Industries, Inc.,
Sybron Corporation, Varian Associates, Inc.
and Berg Electronics.
Samuel B. Casey, Jr.............. Director since 1992. Chairman of the Board,
Dixon Ticonderoga Company, manufacturer and
marketer of writing products, October 1985
until retirement February 1989. Director,
Dresser Industries, Inc. and Dixon
Ticonderoga Company.
Rawles Fulgham................... Director since 1992. Senior Advisor,
Merrill Lynch & Co. Inc., financial
services, Dallas, Texas, since September
1989; Advisor to certain Committees of the
Board of Directors of Dorchester Hugoton
Limited since August 1995; Executive
Director, Merrill Lynch Private Capital,
Inc., private financings, from August 1982
to September 1989. Director, BancTec, Inc.,
NCH Corporation, and Dresser Industries,
Inc.
J. L. Jackson.................... Director since 1992. Chairman of the
Company since January 1, 1994; Chief
Executive Officer of the Company since
October 1993; President and Chief Operating
Officer since February 1997; President from
July 1994 to December 1995; Vice Chairman
of the Company from October 1993 to
December 1993; for more than five years,
business consultant to the petroleum
industry; President and Chief Operating
Officer, Diamond Shamrock Corporation,
1983-1986.
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT, MATERIAL POSITIONS
NAME AND BUSINESS ADDRESS HELD DURING THE PAST FIVE YEARS
--------------------------------- -------------------------------------------
<C> <S>
Graham L. Adelman................ Senior Vice President and General Counsel
of the Company since July 1995; Secretary
of the Company since July 1996; Senior Vice
President, General Counsel and Secretary of
The Western Company of North America from
1990 to April 1995.
Juan M. Bravo.................... Vice President of the Company and President
of Harbison-Walker Refractories Company
since March 1996; President of Harbison-
Walker International Division from November
1995 to March 1996; President and Chief
Executive Officer of Refmex from January
1995 to November 1995; Vice President of
Chemical and Refractories Division of
Penoles S.A. De C.V., Mexico from 1990 to
December 1994.
Gary G. Garrison................. Chief Financial Officer of the Company
since December 1994; Vice President--
Finance and Controller of the Company since
September 1993; Treasurer of the Company
since May 1992; Senior Vice President--
Administration of the Finance Division of
Komatsu Dresser Company October 1988 to
April 1992; Vice President of Dresser
Finance Corporation November 1984 to May
1992.
Thomas R. Hurst.................. Vice President of the Company since June
1994; President of Industrial Tool Division
of the Company since August 1992; President
of Industrial Tool Division of Dresser
Industries, Inc. from May 1983 to July
1992.
Jim Alleman...................... Vice President, Human Resources of the
Company since August 1997; Senior Vice
President, Human Resources of Lomas
Financial Corporation, Inc. from February
1994 to July 1997; Vice President of Human
Resources for Pacific Enterprises Oil
Company (USA) from October 1991 to July
1993; Director of Strategic Planning for
Pacific Enterprises Oil Company (USA) from
August 1990 to September 1991; Director of
Human Resources for Terra Resources, Inc.
from July 1988 to July 1990.
George W. Pasley................. Vice President--Communications of the
Company since September 1996; Business
Consultant from September 1995 to August
1996; Chief Financial Officer of Maxus
Energy Corp. from September 1994 to
September 1995; Senior Vice President of
Maxus Energy Corp. from October 1991 to
August 1994.
Mark D. Stott.................... Vice President--Planning and Development of
the Company since August 1996; Director of
Business Analysis of Motorola, Inc. from
1993 to 1996; Senior Manager of Motorola,
Inc. from 1988 to 1991.
</TABLE>
32
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter of
Transmittal, certificates for Shares and any other required documents should be
sent by each stockholder of the Company or his broker-dealer, commercial bank,
trust company or other nominee to the Depositary as follows:
The Depositary for the Offer is:
HARRIS TRUST AND SAVINGS BANK
Facsimile Transmission By Hand/Overnight Delivery: By Registered or
Number: Harris Trust and Savings Bank Certified Mail:
(For Eligible c/o Harris Trust Company Harris Trust and Savings
Institutions Only) of New York Bank
(212) 701-7636 88 Pine Street c/o Harris Trust Company
Confirm Receipt of 19th Floor of New York
Facsimile by Telephone: New York, NY 10005 P.O. Box 1010
(212) 701-7624 Wall Street Station
New York, NY 10268-1010
Any questions or requests for assistance or additional copies of the Offer to
Purchase and the Letter of Transmittal may be directed to the Information Agent
or the Dealer Manager at their respective telephone numbers and locations
listed below. You may also contact your broker, dealer, commercial bank or
trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
--------------
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT: (212) 440-9800
ALL OTHERS CALL TOLL-FREE: (800) 223-2064
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
31 WEST 52ND STREET
NEW YORK, NEW YORK 10019
(212) 969-2700
<PAGE>
EXHIBIT 99(a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASESERIES B JUNIOR PARTICIPATING
PREFERRED STOCK)
OF
A.P. GREEN INDUSTRIES, INC.
AT
$22.00 NET PER SHARE
BY
BGN ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
HARRIS TRUST AND SAVINGS BANK
<TABLE>
<S> <C> <C>
Facsimile Transmission Number: By Hand/Overnight Delivery: By Registered or Certified Mail:
(For Eligible Institutions Only) Harris Trust and Savings Bank Harris Trust and Savings Bank
(212) 701-7636 c/o Harris Trust Company c/o Harris Trust Company
Confirm Receipt of of New York of New York
Facsimile by Telephone: 88 Pine Street P.O. Box 1010
(212) 701-7624 19th Floor Wall Street Station
New York, NY 10005 New York, NY 10268-1010
------------------
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY
BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
- -------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------
NAME(S) AND
ADDRESS(ES) OF
REGISTERED
OWNER(S)
(PLEASE FILL
IN, IF BLANK,
EXACTLY AS
NAME(S)
APPEAR(S) ON SHARES TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- -------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
TOTAL SHARES
- -------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares
described above are being tendered. See Instruction 4.
<PAGE>
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in Section 3 of the Offer to Purchase (as defined below)) is
utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by the Depositary (as defined in the Introduction of the
Offer to Purchase) at a Book-Entry Transfer Facility (as defined in Section 2
of the Offer to Purchase) pursuant to the procedures set forth in Section 3 of
the Offer to Purchase. Stockholders who deliver Shares by book-entry transfer
are referred to herein as "Book-Entry Stockholders" and other stockholders are
referred to herein as "Certificate Stockholders." Stockholders whose
certificates for Shares are not immediately available or who cannot comply
with the procedure for book-entry transfer on a timely basis, or who cannot
deliver all required documents to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase), may tender their Shares in
accordance with the guaranteed delivery procedure set forth in Section 3 of
the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-
ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES 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 A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY FINANCIAL INSTITUTIONS THAT ARE
PARTICIPANTS IN THE SYSTEM OF ANY BOOK-ENTRY TRANSFER FACILITY MAY DELIVER
SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution ___________________________________________
Check Box of Book-Entry Transfer Facility:
[_]The Depository Trust Company
[_]Philadelphia Depository Trust Company
Account Number __________________________________________________________
Transaction Code Number _________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) __________________________________________
Date of Execution of Notice of Guaranteed Delivery ______________________
Name of Institution which Guaranteed Delivery ___________________________
If delivered by book-entry transfer, check box:
[_]The Depository Trust Company
[_]Philadelphia Depository Trust Company
Account Number __________________________________________________________
Transaction Code Number _________________________________________________
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to BGN Acquisition Corp., a Delaware
corporation (the "Merger Sub") and a wholly owned subsidiary of Global
Industrial Technologies, Inc., a Delaware corporation ("Purchaser"), the
above-described shares, par value $1.00 per share (the "Common Stock"),
including the associated rights to purchase Series B Junior Participating
Preferred Stock (the "Rights" and, together with the Common Stock, the
"Shares"), of A.P. Green Industries, Inc., a Delaware corporation (the
"Company"), pursuant to the Offer to Purchase, dated March 6, 1998 (the "Offer
to Purchase"), all of the outstanding Shares at a price of $22.00 per Share,
net to the seller in cash, on the terms and subject to the conditions set
forth in the Offer to Purchase, receipt of which is hereby acknowledged, and
in this Letter of Transmittal (which, together with the Offer to Purchase,
constitute the "Offer"). The undersigned understands that the Merger Sub
reserves the right to transfer or assign, from time to time, in whole or in
part, to one or more of its affiliates, the right to purchase the Shares
tendered herewith.
On the terms and subject to the conditions of the Offer (including the Offer
Conditions and together with, if the Offer is extended or amended, the terms
and conditions of such extension or amendment), subject to, and effective
upon, acceptance for payment of, and payment for, the Shares tendered herewith
in accordance with the terms of the Offer, the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Merger Sub, all right,
title and interest in and to all of the Shares being tendered hereby and any
and all cash dividends, distributions, rights, other Shares or other
securities issued or issuable in respect of such Shares on or after March 3,
1998 (collectively, "Distributions"), and appoints Harris Trust and Savings
Bank (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 the fullest extent of such
stockholder's rights with respect to such Shares (and any Distributions) (a)
to deliver such Share Certificates (as defined herein) (and any Distributions)
or transfer ownership of such Shares (and any Distributions) on the account
books maintained by a Book-Entry Transfer Facility, together in either such
case with all accompanying evidences of transfer and authenticity, to or upon
the order of the Merger Sub, (b) to present such Shares (and any
Distributions) for transfer on the books of the Company and (c) to receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any Distributions), all in accordance with the terms and the
conditions of the Offer.
The undersigned hereby irrevocably appoints the designees of the Merger Sub,
and each of them, the attorneys-in-fact and proxies of the undersigned, each
with full power of substitution, to the full extent of such stockholder's
rights with respect to the Shares tendered hereby which have been accepted for
payment and with respect to any Distributions. The designees of the Merger Sub
will, with respect to the Shares (and any associated Distributions) for which
the appointment is effective, be empowered to exercise all voting and any
other rights of such stockholder, as they, in their sole discretion, may deem
proper at any annual, special or adjourned meeting of the Company's
stockholders, by written consent in lieu of any such meeting or otherwise.
This proxy and power of attorney shall be irrevocable and coupled with an
interest in the tendered Shares. Such appointment is effective when, and only
to the extent that, the Merger Sub deposits the payment for such Shares with
the Depositary. Upon the effectiveness of such appointment, without further
action, all prior powers of attorney, proxies and consents given by the
undersigned with respect to such Shares (and any associated Distributions)
will be revoked, and no subsequent powers of attorney, proxies, consents or
revocations may be given (and, if given, will not be deemed effective). The
Merger Sub reserves the right to require that, in order for Shares to be
deemed validly tendered, immediately upon the Merger Sub's acceptance for
payment of such Shares, the Merger Sub must be able to exercise full voting
rights with respect to such Shares (and any associated Distributions),
including voting at any meeting of stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares (and any
Distributions) tendered hereby and, when the same are accepted for payment by
the Merger Sub, the Merger Sub will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances, and the same will not be subject to any adverse claim. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or the Merger Sub to be necessary or desirable to
complete the sale, assignment and transfer of the Shares (and any
Distributions) tendered hereby. In addition, the undersigned shall promptly
remit and transfer to the Depositary for the account of the Merger Sub any and
all Distributions in respect of
<PAGE>
the Shares tendered hereby, accompanied by appropriate documentation of
transfer; and, pending such remittance or appropriate assurance thereof, the
Merger Sub shall 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 or value thereof, as determined by the Merger Sub in
its sole discretion.
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall not be affected by, and shall survive, the death or
incapacity of the undersigned and any obligation of the undersigned hereunder
shall be binding upon the heirs, personal representatives, successors and
assigns of the undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to one
of the procedures described in Section 3 of the Offer to Purchase will
constitute a binding agreement between the undersigned and the Merger Sub upon
the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment in the name(s) of the
registered owner(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment (and accompanying documents,
as appropriate) to the address(es) of the registered owner(s) appearing under
"Description of Shares Tendered." In the event that both the Special Delivery
Instructions and the Special Payment Instructions are completed, please issue
the check for the purchase price and/or issue any certificates for Shares not
tendered or accepted for payment (and any accompanying documents, as
appropriate) in the name of, and deliver such check and/or return such
certificates (and any accompanying documents, as appropriate) to, the person
or persons so indicated. The undersigned recognizes that the Merger Sub has no
obligation pursuant to the Special Payment Instructions to transfer any Shares
from the name of the registered owner thereof if the Merger Sub does not
accept for payment any of the Shares so tendered.
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 5 AND 7)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cate(s) for Shares not tendered cate(s) for Shares not tendered
or not accepted for payment or not accepted for payment
and/or the check for the purchase and/or the check for the purchase
price of Shares accepted for pay- price of Shares accepted for pay-
ment are to be issued in the name ment are to be sent to someone
of someone other than the under- other than the undersigned, or to
signed. the undersigned at an address
other than that shown above.
Issue: [_] Check [_] Certificate(s)
to: Deliver: [_] Check [_] Certificate(s)
to:
Name: ____________________________
(PLEASE PRINT) Name: ____________________________
Address: _________________________ (PLEASE PRINT)
__________________________________ Address: _________________________
(INCLUDE ZIP CODE) __________________________________
__________________________________ (INCLUDE ZIP CODE)
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER)
IMPORTANT
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
............................................................................
............................................................................
(SIGNATURE(S) OF HOLDER(S))
Dated: ....... 1998
(Must be signed by registered owner(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered owner(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please set forth
full title and see Instruction 5.)
Name(s).....................................................................
.....................................................................
(PLEASE PRINT)
Capacity (full title).......................................................
Address.....................................................................
.....................................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number..............................................
Tax Identification or
Social Security No. ........................................................
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature........................................................
Name........................................................................
(PLEASE TYPE OR PRINT)
Address.....................................................................
.....................................................................
(INCLUDE ZIP CODE)
Name of Firm................................................................
Dated: ....... 1998
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations
and brokerage houses) which is a participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (an "Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed (a) if this
Letter of Transmittal is signed by the registered owners (which term, for
purposes of this document, includes any participant in any of the Book-Entry
Transfer Facilities' systems whose name appears on a security position listing
as the owner of the Shares) of Shares tendered herewith and such registered
owner has not completed the box entitled "Special Payment Instructions" or the
box entitled "Special Delivery Instructions" on this Letter of Transmittal or
(b) if such Shares are tendered for the account of an Eligible Institution.
See Instruction 5 of this Letter of Transmittal.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES OR BOOK-ENTRY
CONFIRMATIONS. This Letter of Transmittal is to be used either if certificates
are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth in Section 3 of the
Offer to Purchase. Certificates for all physically tendered Shares ("Share
Certificates"), or confirmation of any book-entry transfer into the
Depositary's account at one of the Book-Entry Transfer Facilities of Shares
tendered by book-entry transfer, as well as this Letter of Transmittal
properly completed and duly executed with any required signature guarantees,
and any other documents required by this Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth herein on or
prior to the Expiration Date (as defined in the Offer to Purchase).
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver all other required documents to the Depositary on or prior
to the Expiration Date or who cannot comply with the procedures for book-entry
transfer on a timely basis may nevertheless tender their Shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure 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 provided by the Purchaser must
be received by the Depositary prior to the Expiration Date; and (iii) Share
Certificates or confirmation of any book-entry transfer into the Depositary's
account at a Depository Institution of Shares tendered by book-entry transfer,
as well as a Letter of Transmittal, properly completed and duly executed with
any required signature guarantees (or, in the case of a book-entry transfer,
an Agent's Message), and all 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 execution of such Notice of Guaranteed
Delivery.
If Share Certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE
CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF SUCH DELIVERY
IS BY MAIL, IT IS RECOMMENDED THAT SUCH CERTIFICATES AND DOCUMENTS BE SENT BY
REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE 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 facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
<PAGE>
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted 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, new certificate(s) for the
remainder of the Shares that were evidenced by the old certificate(s) will be
sent to the registered owner, unless otherwise provided in the appropriate box
on this Letter of Transmittal, as soon as practicable after the Expiration
Date. All Shares represented by certificates delivered to the Depositary will
be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered owners of the Shares
tendered hereby, the signature must correspond with the names as written on
the face of the certificates without alteration, enlargement or any other
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such 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 stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and proper evidence satisfactory
to the Parent of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued
in the name of, a person other than the registered owner(s). Signatures on
such certificates or stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by the appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or holders appears on the
certificate(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. The Merger Sub will pay any stock 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
accepted for payment are to be registered in the name of, any person other
than the registered owner, 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 stock transfer taxes (whether imposed on the
registered owner or such person) payable on account of the transfer to such
person will be deducted from the purchase price if satisfactory evidence of
the payment of such taxes, or exemption therefrom, is not submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares not tendered or accepted for
payment are to be issued or returned to, a person other than the signer of
this Letter of Transmittal or if a check and/or such certificates are to be
mailed to a person 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.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for
assistance may be directed to the Information Agent or the Dealer Manager at
their respective addresses set forth below or from your broker, dealer,
commercial bank or trust company. Additional copies of the Offer to Purchase,
this Letter of Transmittal, the Notice of Guaranteed Delivery and other tender
offer materials may be obtained from the Information Agent.
<PAGE>
9. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"),
generally the stockholder's social security or federal employer identification
number, on Substitute Form W-9 below. Failure to provide the information on
the form may subject the tendering stockholder to 31% federal income tax
backup withholding on the payment of the purchase price. The box in Part 3 of
the form may be checked 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. If
the box in Part 3 is checked and the Depositary is not provided with a TIN
within 60 days, the Depositary will withhold 31% of all payments of the
purchase price thereafter until a TIN is provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (TOGETHER WITH SHARE CERTIFICATES OR
CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR THE
NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for purchase is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below and to
certify that such TIN is correct (or that such stockholder is awaiting a TIN)
or otherwise establish a basis for exemption from backup withholding. If such
stockholder is an individual, the TIN is his or her social security number. If
a stockholder fails to provide a TIN to the Depositary, such stockholder may
be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding of 31%
(see below).
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must generally submit a Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. A Form W-8
can be obtained from the Depositary. See the enclosed Guidelines for
Certification 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 or payee. Backup withholding is not an
additional tax. Rather, the 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.
The box in Part 3 of the Substitute Form W-9 may be checked 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. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certification of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding. If
a stockholder's TIN is provided to the Depositary within 60 days of the date
of the Substitute Form W-9, payment will be made to such stockholder without
the imposition of backup withholding. If a stockholder's TIN is not provided
to the Depositary within such 60-day period, the Depositary will make such
payment, subject to backup withholding.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made to a stockholder whose
tendered Shares are accepted for purchase, the stockholder is required to
notify the Depositary of its correct TIN by completing Substitute Form W-9
certifying that the TIN provided on such Form is correct (or that such
stockholder is awaiting a TIN, in which case the stockholder should check the
box in Part 3 of the Substitute Form W-9) and that (A) such stockholder is
exempt from backup withholding, (B) such stockholder has not been notified by
the Internal Revenue Service that such stockholder is subject to backup
withholding as a result of failure to report all interest or dividends or (C)
the Internal Revenue Service has notified the stockholder that the stockholder
is no longer subject to backup withholding. The stockholder must sign and date
the Substitute Form W-9 where indicated, certifying that the information on
such Form is correct.
<PAGE>
Alternatively, a stockholder that qualifies as an exempt recipient (other
than a stockholder required to complete Form W-8 as described above) should
write "Exempt" in Part 1 of the Substitute Form W-9, enter its correct TIN and
sign and date such Form where indicated.
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 owner of the Shares or
of the last transferee appearing on the transfers attached to, or endorsed on,
the Shares. If the Shares are 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.
<PAGE>
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 9)
PAYER: HARRIS TRUST AND SAVINGS BANK
- --------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR Social security number
FORM W-9 TIN IN THE BOX AT RIGHT AND
CERTIFY BY SIGNING AND OR
DATING BELOW.
Employer identification
number
-----------------------
-----------------------------------------------------------
PART 2--CERTIFICATION--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 because
DEPARTMENT OF THE (i) I am exempt from backup withholding, (ii) I
TREASURY INTERNAL have not been notified by the Internal Revenue
REVENUE SERVICE Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (iii) the IRS has
notified me that I am no longer subject to backup
withholding.
-----------------------------------------------------------
Certification Instructions--You must
cross out item (2) in Part 2 above if
you have been notified by the IRS
that you are subject to backup with-
holding because of under-reporting PART 3--
interest or dividends on your tax re- Awaiting TIN [_]
PAYER'S REQUEST FOR turn. However, if after being noti-
TAXPAYER fied by the IRS that you were subject
IDENTIFICATION to backup withholding you received
NUMBER (TIN) another notification from the IRS
stating that you are no longer sub-
ject to backup withholding, do not
cross out item (2).
SIGNATURE ______________ DATE _______
NAME (Please Print): _________________
- --------------------------------------------------------------------------------
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 ADDITIONAL INFORMATION.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (i) 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
(ii) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
60 days, 31% of all reportable payments made to me thereafter will be
withheld until I provide a taxpayer identification number to the Depositary.
------------------------------------ ------------------------------------
Signature Date
- ------------------------------------
Name (Please Print )
- --------------------------------------------------------------------------------
<PAGE>
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
-------------
Wall Street Plaza
New York, New York 10005
Bankers and Brokers Call Collect (212) 440-9800
All others Call Toll Free (800) 223-2064
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, New York 10019
(212) 969-2700
March 6, 1998
<PAGE>
EXHIBIT 99(a)(3)
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK)
OF
A.P. GREEN INDUSTRIES, INC.
AT
$22.00 NET PER SHARE
BY
BGN ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED.
March 6, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by BGN Acquisition Corp., a Delaware corporation (the
"Merger Sub") and a wholly owned subsidiary of Global Industrial Technologies,
Inc., a Delaware corporation ("Purchaser"), to act as Dealer Manager in
connection with the Merger Sub's offer to purchase all outstanding shares of
Common Stock, par value $1.00 per share (the "Common Stock"), including the
associated rights to purchase Series B Junior Participating Preferred Stock
(the "Rights" and, together with the Common Stock, the "Shares"), of A.P.
Green Industries, Inc., a Delaware corporation (the "Company"), at $22.00 per
Share, net to the seller in cash, on the terms and subject to the conditions
set forth in the Offer to Purchase, dated March 6, 1998, and the related
Letter of Transmittal (which, together with any amendments or supplements
thereto collectively constitute the "Offer"). Please furnish copies of the
enclosed materials to those of your clients for whom you hold Shares
registered in your name or in the name of your nominee.
Enclosed herewith are the following documents:
1. Offer to Purchase, dated March 6, 1998;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer;
3. Letter to Stockholders of the Company from the President and Chief
Executive Officer of the Company, accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
5. Notice of Guaranteed Delivery;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to Harris Trust and Savings Bank, the
Depositary.
<PAGE>
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY
DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS DESCRIBED
IN SECTION 13 OF THE OFFER TO PURCHASE.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of March 3, 1998, among the Company, Purchaser
and the Merger Sub, pursuant to which, after the completion of the Offer, the
Merger Sub will be merged with and into the Company (the "Merger") and each
issued and outstanding Share (other than Shares owned by Purchaser, the Merger
Sub or any other subsidiary of Purchaser or Shares that are held by
stockholders exercising appraisal rights pursuant to Section 262 of the
Delaware General Corporation Law) shall by virtue of the Merger and without
any action on the part of the holder thereof, be converted into the right to
receive, without interest, an amount in cash equal to $22.00. As a result of
the Merger, the Company will become a wholly owned subsidiary of Purchaser.
The Merger Agreement is more fully described in Section 11 of the Offer to
Purchase.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
for such Shares or timely confirmation of the book-entry transfer of such
Shares into the Depositary's account at the Book-Entry Transfer Facility (as
defined in the Offer to Purchase) pursuant to the procedures set forth in
Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message (as defined in the Offer to Purchase)) and (iii) any other documents
required by such Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL INTEREST
BE PAID ON THE PURCHASE PRICE FOR SHARES, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT PURSUANT TO THE OFFER.
Neither Purchaser nor the Merger Sub will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager, as disclosed
in the Offer to Purchase) in connection with the solicitation of tenders of
Shares pursuant to the Offer. You will be reimbursed upon request for
customary mailing and handling expenses incurred by you in forwarding the
enclosed offering materials to your clients.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of the enclosed Offer to Purchase.
Requests for additional copies of the enclosed materials may be directed to
the Information Agent or to brokers, dealers, commercial banks or trust
companies.
Very truly yours,
Wasserstein Perella & Co., Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF PURCHASER, THE MERGER SUB, THE DEALER MANAGER,
THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT
OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER
NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.
2
<PAGE>
EXHIBIT 99(a)(4)
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK)
OF
A.P. GREEN INDUSTRIES, INC.
AT
$22.00 NET PER SHARE
BY
BGN ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED.
March 6, 1998
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated March 6, 1998
(the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") relating to the offer by BGN Acquisition Corp., a Delaware
corporation (the "Merger Sub") and a wholly owned subsidiary of Global
Industrial Technologies, Inc., a Delaware corporation ("Purchaser"), to
purchase for cash, all of the outstanding shares of Common Stock, par value
$1.00 per share (the "Common Stock"), including the associated rights to
purchase Series B Junior Participating Preferred Stock (the "Rights"), of A.P.
Green Industries, Inc., a Delaware corporation (the "Company") (the Common
Stock and the Rights together are referred to herein as the "Shares"), on the
terms and subject to the conditions set forth in the Offer (together with, if
the Offer is extended or amended, the terms of such extension or amendment).
Also enclosed is the letter to stockholders of the Company from the President
and Chief Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9.
WE ARE 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 IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The Offer price is $22.00 per Share, net to the Seller in cash,
without interest thereon, upon the terms and subject to the conditions of
the Offer.
2. The Offer is being made for all of the outstanding Shares.
3. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT
THE OFFER AND THE MERGER (AS DEFINED BELOW) ARE FAIR TO AND IN THE BEST
INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED
THE OFFER AND THE MERGER AGREEMENT (AS DEFINED BELOW) AND UNANIMOUSLY
RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
<PAGE>
4. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares representing at least a majority of the outstanding Shares on a
fully diluted basis. The Offer is also subject to certain other conditions
described in Section 13 of the Offer to Purchase.
5. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED BY THE
MERGER SUB (THE "EXPIRATION DATE").
6. The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of March 3, 1998 (the "Merger Agreement"), among the Company,
Purchaser and the Merger Sub, pursuant to which, after the completion of
the Offer, the Merger Sub will be merged with and into the Company (the
"Merger") and each issued and outstanding Share (other than Shares owned by
Purchaser, the Merger Sub or any other subsidiary of Purchaser or Shares
that are held by stockholders exercising appraisal rights pursuant to
Section 262 of the Delaware General Corporation Law) shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into the right to receive, without interest, an amount in cash
equal to $22.00. As a result of the Merger, the Company will become a
wholly owned subsidiary of Purchaser. The Merger Agreement is more fully
described in Section 11 of the Offer to Purchase.
7. Any stock transfer taxes applicable to a sale of Shares to the Merger
Sub will be borne by the Merger Sub, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the Expiration Date.
If you wish to have us tender any of 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 on the detachable part hereof. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender on your behalf prior to the Expiration Date.
Payment for Shares accepted for payment pursuant to the Offer will be in all
cases made only after timely receipt by Harris Trust and Savings Bank (the
"Depositary"), of (a) certificates for (or a timely Book-Entry Confirmation
(as defined in the Offer to Purchase) with respect to) such Shares, (b) a
Letter of Transmittal, properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer effected
pursuant to the procedure set forth in Section 3 of the Offer to Purchase, an
Agent's Message, and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different
times depending upon when certificates for Shares or Book-Entry Confirmations
with respect to Shares are actually received by the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR SHARES,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING PAYMENT
PURSUANT TO THE OFFER.
The Offer is not being made to, nor will tenders be accepted from, or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities or blue sky laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed made on behalf of the Merger Sub by Wasserstein Perella & Co., Inc.,
the Dealer Manager for the Offer, or one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction. An envelope in which to
return your instructions to us is enclosed. If you authorize tender of your
Shares, all such Shares will be tendered unless otherwise indicated in such
instruction form. Please forward your instructions to us as soon as possible
to allow us ample time to tender Shares on your behalf prior to the expiration
of the Offer.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE SERIES B JUNIOR PARTICIPATING
PREFERRED STOCK)
OF
A.P. GREEN INDUSTRIES, INC.
The undersigned acknowledge(s) receipt of your letter, the Offer to
Purchase, dated March 6, 1998 (the "Offer to Purchase"), and the related
Letter of Transmittal relating to shares of Common Stock, par value $1.00 per
share (the "Common Stock"), including the associated rights to purchase Series
B Junior Participating Preferred Stock (the "Rights"), of A.P. Green
Industries, Inc., a Delaware corporation. The Common Stock and the Rights
together are referred to herein as the "Shares."
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, on the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
Number of Shares to be Tendered:* SIGN HERE
_______________________________ Shares --------------------------------------
Daytime Area Code --------------------------------------
and Telephone No. ____________________ SIGNATURE(S)
Taxpayer Identification --------------------------------------
No. or Social Security No. ___________
--------------------------------------
Dated: _________________________, 1997 (PLEASE PRINT NAME(S) AND
ADDRESS(ES))
- -------
* Unless otherwise indicated, it will be assumed that all your Shares are to
be tendered.
3
<PAGE>
EXHIBIT 99(a)(5)
[GLOBAL INDUSTRIAL TECHNOLOGIES]
FOR IMMEDIATE RELEASE
INVESTOR CONTACT: GEORGE PASLEY MEDIA CONTACT: LARRY NANCE
V.P. COMMUNICATIONS MANAGER, CORPORATE RELATIONS/PUBLIC AFFAIRS
214-953-4510 214-953-4518
WEB SITE: PRNEWSWIRE.COM/GIX
GLOBAL INDUSTRIAL TECHNOLOGIES TO ACQUIRE A.P. GREEN
----------------------------------------------------
-COMBINATION OF HARBISON-WALKER AND A.P. GREEN TO CREATE LEADING REFRACTORIES
---------------------------------------------------------------------------
BUSINESS IN WESTERN HEMISPHERE: GENERATE OPPORTUNITIES FOR ECONOMIES OF SCALE-
- -----------------------------------------------------------------------------
- -COMPANY ALSO SIGNS DEFINITIVE AGREEMENT FOR SALE OF INTOOL FOR $217.5MILLION-
- ----------------------------------------------------------------------------
DALLAS, TX, March 4, 1998 -- Global Industrial Technologies, Inc. (NYSE: GIX)
announced today that it has signed a definitive agreement to purchase for cash
all outstanding shares of A.P. Green Industries, Inc. (NYSE: APK) at $22 per
share, or approximately $195 million. The Company also said it signed a
definitive agreement for the previously announced sale of its Industrial Tool
business to Cooper Industries (NYSE:CBE) of Houston, Texas, for $217.5 million.
"These transactions further our efforts to create one of the world's leading
refractories companies, and sharpen our focus on industrial businesses in which
we see strong opportunities for substantial future profit growth," said J.L.
Jackson, Chairman and Chief Executive of Global Industrial Technologies. "A.P.
Green also brings to Global an attractive and profitable lime business, which
makes up 38% of their operating income and will provide product diversity after
integration into our Minerals operation."
"With the sale of INTOOL for a price of approximately nine times EBITDA, we have
created significant value, which we will redeploy into a major opportunity to
expand the profit potential, and growth of our Harbison-Walker subsidiary,"
Jackson said. "The critical mass we will possess in that business, our proven
ability to operate as a low-cost producer, and the economies of scale and
synergies we expect to achieve as a result of the combination will help us
generate enhanced returns from this business. As a result of these benefits, we
expect our acquisition of Green to be modestly accretive to earnings in fiscal
1998, and significantly accretive to earnings in 1999 and beyond notwithstanding
a restructuring charge associated with this transaction. Further, we expect
profit contributions from this acquisition to build as we integrate Green's
operations with Harbison-Walker's over the next two years. Once fully
integrated, we believe that annual
<PAGE>
cost reductions in the range of $15-$20 million are achievable after an assumed
potential 15% reduction of A.P. Green's sales."
"The decisions we announce today were arrived at following an extensive
evaluation of our businesses both with resources within the Company and with
outside consultants, together with a full review of all options that could help
us deliver the greatest possible value to shareholders," continued Jackson.
"Our major presence in the refractories market, together with our forged
products business and its exciting new undercarriage operation, represent a
solid core from which to build returns for shareholders."
Global's acquisition of Green, which will be effected by means of a tender
offer, was approved unanimously by the Boards of Directors of both companies.
The tender offer will commence within five business days and once initiated,
will be open for 20 business days unless further extended. Global's tender
offer is conditioned upon, among other things, customary regulatory approvals
and there being validly tendered and not withdrawn at least a majority of the
outstanding shares of A.P. Green. After the consummation of the tender offer,
Global has agreed to acquire any of the remaining outstanding shares of Green
pursuant to a second-step merger in which holders of such shares will receive
$22 per share.
Juan Bravo, president of Harbison-Walker stated: "We are very excited about the
prospects of the Harbison-Walker/Green operation. The combined business will
operate plants in 6 countries around the world, with revenues of more than $650
million. We believe that together, the management and employees of the combined
company can create significant value for Global shareholders."
Wasserstein Perella is the Financial Advisor for Global Industrial Technologies
in its acquisition of A.P. Green. Offering materials will be available from the
Information Agent, Georgeson & Company Inc. The depositary for the offer is
Harris Trust and Savings Bank.
A.P. Green, with headquarters in Mexico, Mo., reported sales and operating
revenues of $277.9 million last year. It has 22 plants located in the U.S.,
Canada, Mexico, Colombia, the U.K. and Indonesia, manufacturing refractory
products used in the processing of steel and other metals, chemicals, glass,
ceramics, paper and cement. A.P. Green also produces lime used in the
manufacture of steel, aluminum, pulp and paper processing, soil stabilization
for road construction, and water purification.
The Company expects to close its sale of INTOOL to Cooper Industries by the end
of the calendar first quarter. INTOOL reported sales of $113.2 million and
operating earnings of $19.7 million for 1997. Cooper is a global, diversified,
manufacturer of electrical products, tools and hardware, and automotive products
with 1997 revenues of
-2-
<PAGE>
$5.3 billion. INTOOL will become a part of Cooper Power Tools Division. "From
what was a small division of Dresser Industries, we have built a profitable and
thriving business at INTOOL through internal growth, our 1995 acquisition of
Rotor Tool, and our establishment of a new start-up division, ITD Automation,"
said Jackson. "We are pleased that the managers and employees of INTOOL are
becoming part of a company that recognizes the value of INTOOL's brands,
products and people and are committed to being a leader in the industrial tool
business."
Global Industrial Technologies is a major manufacturer of technologically
advanced industrial products that support high-growth markets around the world.
Its Harbison-Walker subsidiary operates 15 refractory plants in five countries,
including the United States, Canada, Mexico, Chile and Germany.
Statements the Company may publish, including those in this announcement, that
are not strictly historical are "forward-looking" statements under the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Although the Company believes the expectations reflected in such forward-looking
statements are based on reasonable assumptions, it can give no assurance that
its expectations will be realized. Forward-looking statements involve known and
unknown risks which may cause the Company's actual results and corporate
developments to differ materially from those expected. Factors that could cause
results and developments to differ materially from the Company's expectations
include, without limitation, changes in manufacturing and shipment schedules,
delays in completing plant construction and acquisitions, currency exchange
rates, new product and technology developments, competition within each business
segment, cyclicity of the markets for the products of a major segment,
litigation, significant cost variances, the effects of acquisitions and
divestitures, and other risks described from time to time in the Company's SEC
reports including quarterly reports on Form 10-Q, annual reports on Form 10-K
and reports on Form 8-K.
-3-
<PAGE>
Exhibit 99(a)(6)
[Letterhead of Global Industrial Technologies, Inc.]
FOR IMMEDIATE RELEASE
- - - - - - - - - - - - - - - - - - - - - -
Investor Contact: George Pasley Media Contact: Larry Nance
V.P. Communications Manager, Corporate Relations/Public Affairs
214-953-4510 214-953-4518
Web site: prnewswire.com/gix
GLOBAL INDUSTRIAL TECHNOLOGIES, INC. COMMENCES TENDER OFFER FOR A.P. GREEN
INDUSTRIES, INC.
Dallas, TX (March 6, 1998) - Global Industrial Technologies, Inc. (NYSE: GIX)
today commenced its previously announced cash tender offer for all of the
outstanding common shares of A.P. Green Industries, Inc. (NYSE: APK) at a price
of $22.00 per share, net to the seller, in cash. The tender offer is scheduled
to expire at 12:00 midnight, Eastern Time, on Thursday, April 2, 1998, unless
extended.
The complete terms and conditions of the offer are set forth in the Offer to
Purchase, copies of which are available by contacting the information agent,
Georgeson & Company Inc. at 800-223-2064.
Global Industrial Technologies, Inc. also said it filed a Premerger Notification
and Report Form with the Federal Trade Commission and the Antitrust Division of
the Department of Justice under the Hart-Scott-Rodino Act on Wednesday, March 4,
1998.
Wasserstein Perella & Co., Inc. is the Dealer Manager for the Offer.
Global Industrial Technologies, Inc. is a major manufacturer of technologically
advanced industrial products that support high-growth markets around the world.
Its Harbison-Walker subsidiary operates 15 refractory plants in five countries,
including the United States, Canada, Mexico, Chile and Germany.
<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
March 6, 1998 and the related Letter of Transmittal and any amendments or
supplements thereto, and is being made to all holders of Shares. The Offer
is not being made to (nor will tenders be accepted from or on behalf of)
holders of Shares in any jurisdiction in which the making of the Offer
or the 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 will be deemed to be made
on behalf of Purchaser by Wasserstein Perella & Co., Inc.
or one or more registered brokers or dealers that are
licenced under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK)
OF
A.P. GREEN INDUSTRIES, INC.
AT
$22.00 NET PER SHARE
BY
BGN ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
BGN Acquisition Corp., a Delaware corporation (the "Merger Sub") and a wholly
owned subsidiary of Global Industrial Technologies, Inc., a Delaware corporation
("Purchaser"), is offering to purchase all of the outstanding shares of common
stock, par value $1.00 per share (the "Common Stock"), of A.P. Green Industries,
Inc., a Delaware corporation (the "Company"), including the associated rights to
purchase Series B Junior Participating Preferred Stock of the Company (the
"Rights" and, together with the Common Stock, the "Shares"), of the Company at
$22.00 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated March 6, 1998, and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"). Tendering
stockholders will not be obligated to pay brokerage fees or commissions or,
<PAGE>
subject to Instruction 6 of the Letter of Transmittal, transfer taxes on the
purchase of Shares by the Merger Sub pursuant to the Offer. The purpose of the
Offer is to acquire for cash as many of the outstanding Shares as possible as a
first step in acquiring the entire equity interest in the Company. Following
the consummation of the Offer, Purchaser intends to effect the merger described
below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 2, 1998 UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING A NUMBER OF
SHARES REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY
DILUTED BASIS BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION
OF THE OFFER, AND (2) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER APPLICABLE
TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN
TERMINATED. CERTAIN OTHER CONDITIONS TO CONSUMMATION OF THE OFFER ARE DESCRIBED
IN SECTION 13 OF THE OFFER TO PURCHASE.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as
of March 3, 1998 (the "Merger Agreement"), among the Company, Purchaser and the
Merger Sub, pursuant to which, after the completion of the Offer, the Merger Sub
will be merged with and into the Company (the "Merger") and each outstanding and
issued Share (other than Shares owned by Purchaser, the Merger Sub or any other
subsidiary of Purchaser or Shares that are held by stockholders exercising
appraisal rights pursuant to Section 262 of the Delaware General Corporation
Law), will, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into the right to receive, without interest, an
amount in cash equal to $22.00. As a result of the Merger, the Company will
become a wholly owned subsidiary of Purchaser. The Merger Agreement is more
fully described in Section 11 of the Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND
ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AGREEMENT
AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, the Merger Sub will be deemed to have accepted for
payment Shares validly tendered and not withdrawn as, if and when the Merger Sub
gives oral or written notice to Harris Trust and Savings Bank (the "Depositary")
of its acceptance for payment of such Shares pursuant to the Offer. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for the
tendering stockholders for the purpose of receiving payments from the Merger Sub
and transmitting such payments to the tendering stockholders. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID, REGARDLESS
OF ANY DELAY IN MAKING SUCH PAYMENT.
In all cases, payment for Shares tendered and accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of (i)
certificates for such Shares (or confirmation of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility"))
pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii)
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) in accordance with the instructions of the Letter of Transmittal, with
any required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message (as defined in Section 3 of the Offer to Purchase)) and (iii)
any other documents required by such Letter of Transmittal.
Subject to the applicable rules and regulations of the Securities and Exchange
Commission, the Merger Sub expressly reserves the right, in its sole discretion,
at any time or from time to time, to extend the period of time during which the
Offer is open by giving oral or written notice of such extension to the
Depositary. Any such extension will also be publicly announced by press release
issued no later than 9:00 A.M., New York City time, on the next business day
after the previously scheduled expiration date of the Offer.
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date (as defined in Section 1 of the Offer to
<PAGE>
Purchase) and, unless theretofore accepted for payment by the Merger Sub
pursuant to the Offer, may also be withdrawn at any time after May 4, 1998.
For a withdrawal to be effective, a written, telegraphic, telex 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 the Offer to Purchase. Any
such notice of withdrawal must specify the name of the person having tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the names
in which the certificate(s) evidencing the Shares to be withdrawn are
registered, if different from that of the person who tendered such Shares. If
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, the name of the registered holder and the serial
numbers of the particular certificates evidencing the Shares to be withdrawn
must also be furnished to the Depositary as aforesaid prior to the physical
release of such certificates and, unless such Shares have been tendered for the
account of any Eligible Institution (as defined in Section 3 of the Offer to
Purchase), the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with such Book-Entry Transfer Facility's procedures for such
withdrawal, in which case a notice of withdrawal will be effective if delivered
to the Depositary in writing. Withdrawals of tenders of Shares may not be
rescinded, and any Shares properly withdrawn will thereafter be deemed not
validly tendered for the purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 3
of the Offer to Purchase at any time on or prior to the Expiration Date.
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 the Merger Sub 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 Letter of Transmittal and, if
required, other relevant materials, will be mailed by the Merger Sub 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.
THE OFFER TO PURCHASE AND THE LETTER OF THE TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Information Agent
or to the Dealer Manager at their respective addresses and telephone numbers
set forth below. Requests for additional 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. Such additional copies will be
furnished at the Merger Sub's expense. All questions as to the form and
validity (including time of receipt) of any notice of withdrawal will be
determined by the Merger Sub, in its sole discretion, which determination shall
be final and binding. The Merger Sub will not pay any fees or commissions to
any broker or dealer or any other person (other than the Dealer Manager) for
soliciting tenders of Shares pursuant to the Offer.
<PAGE>
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. -- LOGO]
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
ALL OTHERS CALL TOLL-FREE 1-800-223-2064
The Dealer Manager for the Offer is:
WASSERSTEIN PERELLA & CO., INC.
31 West 52nd Street
New York, New York 10019
(212) 969-2700
<PAGE>
EXHIBIT 99(a)(8)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK)
OF
A.P. GREEN INDUSTRIES, INC.
As set forth in Section 3 of the Offer to Purchase (as defined below), this
form or one substantially equivalent may be used to accept the Offer (as
defined below) if certificates for shares of Common Stock, par value $1.00 per
share (the "Common Stock"), including the associated rights to purchase Series
B Junior Participating Preferred Stock (the "Rights" and, collectively with the
Common Stock, the "Shares"), of A.P. Green Industries, Inc., a Delaware
corporation (the "Company"), are not immediately available, or if the procedure
for book-entry transfer cannot be complied with on a timely basis, or all
required documents cannot be delivered to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase). This form
may be delivered by hand to the Depositary or transmitted by telegram,
facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution (as defined in Section 3 of the Offer to Purchase).
See Section 3 of the Offer to Purchase.
The Depositary:
HARRIS TRUST AND SAVINGS BANK
Facsimile Transmission By Hand/Overnight Delivery: By Registered or
Number: Harris Trust and Savings Bank Certified Mail:
(For Eligible c/o Harris Trust Company Harris Trust and Savings
Institutions Only) of New York Bank
(212) 701-7636 88 Pine Street c/o Harris Trust Company
Confirm Receipt of 19th Floor of New York
Facsimile by Telephone: New York, NY 10005 P.O. Box 1010
(212) 701-7624 Wall Street Station
New York, NY 10268-1010
--------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to BGN Acquisition Corp., a Delaware
corporation (the "Merger Sub") and a wholly owned subsidiary of Global
Industrial Technologies, Inc., a Delaware corporation, on the terms and
subject to the conditions set forth in the Offer to Purchase, dated March 6,
1998 (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
set forth below, all pursuant to the guaranteed delivery procedures set forth
in Section 3 of the Offer to Purchase.
Number of Shares: ____________________ Name(s) of Record Holder(s) __________
Certificate Nos. --------------------------------------
(if available): ______________________
--------------------------------------
(CHECK ONE BOX IF SHARES WILL BE PLEASE PRINT
TENDERED BY BOOK-ENTRY TRANSFER)
Address(es): _________________________
[_] The Depository Trust Company
[_] Philadelphia Depository Trust --------------------------------------
Company
ZIP CODE
Account Number: ______________________
Dated: _______________________________ Daytime Area Code
and Tel. No.: ________________________
Signature(s): ________________________
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation (as defined in the
Offer to Purchase) with respect to such Shares, in any such case together with
a properly completed and duly executed Letter of Transmittal, with any
required signature guarantees, or an Agent's Message (as defined in the Offer
to Purchase), and any other required documents, within THREE trading days
after the date hereof.
The Eligible Institution that completes this form must communicate this
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.
Name of Firm:
--------------------------- --------------------------------------
AUTHORIZED SIGNATURE
Address:
------------------------------- Name:
ZIP CODE ---------------------------------
PLEASE PRINT
- -------------------------------------- Title:
----------------------------------
Area Code and Tel. No.:
--------------------- Dated:
---------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT 99(a)(9)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER NAME AND IDENTIFICATION NUMBER TO GIVE
THE PAYER. Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen; i.e., 00-0000000. The table below will help determine the
name and number to give the payer.
- ----------------------------------- -----------------------------------
<TABLE>
<CAPTION>
GIVE THE NAME AND
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT NUMBER OF
- ---------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of the
individuals (1)
3. Custodian account of a The minor (2)
minor (Uniform Gift to
Minors Act)
4.a. The usual revocable The grantor-
savings trust account trustee (1)
(grantor is also
trustee)
b. So-called trust account The actual owner
that is not a legal or (1)
valid trust under State
law
5. Sole proprietorship The owner (3)
account
- ---------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GIVE THE NAME AND
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT NUMBER OF
--
<S> <C>
6. Sole proprietorship The owner (3)
account
7. A valid trust, estate, The legal entity
or pension trust (4)
8. Corporate account The corporation
9. Association, club, The organization
religious, charitable,
educational or other
tax-exempt
organization account
10. Partnership The partnership
11. A broker or registered The broker or
nominee nominee
12. Account with the The public
Department of entity
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) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your Social Security
Number or Employer Identification Number.
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the identifying number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: If no name is circled when more than one name is listed, 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
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), at the local office of the Social
Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees specifically exempted from backup
withholding depending upon the type of payment (see below):
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an IRA or a
custodial account under section 403(b)(7).
(3) The United States or any agency or instrumentality thereof.
(4) A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
(5) A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
(6) An international organization or any agency or instrumentality thereof.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S.
or a possession of the U.S.
(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.
For Interest and dividends, all listed payees are exempt except item (9). For
broker transactions, payees listed in items (1) through (13) and a person
registered under the Investment Advisers Act of 1940 who regularly acts as a
broker are exempt.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART 1 OF THE FORM, AND RETURN IT TO
THE PAYER. If you are a nonresident alien or a foreign entity not subject to
backup withholding, give the payer a completed Form W-8, Certificate of
Foreign Status.
PRIVACY ACT NOTICE. Section 6109 requires most recipients of dividend,
Interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. 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) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail to furnish
your correct 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 which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or Imprisonment.
FOR ADDITIONAL INFORMATION CON- TACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE>
EXHIBIT 99(b)(1)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of September 23, 1994
among
INDRESCO INC.,
VARIOUS FINANCIAL INSTITUTIONS
and
BANK OF AMERICA ILLINOIS,
as Agent
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION DEFINITIONS...........................................
1.1 Definitions...........................................
1.2 Computations...........................................
1.3 Cross-References; Section Captions.....................
SECTION 2 COMMITMENTS OF THE LENDERS; TYPES OF LOANS;
BORROWING AND CONVERSION PROCEDURES.................
2.1 Commitments............................................
2.2 Various Types of Loans.................................
2.3 Borrowing Procedures...................................
2.4 Conversion Procedures..................................
2.5 Warranty Upon Conversion...............................
2.6 Conditions
2.7 Pro Rata Treatment.....................................
2.8 Commitments Several....................................
2.9 Extension of the Termination Date......................
SECTION 3 NOTES EVIDENCING LOANS.................................
3.1 Notes..................................................
3.2 Recordkeeping..........................................
SECTION 4 INTEREST...............................................
4.1 Interest Rates.........................................
4.2 Interest Payment Dates.................................
4.3 Interest Periods.......................................
4.4 Setting and Notice of Eurodollar Rates.................
4.5 Computation of Interest................................
4.6 Limitation on Interest.................................
SECTION 5 FEES...................................................
5.1 Non-Use Fee............................................
5.2 Agent's Fee............................................
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS..........................................
6.1 Reduction or termination of the Commitments............
6.2 Prepayments............................................
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF;
TAXES..................................................
7.1 Making of Payments.....................................
7.2 Application of Certain Payments........................
7.3 Due Date Extension.....................................
-i-
<PAGE>
PAGE
7.4 Setoff................................................
7.5 Proration of Payments.................................
7.6 Taxes.................................................
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS...................................
8.1 Increased Costs.......................................
8.2 Basis for Determining Interest Rate
Inadequate or Unfair..................................
8.3 Changes in Law Rendering Eurodollar Loans
Unlawful
8.4 Funding Losses........................................
8.5 Right of Lenders to Fund through Other
Offices...............................................
8.6 Discretion of Lenders as to Manner of
Funding.............................................
8.7 Mitigation of Circumstances; Replacement of
Affected Lender.....................................
8.8 Conclusiveness of Statements; Survival of
Provisions............................................
SECTION 9 WARRANTIES............................................
9.1 Organization, Power, etc..............................
9.2 Authorization; No Conflict............................
9.3 Validity and Binding Nature...........................
9.4 No Default............................................
9.5 Financial Statements..................................
9.6 No Material Adverse Change; Solvency..................
9.7 Litigation; Labor Controversies; Contingent
Liabilities.........................................
9.8 Ownership of Properties...............................
9.9 Subsidiaries..........................................
9.10 Purpose...............................................
9.11 Regulation U..........................................
9.12 Compliance with Laws, etc.............................
9.13 Investment Company Act................................
9.14 Public Utility Holding Company Act....................
9.15 Environmental Warranties..............................
9.16 Pension and Welfare Plans.............................
9.17 Taxes.................................................
9.18 Accuracy of Information...............................
SECTION 10 COVENANTS.............................................
10.1 Reports, Certificates and Other Information...........
10.1.1 Annual Financial Statements...........................
-ii-
<PAGE>
PAGE
10.1.2 Quarterly Financial Statements...............................
10.1.3 Compliance Certificate.......................................
10.1.4 SEC and Other Reports........................................
10.1.5 Other Information............................................
10.2 Notice of Default, Litigation, etc...........................
10.3 Maintenance of Existence, etc................................
10.4 Foreign Qualification........................................
10.5 Books, Records and Access....................................
10.6 Insurance....................................................
10.7 Maintenance of Property......................................
10.8 Taxes........................................................
10.9 Compliance with Laws.........................................
10.10 Further Assurance............................................
10.11 Pension Plans................................................
10.12 Merger, Purchase and Sale....................................
10.13 Indebtedness/Capitalization Ratio............................
10.14 Indebtedness/Net Cash Flow Ration............................
10.15 Interest Coverage Ratio......................................
10.16 Restricted Payments..........................................
10.17 Indebtedness.................................................
10.18 Liens........................................................
10.19 Other Agreements.............................................
10.20 Use of Proceeds..............................................
10.21 Transactions with Affiliates.................................
10.22 Environmental Liabilities....................................
SECTION 11 CONDITIONS OF LENDING........................................
11.1 Initial Loan.................................................
11.1.1 Notes........................................................
11.1.2 Resolutions..................................................
11.1.3 Consents, etc................................................
11.1.4 Incumbency and Signature Certificates........................
11.1.5 Opinion of Counsel for the Company...........................
11.1.6 Other........................................................
11.2 All Loans....................................................
11.2.1 No Default...................................................
11.2.2 No Material Adverse Change...................................
11.2.3 Confirmatory Certificate.....................................
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT...........................
12.1 Events of Default............................................
12.1.1 Non-Payment of Obligation....................................
12.1.2 Non-Performance of Other Obligations.........................
12.1.3 Default on Other Indebtedness................................
12.1.4 Bankruptcy, Insolvency, etc..................................
-iii-
<PAGE>
PAGE
12.1.5 Default on Other Contractual Obligations.......................
12.1.6 Pension Plans..................................................
12.1.7 Breach of Warranty.............................................
12.1.8 Judgments......................................................
12.1.9 Material Adverse Change........................................
12.2 Effect of Event of Default.....................................
SECTION 13 THE AGENT......................................................
13.1 Authorization..................................................
13.2 Indemnification................................................
13.3 Exculpation....................................................
13.4 Credit Investigation...........................................
13.5 Agent and Affiliates...........................................
13.6 Action on Instructions of the Required
Lenders........................................................
13.7 Funding Reliance...............................................
13.8 Resignation....................................................
SECTION 14 GENERAL........................................................
14.1 Waiver; Amendments.............................................
14.2 Confirmations..................................................
14.3 Notices........................................................
14.4 Subsidiary References..........................................
14.5 Regulation U...................................................
14.6 Costs, Expenses and Taxes......................................
14.7 Indemnification by the Company.................................
14.8 Successors and Assigns.........................................
14.9 Assignments; Participations....................................
14.9.1 Assignments....................................................
14.9.2 Participations.................................................
14.10 Governing Law..................................................
14.11 Counterparts...................................................
14.12 Forum Selection and Consent to
Jurisdiction...............................................
14.13 Waiver of Jury Trial...........................................
SCHEDULE I Commitments and Percentages
SCHEDULE 9.7 Litigation, Labor Controversies, Contingent
Liabilities
SCHEDULE 9.8 Properties
SCHEDULE 9.9 Subsidiaries
SCHEDULE 9.15 Environmental Matters
SCHEDULE 10.17 Existing Indebtedness
SCHEDULE 10.18 Existing Liens
-iv-
<PAGE>
PAGE
EXHIBIT A Form of Note (Section 3.1)
EXHIBIT B Form of Compliance Certificate
(Section 10.1.3)
EXHIBIT C Form of Opinion of Counsel for the Company
(Section 11.1.5)
EXHIBIT D Form of Assignment Agreement (Section 14.9)
EXHIBIT E Form of Joinder Agreement (Section 2.1)
-v-
<PAGE>
CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT, dated as of September 23, 1994 (as amended or
otherwise modified from time to time, this "Agreement"), is entered into among
INDRESCO INC., a Delaware corporation (the "Company"), the undersigned financial
institutions (collectively the "Lenders" and individually each a "Lender") and
BANK OF AMERICA ILLINOIS (in its individual capacity, "BofA"), as agent for the
Lenders.
In consideration of the premises and the mutual agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1 DEFINITIONS AND INTERPRETATION.
1.1 Definitions. When used herein the following terms shall have the
-----------
following meanings (such definitions to be applicable to both the singular and
plural forms of such terms):
Acquired Assets means any assets (including the capital stock of any
---------------
Person) acquired by the Company or any of its Subsidiaries pursuant to
transactions of the type described in clauses (a) and (d) of Section 10.12.
----------- --- -------------
Adjusted EBIT means, for any period, the sum of (w) Consolidated Net
-------------
Income for such period, without giving effect to the amount of any income or
loss that is attributable to the Company's interest in Komatsu Dresser Company,
plus (x) Consolidated Interest Expense for such period, plus (y) all United
- ---- ----
States Federal, state, local and foreign income taxes of the Company and its
Subsidiaries for such period, plus (z) any non-cash write-offs relating to
----
acquisitions during such period (but not more than $10,000,000 in the aggregate
for such period).
Adjusted Indebtedness means all Indebtedness of the Company and its
---------------------
Subsidiaries excluding (i) Suretyship Liabilities of the Company or any
Subsidiary of obligations of third parties (i.e., Persons other than the Company
and its Subsidiaries) which do not constitute Indebtedness to the extent such
Suretyship Liabilities do not exceed $1,000,000, (ii) Subordinated Debt and
(iii) only at times through and including October 31, 1994, (a) Suretyship
<PAGE>
Liabilities of the Company in respect of obligations of KDC Financial Corp. or
KDC Financial Limited Partnership for which (x) Komatsu America Corporation has
agreed to indemnify the Company (but only to the extent that Komatsu Ltd. has
guaranteed payment of such indemnity) and (b) Suretyship Liabilities of the
Company in respect of Indebtedness for borrowed money of Komatsu Dresser Company
in an aggregate amount not exceeding $45,000,000.
Affected Lender means any Lender that has given notice to the Company
---------------
(which has not been rescinded) of (i) any obligation by the Company to pay any
amount pursuant to Section 7.6 or 8.1 or (ii) the occurrence of any circumstance
----------- ---
of the nature described in Section 8.2 or 8.3.
----------- ----
Affected Loan -- see Section 8.3.
------------- -----------
Affiliate means, with respect to any Person, any other Person which,
---------
directly or indirectly, controls, is controlled by or is under common control
with such Person. For purposes of this definition, "control" (together with the
correlative meanings of "controlled by" and "under common control with") means
possession, directly or indirectly, of the power (a) to vote 20% or more of the
securities (on a fully diluted basis) having ordinary voting power for the
directors or managing general partners (or their equivalent) of such Person or
(b) to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.
Agent means BofA in its capacity as agent for the Lenders hereunder
-----
and any successor thereto in such capacity.
Agreement -- see the Preamble.
--------- --------
Alternate Reference Rate means at any time the greater of (a) the
------------------------
Federal Funds Rate plus 1/2 of 1% and (b) the Reference Rate.
Assignee -- see Section 14.9.1.
-------- ---------------
Assignment Agreement -- see Section 14.9.1.
-------------------- --------------
BofA - see Preamble.
---- --------
-2-
<PAGE>
Business Day means any day (other than a Saturday or Sunday) on which
------------
banks are open for commercial banking business in Chicago and, in the case of a
Business Day which relates to a Eurodollar Loan, on which dealings are carried
on in the interbank eurodollar market at the location of BofA's Eurodollar
office.
Capitalized Lease Liabilities means all monetary obligations of the
-----------------------------
Company or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
CERCLA means the Comprehensive Environmental Response, Compensation
------
and Liability Act of 1980, as amended, and any successor statute of similar
import, together with the regulations thereunder, in each case as in effect from
time to time.
Code means the Internal Revenue Code of 1986, as amended, reformed or
----
otherwise modified from time to time, and any successor statute of similar
import, together with the regulations thereunder, in each case as in effect from
time to time. References to sections of the Code shall be construed to also
refer to any successor sections.
Commitment as to any Lender means the commitment of such Lender to
----------
make Loans hereunder, as adjusted from time to time pursuant to Section 6.1 or
-----------
Section 14.9. The amount of the initial Commitment of each Lender is set forth
- ------------
on the Schedule I attached to this Agreement.
----------
Company -- see the Preamble.
------- --------
Compliance Certificate means a certificate duly executed by the
----------------------
Company's chief financial officer, chief accounting officer or Treasurer in the
form of Exhibit B hereto, together with such changes as the Required Lenders may
---------
request from time to time for purposes of monitoring the compliance of the
Company and its Subsidiaries herewith.
-3-
<PAGE>
Consolidated Interest Expense means, for any period, the aggregate
-----------------------------
interest expense of the Company and its Subsidiaries, as determined in
accordance with those generally accepted accounting principles applied in the
preparation of the financial statements referred to in Section 9.5.
-----------
Consolidated Net Income means, for any period, all amounts which, in
-----------------------
conformity with those generally accepted accounting principles applied in the
preparation of the financial statements referred to in Section 9.5, would be
-----------
included under net income on a consolidated income statement of the Company and
its Subsidiaries.
Contractual Obligation means, relative to any Person, any provision of
----------------------
any security issued by such Person or of any Instrument or undertaking to which
such Person is a party or by which it or any of its properties, assets or
revenues are bound.
Dollar and the sign "$" mean lawful money of the United States of
------ -
America.
Effective Date -- see Section 11.1.
-------------- ------------
Environmental Action means:
--------------------
(a) any complaint, claim (whether absolute or contingent, matured
or unmatured), citation, demand, inquiry or inquiries, notice of violation,
correspondence, report, action, assertion of potential responsibility,
lien, encumbrance, or proceeding (whether formal or informal), brought or
issued by any governmental unit, agency, or body which relates to any of
the following:
(i) Environmental Laws;
(ii) public health risks;
(iii) the environmental condition of any real property that
at any time was, is or hereafter will be owned, leased, operated
or otherwise used or controlled by the Company or any of its
Subsidiaries (the "Premises"), or any portion thereof, any
--------
property near the Premises, or any property at which the
-4-
<PAGE>
Company or any of its Affiliates is conducting or has conducted
operations (including actual or alleged damage or injury to
wildlife, biota, air, surface or subsurface soil or water, or
other natural resources); or
(iv) the use, exposure, release, generation, manufacture,
transportation to or from, handling, storage, treatment,
recycling, reclamation, reuse, emission, disposal or presence of
any Hazardous Material either on the Premises, any adjacent
property or property at which the Company or any of its
Subsidiaries is conducting or has conducted operations, or the
transportation of any Hazardous Material by the Company, any of
its Subsidiaries or any of their respective agents, employees,
consultants, or independent contractors for sale, treatment,
storage, recycling, reclamation, reuse or disposal;
(b) any violation or claim of violation by the Company or any of
its Subsidiaries of any Environmental Laws;
(c) any Lien for damages caused by, or the recovery of any costs
incurred for the investigation, remediation or cleanup of, any release or
threatened release of any Hazardous Material; or
(d) the destruction or loss of use of property, or the injury,
illness or death of any officer, director, employee, agent, representative,
tenant or invitee of the Company or any of its Subsidiaries or the injury,
illness or death of any other Person, in each case arising from or relating
to the operations of the business of the Company or any of its Subsidiaries
or the environmental condition of the Premises, any adjacent property or
any property at which the Company or any of its Subsidiaries is conducting
or has conducted operations.
-5-
<PAGE>
Environmental Laws means:
------------------
(a) any federal statute, law, code, rule, regulation, ordinance,
order, standard, permit, license or requirement (including consent
decrees, judicial decisions and administrative orders), together with
all related amendments, implementing regulations and reauthorizations,
pertaining to the protection, preservation, conservation or regulation
of the environment, including (without limitation): CERCLA; RCRA; the
Toxic Substances Control Act, 15 U.S.C. (S)2601 et seq.; the Clean Air
-- ---
Act, 42 U.S.C. (S)7401 et seq.; and the Clean Water Act, 33 U.S.C.
-- ---
(S)1251 et seq.;
-- ---
(b) any state or local statute, law, code, rule, regulation,
ordinance, order, standard, permit, license or requirement (including
consent decrees, judicial decisions and administrative orders),
together with all related amendments, implementing regulations and
reauthorizations, pertaining to the protection, preservation,
conservation or regulation of the environment; and
(c) any federal, state or local legislation enacted in the future
pertaining to the protection, preservation, conservation or regulation
of the environment, and all related amendments, implementing
regulations and reauthorizations (provided that no such future
legislation shall be deemed to be an Environmental Law hereunder until
it is actually enacted).
ERISA means the Employee Retirement Income Security Act of 1974, as
-----
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor selections.
ERISA Affiliate means any corporation, trade or business that is,
---------------
along with the Company or any Subsidiary, a member of a controlled group of
corporations or a controlled group of trades or businesses, as described in
section 414(b) or 414(c) respectively, of the Code or section 4001 of ERISA.
-6-
<PAGE>
Eurocurrency Reserve Percentage means, with respect to any Eurodollar
-------------------------------
Loan for any Interest Period, a percentage (expressed as a decimal) equal to the
daily average during such Interest Period of the percentage in effect on each
day of such Interest Period, as prescribed by the Federal Reserve Board, for
determining the aggregate maximum reserve requirements applicable to
"Eurocurrency Liabilities" pursuant to Regulation D or any other then applicable
regulation of such Board of Governors which prescribes reserve requirements
applicable to "Eurocurrency Liabilities" as presently defined in Regulation D.
As of the date of this Agreement, the Eurocurrency Reserve Percentage is 0%.
Eurodollar Loan means any Loan which bears interest at a rate
---------------
determined by reference to the Eurodollar Rate (Reserve Adjusted).
Eurodollar Office means with respect to any Lender the office or
-----------------
offices of such Lender which shall be making or maintaining the Eurodollar Loans
of such Lender hereunder or such other office or offices through which such
Lender determines its Eurodollar Rate. A Eurodollar Office of any Lender may
be, at the option of such Lender, either a domestic or foreign office.
Eurodollar Rate means, with respect to any Eurodollar Loan for any
---------------
Interest Period, the rate per annum at which Dollar deposits in immediately
available funds are offered to the Eurodollar Office of BofA two Business Days
prior to the beginning of such Interest Period by major banks in the interbank
eurodollar market as at or about 10:00 a.m., Chicago time, for delivery on the
first day of such Interest Period, for the number of days comprised therein and
in an amount equal or comparable to the amount of the Eurodollar Loan of BofA
for such Interest Period.
Eurodollar Rate (Reserve Adjusted) means, with respect to any
----------------------------------
Eurodollar Loan for any Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined pursuant to the following
formula:
Eurodollar Rate = Eurodollar Rate
---------------
(Reserve Adjusted) 1-Eurocurrency
Reserve Percentage
-7-
<PAGE>
Event of Default means any of the events described in Section 12.1.
---------------- ------------
Federal Funds Rate means, for any day, the rate set forth in the daily
------------------
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor publication, the
"Composite 3:30 p.m. Quotations") for such day under the caption "Federal Funds
Effective Rate". If such rate is not published in the Composite 3:30 p.m.
Quotations for any Business Day, the rate for such day will be the arithmetic
mean of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m., New York City time, on such day by each of three leading
brokers of Federal funds transactions in New York City, selected by the Agent.
The rate for any day which is not a Business Day shall be the rate for the
immediately preceding Business Day.
Federal Reserve Board means the Board of Governors of the Federal
---------------------
Reserve System or any successor thereto.
Floating Rate Loan means any Loan which bears interest at or by
------------------
reference to the Alternate Reference Rate.
GAAP means generally accepted accounting principles as in effect on
----
the date hereof in the United States of America.
Group - see Section 2.2.
----- -----------
Hazardous Material means: (a) any "hazardous substance" as defined by
------------------
CERCLA, and including the judicial interpretation thereof; (b) any "pollutant or
contaminant" as defined in 42 U.S.C. (S)9601(33); (c) any material now defined
as "hazardous waste" by RCRA; (d) any petroleum product, including crude oil and
any fraction thereof; (e) natural gas, natural gas liquids, liquified natural
gas, or synthetic gas usable for fuel; (f) any "hazardous chemical" as defined
pursuant to 29 C.F.R. Part 1910; (g) any radioactive material, including any
source material, special nuclear material or by-product material as defined at
42 U.S.C. (S)2011 et seq., and any amendments thereto and reauthorizations
-- ---
thereof; and (h) any other substance, regardless of physical form, that is
regulated under any
-8-
<PAGE>
past, present or future federal, state or local government statute, rule or
regulation.
Impermissible Qualification means, relative to the opinion or
---------------------------
certification of any independent public accountant as to any qualification or
exception to such opinion or certification:
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item
in such financial statement and which, as a condition to this removal,
would require an adjustment to such item the effect of which would be to
cause the Company or any of its Subsidiaries to be in default of any of
their respective obligations under Section 10.
----------
Indebtedness of any Person means, without duplication:
------------
(a) all of such Person's obligations for borrowed money
(including all notes payable and drafts accepted representing extensions of
credit) and all of such Person's obligations evidenced by bonds,
debentures, notes or other similar instruments on which interest charges
are customarily paid;
(b) all of such Person's Capitalized Lease Liabilities;
(c) all indebtedness secured by a Lien on property owned or being
purchased by such Person (including indebtedness arising under conditional
sales or other title retention agreements), regardless of whether such
indebtedness shall have been assumed by such Person or is limited in
recourse; provided, however, that, for purposes of determining the amount
-------- -------
of any Indebtedness of the type described in this clause (c), if recourse
----------
with respect to such Indebtedness is limited to
-9-
<PAGE>
such property, the amount of such Indebtedness shall be limited to the fair
market value of such property; and
(d) all Suretyship Liabilities of such Person (excluding
Suretyship Liabilities of the Company or any Subsidiary in respect of
obligations of the Company or any Subsidiary).
Indebtedness/Capitalization Ratio means, at any time, the ratio of (a)
---------------------------------
Adjusted Indebtedness to (b) the sum of Adjusted Indebtedness plus stockholders'
----
equity of the Company plus Subordinated Debt.
----
Indebtedness/Net Cash Flow Ratio means, for any period, the ratio of
--------------------------------
(a) Adjusted Indebtedness as at the last day of such period;
to
(b) the amount ("Net Cash Flow") equal to:
(i) the sum of
(A) Consolidated Net Income for such period,
plus
----
(B) all depreciation and amortization of assets
(including goodwill and other intangible assets) of the
Company and its Subsidiaries that have been deducted in
determining Consolidated Net Income for such period,
plus
----
(C) the absolute value of all extraordinary losses for
such period,
plus
----
(D) Consolidated Interest Expense for such period,
-10-
<PAGE>
plus
----
(E) all United States Federal, state, local and foreign
income taxes of the Company and its Subsidiaries for such
period,
plus
----
(F) any non-cash write-offs relating to acquisitions
during such period (but not more than $10,000,000 in the
aggregate for such period),
minus
-----
(ii) an amount equal to the sum of
(A) the absolute value of the amount of all capital
expenditures of the Company and its Subsidiaries, as
determined in accordance with those generally accepted
accounting principles applied in the preparation of the
financial statements referred to in Section 9.5, made during
-----------
such period (including, without limitation, the aggregate
amount of Capitalized Lease Liabilities incurred during such
period by the Company and its Subsidiaries (excluding,
however, any portion thereof allocable to interest
expense)),
plus
----
(B) all extraordinary gains for such period;
provided that with respect to Acquired Assets the Company shall prepare
- --------
historical financial statements for the period from the beginning of the period
for which Net Cash Flow is being calculated to the time of the acquisition of
such Acquired Assets (it being understood such statements may contain (x)
adjustments to reflect cost savings due to factors such as overlapping functions
and/or personnel between the Company and its Subsidiaries and any Acquired
Assets and any costs which will be incurred by the Company
-11-
<PAGE>
or any Subsidiary in connection with the Acquired Assets such as costs for
facility closures or terminated personnel and (y) such other adjustments as may
be agreed to by the Required Lenders) and items relating to Acquired Assets
shall be included in the computation of Net Cash Flow to the same extent as if
the Company or its Subsidiaries owned the Acquired Assets from the beginning of
the period for which Net Cash Flow is being calculated.
Instrument means any contract, agreement, indenture, mortgage,
----------
document or writing (whether by formal agreement, letter, or otherwise) under
which any obligation is evidenced, assumed or undertaken, or any Lien (or right
or interest therein) is granted or perfected.
Interest Coverage Ratio means, as of the last day of any fiscal
-----------------------
quarter of the Company, the ratio of (x) Adjusted EBIT for the 12-month period
ending on such day to (y) Consolidated Interest Expense for such period.
Interest Period - see Section 4.3.
--------------- -----------
Investment means, relative to any Person:
----------
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business consistent with past
practice);
(b) any Suretyship Liabilities of such Person; and
(c) any ownership or similar interest held by such Person in any
other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
Lender - see the Preamble.
------ --------
-12-
<PAGE>
Lien means any security interest, mortgage, pledge, hypothecation,
----
assignment, deposit arrangement, encumbrance, lien (statutory or other), charge
against or interest in property to secure payment of a debt or performance of an
obligation or other priority or preferential arrangement of any kind or nature
whatsoever (including, without limitation, the interest of a vendor under any
conditional sale or other title retention agreement and the interest of a lessor
under any capitalized lease).
Loan - see Section 2.1.
---- -----------
Margin means (a) if the Interest Coverage Ratio is equal to or greater
------
than 3.75 to 1, 0.35%, (b) if the Interest Coverage Ratio is equal to or greater
than 2.5 to 1 but is less than 3.75 to 1, 0.425%, and (c) if the Interest
Coverage Ratio is less than 2.5 to 1, 0.6%. The margin initially shall be 0.35%
and shall be adjusted, to the extent applicable, 50 days (or, in the case of the
last fiscal quarter of any year, 90 days) after the end of each fiscal quarter
based on the Interest Coverage Ratio as of the last day of such fiscal quarter;
it being understood that if the Company fails to deliver the financial
statements required by Section 10.1.1 or 10.1.2, as applicable, by the 50th day
-------------- ------
(or, if applicable, the 90th day) after any such fiscal quarter, the Margin
shall be 0.6% until such statements are delivered.
Margin Stock means any "margin stock" as defined in Regulation U of
------------
the Federal Reserve Board.
Materially Adverse Effect means, relative to any occurrence of
-------------------------
whatever nature (including (a) any adverse determination in any litigation,
arbitration, or governmental investigation or proceeding or (b) any merger,
consolidation, exchange of stock, sale of assets or equity interests or
acquisition of assets or equity interests), a materially adverse effect on the
assets, business, revenues, financial condition, prospects or operations of the
Company and its Subsidiaries on a consolidated and combined basis, taken as a
whole.
Multiemployer Plan means a multiemployer plan within the meaning of
------------------
section 3(37) of ERISA maintained or contributed to by the Company, any of its
Subsidiaries or any other ERISA Affiliate.
-13-
<PAGE>
Note - see Section 3.1.
---- -----------
Organic Document means, relative to any Person, its certificate of
----------------
incorporation, by-laws, partnership agreement or other constitutive documents
and all shareholder or partner agreements, voting trusts, and similar
arrangements applicable to any of its capital stock or other equity interests.
Participant - see Section 14.9.2.
----------- --------------
PBGC means a "pension plan", as such term is defined in section 3(2)
----
of ERISA, which is subject to title IV of ERISA (other than a Multiemployer
Plan), and to which the Company, any of its Subsidiaries or any ERISA Affiliate
may have any liability, including any liability by reason of having been a
"substantial employer" within the meaning of section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
Percentage means as to any Lender the percentage which such Lender's
----------
Commitment is of the aggregate Commitments (or, if the Commitments have
terminated, which the principal amount of such Lender's outstanding Loans is of
the principal amount of all outstanding Loans). The Percentages of the Lenders
as of the Effective Date are set forth on the Schedule I attached to this
----------
Agreement.
Person means any natural person, corporation, partnership, trust,
------
association, governmental authority or unit, or any other entity, whether acting
in an individual, fiduciary or other capacity.
RCRA means the Resource Conservation and Recovery Act, 42 U.S.C.
----
(S)6901 et seq. and any successor statute of similar import, together with the
-- ---
regulations thereunder, in each case as in effect from time to time.
Reference Rate means at any time per annum then most recently
--------------
announced by BofA as its reference rate at Chicago, Illinois.
Release has the meaning that CERCLA assigns to such term.
-------
-14-
<PAGE>
Reportable Event has the meaning that ERISA assigns to such term.
----------------
Required Lenders means Lenders having an aggregate Percentage of 66-
----------------
2/3% or more.
Significant Affiliate means any Subsidiary, Komatsu Dresser Company,
---------------------
KDC Financial Corp., KDC Financial Limited Partnership and KOMDRESCO Ltd.;
provided that each of Komatsu Dresser Company, KDC Financial Corp. and KDC
- --------
Financial Limited Partnership shall cease to be Significant Affiliates when the
Company and its Subsidiaries no longer own an equity interest in such entity.
Solvent means, with respect to any Person at any time, a condition
-------
under which
(a) the fair value and present fair saleable value of such
Person's total assets is, on the date of determination, greater than
such Person's total liabilities (including contingent and unliquidated
liabilities) at such time;
(b) the fair value and present fair saleable value of such
Person's assets is greater than the amount that will be required to
pay such Person's probable liability on its existing debts as they
become absolute and matured ("debts", for this purpose, includes all
legal liabilities, whether matured or unmatured, liquidated or
unliquidated, absolute, fixed, or contingent);
(c) such Person is and shall continue to be able to pay all of
its liabilities as such liabilities mature; and
(d) such Person does not have unreasonably small capital with
which to engage in its current and in its anticipated business.
For purposes of this definition:
(i) the amount of a Person's contingent or unliquidated
liabilities at any time shall be that amount which, in light of
all the facts and circumstances then existing, represents the
amount which can reasonably be
-15-
<PAGE>
expected to become an actual or matured liability;
(ii) the "fair value" of an asset shall be the amount
which may be realized within a reasonable time either through
collection or sale of such asset at its regular market value;
(iii) the "regular market value" of an asset shall be the
amount which a capable and diligent business person could obtain
for such asset from an interested buyer who is willing to
purchase such asset under ordinary selling conditions; and
(iv) the "present fair saleable value" of an asset means
the amount which can be obtained if such asset is sold with
reasonable promptness in an arms-length transaction in an
existing and not theoretical market.
Subordinated Debt means Debt of the Company having maturities and
-----------------
other terms, and which is subordinated to the obligations of the Company
hereunder in a manner, approved in writing by the Required Lenders (such
approval not to be unreasonably withheld).
Subsidiary means any Person of which or in which the Company and/or
----------
its other Subsidiaries own, directly or indirectly, 50% or more of (a) the
combined voting power of all classes of stock having general voting power under
ordinary circumstances to elect a majority of the board of directors of such
Person, if it is a corporation, (b) the capital interest or profits interest of
such Person, if it is a partnership, joint venture or similar entity, or (c) the
beneficial interest of such Person, if it is a trust, association or other
unincorporated organization; provided, however, that the defined term
-------- -------
"Subsidiary" shall not include Komatsu Dresser Company, KDC Financial Corp., KDC
- -----------
Financial Limited Partnership, KOMDRESCO Ltd., Tswana Equipment Proprietary,
Ltd. or SDC Corporation. Unless the context otherwise requires, each reference
to a "Subsidiary" herein shall be a reference to a Subsidiary of the Company.
-16-
<PAGE>
Suretyship Liability means any agreement, undertaking or other
--------------------
contractual arrangement (other than letters of credit and reimbursement
agreements relating to letters of credit) by which any Person guarantees,
endorses or otherwise becomes or is contingently liable upon (by direct or
indirect agreement, contingent or otherwise, to provide funds for payment, to
supply funds to or otherwise to invest in a debtor, or otherwise to assure a
creditor against loss) any indebtedness, obligation or other liability
(including accounts payable) of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation under any Suretyship Liability shall (subject to any
limitation set forth therein) be deemed to be the outstanding principal amount
of the indebtedness, obligation or other liability guaranteed thereby; provided
--------
that the amount of any Suretyship Liability that does not have a stated or
determinable amount shall be the amount that the Person obligated thereon
reasonably estimates in good faith as its probable liability with respect
thereto.
Taxes with respect to any Person means taxes, duties, imposts, fees,
-----
deductions, withholding, assessments or other governmental charges or levies
imposed upon such Person, its income or any of its properties, franchises or
assets.
Termination Date means September 22, 1995, as such date may from time
----------------
to time be extended in accordance with Section 2.9, or such other date on which
-----------
the Commitments shall terminate pursuant to Section 6.1 or 12.2.
----------- ----
Total Commitment Amount means the aggregate amount of all Lenders'
-----------------------
Commitments (as such amount is reduced from time to time pursuant to Section
-------
6.1).
Type of Loan or Borrowing - see Section 2.2. The types of Loans or
------------------------- -----------
borrowings under this Agreement are as follows: Floating Rate Loans or
borrowings and Eurodollar Loans or borrowings.
Unmatured Event of Default means any event which if it continues
--------------------------
uncured will, with lapse of time or notice or lapse of time and notice,
constitute an Event of Default.
-17-
<PAGE>
Welfare Plan means a "welfare plan", as such term is defined in
------------
section 3(1) of ERISA.
1.2 Computations. Where the character or amount of any asset or
------------
liability or any item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for
purposes of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with GAAP.
1.3 Cross-References; Section Captions. A Section, an Exhibit or a
---------------------------------- ------- -------
Schedule is, unless otherwise stated, a reference to a section hereof or an
- --------
exhibit or schedule hereto, as the case may be. Section captions are for
convenience only and shall not affect the interpretation of this Agreement.
SECTION 2 COMMITMENTS OF THE LENDERS; TYPES OF LOANS; BORROWING AND
CONVERSION PROCEDURES.
2.1 Commitments. Subject to the terms and conditions of this
-----------
Agreement, each of the Lenders, severally and for itself alone, agrees to make
loans to the Company on a revolving basis (collectively the "Loans" and
individually each a "Loan") from time to time before the Termination Date in
such Lender's Percentage of such aggregate amounts as the Company may from time
to time request from all Lenders; provided, however, that (i) the aggregate
-------- -------
principal amount of all Loans which any Lender shall be committed to have
outstanding hereunder shall not at any one time exceed the amount of such
Lender's Commitment; and (ii) the aggregate principal amount of all Loans which
all Lenders shall be committed to have outstanding hereunder shall not at any
one time exceed the Total Commitment Amount. At any time prior to, and provided
the Company has not previously reduced the Commitments pursuant to Section 6.1,
-----------
one or more additional Lenders may at the request of the Company and with the
consent of all Lenders (which consent shall not be unreasonably withheld),
become parties to the Credit Agreement by executing and delivering a Joinder
Agreement in the form of Exhibit E, and contemporaneously with the effectiveness
---------
of any such Joinder Agreement the Total Commitment Amount shall be increased by
the amount of the Commitment of the Lender being added by such Joinder
-18-
<PAGE>
Agreement, provided that the Total Commitment Amount shall not exceed
--------
$150,000,000.
2.2 Various Types of Loans. Each Loan shall be either a Floating
----------------------
Rate Loan or a Eurodollar Loan (each a "type" of Loan), as the Company shall
specify in the related notice of borrowing or conversation pursuant to Section
-------
2.3 or 2.4. Eurodollar Loans having the same Interest Period are sometimes
- --- ---
called a "Group" or collectively "Groups." Floating Rate Loans and Eurodollar
Loans may be outstanding at the same time, provided that (i) not more than ten
--------
different Groups of Loans shall be outstanding at any one time and (ii) the
aggregate principal amount of each Group of Loans shall at all times (including
after giving effect to any conversion or continuation of any Loans) be at least
$2,000,000 and an integral multiple of $500,000.
2.3 Borrowing Procedures. The Company shall give written or
--------------------
telephonic notice to the Agent of each proposed borrowing not later than (a) in
the case of a Floating Rate borrowing, 10:00 a.m., Chicago time, on the proposed
date of such borrowing, and (b) in the case of a Eurodollar borrowing, 10:00
a.m., Chicago time, at least three Business Days prior to the proposed date of
such borrowing. Each such notice shall be effective upon receipt by the Agent
and shall specify the date, amount and type of borrowing and, in the case of a
Eurodollar borrowing, the initial Interest Period therefor. Promptly upon
receipt of such notice, the Agent shall advise each Lender thereof. Not later
than noon, Chicago time, on the date of a proposed borrowing, each Lender shall
provide the Agent at the principal office of the Agent in Chicago with
immediately available funds covering such Lender's Percentage of such borrowing
and, subject to the satisfaction of the conditions precedent set forth in
Section 11 with respect to such borrowing, the Agent shall pay over such funds
- ----------
to the Company on the requested borrowing date. Each borrowing shall be on a
Business Day. Subject to the last sentence of Section 2.2 in the case of
-----------
Eurodollar Loans, each borrowing shall be in an aggregate amount of at least
$2,000,000 and an integral multiple of $500,000.
2.4 Conversion Procedures. Subject to the provisions of the last
---------------------
sentence of Section 2.2, the Company may convert all or any part of any
-----------
outstanding Loan into a Loan of a different type by giving written or telephonic
notice to the Agent not later than (a) in the case of
-19-
<PAGE>
conversion into a Floating Rate Loan, 10:00 a.m., Chicago time, on the proposed
date of such conversion, and (b) in the case of a conversion into a Eurodollar
Loan, 10:00 a.m., Chicago time, at least three Business Days prior to the
proposed date of such conversion. Each such notice shall be effective upon
receipt by the Agent and shall specify the date and amount of such conversion,
the Loan to be so converted, the type of Loan to be converted into and, in the
case of a conversion into a Eurodollar Loan, the initial Interest Period
therefor. Promptly upon receipt of such notice, the Agent shall advise each
Lender thereof. Subject to Section 2.6, such Loan shall be so converted on the
-----------
requested date of conversion. Each conversion shall be on a Business Day.
2.5 Warranty upon Conversion. Each notice of conversion pursuant to
------------------------
Section 2.4 shall automatically constitute a warranty by the Company to the
- -----------
Agent and each Lender to the effect that, on the date of such requested
conversion, no Event of Default or unmatured Event of Default shall have then
occurred and be continuing.
2.6 Conditions. Notwithstanding any other provision of this
----------
Agreement, no Lender shall be obligated to make any Loan, or to convert into or
permit the continuation at the end of the applicable Interest Period of any
Eurodollar Loan, if an Event of Default or Unmatured Event of Default exists or
would result therefrom.
2.7 Pro Rata Treatment. All borrowings, conversions and repayments
------------------
shall be effected so that after giving effect thereto each Lender will have a
pro rata share (according to its Percentage) of all types and Groups of Loans.
2.8 Commitments Several. The failure of any Lender to make a
-------------------
requested Loan on any date shall not relieve any other Lender of its obligation
(if any) to make a Loan on such date, but no Lender shall be responsible for the
failure of any other Lender to make any Loan to be made by such other Lender.
2.9 Extension of the Termination Date.
---------------------------------
(a) At least 60 but not more than 90 days before any scheduled
Termination Date, the Company may, by delivery of a written request to
the
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<PAGE>
Agent, request that each Lender agree to extend the then-scheduled
Termination Date by 364 days.
(b) The Agent shall, upon receipt of any such extension request,
promptly notify each Lender thereof, and request that each Lender
promptly advise the Agent of its approval or rejection of such
request.
(c) Upon receipt of such notification from the Agent, each Lender
may, in its sole discretion, agree to extend for 264 days, or decline
to extend, the Termination Date, and each Lender shall, within 30 days
of receipt of the notice described in clause (b), notify the Agent of
----------
its approval or denial of such request. If any Lender does not so
notify the Agent, such Lender shall be deemed to have denied such
extension request. The Agent shall, no later than 45 days following
its receipt of any extension request from the Company, notify the
Company as to the Lenders which have approved or denied such request.
(d) If all of the Lenders approve any such request, the
Termination Date shall be extended to the date which is 364 days after
the Termination Date in effect immediately prior to such extension. If
fewer than all of the Lenders approve any such request, the
Termination Date shall not be extended.
SECTION 3 NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Lender shall be evidenced by a promissory
-----
note (as amended, supplemented, replaced or otherwise modified from time to
time, individually each a "Note" and collectively for all Lenders the "Notes")
substantially in the form set forth in Exhibit A, with appropriate insertions,
---------
dated the Effective Date (or such other date as shall be satisfactory to the
Agent), payable to the order of such Lender in the principal amount of the
Commitment of such Lender (or, if less, in the aggregate unpaid principal amount
of such Lender's Loans) on the Termination Date.
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<PAGE>
3.2 Recordkeeping. Each Lender shall record in its records, or at
-------------
its option on the schedule attached to its Note, the date and amount of each
Loan made by such Lender, each repayment or conversion thereof and, in the case
of each Eurodollar Loan, the dates on which each Interest Period for such loan
shall begin and end. The aggregate unpaid principal amount so recorded shall be
rebuttable presumptive evidence of the principal amount owing and unpaid on such
Note. The failure to so record any such amount or any error in so recording any
such amount shall not, however, limit or otherwise affect the obligations of the
Company hereunder or under any Note to repay the principal amount of the Loans
evidenced by such Note together with all interest accruing thereon.
SECTION 4 INTEREST.
4.1 Interest Rates. The Company promises to pay interest on the
--------------
unpaid principal amount of each Loan for the period commencing on and including
the date of such Loan to but excluding the date such Loan is paid in full, as
follows:
(a) at all times while such Loan is a Floating Rate Loan, at a
rate per annum equal to the Alternate Reference Rate from time to time in
effect; and
(b) at all times while such Loan is a Eurodollar Loan, at a rate
per annum equal to the Eurodollar Rate (Reserve Adjusted) applicable to
each Interest Period for such Loan plus the Margin from time to time in
effect;
provided, however, that if any principal of any Loan is not paid when due
- -------- -------
(whether by acceleration or otherwise), such principal shall bear interest, from
the due date thereof until paid in full, at a rate per annum equal to the sum of
the Alternate Reference Rate from time to time in effect (but not less than the
applicable interest rate in effect for such Loan at such due date) plus 2%.
4.2 Interest Payment Dates. Accrued interest on each Floating Rate
----------------------
Loan shall be payable on the last day of each calendar quarter and at maturity.
Accrued interest on each Eurodollar Loan shall be payable on the last day of
each Interest Period relating to such Loan and at maturity.
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<PAGE>
After maturity, accrued interest on all Loans shall be payable on demand.
4.3 Interest Periods. Each "Interest Period" for a Eurodollar Loan
----------------
shall commence on the date such Eurodollar Loan is made or converted from a
Floating Rate Loan, or on the expiration of the immediately preceding Interest
Period for such Eurodollar Loan, and shall end on the date which is one, two or
three months thereafter, as the Company may specify:
(a) in the case of an Interest Period which commences on the date
of Eurodollar Loan is made or converted from a Floating Rate Loan, in the
related notice or borrowing or conversion pursuant to Section 2.3 or 2.4,
----------- ---
or
(b) in the case of succeeding Interest Period with respect to any
Eurodollar Loan, by written or telephonic notice to the Agent not later
than 10:00 a.m., Chicago time, at least three Business Days prior to the
first day of such succeeding Interest Period, it being understood that (i)
each such notice shall be effective upon receipt by the Agent (which shall
promptly advise each Lender thereof) and (ii) if the Company fails to give
such notice, such Loan shall automatically become a Floating Rate Loan at
the end of its then-current Interest Period.
Each Interest Period for a Eurodollar Loan that begins on the last day of a
calendar month (or on a day for which there is no numerically corresponding day
in the appropriate subsequent month) shall end on the last Business Day of the
appropriate subsequent calendar month. Each Interest Period for a Eurodollar
Loan which would otherwise end on a day which is not a Business Day shall end on
the immediately succeeding Business Day (unless such immediately succeeding
Business Day is the first Business Day of a calendar month, in which case such
Interest Period shall end on the immediately preceding Business Day). The
Company may not select any Interest Period which would end after the scheduled
Termination Date.
4.4 Setting and Notice of Eurodollar Rates. The applicable
--------------------------------------
Eurodollar Rate for each Interest Period shall be determined by the Agent, and
notice thereof shall be given
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<PAGE>
by the Agent promptly to the Company and each Lender. Each determination of the
applicable Eurodollar Rate by the Agent shall be conclusive and binding upon the
parties hereto, in the absence of demonstrable error. The Agent shall, upon
written request of the Company or any Lender, deliver to the Company or such
Lender a statement showing the computations used by the Agent in determining any
applicable Eurodollar Rate hereunder.
4.5 Computation of Interest. Interest shall be computed for the
-----------------------
actual number of days elapsed on the basis of a year of 160 days. The
applicable interest rate for each Floating Rate Loan shall change simultaneously
with each change in the Alternate Reference Rate.
4.6 Limitation on Interest. It is the intention of the parties
----------------------
hereto to conform strictly to applicable usury laws and, anything herein or in
any Note to the contrary notwithstanding, the obligations of the Company to each
Lender under this Agreement and any Note shall be subject to the limitation that
payments of interest shall not be required to the extent that receipt thereof
would be contrary to provisions of law applicable to such Lender limiting rates
of interest which may be charged or collected by such Lender. Accordingly, if
the transactions contemplated hereby or by any Note would be usurious under any
applicable law, rule, regulation, order or decree (or other requirement having
the force of law) of any governmental authority, court or other tribunal
(including the Federal and state laws of the United States of America or of any
other jurisdiction whose laws may be mandatorily applicable) (collectively,
"Applicable Law") with respect to any Lender, then, in that event,
notwithstanding anything to the contrary in this Agreement or any Note, it is
agreed as follows:
(a) the following provisions of this Section 4.6 shall govern and
-----------
control;
(b) the aggregate of all consideration that constitutes interest
under Applicable Law that is contracted for, charged or received under this
Agreement or under any Note by any Lender shall under no circumstances
exceed the maximum amount of interest allowed by Applicable Law (such
maximum, nonusurious interest rate that may, under Applicable Law, be
contracted for, charged or
-24-
<PAGE>
received, the "Highest Lawful Rate"), and any excess shall be credited to
the Company by such Lender (or, if such consideration shall have been
finally paid in full, such excess refunded to the Company by such Lender);
(c) all sums paid, or agreed to be paid, to any Lender for the
use, forbearance and detention of the indebtedness of the Company to such
Lender hereunder or under any Note shall, to the extent permitted by
Applicable Law, be amortized, prorated, allocated and spread throughout the
full term of such indebtedness until payment in full of such indebtedness
so that the actual rate of interest is uniform throughout the full term
thereof;
(d) if at any time the interest provided pursuant to Section 4.1,
-----------
together with any fees payable to any Lender pursuant to this Agreement or
any Note that are deemed to be interest under Applicable Law, exceeds that
amount which would have accrued to such Lender at the Highest Lawful Rate,
the amount of interest and any such fees to accrue pursuant to this
Agreement or any Note shall be limited, notwithstanding anything to the
contrary in this Agreement or any Note, to the amount which would have
accrued at the Highest Lawful Rate, but any subsequent reductions in the
amount of such interest and/or fees, as applicable, which would otherwise
occur shall not reduce the interest to accrue to such Lender pursuant to
this Agreement and the applicable Note below the Highest Lawful Rate until
the total amount of interest accrued pursuant to this Agreement and such
Note and such fees that are deemed to be interest equals the amount of
interest which would have accrued to such Lender if a varying rate per
annum equal to the rate provided pursuant to Section 4.1 had at all times
-----------
been in effect, plus the amount of fees which would have been received but
----
for the effect of this Section 4.6; and
-----------
(e) if the total amount of interest paid or accrued, together
with any fees payable pursuant to this Agreement and any Note that are
deemed to
-25-
<PAGE>
be interest under Applicable Law, pursuant to this Agreement and any Note
under the foregoing provisions of this Section 4.6, is less than the total
-----------
amount of interest which would have accrued if a varying rate per annum
equal to the rate provided pursuant to Section 4.1 had at all times been in
-----------
effect and all fees provided for in this Agreement and such Note had been
paid, then the Company agrees to pay to the applicable Lender, upon demand,
an amount equal to the difference between (i) the lesser of (A) the amount
of interest and fees which would have accrued if the Highest Lawful Rate
had at all times been in effect, and (B) the amount of interest and fees
which would have accrued if a varying rate per annum equal to the rate
provided pursuant to Section 4.1 had at all times been in effect and all
-----------
fees provided for in this Agreement and the applicable Note had been paid
and (ii) the amount of interest and fees paid in accordance with the other
provisions of this Agreement and the applicable Note.
For purposes of Article 5069-1.04, Vernon's Texas Civil Statutes, to the extent,
if any, applicable to any lender, the Company agrees that the Highest Lawful
Rate shall be the "indicated (weekly) rate ceiling" as defined in said Article;
provided that any Lender may also rely, to the extent permitted by Applicable
- --------
Law, on alternative maximum rates of interest, if greater, under other
Applicable Laws; provided, further, that to the extent permitted by such
-------- -------
Article, any Lender by notice to the Company may revise the aforesaid election
of such interest rate ceiling as such ceiling affect the then current or future
balances outstanding under this Agreement and any Note. Chapter 15, Subtitle 3,
Title 79, of the Revised Civil Statutes of Texas, 1925 (relating to revolving
loans and triparty accounts), shall not apply to this Agreement or any Note.
SECTION 5 FEES.
5.1. Non-Use Fee. The Company agrees to pay to the Agent for the
-----------
account of each Lender a non-use fee for the period from and including the
Effective Date to but excluding the Termination Date in an amount equal to the
Specified Percentage (as defined below) per annum of the daily average of the
unused amount of such Lender's
-26-
<PAGE>
Commitment. Such non-use fee shall be payable in arrears on the last day of
each calendar quarter and on the Termination Date for any period then ending for
which such non-use fee shall not have been theretofore paid. The non-use fee
shall be computed for the actual number of days elapsed on the basis of a year
of 360 days.
For purposes of the foregoing, "Specified Percentage" means (a) if the
Interest Coverage Ratio is equal to or greater than 3.75 to 1, 0.10%, (b) if the
Interest Coverage Ratio is equal to or greater than 2.5 to 1 but less than .375
to 1, 0.125%, and (c) if the Interest Coverage Ratio is less than 2.5 to 1,
0.175%. The Specified Percentage initially shall be 0.10% and shall be
adjusted, to the extent applicable, 50 days (or, in the case of the last fiscal
quarter of any fiscal year, 90 days) after the end of each fiscal quarter based
on the Interest Coverage Ratio as of the last day of such fiscal quarter; it
being understood that if the Company fails to deliver the financial statements
required By Section 10.1.1 or 10.1.2, as applicable, by the 50th day (or, if
-------------- ------
applicable, the 90th day) after any fiscal quarter, the Specified Percentage
shall be 0.175% until such financial statements are delivered.
5.2 Agent's Fee. The Company agrees to pay to the Agent for its own
-----------
account such fees are agreed to from time to time by the Company and the Agent.
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS; PREPAYMENTS.
6.1 Reduction or Termination of the Commitments. The Company may from
-------------------------------------------
time to time on at least five Business Days' prior written notice received by
the Agent (which shall promptly advise each Lender thereof) permanently reduce
the amount of the Commitments to an amount not less than the aggregate unpaid
principal amount of the Loans. Any such reduction shall be in an amount that is
an integral multiple of $5,000,000 and shall be pro rata among the Lenders
according to their respective Percentages. The Company may at any time on like
notice terminate the commitments upon payment in full of all Loans and all other
obligations of the Company hereunder.
6.2 Prepayments. The Company may from time to time prepay the Loans
-----------
in whole or in part, provided that
-27-
<PAGE>
(a) the Company shall give the Agent (which shall promptly advise each Lender)
written notice thereof not later than 11:00 a.m., Chicago time, on the date of
such prepayment, in the case of Floating Rate Loans, and not less than two
Business Days' prior to the date of such prepayment, in the case of Eurodollar
Loans, in each case specifying the Loans to be prepaid and the date (which shall
be a Business Day) and amount of prepayment (b) each partial prepayment of Loans
shall be in an aggregate principal amount of at least $1,000,000 and an integral
multiple of $500,000 and (c) any prepayment of Eurodollar Loans on a day other
than the last day of an Interest Period therefor shall be subject to Section
-------
8.4. After giving effect to any prepayment of Eurodollar Loans, each Group of
Eurodollar Loans shall be at least $2,000,000 and an integral multiple of
$500,000.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES
7.1 Making of Payments. All payments of principal of or interest on
------------------
the Notes, and of all fees, shall be made by the Company to the Agent in
immediately available funds at its office in Chicago not later than noon,
Chicago time, on the date due; and funds received after that hour shall be
deemed to have been received by the Agent on the immediately following Business
Day. The Agent shall promptly remit to each Lender its share of all such
payments received in collected funds by the Agent for the account of such
Lender.
All payments under Section 8.1 and 8.4 shall be made by the Company
----------- ---
directly to the Lender entitled thereto.
7.2 Application of Certain Payments. Each payment of principal shall
-------------------------------
be applied to such Loans as the Company shall direct by notice to be received by
the Agent on or before the date of such payment, or in the absence of such
notice, as the Agent shall determine in its discretion. Concurrently with each
remittance to any Lender of its share of any such payment, the Agent shall
advise such Lender as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest with
------------------
respect to any of the Notes, or of any fee, falls due on a day which is not a
Business Day, then such due date shall be extended to the immediately following
Business Day and, in the case of principal,
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<PAGE>
additional interest shall accrue and be payable for the period of any such
extension.
7.4 Setoff. The Company agrees that the Agent and each Lender have
------
all rights of set-off and bankers' lien provided by applicable law, and in
addition thereto, the Company agrees that at any time any Unmatured Event of
Default described in Section 12.1.4 or any Event of Default exists, the Agent
--------------
and each Lender may apply to the payment of any obligations of the Company
hereunder any and all balances, credits, deposits, accounts or moneys of the
Company then or thereafter with the Agent or such Lender.
7.5 Proration of Payments. If any Lender shall obtain any payment or
---------------------
other recovery (whether voluntary, involuntary, by application of offset or
otherwise) on account of principal of or interest on any Note in excess of its
pro rata share of payments and other recoveries obtained by all Lenders on
account of principal of and interest on all Notes (other than any non-pro rata
interest payment resulting from a Loan being an Affected Loan or as a result of
replacement of a Lender pursuant to Section 8.7), such Lender shall purchase
-----------
from the other Lenders such participation in the Notes held by them as shall be
necessary to cause such purchasing Lender to share the excess payment or other
recovery ratably with each of them; provided, however, that if all or any
--------- -------
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery.
7.6 Taxes.
-----
(a) All payments by the Company of principal, interest, fees,
indemnities and other amounts payable hereunder and under the Notes
shall be made to the recipient thereof without setoff or counterclaim
and free and clear of, and without withholding or deduction for or on
account of, any present or future Taxes (other than Excluded Taxes (as
defined below)) now or hereafter imposed on such recipient or its
income, property, assets or franchises (such recipient's "Recipient
Taxes"), except to the extent that such withholding or deduction (i)
is required by applicable law, (ii) results from the breach by such
recipient of its Exemption Agreement (as
-29-
<PAGE>
defined below) or (iii) would not be required if such recipient's
Exemption Representation (as defined below) were true. If any such
withholding or deduction is required by applicable law, the Company
will:
(A) pay to the relevant authorities the full amount so required
to be withheld or deducted;
(B) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to
such authorities; and
(C) except to the extent that such withholding or deduction
results from the breach, by the recipient of a payment, of its
Exemption Agreement or would not be required if such recipient's
Exemption Representation were true, pay to the Agent for the account
of the relevant recipient such additional amount as is necessary to
ensure that the net amount actually received by such recipient will
equal the full amount such recipient would have received had no such
withholding or deduction been required.
For the purposes of this Section 7.6, "Excluded Taxes" means, in the case of
-----------
payments made to any Lender or the Agent, all of the following: taxes imposed
upon the overall net income of such Lender or the Agent, franchise taxes imposed
upon such Lender or the Agent with respect to its net income by the jurisdiction
under the laws of which such Lender or the Agent, as the case may be, is
organized or any political subdivision thereof, and franchise taxes imposed upon
such Lender or the Agent with respect to its net income by the jurisdiction in
which such Lender's or the Agent's Eurodollar Office is located or any political
subdivision thereof.
(b) In consideration of the Company's agreements in clause (a)
----------
of this Section 7.6, each Lender which is not organized under the
-----------
laws of the United States or a State thereof hereby agrees (such
Lender's "Exemption Agreement"), to the extent permitted by
applicable law (including any
-30-
<PAGE>
applicable double taxation treaty of the jurisdiction of its
incorporation and the jurisdiction in which its Eurodollar Office is
located), to execute and deliver to the Company (i) on or before the
first date on which any payment is to be made to such Lender
hereunder, a United States Internal Revenue Service Form 1001 or
4224 (or successor form), as appropriate, properly completed and
claiming a complete exemption, from withholding or deduction for or
on account of Recipient Taxes of such Lender, and (ii) a new Form
1001 or 4224 (or successor form), as appropriate, upon the
expiration or obsolescence of any previously delivered Form.
(c) Each Lender hereby represents and warrants (such Lender's
"Exemption Representation") to the Company that on the Effective
Date (or, if later, the date such Lender becomes a party to this
Agreement) it is entitled to receive payments of principal of, and
interest on, Loans made by such Lender without withholding or
deduction for or on account of such Lender's Recipient Taxes imposed
by the United States of America or any political subdivision
thereof.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS.
8.1 Increased Costs. (a) If, after the date hereof, the adoption of
---------------
any applicable law, rule or regulation, or any change in any applicable law,
rule or regulation (including, without limitation, Regulation D of the Federal
Reserve Board), or any change in the interpre tation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Lender (or
any Eurodollar Office of such Lender) with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency
(A) shall subject any Lender (or any Eurodollar Office of
such Lender) to any tax, duty or other charge with respect to its
Eurodollar Loans, its Note or its obligation to make Eurodollar
Loans, or shall change the
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<PAGE>
basis of taxation of payments to any Lender of the principal of
or interest on its Eurodollar Loans or any other amounts due
under this Agreement in respect of its Eurodollar Loans or its
obligation to make Eurodollar Loans (except for taxes imposed on
or measured by the overall net income of such Lender or its
Eurodollar Office imposed by the jurisdiction, or any political
subdivision thereof or taxing authority therein, in which such
Lender's principal executive office or Eurodollar Office is
located or in which such Lender is incorporated); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the
Federal Reserve Board, but excluding any reserve included in the
determination of interest rates pursuant to Section 4), special
---------
deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by any Lender (or any
Eurodollar Office of such Lender); or
(C) shall impose on any Lender (or its Eurodollar Office)
any other condition affecting its Eurodollar Loans, its Note or
its obligation to make Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D referred to above, to impose a cost on) such Lender (or any
Eurodollar Office of such Lender) of making or maintaining any Eurodollar Loan,
or to reduce the amount of any sum received or receivable by such Lender (or its
Eurodollar Office) under this Agreement or under its Note with respect thereto,
then within 10 days after demand by such Lender (which demand shall be
accompanied by a statement setting forth the basis of such demand, a copy of
which shall be furnished to the Agent), the Company shall pay directly to such
Lender such additional amount or amounts as will compensate such Lender for such
increased cost or such reduction.
(b) If any Lender shall reasonably determine that the adoption or
phase-in of any applicable law, rule or
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<PAGE>
regulation regarding capital adequacy, or any change in any applicable law, rule
or regulation, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Eurodollar Office) or any Person controlling such Lender with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's or such controlling
Person's capital as a consequence of such Lender's obligations hereunder
(including, without limitation, such Lender's Commitment) to a level below that
which such Lender or such controlling Person could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's or such
controlling Person's policies with respect to capital adequacy) by an amount
deemed by such Lender or such controlling Person to be material, then from time
to time, within 10 days after demand by such Lender (which demand shall be
accompanied by a statement setting forth the basis of such demand, a copy of
which shall be furnished to the Agent), the Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling Person for such reduction.
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If
--------------------------------------------------------
with respect to any Interest Period:
(a) Lenders having an aggregate Percentage of 50% or more advise
the Agent that deposits in Dollars (in the applicable amounts) are not being
offered to such Lenders in the relevant market for such Interest Period, or the
Agent otherwise reasonably determines (which determination shall be binding and
conclusive on the Company) that by reason of circumstances affecting the
interbank eurodollar market adequate and reasonable means do not exist for
ascertaining the applicable Eurodollar Rate; or
(b) Lenders having an aggregate Percentage of 50% or more advise
the Agent that the Eurodollar Rate (Reserve Adjusted) as determined by the Agent
will not adequately and fairly reflect the cost to such Lenders of maintaining
or funding such Loans for such Interest Period, or that the making or funding of
Eurodollar Loans has become
-33-
<PAGE>
impracticable as a result of an event occurring after the date of this Agreement
which in the reasonable opinion of such Lenders materially affects such Loans,
then the Agent shall promptly notify the other parties thereof and, so long as
- ----
such circumstances shall continue, (i) no Lender shall be under any obligation
to make or convert into Eurodollar Loans and (ii) on the last day of the current
Interest Period for each Eurodollar Loan, such Loan shall, unless then repaid in
full, automatically convert to a Floating Rate Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful. In the event
--------------------------------------------------
that any change in (including the adoption of any new) applicable laws or
regulations, or any change in the interpretation of applicable laws or
regulations by any governmental or other regulatory body charged with the
administration thereof, should make it (or in the good faith judgment of any
Lender cause a substantial question as to whether it is) unlawful for any Lender
to make, maintain or fund Eurodollar Loans, then such Lender shall promptly
notify each of the other parties hereto and, so long as such circumstances shall
continue, (a) such Lender shall have no obligation to make or convert into
Eurodollar Loans (but shall make Floating Rate Loans concurrently with the
making of or conversion into Eurodollar Loans by the Lenders which are not so
affected, in each case in an amount equal to such Lender's Percentage of all
Eurodollar Loans which would be made or converted into at such time in the
absence of such circumstances) and (b) on the last day of the current Interest
Period for each Eurodollar Loan of such Lender (or, in any event, if such Lender
so requests, on such earlier date as may be required by the relevant law,
regulation or interpretation), such Eurodollar Loan shall, unless then repaid in
full, automat ically convert to a Floating Rate Loan. Each Floating Rate Loan
made by a Lender which, but for the circumstances described in the foregoing
sentence, would be a Eurodollar Loan (an "Affected Loan") shall, notwithstanding
any other provision of this Agreement, remain outstanding for the same period as
the Group of Eurodollar Loans of which such Affected Loan would be a part absent
such circumstances.
8.4 Funding Losses. The Company agrees that, upon demand by any
--------------
Lender (which demand shall be accompanied by a statement setting forth the basis
for the calculations of the amount being claimed, a copy of which shall be
-34-
<PAGE>
furnished to the Agent), the Company will indemnify such Lender against any net
loss or expense which such Lender may sustain or incur (including, without
limitation, any net loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain any Eurodollar Loan), as reasonably determined by such Lender, as a
result of (a) any payment or prepayment or conversion of any Eurodollar Loan of
such Lender on a date other than the last day of an Interest Period for such
Loan (including, without limita tion, any conversion pursuant to Section 8.3)
-----------
or (b) any failure of the Company to borrow or convert any Loans on a date
specified therefor in a notice of borrowing or conversion pursuant to this
Agreement (other than as a result of a default by such Lender or the Agent).
For this purpose, all notices to the Agent pursuant to this Agreement shall be
deemed to be irrevocable.
8.5 Right of Lenders to Fund through Other Offices. Subject to
----------------------------------------------
clause (a) of Section 8.7, each Lender may, if it so elects, fulfill its
-----------
commitment as to any Eurodollar Loan by causing a foreign branch or affiliate of
such Lender to make such Loan, provided that in such event for the purposes of
--------
this Agreement such Loan shall be deemed to have been made by such Lender and
the obligation of the Company to repay such Loan shall nevertheless be to such
Lender and shall be deemed held by it, to the extent of such Loan, for the
account of such branch or affiliate.
8.6 Discretion of Lenders as to Manner of Funding. Notwithstanding
---------------------------------------------
any provision of this Agreement to the contrary, each Lender shall be entitled
to fund and maintain its funding of all or any part of its Loans in any manner
it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if such Lender had
actually funded and maintained each Eurodollar Loan during each Interest Period
for such Loan through the purchase of deposits having a maturity corresponding
to such Interest Period and bearing an interest rate equal to the Eurodollar
Rate for such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected Lender. (a)
-----------------------------------------------------------
Each Lender shall promptly notify the Company and the Agent of any event of
which it has knowledge which will result in, and will use reasonable commercial
efforts available to it (and not, in such Lender's sole
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judgment, otherwise disadvantageous to such Lender) to mitigate or avoid, (i)
any obligation by the Company to pay any amount pursuant to Section 7.6 or 8.1
----------- ---
(ii) the occur rence of any circumstance of the nature described in Section 8.2
-----------
or 8.3 (and, if any Lender has given notice of any such event described in
---
clause (i) or (ii) above and thereafter such event ceases to exist, such Lender
- ---------- ----
shall promptly so notify the Company and the Agent). Without limiting the
foregoing, each Lender will designate a different funding office if such
designation will avoid (or reduce the cost to the Company of) any event
described in clause (i) or (ii) of the preceding sentence and such designation
---------- ----
will not, in such Lender's sole judgment, be otherwise disadvantageous to such
Lender.
(b) At any time any Lender is an Affected Lender, the Company may
replace such Affected Lender as a party to this Agreement with one or more other
bank(s) or financial institution(s) reasonably satisfactory to the Agent, such
bank(s) or financial institution(s) to have a Commitment or Commitments, as the
case may be, in such amounts as shall be reasonably satisfactory to the Agent
(and upon notice from the Company such Affected Lender shall assign, without
recourse or warranty, its Commitment, its Loans, its Note and all of its other
rights and obligations hereunder to such replacement bank(s) or other financial
institution(s) for a purchase price equal to the sum of the principal amount of
the Loans so assigned, all accrued and unpaid interest thereon, its ratable
share of all accrued and unpaid non-use fees, any amounts payable under Section
-------
8.4 as a result of such Lender receiving payment of any Eurodollar Loan prior to
- ---
the end of an Interest Period therefor and all other obligations owed to such
Affected Lender hereunder).
8.8 Conclusiveness of Statements; Survival of Provisions.
----------------------------------------------------
Determinations and statements of any Lender pursuant to Section 8.1, 8.2, 8.3 or
----------- --- ---
8.4 shall be conclusive absent demonstrable error. Lenders may use reasonable
- ---
averaging and attribution methods in determining compensa tion under Sections
--------
8.1 and 8.4, and the provisions of such Sections shall survive repayment of the
- --- ---
Loans, cancellation of the Notes and any termination of this Agreement.
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SECTION 9 WARRANTIES.
To induce the Agent and the Lenders to enter into this Agreement and
to induce the Lenders to make Loans hereunder, the Company warrants to the Agent
and the Lenders that:
9.1 Organization, Power, etc. Each of the Company and each of its
------------------------
Subsidiaries (a) is a corporation or a partnership, as the case may be, validly
organized and existing and in good standing under the laws of the state of its
organization, and (b) is duly qualified to do business and is in good standing
as a foreign corporation or partnership, as the case may be, in each
jurisdiction where the nature of its activities or properties makes such
qualification necessary and where any failure so to qualify, individually or in
the aggregate for all such failures, would have a Materially Adverse Effect.
Each of the Company and each of its Subsidiaries has full power and authority to
own and hold under lease its property and to conduct its business as currently
conducted by it, other than governmental licenses, consents and approvals the
failure to hold which, individually or in the aggregate for all such failures,
would not have a Materially Adverse Effect. The Company has full power and
authority to execute, deliver, and perform its obligations under this Agreement
and each Note and to borrow Loans hereunder.
9.2 Authorization; No Conflict. The execution and delivery of this
--------------------------
Agreement and each Note, the borrowings hereunder, and the performance by the
Company of its obligations under this Agreement and each Note are within the
Company's corporate powers, have all been duly authorized by all necessary
corporate action or other organizational action, have received all necessary
governmental approvals (if any shall be required), and do not and will not
conflict with, result in any violation of, or constitute any default under any
provision of any Organic Document or material Contractual Obligation of the
Company or any of its Subsidiaries or any law or regulation of any governmental
authority or agency or any judicial decision, decree or order of any court or
other governmental authority, and will not result in or require the creation or
imposition of any Lien on any properties, assets, or revenues of the Company or
any of its Subsidiaries pursuant to the provisions of any Contractual Obligation
of the Company or any of its Subsidiaries.
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9.3 Validity and Binding Nature. This Agreement is, and each Note
---------------------------
when duly executed and delivered will be, a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in effect affecting the
enforceability of the rights of creditors generally and by the application of
general principles of equity.
9.4 No Default. Each of the Company and each of its Subsidiaries is
----------
in compliance with all provisions of its Organic Documents and all Instruments
to which it may be subject or by which it or any of its properties may be bound,
the failure to comply with which, individually or in the aggregate for all such
failures, would have a Materially Adverse Effect. No Event of Default or
Unmatured Event of Default has occurred and is continuing.
9.5 Financial Statements. The audited consolidated financial
--------------------
statements of the Company and its Subsidiaries as at October 31, 1993 and the
unaudited consolidated financial statements of the Company and its Subsidiaries
as at July 31, 1994, copies of which have been furnished to each Lender, have
been prepared in conformity with generally accepted accounting principles
applied on a basis consistent with that of the preceding fiscal year and period
and present fairly the financial condition of the Company and its Subsidiaries
as at such dates and the results of their operations for the periods then ended,
subject (in the case of the interim financial statement) to year-end audit
adjustments.
9.6 No Material Adverse Change; Solvency. Since the date of the
------------------------------------
audited financial statements described in Section 9.5, there have been no
-----------
occurrences which, individually or in the aggregate, have had a Materially
Adverse Effect. On the Effective Date, and on the date of the making of each
Loan, after giving effect to the making of such Loan, the Company and its
domestic Subsidiaries shall be Solvent.
9.7 Litigation; Labor Controversies; Contingent Liabilities. Except
-------------------------------------------------------
as set forth in Section 9.7,
-----------
(a) there are no claims, litigation (including, without
limitation, derivative
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actions), arbitration proceedings, administrative proceedings or
investigations that are pending or threatened against or affecting the
Company or any of its Subsidiaries (i) which, if adversely determined would
have a Materially Adverse Effect, or (ii) which purport to affect the
legality, validity, or enforceability of this Agreement or any Note or any
action taken or to be taken pursuant hereto, and there are no inquiries,
whether formal or informal, from any governmental agency or authority or
otherwise, which would give rise to any such action, proceeding or
investigation;
(b) there are no labor controversies pending or threatened
against the Company or any of its Subsidiaries which, based on reasonable
assumptions of the Company as to the probable outcome of any and all such
labor controversies, would have a Materially Adverse Effect; and
(c) other than any liability incident to any litigation,
proceedings or investigations described in this Section 9.7, neither the
-----------
Company nor any of its Subsidiaries has any material contingent liabilities
not provided for or disclosed in the financial statements referred to in
Section 9.5.
-----------
9.8 Ownership of Properties. Except (a) as set forth in Schedule 9.8
----------------------- ------------
and (b) for any failure to have a valid leasehold interest or a valid ownership
interest which would not, individually or in the aggregate for all such
failures, have a Materially Adverse Effect, each of the Company and each of its
Subsidiaries has a valid leasehold interest in all property leased by it, and
has good and marketable title to all of the properties and assets, real,
personal or mixed, tangible and intangible, of any nature whatsoever, owned by
it (which, with respect to licenses, means that the Company or such Subsidiary
(as applicable) is the lawful owner of its rights under such licenses), free and
clear of all Liens, charges, options or claims (including infringement claims
with respect to patents, trademarks, copyrights and all other intellectual
property) except for Liens permitted by Section 10.18. The Company and its
-------------
Subsidiaries own, or have a valid equitable interest sufficient to obtain an
assignment of, all franchises,
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<PAGE>
patents, copyrights, trademarks, trade names, licenses and permits, and rights
in respect of the foregoing, adequate for the conduct of their respective
businesses substantially as now conducted without known conflict with any rights
of any other Person.
9.9 Subsidiaries. Neither the Company nor any of its Subsidiaries
------------
has any Subsidiaries other than those listed on Schedule 9.9. The percentage
------------
ownership of such subsidiaries by the Company and its Subsidiaries is set forth
on Schedule 9.9.
------------
9.10 Purpose. The proceeds of the Loans will be used by the Company
-------
and its Subsidiaries for working capital needs and general corporate purposes
(including acquisitions).
9.11 Regulation U. Neither the Company nor any Subsidiary is engaged
------------
in the business of purchasing or selling Margin Stock, or extending credit to
others for the purpose of purchasing or carrying Margin Stock, and less than 25%
of the assets of the Company and its Subsidiaries, individually and on a
consolidated basis with its respective Subsidiaries, consists of Margin Stock.
No part of the proceeds of any Loan will be used to purchase or carry any Margin
Stock or for any other purpose which would violate, or be inconsistent with, any
of the margin regulations of the Federal Reserve Board.
9.12 Compliance with Laws, etc. Neither the Company nor any of its
-------------------------
Subsidiaries is in violation of any applicable law, rule, regulation, judgment,
decree or order of any governmental authority (federal, state, local or
foreign), which violation, individually or in the aggregate for all such
violations, would be reasonably likely to have a Materially Adverse Effect. The
Company and its Subsidiaries have obtained all governmental authorizations,
permits, licenses and other approvals required for the ownership and operation
of their respective businesses, the failure to obtain which (individually or in
the aggregate for all such failures) would be reasonably likely to have a
Materially Adverse Effect, and all such governmental authorizations, permits,
licenses and other approvals have been, and are currently, in effect, and the
Company and its Subsidiaries are in compliance with all such governmental
authorizations, permits, licenses and other approvals, the failure to comply
with which, individually or in the
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<PAGE>
aggregate for all such failures, would be reasonably likely to have a Materially
Adverse Effect.
9.13 Investment Company Act. Neither the Company nor any Subsidiary
----------------------
is an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
9.14 Public Utility Holding Company Act. Neither the Company nor any
----------------------------------
Subsidiary is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
9.15 Environmental Warranties. To the Company's knowledge, except as
------------------------
set forth in Schedule 9.15,
-------------
(a) all facilities and property (including underlying
groundwater) owned or leased by the Company or any of its Subsidiaries have
been, and continue to be, in compliance with all Environmental Laws, the
noncompliance by the Company and its Subsidiaries with which, individually
or in the aggregate for all such noncompliance, would have a Materially
Adverse Effect;
(b) there are no pending, unresolved or threatened Environmental
Actions which
(i) (individually or in the aggregate for all such
Environmental Actions) would be reasonably likely to have a
Materially Adverse Effect;
(c) there have been no Releases of Hazardous Materials at, on or
under any property now or previously owned or leased by the Company or any
of its Subsidiaries that, singly or in the aggregate, have had, have, or
may reasonably be expected to have, a Materially Adverse Effect;
(d) the Company and its Subsidiaries have been issued and are in
compliance with all permits, certificates, approvals, licenses and other
authorizations relating to environmental
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<PAGE>
matters that are necessary or desirable for their businesses, which failure
or failures so to comply (individually or in the aggregate) would be likely
to have a Materially Adverse Effect;
(e) no property now or previously owned or leased by the Company
or any of its Subsidiaries is listed or proposed for listing (with respect
to owned property only) on the National Priorities List pursuant to CERCLA,
on the CERCLIS (as defined in CERCLA) or on any similar state list of sites
requiring investigation or clean-up; and
(f) no conditions exist at, on or under any property now or
previously owned, leased or operated by the Company or any of its
Subsidiaries which, with the passage of time, or the giving of notice or
both, would give rise to liability under any Environmental Law, which
liability or liabilities (individually or in the aggregate) would be likely
to have a Materially Adverse Effect.
9.16 Pension and Welfare Plans. Each Pension Plan and each Welfare
-------------------------
Plan complies in all material respects with all applicable statutes and
governmental rules and regulations, and (a) no Reportable Event has occurred for
which the 30-day notice has not been waived, (b) neither the Company, any of its
Subsidiaries nor any ERISA Affiliate has withdrawn from any Pension Plan or
instituted steps to do so, other than withdrawals which, individually or in the
aggregate for all such withdrawals, would not be reasonably likely to have a
Materially Adverse Effect, (c) no steps have been instituted to terminate any
Pension Plan other than a standard termination under Section 4041(b) of ERISA
which does not require an expenditure that, individually or in the aggregate for
all such expenditures, would have a Materially Adverse Effect, and (d) no
contribution failure has occurred with respect to any Pension Plan sufficient to
give rise to a Lien under Section 302(f) of ERISA. No condition exists or event
or transaction has occurred with respect to any Pension Plan which would result
in the incurrence by the Company, any of its Subsidiaries or any ERISA Affiliate
of any liability, fine or penalty in an amount that, individually or in the
aggregate for all such liabilities, fines and penalties, would have a Materially
Adverse Effect. Neither the Company, any of its
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<PAGE>
Subsidiaries nor any ERISA Affiliate is a member of, or contributes to, any
Multiemployer Plan.
9.17 Taxes. Each of the Company and, to the extent material, its
-----
Subsidiaries has filed all tax returns, reports and declarations which are
required to have been filed by it and has paid, or made adequate provisions for
the timely payment of, all of its Taxes which are due and payable, except such
Taxes, if any, as are being contested in good faith and by appropriate
proceedings and as to which reserves or other appropriate provisions as may be
required by GAAP have been, and are being, maintained.
9.18 Accuracy of Information. To the best of the Company's
-----------------------
knowledge, all factual information heretofore or contemporaneously herewith
furnished by or on behalf of the Company to any Lender for purposes of or in
connection with this Agreement and the transactions contemplated hereby is, and
all factual information hereafter furnished by or on behalf of the Company to
any Lender will be, true and accurate in every material respect on the date as
of which such information is dated or certified and as of the Effective Date,
and none of such information is or will be incomplete by omitting to state any
material fact necessary to make such information not misleading.
SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and thereafter
until all obligations hereunder and under the Notes are paid in full, the
Company agrees that, unless at any time the Required Lenders shall otherwise
expressly consent in writing, the Company will perform and comply with, and will
cause its Subsidiaries to perform and comply with, the obligations set forth in
this Section 10.
----------
10.1 Reports, Certificates and Other Information. The Company will
-------------------------------------------
furnish to each Lender:
10.1.1 Annual Financial Statements. Within 90 days after the close
---------------------------
of each fiscal year of the Company, a copy of a consolidated balance sheet, as
at the close of such fiscal year, and the related consolidated statements of
operations, shareholders' equity, and cash flow for such fiscal year, together
with supporting notes thereto, of the Company and its consolidated Subsidiaries
(with comparable
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<PAGE>
information as at the close of and for the prior fiscal year), in each case
prepared in accordance with GAAP consistently applied and certified without
Impermissible Qualification by Price Waterhouse or another firm of independent
certified public accountants recognized to be of similar standing.
10.1.2 Quarterly Financial Statements. Within 50 days after the end
------------------------------
of each quarter (except the last quarter) of each fiscal year of the Company, a
copy of a consolidated balance sheet, as at the close of such quarter, and the
related consolidated statements of operations, shareholders' equity, and cash
flow for such quarter and for the period commencing at the close of the previous
fiscal year and ending with the close of such quarter, of the Company and its
consolidated Subsidiaries (with comparable information at the close of and for
the corresponding quarter of the prior fiscal year and for the corresponding
period of such prior fiscal year), each in reasonable detail and prepared in
accordance with GAAP consistently applied and certified by the chief accounting
officer, the chief financial officer or the Treasurer of the Company.
10.1.3 Compliance Certificate. Contemporaneously with the furnishing
----------------------
of a copy of each of the financial statements provided for in Section 10.1.1 and
--------------
10.1.2, a Compliance Certificate dated the date of such annual or such quarterly
- ------
financial statements, certified by the chief accounting officer, the chief
financial officer or the Treasurer of the Company and (a) to the effect that no
Event of Default or Unmatured Event of Default has occurred and is continuing,
or, if any such event has occurred and is continuing, describing it and the
steps, if any, being taken to cure it, and (b) containing a computation of, and
showing compliance with, each of the financial ratios and restrictions contained
in this Section 10.
----------
10.1.4 SEC and Other Reports. Copies of each filing and report made
---------------------
by the Company or any Subsidiary with or to any and of each communication from
the Company or any Subsidiary to shareholders generally, promptly upon the
filing or making thereof.
10.1.5 Other Information. Promptly, from time to time, such other
-----------------
reports or information concerning the Company and its Significant Affiliates as
any Lender may reasonably request; provided, however, that with respect to
-------- -------
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<PAGE>
Significant Affiliates not controlled by the Company, such reports and
information so requested shall relate to either (i) the data necessary to
demonstrate compliance with the financial covenants set forth herein or (ii)
information accessible to the Company and which the Company is authorized to
disclose to the Lenders.
Each of the financial statements referred to in Sections 10.1.1 and
---------------
10.1.2 above will be true and correct in all material respects as of the dates
- ------
and for the periods stated therein, subject, in the case of unaudited financial
statements, to changes resulting from normal recurring year-end audit
adjustments consistent with past practice (none of which, alone or in the
aggregate, would be reasonably likely to have a Materially Adverse Effect).
10.2 Notice of Default, Litigation, etc. The Company will, and will
----------------------------------
cause each of its Subsidiaries to, notify the Lenders in writing of any of the
following within three Business Days after learning thereof:
(a) Default. The occurrence of any Event of Default or
-------
Unmatured Event of Default;
(b) Litigation. The occurrence of any adverse development with
----------
respect to any litigation, action, proceeding, investigation or labor
controversy of the type described in Section 9.7 that is likely to have a
-----------
Materially Adverse Effect, or the commencement of any litigation, action,
proceeding, investigation or labor controversy of the type described in
Section 9.7, and, if requested by any Lender, provide such Lender copies of
-----------
all documentation relating to any of the foregoing;
(c) Environmental Action. The existence of any Environmental
--------------------
Action relating to the Company or any Subsidiary or any material
development relating to any such Environmental Action, if, based upon
information then reasonably available, the Company expects that such
Environmental Action is reasonably likely to result in the payment of
fines, compliance costs or clean-up costs by the Company or such Subsidiary
in excess of an aggregate of $5,000,000 for such Environmental Action;
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<PAGE>
(c) Pension and Welfare Plans. The occurrence of any of the
-------------------------
following: a Reportable Event with respect to any Pension Plan for which
the 30-day notice has not been waived; the institution of any steps by the
Company, any of its Subsidiaries, any ERISA Affiliate, the PBGC or any
other Person to terminate any Pension Plan if such termination would be
reasonably likely to result in a liability of $5,000,000 or more in excess
of any remaining contributions to such Pension Plan due from the Company,
any of its Subsidiaries or any ERISA Affiliate for the year in which such
termination occurs; the institution of any steps by the Company, any of its
Subsidiaries, or any ERISA Affiliate to withdraw from any Pension Plan if
such withdrawal would be reasonably likely to result in a liability of
$5,000,000 or more in excess of any remaining contributions to such Pension
Plan due from the Company, any of its Subsidiaries or any ERISA Affiliate
for the year in which such withdrawal occurs; the failure to make a
required contribution to any Pension Plan if such failure is sufficient to
give rise to a Lien under section 302(f) of ERISA; the taking of any action
with respect to a Pension Plan which would reasonably be expected to result
in the requirement that the Company, any of its Subsidiaries or any ERISA
Affiliate furnish a bond or other security to the PBGC or to such Pension
Plan; the occurrence of any event with respect to any Pension Plan which
would be reasonably likely to result in the incurrence by the Company, any
of its Subsidiaries or any ERISA Affiliate of any liability, fine or
penalty in an aggregate amount that, individually or in the aggregate for
all such liabilities, fines and penalties, would have a Materially Adverse
Effect; the occurrence of any event that would constitute a complete or
partial withdrawal from a Multiemployer Plan by the Company, any of its
Subsidiaries or any ERISA Affiliate if such withdrawal would be reasonably
likely to result in a liability of $5,000,000 or more in excess of any
remaining contribution to such Multiemployer Plan due from the Company, any
of its Subsidiaries or any ERISA Affiliate for the year in which such
withdrawal occurs; or any
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<PAGE>
amendment to a welfare plan that would have a Materially Adverse Effect;
(d) Material Adverse Change. The occurrence of any circumstance
-----------------------
that is reasonably likely to have a Materially Adverse Effect;
(e) Default on other Indebtedness. The receipt of any notice of
-----------------------------
any default or event of default (however denominated) with respect to any
Indebted ness of the Company or any of its Subsidiaries of $10,000,000 or
more (in the aggregate for all such notices which are currently effective)
from the trustee therefor or any holder thereof; and
Each notice delivered pursuant to this Section 10.2 shall contain a description
------------
in reasonable detail of the nature and period of existence of the matter in
question and of the actions which the Company or the applicable Subsidiary (as
applicable) has taken and proposes to take with respect thereto.
10.3 Maintenance of Existence, etc. The Company will maintain and
-----------------------------
preserve, and, except as otherwise permitted pursuant to Section 10.12, will
-------------
cause each of its Subsidiaries to maintain and preserve, in full force and
effect (a) its existence and good standing in the jurisdiction of its
incorporation and (b) its qualification and good standing as a foreign
corporation in each jurisdiction where the nature of its business makes such
qualification necessary (except in those instances in which the failure to be
qualified or in good standing would not have a Materially Adverse Effect).
10.4 Foreign Qualification. The Company will, and will cause each of
---------------------
its Subsidiaries to, cause to be done all things necessary at all times so that
the Company and each of its Subsidiaries will be duly qualified to do business
and be in good standing as a foreign corporation or partnership (as applicable)
in each jurisdiction where the ownership or lease of their respective properties
or the nature of their respective businesses makes such qualification necessary
and where the failure so to qualify, individually or in the aggregate for all
such failures, would have a Materially Adverse Effect.
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<PAGE>
10.5 Books, Records and Access. The Company will: maintain, and
-------------------------
will cause each of its Subsidiaries to maintain, complete and accurate books and
records reflecting all of their respective business affairs and transactions in
accordance with GAAP; permit, and will cause each of its Subsidiaries to permit,
any Lender and its agents and representatives to have access to the books and
records of the Company and such Subsidiary during normal business hours; permit,
and will cause each of its Subsidiaries to permit, any Lender and its agents and
representatives to make copies of such books and records; and permit, and will
cause each of its Subsidiaries to permit, any Lender and its agents and
representatives, at reasonable times and intervals during normal business hours,
to visit all of their respective offices and other locations, to discuss their
financial matters with their respective officers and independent public
accountants (and hereby authorizes such independent public accountants to
discuss such financial matters with any Lender or its representatives, whether
or not any representative of the Company or such Subsidiary is present, upon the
request of such Lender and the consent of the Company thereto, such consent not
to be unreasonably withheld or delayed).
10.6 Insurance. The Company will maintain, and will cause each of
---------
its Subsidiaries to maintain, insurance (which may include self-insurance) with
respect to their respective properties, assets, revenues, businesses and
business operations against such casualties and contingencies and of such types
and in such amounts as is customary in accordance with prudent business practice
in the case of similar businesses and such other insurance as is required by
law.
10.7 Maintenance of Property. The Company will maintain, preserve
-----------------------
and keep, and will cause each of its Subsidiaries to maintain, preserve and
keep, the properties which are useful and necessary in their respective
businesses in good repair, working order and condition, ordinary wear and tear
excepted.
10.8 Taxes. The Company will pay, and will cause each of its
-----
Subsidiaries to pay, when due, all of their respective Taxes; provided, however,
-------- -------
that the foregoing shall not require the Company or any of its Subsidiaries to
pay or discharge any Taxes so long as (a) the Company or such Subsidiary, as the
case may be, is contesting such
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<PAGE>
Taxes in good faith and by appropriate proceedings and the Company or such
Subsidiary has set aside on its books such reserves or other appropriate
provisions therefor as may be required by GAAP and (b) no forfeiture would occur
or would be threatened as a result of such contest by the Company or such
Subsidiary.
10.9 Compliance with Laws. The Company will: (a) comply, and will
--------------------
cause each of its Subsidiaries to comply, with all applicable laws, rules,
regulations, judgments, rulings, decrees and orders of any governmental
authority, the noncompliance by the Company and its Subsidiaries with which,
individually or in the aggregate for all such noncompliance, would have a
Materially Adverse Effect; (b) obtain, and will cause each of its Subsidiaries
to obtain, all governmental authorizations, permits and licenses necessary or
desirable for the operations of the Company and its Subsidiaries, which failure
by the Company and its Subsidiaries to obtain any of the foregoing, individually
or in the aggregate for all such failures, would have a Materially Adverse
Effect; and (c) cause, and will cause each of its Subsidiaries to cause, all
governmental authorizations, permits and licenses necessary or desirable for the
operations of the Company and its Subsidiaries to remain in effect and to be
renewed in a timely manner and conduct, and will cause each of its Subsidiaries
to conduct, their respective businesses in compliance therewith, the
noncompliance with which by the Company and its Subsidiaries, individually or in
the aggregate for all such noncompliance, would have a Materially Adverse
Effect.
10.10 Further Assurances. The Company will, and will cause each of
------------------
its Subsidiaries to, cooperate with the Lenders and execute and furnish to any
Lender such further agreements, instruments, certificates and other documents as
such Lender may reasonably request to carry out to such Lender's reasonable
satisfaction the transactions contemplated in this Agreement.
10.11 Pension Plans. The Company will: not permit, and will not
-------------
permit any of its Subsidiaries to permit, any condition to exist in connection
with any Pension Plan which would constitute grounds for the PBGC to institute
proceedings to have such Pension Plan terminated or a trustee appointed to
administer such Pension Plan which proceedings, or the outcome thereof, would be
reasonably
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likely to have a Materially Adverse Effect; and not engage in, or permit to
exist or occur, or permit any of its Subsidiaries to engage in, or permit to
exist or occur, any other condition, event or transaction with respect to any
Pension Plan which would result in the incurrence by the Company or any of its
Subsidiaries of any liability, fine or penalty that, individually or in the
aggregate for all such liabilities, fines, or penalties, would have a Materially
Adverse Effect.
10.12 Merger, Purchase and Sale. The Company will not, and (except
-------------------------
for any such transaction between wholly-owned Subsidiaries of the Company or
between Subsidiaries in which the Company owns equal percentages of voting
stock) will not permit any of its Subsidiaries to:
(a) be a party to any merger, consolidation or exchange of stock
with any other Person, unless immediately before such merger, consolidation
or exchange of stock and after giving effect thereto, no Event of Default
or Unmatured Event or Default shall have occurred and be continuing;
(b) sell, transfer, convey, lease or otherwise dispose of any
of, or grant options, warrants, or other rights with respect to, any of
their respective assets (including capital stock of, or other equity
interests in, any Subsidiary) to any Person, unless, immediately before
such sale, transfer, conveyance, lease or other disposition and after
giving effect thereto, no Event of Default or Unmatured Event of Default
shall have occurred and be continuing;
(c) sell or assign, with or without recourse, any accounts
receivable or chattel paper, except for (i) sales or assignments of
accounts receivable or chattel paper in an amount that at any time does not
cause the aggregate outstanding amount of all accounts receivable and
chattel paper that are sold and assigned to exceed $50,000,000 and (ii)
such other sales or assignments of accounts receivable or chattel paper
that the Required Lenders, in their reasonable discretion, approve in
writing; or
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(d) purchase or otherwise acquire all or substantially all the
assets of, or the equity interests in, any Person, unless, immediately
before such purchase or acquisition and after giving effect thereto, no
Event of Default or Unmatured Event of Default shall have occurred and be
continuing.
10.13 Indebtedness/Capitalization Ratio. The Company will not permit
---------------------------------
the Indebtedness/Capitalization Ratio to be greater than 0.5 to 1.0 at any time.
10.14 Indebtedness/Net Cash Flow Ratio. The Company will not permit
--------------------------------
the Indebtedness/Net Cash Flow Ratio to be less than 4.5 to 1, as measured as of
the last day of any fiscal quarter of the Company and its Subsidiaries for the
12-month period ending on the last day of such fiscal quarter.
10.15 Interest Coverage Ratio. The Company will not permit the
-----------------------
Interest Coverage Ratio as of the last day of any fiscal quarter of the Company
to be less than 2.0 to 1.
10.16 Restricted Payments. (a) The Company will not, and will not
-------------------
permit any of its Subsidiaries to, purchase or redeem any shares of their
respective stock or other equity interests; (b) the Company will not, and will
not permit any of its non-wholly-owned Subsidiaries to, declare, pay, or make
any dividend or distribution (in cash, property, or obligations) on any shares
of any class of its own capital stock (now or hereafter outstanding) or other
equity interests (now or hereafter outstanding), or on any warrants, options, or
other rights with respect to any shares of any class of its own capital stock
(now or hereafter outstanding) or other equity interests (now or hereafter
outstanding) (other than dividends or distributions payable solely in its stock,
or warrants to purchase its stock, or split-ups or reclassifications of its
stock into additional or other shares of its stock, so long as such transactions
do not involve the incurrence of Indebtedness) nor will it apply, or permit any
of its Subsidiaries to apply, any of their respective funds, properties or
assets to the purchase, redemption, sinking fund or other retirement of any
shares of any class of its own capital stock (now or hereafter outstanding) or
other equity interests (now or hereafter outstanding); (c) the Company will not,
and will not permit any of its
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<PAGE>
Subsidiaries to, set aside any funds or make any deposit for any of the
foregoing purposes; and (d) the Company will not prepay, purchase or redeem, and
will not permit any of its Subsidiaries to purchase, any subordinated
Indebtedness of the Company; provided, however, (i) the Company may declare, pay
-------- -------
and make cash dividends and distributions and redeem and purchase its stock and
equity interests, and set aside funds for such purposes, in each case so long as
no Event of Default or Unmatured Event of Default shall have occurred and be
continuing immediately prior thereto or will result therefrom and (ii) any
Subsidiary may pay dividends the Company.
10.17 Indebtedness. The Company will not, and will not permit any
------------
Subsidiary to, create, incur, assume or permit to exist or otherwise become or
be liable in respect of any Indebtedness except: (a) the Loans; (b)
Indebtedness of Subsidiaries to the Company; (c) Indebtedness of Subsidiaries to
other Subsidiaries; (d) Capitalized Lease Liabilities; (e) other Indebtedness
outstanding on the date hereof and listed on Schedule 10.17 or hereafter
--------------
incurred in connection with Liens permitted by Section 10.18; (f) Indebtedness
-------------
in respect of judgments or awards which have been in force for less than the
applicable appeal period so long as execution is not levied thereunder (or in
respect of which the Company or its relevant Subsidiary shall at the time in
good faith be prosecuting an appeal or proceedings for review and in respect of
which a stay of execution shall have been obtained pending such appeal or
review) and which does not, in the aggregate for the Company and all of its
Subsidiaries, exceed $5,000,000 at any time; (g) the endorsement, in the
ordinary course of collection, of instruments payable to the order of the
Company or any of its Subsidiaries (as applicable); (h) guaranties by the
Company of the obligations of its Subsidiaries; and (i) other Indebtedness of
the Company and its Subsidiaries; provided, however, that no Indebtedness
-------- -------
otherwise permitted by clause (d), (e), (h}, or (i) shall be permitted to be
---------- --- --- ---
incurred if, either immediately before the proposed incurrence or issuance
thereof or after giving effect to the incurrence or issuance thereof (as
applicable), any Event of Default or Unmatured Event of Default shall have
occurred and be continuing.
10.18 Liens. The Company will not, and will not permit any
-----
Subsidiary to, create, incur, assume or permit to exist any Lien with respect to
any of its properties, assets
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<PAGE>
or revenues, whether now owned or hereafter acquired, except (a) Liens (i) in
------
connection with the acquisition of property after the date hereof by way of
purchase money mortgage, conditional sale or other title retention agreement,
capitalized lease or other deferred payment contract, and attaching only to the
property being acquired, and (ii) existing prior to the time any property is
acquired by the Company or any Subsidiary and attaching only to such property
(but not incurred in anticipation of such acquisition by the Company or such
Subsidiary); in each case if the Indebtedness secured by each Lien described in
clause (i) or clause (ii) above is permitted pursuant to Section 10.17; (b)
- ---------- ----------- -------------
Liens for current Taxes that are not delinquent or Taxes that are being
contested in good faith and by appropriate proceedings and as to which reserves
or other appropriate provisions as may be required by GAAP have been and are
being maintained; (c) Liens of carriers, warehousemen, mechanics, materialmen,
repairmen, and landlords arising in the ordinary course of business and securing
obligations which are not overdue or which are being contested in good faith and
by appropriate proceedings and as to which reserves or other appropriate
provisions as may be required by GAAP have been and are being maintained; (d)
Liens incurred in the ordinary course of business in connection with workmen's
compensation, unemployment insurance, or other forms of governmental insurance
or benefits, or to secure performance of tenders, statutory obligations, leases,
and contracts (other than for borrowed money) entered into in the ordinary
course of business or to secure obligations on surety or appeal bonds; (e) Liens
in favor of the Agent; (f) Liens disclosed on Schedule 10.18; (g) Liens
--------------
disclosed in the financial statements referred to in Section 9.5; (h) judgment
-----------
Liens in existence less than 30 days after the entry thereof or with respect to
which execution has been stayed; and (i) Liens securing Indebtedness of
Subsidiaries not exceeding in the aggregate $25,000,000.
10.19 Other Agreements. The Company will not, and will not permit
----------------
any of its Subsidiaries to, enter into any agreement containing any provision
which would be violated or breached by any Loan (or request therefor) or by the
Company's performance of its obligations hereunder.
10.20 Use of Proceeds. The Company will not, and will not permit any
---------------
of its Subsidiaries to, use any proceeds of the Loans, either directly or
indirectly, for the
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<PAGE>
purpose, whether immediate, incidental or ultimate, of "purchasing or carrying
any margin stock" within the meaning of Regulation U of the Federal Reserve
Board, as amended from time to time; and will furnish, and will cause its
Subsidiaries to furnish, to any Lender, upon such Lender's request, a statement
in conformity with the requirements of Federal Reserve Form U-1 referred to in
Regulation U. The Company may use the proceeds of the Loans to finance
acquisitions of other companies or assets provided (a) such acquisition is not
--------
prohibited by another provision of this Credit Agreement and (b) the Person
being acquired or the Person whose assets are being acquired (or such Person's
board of directors) has not (i) announced that it will oppose such acquisition
or (ii) commenced any litigation which alleges such acquisition violates, or
will violate, applicable law.
10.21 Transactions with Affiliates. The Company will not, and will
----------------------------
not permit any of its Subsidiaries to, enter into or cause, suffer or permit to
exist any transaction or arrangement (including, without limitation, the
purchase, sale, lease or exchange of property or the rendering of any service)
with any of its Affiliates (excluding the Company or any Subsidiary), if such
transaction or arrangement is on a non-arm's-length basis and such transaction
or arrangement, individually or in the aggregate for all such transactions or
arrangements, would be reasonably likely to have a Materially Adverse Effect.
10.22 Environmental Liabilities. The Company will not, and will not
-------------------------
permit any of its Subsidiaries to, violate any requirement of any Environmental
Law, the violation of which by the Company and its Subsidiaries, individually or
in the aggregate for all such violations, would have a Materially Adverse
Effect. Without limiting the foregoing, the Company and its Subsidiaries will
not, and will not permit any Person to, Release any Hazardous Materials into the
environment or onto or (except in accordance with applicable law) from any real
property leased, owned or operated by the Company or any of its Subsidiaries or
any adjacent property, which Releases (individually or in the aggregate for all
such Releases) would be reasonably likely to result in a requirement that the
Company or any of its Subsidiaries undertake any removal or other remedial
action pursuant to any Environmental Law, nor allow any Lien imposed pursuant to
any Environmental Law
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<PAGE>
to be imposed or to remain on such owned or operated real property.
SECTION 11 CONDITIONS OF LENDING.
The obligation of each Lender to make its Loans is subject to the
following conditions precedent:
11.1 Initial Loan. The obligation of each Lender to make its initial
------------
Loan is, in addition to the conditions precedent specified in Section 11.2,
------------
subject to the conditions precedent (and the date on which all such conditions
precedent have been satisfied or waived in writing by the Lenders is herein
called the "Effective Date") that the Agent shall have received all of the
following, each duly executed and dated the Effective Date (or such other date
as shall be satisfactory to the Agent), in form and substance satisfactory to
the Agent, and each (except for the Notes, of which only the original shall be
signed) in sufficient number of signed counterparts to provide one for each
Lender:
11.1.1 Notes. The Notes of the Company payable to the order of
-----
the Lenders.
11.1.2 Resolutions. Certified copies of resolutions of the
-----------
Board of Directors of the Company authorizing the execution, delivery and
performance by the Company of this Agreement, the Notes and the other documents
to be executed by the Company pursuant hereto.
11.1.3 Consents, etc. Certified copies of all documents
-------------
evidencing any consents and governmental approvals (if any) required for the
execution, delivery and performance by the Company of this Agreement and the
Notes.
11.1.4 Incumbency and Signature Certificates. An incumbency and
-------------------------------------
signature certificate of the Company certifying the names of the officer or
officers of the Company authorized to sign this Agreement, the Notes and the
other documents required to be delivered by the Company in connection with this
Agreement, together with a sample of the true signature of each such officer (it
being understood that the Agent and each Lender may conclusively rely on such
certificate until formally advised by a like certificate of any changes
therein).
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<PAGE>
11.1.5 Opinion of Counsel for the Company. The opinion of Steve
----------------------------------
Barnett, Esq., counsel to the Company, substantially in the form of Exhibit C.
---------
11.1.6 Other. Such other documents as the Agent or any Lender
-----
may reasonably request.
11.2 All Loans. The obligation of each Lender to make each Loan is
---------
subject to the following further conditions precedent that:
11.2.1 No Default. (a) No Event of Default or Unmatured Event
----------
of Default has occurred and is continuing or will result from the making of such
Loan and (b) the warranties of the Company contained in Section 9 (excluding
Section 9.9) are true and correct in all material respects as of the date of
- -----------
such requested Loan, with the same effect as though made on such date.
11.2.2 No Material Adverse Change. Since the date of the audited
--------------------------
financial statements referred to in Section 9.5, there has been no change in the
-----------
assets, business, revenues, financial condition, prospects or operations of the
Company and its Subsidiaries which has (or has had) a Materially Adverse Effect.
11.2.3 Confirmatory Certificate. If requested by the Agent or
------------------------
any Lender, the Agent shall have received (in sufficient counterparts to provide
one to each Lender) a certificate dated the date of such requested Loan and
signed by a duly authorized officer of the Company as to the matters set out in
Section 11.2.1 and 11.2.2 (it being understood that each request by the Company
- -------------- ------
for the making of a Loan shall be deemed to constitute a warranty by the Company
that the conditions precedent set forth in Section 11.2.1 and 11.2.2 will be
-------------- ------
satisfied at the time of the making of such Loan), together with such other
documents as the Agent or any Lender may reasonably request in support thereof.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an
-----------------
"Event of Default" under this Agreement:
12.1.1 Non-Payment of Obligation. The Company shall default in the
-------------------------
payment when due of any
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<PAGE>
principal of or interest on any Loan; or the Company shall default, and such
default shall continue unremedied for three Business Days after notice to the
Company from the Agent or any Lender, in the payment when due of any other
Obligation (including, without limitation, any fees or expenses not being
contested in good faith).
12.1.2 Non-Performance of Other Obligations. The Company shall
------------------------------------
default in the due performance and observance of Section 10.13, 10.14 or 10.15;
------------- ----- -----
or the Company shall default in the due performance and observance of any other
agreement contained herein (and not constituting an Event of Default under any
other provision of this Agreement), and such default shall continue unremedied
for a period of 30 days.
12.1.3 Default on Other Indebtedness. (a) The Company or any
-----------------------------
Significant Affiliate shall default, and such default shall continue for three
days, in the payment of any Indebtedness in a principal amount of $10,000,000 or
more when due, whether by acceleration or otherwise, of any Indebtedness of, or
guaranteed by the Company or any Significant Affiliate (other than the
Indebtedness hereunder); or (b) any event or condition shall occur which results
in, or continues unremedied for a period of time sufficient to permit, the
acceleration of the maturity of any Indebtedness of, or guaranteed by, the
Company or any Significant Affiliate (other than the Indebtedness hereunder) or
any event or condition shall occur which enables the holder or holders of such
other Indebtedness or any trustee or agent for such holders to accelerate the
maturity of such other Indebtedness or to require the Company or any of its
Significant Affiliates to purchase, redeem or cause the defeasance of such other
Indebtedness in whole or in part, and, in all cases described in this clause
(b), such event or condition shall continue for three days.
12.1.4 Bankruptcy, Insolvency, etc. (a) The Company or any
---------------------------
Significant Affiliate becomes insolvent or generally fails to pay, or admits in
writing its inability or refusal to pay, debts as they become due; (b) the
Company or any Significant Affiliate applies for, consents to, or acquiesces in
the appointment of a trustee, receiver, sequestrator or other custodian for the
Company or any Significant Affiliate or for a substantial part of the property
of any thereof, or makes a general assignment for the benefit of creditors; (c)
in the absence of such
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<PAGE>
application, consent or acquiescence, a trustee, receiver, sequestrator or other
custodian is appointed for the Company or any of its Significant Affiliates or
for a substantial part of the property of any thereof and is not discharged
within 60 days; (d) any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any bankruptcy or insolvency law, or any dissolution,
winding-up or liquidation proceeding, is commenced in respect of the Company or
any of its Significant Affiliates, and if such case or proceeding is not
commenced by the Company or any of its Significant Affiliates, it is consented
to or acquiesced in by the Company or such Significant Affiliate or results in
the entry of an order for relief or remains for 60 days undismissed; (e) any
warrant of attachment or similar legal process is issued against any substantial
part of the property of the Company or any of its Significant Affiliates which
is not released within 60 days after service; or (f) the Company or any
Significant Affiliate takes any corporate or other action to authorize, or in
furtherance of, any of the foregoing.
12.1.5 Default on Other Contractual Obligations. The Company or any
----------------------------------------
Subsidiary shall default in the payment when due, whether by acceleration or
otherwise, in the performance or observance of any Contractual Obligation of the
Company or any Subsidiary to or with any other Person involving the payment of
an amount in excess of $3,000,000 at any time by the Company or any Subsidiary
(other than any such Contractual Obligation constituting or related to
Indebtedness).
12.1.6 Pension Plans. Any of the following events shall occur
-------------
with respect to any Pension Plan:
(a) the institution by the Company, any of its Subsidiaries,
any ERISA Affiliate or any other Person of steps to terminate any
Pension Plan if, in order to effectuate such termination, the
Company, any such Subsidiary or any ERISA Affiliate would be
required to make a contribution to such Pension Plan or would
incur a liability or obligation to such Pension Plan of
$8,000,000 or more in excess of any remaining contributions to
such Pension Plan due from the Company, any of its Subsidiaries
or any ERISA Affiliate for the year in which such termination
occurs;
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<PAGE>
(b) a contribution failure occurs with respect to any
Pension Plan sufficient to give rise to a Lien under section
302(f) of ERISA;
(c) the institution of any steps or the failure to take any
action by the Company, any Subsidiary, any ERISA Affiliate or any
other Person if such act or omission would reasonably be expected
to result in the assessment of withdrawal liability by a
Multiemployer Plan against the Company, any Subsidiary or any
ERISA Affiliate in an amount of $8,000,000 or more in excess of
any remaining contributions to such Multiemployer Plan due from
the Company, any of its Subsidiaries or any ERISA Affiliate for
the year in which such withdrawal occurs; or
(d) a "default" (as defined in section 4219(c)(5) of ERISA)
occurs with respect to payments owed by the Company, any
Subsidiary or any ERISA Affiliate to any Multiemployer Plan.
12.1.7 Breach of Warranty. Any material representation and
------------------
warranty of the Company in this Agreement or in any other Loan Document
executed by it or any other writing furnished by or on behalf of the
Company or any of its Subsidiaries to the Agent or any Lender for
purposes of or in connection with this Agreement is or shall be untrue
or misleading in any material respect on or as of the date on which such
representation and warranty was made or deemed made, and such
circumstances shall continue for thirty days or more.
12.1.8 Judgments. There shall be entered against the Company or
---------
any Subsidiary one or more judgments or decrees for the payment of
money in an aggregate amount in excess of $25,000,000 at any one time
outstanding for the Company and all of its Subsidiaries, excluding
those judgments or decrees (a) that shall have been outstanding less
than 30 calendar days from the entry thereof or (b) that shall have
been stayed (for as long as such stay shall continue and for 30 days
thereafter) or (c) that shall have been satisfied or (d) for which the
Company or the relevant Subsidiary is insured.
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12.1.9 Material Adverse Change. Any event or condition occurs or
-----------------------
arises which has a Materially Adverse Effect and such event or condition
continues for more than 10 days after notice is given to the Company by the
Required Lenders.
12.2 Effect of Event of Default. If any Event of Default described
--------------------------
in Section 12.1.4 shall occur, the Commitments (if they have not theretofore
--------------
terminated) shall immediately terminate and the Notes and all other obligations
hereunder shall become immediately due and payable, all without presentment,
demand, protest or notice of any kind; and in the case of any other Event of
Default, the Agent may, and upon written request of the Required Lenders shall,
declare the Commitments (if they have not theretofore terminated) to be
terminated and/or declare all Notes and all other obligations hereunder to be
due and payable, whereupon the Commitments (if they have not theretofore
terminated) shall immediately terminate and/or all Notes and all other
obligations hereunder shall become immediately due and payable, all without
presentment, demand, protest or notice of any kind. The Agent shall promptly
advise the Company of any such declaration, but failure to do so shall not
impair the effect of such declaration. Notwithstanding the foregoing, the
effect as an Event of Default of any event described in Section 12.1.1 or
--------------
Section 12.1.4 may be waived by the written concurrence of all of the Lenders,
- --------------
and the effect as an Event of Default of any other event described in this
Section 12 may be waived by the written concurrence of the Required Lenders.
- ----------
SECTION 13 THE AGENT.
13.1 Authorization. Each Lender authorizes the Agent to act on
-------------
behalf of such Lender to the extent provided herein or any other document or
instrument delivered hereunder or in connection herewith, and to take such other
action as may be reasonably incidental thereto.
13.2 Indemnification. Each Lender agrees to reimburse and indemnify
---------------
the Agent for, and hold the Agent harmless against, a share (determined in
accordance with such Lender's Percentage) of any loss, damage, penalty, action,
judgment, obligation, cost, disbursement, liability or expense (including
reasonable attorneys' fees) which may at any time be incurred by the Agent (and
for which the Agent is not reimbursed by the Company) arising out of or in
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connection with the performance of its obligations or the exercise of its powers
hereunder or any other document or instrument delivered hereunder or in
connection herewith, as well as the costs and expenses of defending against any
claim against the Agent arising hereunder or thereunder, provided that no Lender
--------
shall be liable for any of the foregoing which are determined by a court of
competent jurisdiction in a final proceeding to have resulted solely from the
Agent's gross negligence or willful misconduct.
13.3 Exculpation. The Agent shall be entitled to rely upon advice of
-----------
counsel concerning legal matters, and upon this Agreement and any schedule,
certificate, statement, report, notice or other writing which it believes to be
genuine or to have been presented by a proper person. Neither the Agent nor any
of its directors, officers, employees or agents shall (i) be responsible for any
recitals, representations or warranties contained in, or for the execution,
validity, genuineness, effectiveness or enforceability of, this Agreement or any
other instrument or document delivered hereunder or in connection herewith, (ii)
be responsible for the validity, genuineness, perfection, effectiveness,
enforceability, existence, value or enforcement of any collateral security,
(iii) be under any duty to inquire into or pass upon any of the foregoing
matters, or to make any inquiry concerning the performance by the Company or any
other obligor of its obligations, or (iv) in any event, be liable as such for
any action taken or omitted by it or them, except for its or their own gross
negligence or willful misconduct. The agency hereby created shall in no way
impair or affect any of the rights and powers of, or impose any duties or
obligations upon, the Agent in its individual capacity.
13.4 Credit Investigation. Each Lender acknowledges that it has made
--------------------
such inquiries and taken such care on its own behalf as would have been the case
had such Lender's Commitment been granted and such Lender's Loans been made
directly by such Lender to the Company without the intervention of the Agent or
any other Lender. Each Lender agrees and acknowledges that the Agent makes no
representations or warranties about the creditworthiness of the Company or any
other party to this Agreement or with respect to the legality, validity,
sufficiency or enforceability of this Agreement or any Note or the value of any
security therefor.
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13.5 Agent and Affiliates. The Agent in its individual capacity
--------------------
shall have the same rights and powers hereunder as any other Lender and may
exercise or refrain from exercising the same as though it were not the Agent,
and the Agent and its affiliates may accept deposits from and generally engage
in any kind of business with the Company or any affiliate thereof as if the
Agent were not the Agent hereunder.
13.6 Action on Instructions of the Required Lenders. As to any
----------------------------------------------
matters not expressly provided for by this Agreement (including, without
limitation, enforcement of this Agreement and collection of the Loans), the
Agent shall not be required to exercise any discretion or take any action, but
the Agent shall in all cases be fully protected in acting or refraining from
acting upon the written instructions (i) from the Required Lenders, except for
instructions which under the express provisions hereof must be received by the
Agent from all Lenders, and (ii) in the case of such instructions, from all
Lenders. In no event will the Agent be required to take any action which
exposes the Agent to personal liability or which is contrary to this Agreement
or applicable law. The relationship between the Agent and the Lenders is and
shall be that of agent and principal only and nothing herein contained shall be
construed to constitute the Agent a trustee for any holder of a Note or of a
participation therein nor to impose on the Agent duties and obligations other
than those expressly provided for herein.
13.7 Funding Reliance. (a) Unless the Agent receives notice from a
----------------
Lender by 11:00 a.m., Chicago time, on the day of a proposed borrowing that such
Lender will not make available to the Agent the amount which would constitute
its Percentage of such borrowing in accordance with Section 2.3, the Agent may
-----------
assume that such Lender has made such amount available to the Agent and, in
reliance upon such assumption, make a corresponding amount available to the
Company. If and to the extent such Lender has not made any such amount
available to the Agent, such Lender and the Company jointly and severally agree
to repay such amount to the Agent forthwith on demand, together with interest
thereon (i) in the case of the Company, the interest rate applicable to Loans
comprising such borrowing and (ii) in the case of such Lender, the Federal Funds
Rate (or, beginning on the third Business Day after demand, the rate set forth
in clause (i)). Nothing set forth in this clause
---------- ------
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<PAGE>
(a) shall relieve any Lender of any obligation it may have to make any Loan
- ---
hereunder.
(b) Unless the Agent receives notice from the Company prior to the
due date for any payment hereunder that the Company does not intend to make such
payment, the Agent may assume that the Company has made such payment and, in
reliance upon such assumption, make available to each Lender its share of such
payment. If and to the extent that the Company has not made any such payment to
the Agent, each Lender which received a share of such payment shall repay such
share (or the relevant portion thereof) to the Agent forthwith on demand,
together with interest thereon at the Federal Funds Rate (or, beginning on the
third Business Day after demand, at the Alternate Reference Rate). Nothing set
forth in this clause (b) shall relieve the Company of any obligation it may have
----------
to make any payment hereunder.
13.8 Resignation. The Agent may resign as such at any time upon at
-----------
least 30 days' prior notice to the Company and the Lenders. In the event of any
such resignation, the Required Lenders (with, so long as no Event of Default or
Unmatured Event of Default exists, the consent of the Company, which consent
shall not be unreasonably delayed or withheld) shall as promptly as practicable
appoint a successor Agent. If no successor shall have been so appointed, and
shall have accepted such appointment, within 30 days after the giving of notice
of such resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States of America having a combined capital, surplus and
undivided profits of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
all further duties and obligations under this Agreement. After any resignation
pursuant to this Section 13.8, the provisions of this Section 13 shall inure to
------------ ----------
the benefit of the retiring Agent as to any actions taken or omitted to be taken
by it while it was Agent hereunder.
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<PAGE>
SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of the Agent or any
------------------
Lender in the exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by any of them of any right,
power or remedy preclude other or further exercise thereof, or the exercise of
any other right, power or remedy. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement or the Notes shall in
any event be effective unless the same shall be writing and signed and delivered
by the Agent and signed and delivered by Lenders having an aggregate Percentage
of not less than the aggregate Percentage expressly designated herein with
respect thereto or, in the absence of such designation as to any provision of
this Agreement or the Notes, by the Required Lenders, and then any such
amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No amendment,
modification, waiver or consent shall (i) extend or increase the amount of the
Commitments, (ii) extend the date for payment of any principal of or interest on
the Loans or any fees payable hereunder, (iii) reduce the principal amount of
any Loan, the rate of interest thereon or any fees payable hereunder, (iv)
change the definition of Required Lenders or otherwise reduce the aggregate
Percentage required to effect an amendment, modification, waiver or consent or
(v) amend this sentence without, in each case, the consent of all Lenders. No
provisions of Section 13 shall be amended, modified or waived without the
----------
written consent of the Agent.
14.2 Confirmations. The Company and each holder of a Note agree from
-------------
time to time, upon written request received by it from the other, to confirm to
the other in writing (with a copy of each such confirmation to the Agent) the
aggregate unpaid principal amount of the Loans then outstanding under such Note.
14.3 Notices. Except as otherwise provided in Sections 2.3, 2.4 and
------- ------------ ---
4.3, all notices hereunder shall be in writing (including, without limitation,
- ---
facsimile transmission) and shall be sent to the applicable party at its address
shown below its signature hereto or at such other address as such party may, by
written notice received by the other party, have designated as its address for
such purpose. Notices sent by facsimile transmission shall be
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<PAGE>
deemed to have been given when sent; notices sent by mail shall be deemed to
have been given three Business Days after the date when sent by registered or
certified mail, postage prepaid; and notices sent by hand delivery shall be
deemed to have given when received. For purposes of Sections 2.3, 2.4 and 4.3,
------------ --- ---
the Agent shall be entitled to rely on telephonic instructions from any person
that the Agent in good faith believes is an authorized officer or employee of
the Company, and the Company shall hold the Agent and each Lender harmless from
any loss, cost or expense resulting from any such reliance.
14.4 Subsidiary References. The provisions of this Agreement
---------------------
relating to Subsidiaries shall apply only during such times as the Company has
one or more Subsidiaries.
14.5 Regulation U. Each Lender represents that it in good faith is
------------
not relying, either directly or indirectly, upon any Margin Stock as collateral
security for the extension or maintenance by it of any credit provided for in
this Agreement.
14.6 Costs, Expenses and Taxes. The Company agrees to pay on demand
-------------------------
all reasonable out-of-pocket costs and expenses of the Agent (including the fees
and out-of-pocket of counsel for the Agent and of local counsel, if any, who may
be retained by said counsel) in connection with the preparation, execution,
delivery and administration of this Agreement and all other documents provided
for herein or delivered or to be delivered hereunder or in connection herewith
(including, without limitation, any amendment, supplement or waiver to this
Agreement or any such other document). The Company further agrees to pay all
reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees, court costs and other legal expenses and allocated costs of staff counsel)
incurred by the Agent and each Lender in connection with (i) the negotiation of
any restructuring or "work-out" (whether or not consummated) of the obligations
of the Company hereunder and (ii) the enforcement of this Agreement or any other
document provided for herein or delivered or to be delivered hereunder or in
connection herewith. In addition, the Company agrees to pay, and to save the
Agent and the Lenders harmless from all liability for, any stamp or other
similar taxes which may be payable in connection with the execution and delivery
of this Agreement, the borrowings hereunder, the issuance of
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<PAGE>
the Notes or the execution and delivery of any other document provided for
herein or delivered or to be delivered hereunder or in connection herewith. All
obligations provided for in this Section 14.6 shall survive repayment of the
------------
Loans, cancellation of the Notes and any termination of this Agreement.
14.7 Indemnification by the Company.
------------------------------
(a) In consideration of the execution and delivery of this Agreement
by the Agent and the Lenders and the agreement to extend the Commitments
provided hereunder, the Company hereby agrees to indemnify, exonerate and hold
the Agent, each Lender and each of the officers, directors, employees and agents
of the Agent and each Lender (collectively the "Lender Parties" and individually
each a "Lender Party") free and harmless from and against any and all actions,
causes of action, suits, losses, liabilities, damages and expenses, including,
without limitation, reasonable attorneys' fees and charges and allocated costs
of staff counsel (collectively called the "Indemnified Liabilities"), incurred
by the Lender Parties or any of them as a result of, or arising out of, or
relating to, (i) any tender offer, merger, purchase of stock, purchase of assets
or other similar transaction financed or proposed to be financed in whole or in
part, directly or indirectly, with the proceeds of any of the Loans or (ii) the
enforcement of this Agreement or any Note by any of the Lender Parties, except
for any such Indemnified Liabilities arising on account of any such Lender
Party's bad faith, gross negligence or willful misconduct. If and to the extent
that the foregoing undertaking may be unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law.
(b) Without limiting clause (a) above, the Company agrees to
----------
reimburse each Lender Party for, and indemnify each Lender Party against, any
and all losses, claims, damages, penalties, judgments, liabilities and expenses
(including reasonable attorneys' and consultant's fees and allocated costs of
staff counsel) which any Lender Party may pay, incur or become subject to
arising out of or relating to the use, handling release, emission, discharge,
transportation, storage, treatment or disposal of any Hazardous Material at any
real property owned or leased by
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the Company or any Subsidiary or used by the Company or any Subsidiary in its
business or operations, except to the extent caused by the acts or omissions of
such Lender Party.
(c) All obligations provided for in this Section 14.7 shall survive
------------
repayment of the Loans, cancellation of the Notes and any termination of this
Agreement.
14.8 Successors and Assigns. This Agreement shall be binding upon
----------------------
the Company, the Lenders and the Agent and their respective successors and
assigns, and shall inure to the benefit of the Company, the Lenders and the
Agent and the successors and assigns of the Lenders and the Agent. The Company
may not assign its rights or obligations hereunder without the prior written
consent of all Lenders.
14.9 Assignments; Participations.
---------------------------
14.9.1 Assignments. Any Lender may, with the prior written consent
-----------
of the Company and the Agent (which consents shall not be unreasonably delayed
or withheld), at any time assign and delegate to one or more commercial banks or
other Persons (any Person to whom such an assignment and delegation is to be
made being herein called an "Assignee"), all or any fraction of such Lender's
Loans and Commitment (which assignment and delegation shall be of a constant,
and not a varying, percentage of all the assigning Lender's Loans) in a minimum
aggregate amount equal to the lesser of (i) the assigning Lender's remaining
Commitment and (ii) $5,000,000; provided, however, that (a) no assignment and
-------- -------
delegation may be made to any Person if, at the time of such assignment and
delegation, the Company would be obligated to pay any greater amount under
Section 7.6 or Section 8 to the Assignee than the Company is then obligated to
- ----------- ---------
pay to the assigning Lender under such Section and (b) the Company and the Agent
shall be entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned and delegated to an Assignee until the
date when all of the following conditions hall have been met:
(x) five Business Days (or such lesser period of time as the
Agent and the assigning Lender shall agree) shall have passed after written
notice of such assignment and delegation, together with payment
instructions, addresses and related information with respect to such
Assignee,
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<PAGE>
shall have been given to the Company and the Agent by such assigning Lender
and the Assignee,
(y) the assigning Lender and the Assignee shall have executed
and delivered to the Company and the Agent an assignment agreement
substantially in the form of Exhibit D (an "Assignment Agreement"),
---------
together with any documents required to be delivered thereunder, which
Assignment Agreement shall have been accepted by the Agent and the Company,
and
(z) the assigning Lender or the Assignee shall have paid the
Agent a processing fee of $2,500.
From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Lender hereunder, and (y) the assigning Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it pursuant to such Assignment Agreement, shall be released from
its obligations hereunder. Within five Business Days after effectiveness of any
assignment and delegation, the Company shall execute and deliver to the Agent
(for delivery to the Assignee and the Assignor, as applicable) a new Note in the
principal amount of the Assignee's Commitment and, if the assigning Lender has
retained a Commitment hereunder, a replacement Note in the principal amount of
the Commitment retained by the assigning Lender (such Note to be in exchange
for, but not in payment of, the predecessor Note held by such assigning Lender).
Each such Note shall be dated the effective date of such assignment. The
assigning Lender shall mark the predecessor Note "exchanged" and deliver it to
the Company. Accrued interest on that part of the predecessor Note being
assigned shall be paid as provided in the Assignment Agreement. Accrued
interest and fees on that part of the predecessor Note not being assigned shall
be paid to the assigning Lender. Accrued interest and accrued fees shall be
paid at the same time or times provided in the predecessor Note and in this
Agreement. Any attempted assignment and delegation not made in accordance with
this Section 14.9.1 shall be null and void.
--------------
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<PAGE>
Notwithstanding the foregoing provisions of this Section 14.9.1 or any
--------------
other provision of this Agreement, any Lender may at any time assign all or any
portion of its Loans and its Note to a Federal Reserve Bank (but no such
assignment shall release any Lender from any of its obligations hereunder).
14.9.2 Participations. Any Lender may at any time sell to one or
--------------
more commercial banks or other Persons participating interests in any Loan owing
to such Lender, the Note held by such Lender, the Commitment of such Lender or
any other interest of such Lender hereunder (any Person purchasing any such
participating interest being herein called a "Participant"). In the event of a
sale by a Lender of a participating interest to a Participant, (x) such Lender
shall remain the holder of its Note for all purposes of this Agreement and (y)
the Company and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations hereunder. No
Participant shall have any direct or indirect voting rights hereunder (except
that a Lender may grant a Participant rights with respect to any of the events
described in the penultimate sentence of Section 14.1). The Company agrees that
------------
if amounts outstanding under this Agreement and the Notes are due and payable
(as a result of acceleration or otherwise), each Participant shall be deemed to
have the right of setoff in respect of its participating interest in amounts
owing under this Agreement and any Note to the same extent as if the amount of
its participating interest were owing directly to it as a Lender under this
Agreement or such Note; provided that such right of setoff shall be subject to
--------
the obligation of each Participant to share with the Lenders, and the Lenders
agree to share with each Participant, as provided in Section 7.5. The Company
-----------
also agrees that each Participant shall be entitled to the benefits of Section
-------
7.6 and Section 8 as if it were a Lender (provided that no Participant shall
- --- ---------
receive any greater compensation pursuant to such Sections than would have been
paid to the participating Lender if no participation had been sold).
14.10 Governing Law. This Agreement and each Note shall be a
-------------
contract made under and governed by the laws of the State of Illinois applicable
to contracts made and to be performed entirely within the State of Illinois.
Whenever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid
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<PAGE>
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement. All obligations
of the Company and rights of the Agent and the Lenders expressed herein or in
the Notes shall be in addition to and not in limitation of those provided by
applicable law.
14.11 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall together constitute but one and the same Agreement.
When counterparts executed by all of the parties hereto shall have been lodged
with the Agent (or, in the case of any Lender as to which an executed
counterpart shall not have been so lodged, the Agent shall have received
confirmation from such Lender of execution of a counterpart hereof by such
Lender), this Agreement shall become effective as of the date hereof, and at
such time the Agent shall notify the Company and each Lender.
14.12 Forum Selection and Consent to Jurisdiction. ANY LITIGATION
-------------------------------------------
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR
NOTE, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF
ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE COMPANY HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
14.13 Waiver of Jury Trial. EACH OF THE COMPANY, THE AGENT AND EACH
--------------------
LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE AND AMENDMENT,
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<PAGE>
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
Delivered at Chicago, Illinois, as of the day and year first above written.
INDRESCO INC.
By __________________________
Title _______________________
By __________________________
Title _______________________
Address: 2121 San Jacinto Street
Suite 2500 LB-31
Dallas, Texas 75201
Attention: Gary G. Garrison
Facsimile: 214/953-4598
BANK OF AMERICA ILLINOIS,
individually and as Agent
By __________________________
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Attention: W. Thomas Barnett
Facsimile: 312/987-5833
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<PAGE>
SCHEDULE I
COMMITMENTS AND PERCENTAGES
Lender Percentage Commitment
----------------- ----------
Bank of America Illinois $60,000,000 100%
_______________
Total $60,000,000 100%
<PAGE>
EXHIBIT 99(b)(2)
SEVENTH AMENDMENT TO CREDIT AGREEMENT
-------------------------------------
SEVENTH AMENDMENT, dated as of February 19, 1998, among GLOBAL INDUSTRIAL
TECHNOLOGIES, INC., a Delaware corporation (the "Parent Company"), GP CORP., a
Nevada corporation ("GPX") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Agent (the "Agent") and as a Lender (the "Lender").
WHEREAS, the Lender has extended credit to the Parent Company and GPX
("Borrowers") pursuant to that certain Credit Agreement dated as of September
23, 1994 as amended from time to time by (1) letter agreement dated November 29,
1994, (2) letter agreement dated January 6, 1995, (3) letter agreement dated
January 25, 1995, (4) first Amendment to Credit Agreement dated as of September
15, 1995, (5) Assignment and Assumption Agreement and Second Amendment to Credit
Agreement dated as of November 1, 1995, (6) Third Amendment to Credit Agreement
dated as of September 25, 1996, (7) Fourth Amendment to Credit Agreement dated
as of June 15, 1997, (8) Fifth Amendment to Credit Agreement dated as of July
31, 1997 and (9) Sixth Amendment to Credit Agreement dated as of December 30,
1997 and as at any time further amended, modified or supplemented (the "Credit
Agreement"); and
WHEREAS, the Borrowers, the Agent and Lender desire to amend the Agreement
as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties agree as follows:
1. All capitalized terms used herein which are defined in the Credit
Agreement shall have the meanings provided therefor in the Credit Agreement
unless otherwise defined herein.
2. The definition "Termination Date" in Section 1.1 of the Credit
Agreement is hereby amended by deleting the date "November 1, 1999" and
inserting the date "August 31, 1998" in lieu thereof. Accordingly, all Loans
shall be due on the Termination Date as amended.
3. Section 2.1 of the Credit Agreement is hereby amended by deleting the
Total Commitment Amount of "$150,000,000" and inserting the amount
"$260,000,000" in lieu thereof.
4. A new Section 2.1A shall be added to the Credit Agreement following
Section 2.1 to read in its entirety as follows:
<PAGE>
"2.1A Term Loan. Subject to the terms and conditions of this Agreement, on
---------
not more than one date up to and including August 27, 1998, each of the Lenders,
severally and for itself alone, agrees to lend one term loan (collectively, the
"Term Loan" and together with any Loan, the "Loans") to the Company in the
aggregate principal amount of Two Hundred Million Dollars ($200,000,000), the
proceeds of which shall be applied by the Company only for the acquisition of
the stock and assets of A.P. Green Industries (herein called "APK") and related
expenses. The outstanding principal balance of the Term Loan shall be repaid on
or before August 31, 1998 (the "Term Loan Payment Date"). Principal amounts of
the Term Loan that are repaid shall not be reborrowed. Interest on the Term
Loan shall accrue and be payable in accordance with this Agreement. The Term
Loan of each Lender shall be evidenced by a promissory note (as amended,
supplemented, replaced or otherwise modified from time to time, individually
each a "Term Note" and collectively for all Lenders, the "Term Notes," and
collectively with any Note, the "Notes") substantially in the form set forth in
Exhibit F with appropriate insertions, dated the date of disbursement of such
- ---------
Lender's Term Loan and payable on the Term Loan Payment Date."
5. Section 2.9 of the Credit Agreement is hereby amended by inserting a
new subsection (e) to read in its entirety as follows:
"(e) Notwithstanding anything contained herein, the commitment of the
Lenders to extend the Term Loan (herein called the "Term Commitment") shall not
be subject to extension pursuant to this Section 2.9."
6. Section 3.1 of the Credit Agreement is hereby amended by inserting the
following sentence at the end thereof: "Pursuant to Section 2.1 A, the Term
Loan of each Lender shall be evidenced by the Term Notes."
7. Section 4.1 (b) of the Credit Agreement is hereby amended by inserting
the phrase "plus 0. 125% "following the words "in effect" contained therein.
8. A new Section 4. 1 A is hereby added to the Credit Agreement to read in
its entirety as follows:
"4.1A Term Loan Interest Rates. From and after the date of disbursement of
------------------------
the Term Loan, Borrowers promise to pay interest on the unpaid principal amount
of each Loan for the period commencing on and including the date of such Loan to
but excluding the date such Loan is paid in full, and for such time as the Term
Loan is outstanding, but after repayment of the Term Loan, if any Loans are
outstanding, at the rates in Section 4.1, as follows:
(a) at all times while such Loan is a Floating Rate Loan, at a rate per
annum equal to the Alternate Reference Rate from time to time in effect provided
--------
that if the
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<PAGE>
Term Loan is not repaid on or before ninety (90) days after the date of the Term
Loan, the Borrowers shall pay interest on the unpaid principal amount of the
Floating Rate Loans for the period commencing on and including the ninety-first
(91st) day after the date of the Tenn Loan to but excluding the date such Loan
is paid in full at a rate per annum equal to the Alternate Reference Rate from
time to time in effect plus one-quarter of one percent (1 /4%), subject to the
proviso in Section 4. 1; and
(b) at all times while such Loan is a Eurodollar Loan and the Company has
entered into a binding and enforceable agreement, in form and substance
satisfactory to the Lenders, for the sale of its shareholding interest in
INTOOL, Inc., a Delaware corporation ("INTOOL"), for not less than $200,000,000
(the "INTOOL Agreement"), at a rate per annum equal to the Eurodollar Rate
(Reserve Adjusted) applicable to each Interest Period for such Loan plus seven-
eighths of one percent (7/8%), provided that if (i) at any time the INTOOL
--------
Agreement is not in full force and effect, the Borrowers shall pay interest on
the unpaid principal amount of each Eurodollar Loan for the period commencing on
and including the later of (x) the date of such Loan and (y) the date on which
the INTOOL Agreement ceased to be effective, to but excluding the date such Loan
is paid in full, at a rate per annum equal to the Eurodollar Rate (Reserve
Adjusted) applicable to each Interest Period (or portion thereof) for such Loan
plus one and three-quarters percent (1.75%), provided further that if the Term
----------------
Loan is not repaid on or before ninety (90) days after the date of the Term
Loan, the Borrowers shall pay interest on the unpaid principal amount of the
Eurodollar Loans for the period commencing on and including the ninety-first
(91st) day after the date of the Term Loan to but excluding the date such Loan
is paid in full at a rate per annum equal to the Eurodollar Rate (Reserve
Adjusted) applicable to each Interest Period (or portion thereof) for such Loan
from time to time in effect plus two percent (2%), subject to the proviso in
Section 4.1."
9. Section 5.1 is hereby amended by inserting the word "Revolving" before
the word "Commitment" in the first sentence thereof and by adding a new sentence
at the end of the first paragraph of Section 5.1 to read in its entirety as
follows: "The term "Revolving Commitment" means the commitment of each Lender to
make Loans hereunder from time to time pursuant to Section 2.1 hereof and
'Commitments' means the Revolving Commitment and the Term Commitment of the
Lenders."
10. A new Section 5. 1 A is hereby added to the Credit Agreement to read
in its entirety as follows:
"5.1A Term Commitment Non-Use Fee. The Company agrees to pay to the Agent
---------------------------
for the account of each Lender a non-use fee for the period from and including
February 23, 1998 to but excluding the earlier of the date of disbursement of
the Term Loan and August 31, 1998 in an amount equal to three-eighths of one
percent (3/8 %) per annum of the daily average of the unused amount of each
Lenders's Commitment to make the Term
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<PAGE>
Loan as stated on Schedule I to this Agreement. Such non-use fee shall be
payable in arrears on the last day of each calendar quarter and on the
Termination Date for any period then ending for which such non-use fee shall not
have been theretofore paid. The non-use fee shall be computed for the actual
number of days elapsed on the basis of a year of 360 days.
11. A new Section 5.3 is hereby added to the Credit Agreement to read in
its entirety as follows:
"5.3 Closing Fee. The Company agrees to pay to the Agent a closing fee as
-----------
agreed by the Company and the Agent. Such fee shall be payable on the date of
the execution by the Company of the Seventh Amendment to Credit Agreement."
12. A new Section 5.4 is hereby added to the Credit Agreement to read in
its entirety as follows:
"5.4 Funding Fee. On the date of disbursement of the Term Loan, the
-----------
Company shall pay to the Agent a funding fee as agreed by the Company and the
Agent."
13. Section 6.1 of the Credit Agreement is hereby amended by deleting the
words "the Commitments" in the first and second sentences thereof and inserting
the words "either the Revolving Commitment or the Term Commitment or both" in
lieu thereof
14. Section 6.3(c) of the Credit Agreement is hereby amended by adding the
following provision at the end thereof, "provided that there shall be excluded
--------
from the definition of "Long Term Indebtedness" up to $50,000,000 of
Indebtedness of APK existing at the time of APK's acquisition by the Company
that is refinanced on terms that are consistent with this Agreement."
15. A new Section 6.3(e) is hereby added to the Credit Agreement to read
in its entirety as follows:
"(e) The Company shall reduce the Term Commitment and shall prepay the Term
Loan in an amount equal to one hundred percent (100%) of (i) the net proceeds of
the sale of the Company's shareholding interest in INTOOL, plus (ii) the net
proceeds (including the conversion to cash of any non-cash proceeds (whether
principal or interest and including securities, release of escrow arrangements
or lease payments) received therefrom) of any asset sale that requires the
consent of the Required Lenders pursuant to this Agreement, plus (iii) the net
cash proceeds of the issuance of any (x) capital stock, warrants, options or
other rights to acquire capital stock of the Company or any of its Subsidiaries,
(y) subordinated indebtedness which is not Subordinated Indebtedness and (z)
Long Term Indebtedness as provided in subsection 6.3(c) hereof."
-4-
<PAGE>
16. Section 10. 13 of the Credit Agreement is hereby amended to read in
its entirety as follows:
"10.13 Indebtedness/Capitalization Ratio. The Company will not permit the
---------------------------------
Indebtedness/Capitalization Ratio to be greater than 0.5 to 1.0 at any time,
provided that from and after the date of the Term Loan the Company shall not
- --------
permit the Indebtedness/Capitalization Ratio to be greater than 0.65 to 1.0 at
any time."
17. Section 10.14 of the Credit Agreement is hereby amended to read in
its entirety as follows:
"10.14 Indebtedness/Net Cash Flow Ratio. The Company will not permit the
---------------------------------
Indebtedness/Net Cash Flow Ratio to be greater than 3.0 to 1, as measured as of
the last day of any fiscal quarter of the Company and its Subsidiaries for the
12-month period ending on the last day of such fiscal quarter, provided that
--------
from and after the date of the Term Loan the Company shall not permit the
Indebtedness/Net Cash Flow Ratio to be greater than 4.5 to 1."
18. Schedule I to the Credit Agreement is hereby deleted therefrom, and
Schedule I attached hereto is substituted in lieu thereof
19. This Amendment shall be limited precisely as written and shall not
be deemed to (i) be a consent to the modification or waiver of any other term or
condition of the Agreement or of any of the instruments or agreements referred
to therein or (ii) prejudice any right which the Lender may now have under or in
connection with the Agreement, as amended by this Amendment. Except as expressly
modified hereby, all of the terms and provisions of the Agreement shall continue
in full force and effect; and the Borrowers hereby confirm each and every one of
their obligations under the Agreement, as amended by this Amendment. Whenever
the term "Agreement" is used in the Agreement and whenever the Agreement is
referred to in any of the instruments, agreements or other documents or papers
executed and delivered in connection therewith, it shall be deemed to mean the
Agreement, as amended by this Amendment.
20. This Amendment shall be effective on the date (the "Effective
Date") on which the following conditions precedent shall have been satisfied:
(a) Execution and delivery by the Borrowers to the Agent of this
Amendment and evidence of due authorization and signing by the Borrowers;
(b) Receipt by the Agent of executed counterparts of the Company's
agreement with BancAmerica Robertson Stephens regarding syndication of all the
Company's and certain of its Subsidiaries' Indebtedness on terms satisfactory to
the Lender (the "BARS Agreement");
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<PAGE>
(c) Receipt by the Agent of the fees and expenses provided herein and in
the Credit Agreement as amended hereby;
(d) Receipt by the Agent of an opinion of counsel reasonably satisfactory
to the Agent and the Lender regarding the effectiveness of this Amendment and
the BARS Agreement and all documents executed in connection therewith;
(e) Receipt by the Agent of copies certified by, respectively, the
Secretary of each of Parent Company and GPX of incumbency certificates as to all
persons signing on behalf of Parent Company and GPX and such other evidence of
all necessary corporate actions of Parent Company and GPX, including without
limitation corporate resolutions, for the valid execution, delivery and
performance of this Amendment and all other instruments and documents signed by
the parties hereto;
(f) Any other actions reasonably required by the Agent or the Lender in
connection with the transactions contemplated hereby.
21. The Parent Company agrees to pay to or reimburse the Agent and the
Lender, upon demand, for all reasonable costs and expenses (including allocated
costs of in-house counsel) incurred in connection with the preparation,
negotiation, execution and delivery of this Amendment.
22. THIS SEVENTH AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS.
23. The Borrowers hereby represent and warrant to the Lender that on and
as of the date hereof after giving effect to this Amendment there shall exist no
Event of Default or Default and all representations and warranties contained in
the Agreement or otherwise made in writing in connection herewith or therewith
(as though made in connection with a request for a Loan under the Agreement)
shall be true and correct with the same effect as though such representations
and warranties had been made on and as of the date hereof.
24. The Parent Company hereby ratifies the Parent Guaranty dated November
1, 1995 executed by the Parent Company and confirms that said Parent Guaranty
remains in full force and effect in accordance with its terms.
-6-
<PAGE>
IN WITNESS WHEREOF. the parties hereto have executed this Seventh Amendment
by their duly authorized officers as of the date and year first above written.
PARENT COMPANY:
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
By:_____________________________
Title: ___________________________
By:_____________________________
Title:
GPX:
GPX CORP.
By:_____________________________
Title: President
By:_____________________________
Title: Vice President & Treasurer
AGENT
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:_____________________________
Title:___________________________
-7-
<PAGE>
LENDER:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:_____________________________
Title:___________________________
-8-
<PAGE>
SCHEDULE I
COMMITMENTS AND PERCENTAGES
Lender Term Revolving Credit
Percentage Commitment Commitment
- ---------- ---------- ----------
Bank of America NT&SA $200,000,000 $60,000,000 100%
------------ -----------
TOTAL $200,000,000 $60,000,000 100%
-9-
<PAGE>
EXHIBIT F
FORM OF TERM NOTE
$200,000,000 __________, 1998
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
Bank of America National Trust and Savings Association at the principal office
of Bank of America National Trust and Savings Association (the "Agent"), in
Chicago, Illinois, on the date set forth in the Credit Agreement referred to
below, Two Hundred Million Dollars ($200,000,000) or, if less, the aggregate
unpaid amount of the Term Loan made by the payee to the undersigned pursuant to
the Credit Agreement (as shown in the records of the payee, or at the payee's
option, on the schedule attached hereto and any continuation thereof).
The undersigned further promises to pay interest on the unpaid
principal amount of each Loan evidenced hereby from the date of such Loan until
such Loan is paid in full, payable at the rate(s) and at the time(s) set forth
in the Credit Agreement. Payments of both principal and interest are to be made
in lawful money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of September 23, 1994
(herein, as amended or otherwise modified from time to time, called the 'Credit
Agreement"), among the undersigned, certain financial institutions (including
the payee) and the Agent, to which Credit Agreement reference is hereby made for
a statement of the terms and provisions under which this Note may or must be
paid prior to its due date or may have its due date accelerated.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees subject only
to any limitation imposed by applicable law, to pay all reasonable expenses,
including reasonable attorneys' fees (including the allocated cost of in-house
counsel) and out-of-pocket expenses, incurred by the holder of this Note in
endeavoring to collect any amounts payable hereunder which are not paid
-10-
<PAGE>
when due, whether by acceleration or otherwise. Each of the Company and each
guarantor hereof waives demand, presentment, protest, diligence, notice of
dishonor and any other formality in connection with this note.
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
By:_____________________________
Title:__________________________
By:_____________________________
Title:__________________________
-11-
<PAGE>
EXHIBIT 99(c)(1)
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
---------
dated as of March 3, 1998, among A.P. Green Industries, Inc., a Delaware
corporation (the "Company"), Global Industrial Technologies, Inc., a Delaware
-------
corporation ("Purchaser"), and BGN Acquisition Corp., a Delaware corporation and
---------
a wholly-owned subsidiary of Purchaser ("Merger Sub"), the Company and Merger
----------
Sub sometimes being hereinafter collectively referred to as the "Constituent
-----------
Corporations."
- ------------
RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company each
have determined that it is in the best interests of their respective
shareholders for Purchaser to acquire the Company upon the terms and subject to
the conditions set forth herein; and
WHEREAS, the Company, Purchaser and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representation, warranties, covenants and agreements contained herein the
parties hereto hereby agree as follows:
ARTICLE I
THE TENDER OFFER
1.1. Tender Offer. (a) Provided that this Agreement shall not have
------------
been terminated in accordance with Article IX hereof and none of the events set
forth in Annex A hereto shall have occurred or be existing, within five business
days of the date hereof, Purchaser shall cause Merger Sub to commence a tender
offer (the "Offer") for all of the outstanding shares of Common Stock, par value
-----
$1.00 per share, of the Company, including the associated Rights (as defined in
Section 6.1(b)) (together, the "Shares") at a price of $22.00 per Share in cash,
------
net to the seller, subject to the terms and conditions set forth in Annex A
hereto (the "Offer Conditions"). The initial expiration date of the Offer shall
----------------
be the date twenty business days from and including the date (the "Commencement
------------
Date") the Offer Documents (as hereinafter defined) are first filed with the
- ----
Securities and Exchange Commission (the "SEC"). Purchaser and Merger Sub
---
expressly reserve the right, in their sole discretion, to waive any condition
(other than the Minimum Condition, as defined in the Offer Conditions) and to
set forth or change any other term and condition of the Offer, provided that,
--------
unless previously approved by the Company in writing, no provision may be set
forth or changed which decreases the price per Share payable in the Offer,
changes the form of consideration payable in the Offer (other than by adding
consideration), reduces the maximum number of Shares to be purchased in the
Offer, or imposes conditions to the Offer
<PAGE>
in addition to those set forth herein that are materially adverse to holders of
the Shares. Merger Sub covenants and agrees that, subject to the terms and
conditions of the Offer, including but not limited to the Offer Conditions, it
will accept for payment and pay for Shares as soon as it is permitted to do so
under applicable law, provided that Merger Sub shall have the right, in its sole
--------
discretion, to extend the Offer from time to time notwithstanding the prior
satisfaction of the Offer Conditions. It is agreed that the terms and
conditions set forth in the Offer, including but not limited to the Offer
Conditions, are for the benefit of Purchaser and Merger Sub and may be asserted
by Purchaser and Merger Sub regardless of the circumstances giving rise to any
such condition.
(b) The Company hereby approves of and consents to the Offer and
represents and warrants that: (i) its Board of Directors, at a meeting duly
called and held on March 2, 1998, has unanimously (A) determined that this
Agreement and the transactions contemplated hereby, including each of the Offer
and the Merger (as defined in Section 2.1), are fair to and in the best
interests of the holders of Shares, (B) approved this Agreement and the
transactions contemplated hereby, including each of the Offer and the Merger,
and (C) resolved to recommend that the stockholders of the Company accept the
Offer, tender their Shares to Merger Sub thereunder and approve this Agreement
and the transactions contem plated hereby; and (ii) Credit Suisse First Boston
(the "Financial Advisor") has delivered to the Board of Directors of the Company
-----------------
its written opinion that the consideration to be received by holders of Shares,
other than Purchaser and Merger Sub, pursuant to each of the Offer and the
Merger is fair to such holders from a financial point of view. The Company has
been authorized by the Financial Advisor to permit, subject to prior review and
consent by such Financial Advisor (such consent not to be unreasonably
withheld), the inclusion of such fairness opinion (or a reference thereto) in a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
--------------
to be filed with the SEC upon commencement of the Offer and in the Proxy
Statement referred to in Section 7.3(a). The Company hereby consents to the
inclusion in the Offer Documents (as defined in Section 1.1(c)) of the
recommendations of the Board of Directors of the Company described herein.
(c) Purchaser agrees, as to the Offer to Purchase and related Letter
of Transmittal (which together constitute the "Offer Documents"), and the
---------------
Company agrees, as to the Schedule 14D-9, that such documents shall, in all
material respects, comply with the requirements of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder (the "Exchange
--------
Act") and other applicable laws. The Company and its counsel, as to the Offer
Documents, and Purchaser and its counsel, as to the Schedule 14D-9, shall be
given an opportunity to review such documents a reasonable time prior to their
being filed with the SEC. Purchaser, Merger Sub and the Company each agrees
promptly to correct any information provided by it for use in the Offer
Documents or the Schedule 14D-9, as applicable, that shall have become false or
misleading in any material respect, and Purchaser and Merger Sub, on the one
hand, and the Company, on the other hand, further agree to take all steps
necessary to cause the Offer Documents and the Schedule
-2-
<PAGE>
14D-9, as the case may be, as so corrected to be filed with the SEC and
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws.
(d) In connection with the Offer, the Company will cause its transfer
agent to furnish promptly to Merger Sub a list, as of a recent date, of the
record holders of Shares and their addresses, as well as mailing labels
containing the names and addresses of all record holders of Shares and lists of
security positions of Shares held in stock depositories. The Company will
furnish Merger Sub with such additional information (including, but not limited
to, updated lists of holders of Shares and their addresses, mailing labels and
lists of security positions) and such other assistance as Purchaser or Merger
Sub or their agents may reasonably request in communicating the Offer to the
record and beneficial holders of Shares.
ARTICLE II
THE MERGER; CLOSING; EFFECTIVE TIME
2.1. The Merger. Subject to the terms and conditions of this
----------
Agreement, at the Effective Time (as defined in Section 2.3) Merger Sub shall be
merged with and into the Company and the separate corporate existence of Merger
Sub shall thereupon cease (the "Merger"). The Company shall be the surviving
------
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
---------
Corporation") and shall continue to be governed by the laws of the State of
- -----------
Delaware, and the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in Section 3.1. The Merger shall have the
effects specified in the Delaware General Corporation Law (the "DGCL").
----
2.2. Closing. The closing of the Merger (the "Closing") shall take
------- -------
place (i) at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New
York at 9:00 a.m. on the first business day on which the last to be fulfilled or
waived of the conditions set forth in Article VIII hereof shall be fulfilled or
waived in accordance with this Agreement or (ii) at such other place and time
and/or on such other date as the Company and Purchaser may agree.
2.3. Effective Time. As soon as practicable following the Closing,
--------------
and provided that this Agreement has not been terminated or abandoned pursuant
to Article IX hereof, the Company and Purchaser will cause a Certificate of
Merger (the "Delaware Certificate of Merger") to be executed and filed with the
------------------------------
Secretary of State of Delaware as provided in Section 251 of the DGCL. The
Merger shall become effective on the date on which the Delaware Certificate of
Merger has been duly filed with the Secretary of State of Delaware, and such
time is hereinafter referred to as the "Effective Time."
--------------
-3-
<PAGE>
ARTICLE III
CERTIFICATE OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
3.1. The Certificate of Incorporation. The Restated Certificate of
--------------------------------
Incorporation of the Company (the "Company Certificate") in effect at the
-------------------
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, until duly amended in accordance with the terms thereof and the
DGCL, except that Article Fourth of the Company Certificate 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 $1.00
per share."
3.2. The By-Laws. The By-Laws of the Company (the "Company By-Laws")
----------- ---------------
in effect at the Effective Time shall be the By-Laws of the Surviving
Corporation, until duly amended in accordance with the terms thereof and the
DGCL.
ARTICLE IV
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
4.1. Officers and Directors. The directors of Merger Sub and the
----------------------
officers of the Company at the Effective Time shall, from and after the
Effective Time, be the directors and officers, respectively, of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-Laws.
4.2. Boards of Directors; Committees. If requested by Purchaser, the
-------------------------------
Company will, subject to compliance with applicable law and promptly following
the purchase by Merger Sub of Shares pursuant to the Offer, 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 not less than the
product of (i) the total number of directors on the Board of Directors of the
Company (giving effect to the directors elected pursuant to this sentence) and
(ii) a fraction the numerator of which is the aggregate number of Shares
beneficially owned by Merger Sub or any affiliate of Merger Sub and the
denominator of which is the total number of Shares then outstanding. In
furtherance thereof, the Company will increase the size of the Board of
Directors of the Company, or use its reasonable efforts
-4-
<PAGE>
to secure the resignation of directors, or both, as is necessary to permit
Purchaser's designees to be elected to the Board of Directors of the Company.
At such time, the Company, if so requested, will use its reasonable efforts to
cause persons designated by Purchaser to constitute the same proportionate
representation of each committee of the Board of Directors of the Company, each
board of directors of each subsidiary of the Company and each committee of each
such board (in each case to the extent of the Company's ability to elect such
persons). No directors appointed by Purchaser shall be entitled to receive any
compensation or benefits currently in effect for the Company's non-employee
directors. The Company's obligations to appoint designees to the Board of
Directors of the Company shall be subject to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder. The Company shall promptly take all
actions required pursuant to such Section and Rule in order to fulfill its
obligations under this Section 4.2 and shall include in the Schedule 14D-9, or
in a separate Rule 14f-1 information statement provided to stockholders, such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 to fulfill its obligations under
this Section 4.2. Purchaser and Merger Sub will supply to the Company and will
be solely responsible for any information with respect to either of them and
their nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1.
4.3 Actions by Directors. For purposes of Article IX and Sections
--------------------
10.3 and 10.4, no action taken by the Board of Directors of the Company after
the date of the consummation of the Offer and prior to the Merger shall be
effective unless such action is approved by the affirmative vote of at least a
majority of the directors of the Company which are not officers of Purchaser or
designees, stockholders or affiliates of Purchaser.
ARTICLE V
CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
5.1. Conversion or Cancellation of Shares. The manner of converting
------------------------------------
or canceling shares of the Company and Merger Sub in the Merger shall be as
follows:
(a) At the Effective Time, each Share of the Company issued and
outstanding immediately prior to the Effective Time (other than Shares owned by
Purchaser, Merger Sub or any other subsidiary of Purchaser (collectively, the
"Purchaser Companies") or Shares that are held by stockholders ("Dissenting
- -------------------- ----------
Stockholders") exercising appraisal rights pursuant to Section 262 of the DGCL)
- ------------
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive, without interest, an amount in
cash (the "Merger Consideration") equal to $22.00 or such greater amount which
--------------------
may be paid pursuant to the Offer. All Shares (other than those owned by the
Purchaser Companies), by virtue of the Merger and without any action on the part
of the holders thereof, shall no longer be outstanding and shall be canceled and
retired and shall cease to exist, and each
-5-
<PAGE>
holder of a certificate representing any such Shares shall thereafter cease to
have any rights with respect to such Shares, except the right to receive the
Merger Consideration for such Shares upon the surrender of such certificate in
accordance with Section 5.2 or the right, if any, to receive payment from the
Surviving Corporation of the "fair value" of such Shares as determined in
accordance with Section 262 of the DGCL.
(b) At the Effective Time, each Share issued and outstanding at the
Effective Time and owned by any of the Purchaser Companies, and each Share
issued and held in the Company's treasury at the Effective Time, shall, by
virtue of the Merger and without any action on the part of the holder thereof,
cease to be outstanding, shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
(c) At the Effective Time, each share of Common Stock, par value
$0.001 per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of Merger Sub or the holders of such shares, be converted into one Share.
5.2. Payment for Shares. Purchaser shall make available or cause to
------------------
be made available to the paying agent appointed by Purchaser with the Company's
prior approval (the "Paying Agent") amounts sufficient in the aggregate to
------------
provide all funds necessary for the Paying Agent to make payments pursuant to
Section 5.1(a) hereof to holders of Shares issued and outstanding immediately
prior to the Effective Time (other than Shares owned by the Purchaser
Companies). Such funds shall be invested by the Paying Agent as directed by
Purchaser, provided that such investments shall be in obligations of or
--------
guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard &
Poor's Corporation, respectively, or in certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with capital exceeding
$500 million. Any net profit resulting from, or interest or income produced by,
such investments will be payable to the Surviving Corporation or Purchaser, as
Purchaser directs. Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each person who was, at the Effective Time, a holder
of record (other than any of the Purchaser Companies) of Shares a form (mutually
agreed to by Purchaser and the Company) of letter of transmittal and
instructions for use in effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented any of such Shares in
exchange for payment therefor. Upon surrender to the Paying Agent of such
certificates, together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, the Surviving Corporation
shall promptly cause to be paid to the persons entitled thereto a check in the
amount to which such persons are entitled as Merger Consideration, after giving
effect to any required tax withholdings. No interest will be paid or will
accrue on the amount payable upon the surrender of any such certificate. If
payment is to be made to a person other than the registered holder of the
certificate surrendered, it shall be a condition of such payment that the
certificate so
-6-
<PAGE>
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the certificate surrendered or establish to the satisfaction of the
Surviving Corporation or the Paying Agent that such tax has been paid or is not
applicable. One hundred and eighty days following the Effective Time, the
Surviving Corporation shall be entitled to cause the Paying Agent to deliver to
it any funds (including any interest received with respect thereto) made
available to the Paying Agent which have not been disbursed to holders of
certificates formerly representing Shares outstanding on the Effective Time, and
thereafter such holders shall be entitled to look to the Surviving Corporation
only as general creditors thereof with respect to the cash payable upon due
surrender of their certificates. Notwithstanding the foregoing, neither the
Paying Agent nor any party hereto shall be liable to any holder of certificates
formerly representing Shares for any amount paid to a public official pursuant
to any applicable abandoned property, escheat or similar law. The Surviving
Corporation shall pay all charges and expenses, including those of the Paying
Agent, in connection with the exchange of cash for Shares and Purchaser shall
reimburse the Surviving Corporation for such charges and expenses.
5.3. Dissenters' Rights. If any Dissenting Stockholder shall be
------------------
entitled to be paid the "fair value" of his or her Shares, as provided in
Section 262 of the DGCL, the Company shall give Purchaser notice thereof and
Purchaser shall have the right to participate in all negotiations and
proceedings with respect to any such demands. Neither the Company nor the
Surviving Corporation shall, except with the prior written consent of Purchaser,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment. If any Dissenting Stockholder shall fail to perfect or
shall have effectively withdrawn or lost the right to dissent, the Shares held
by such Dissenting Stockholder shall thereupon be treated as though such Shares
had been converted into the Merger Consideration pursuant to Section 5.1.
5.4. Transfer of Shares After the Effective Time. No transfers of
-------------------------------------------
Shares shall be made on the stock transfer books of the Surviving Corporation at
or after the Effective Time.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Representations and Warranties of the Company. The Company
---------------------------------------------
hereby represents and warrants to Purchaser and Merger Sub that:
(a) Corporate Organization and Qualification. Each of the Company
----------------------------------------
and its subsidiaries is a corporation duly organized, validly existing and in
good standing under the
-7-
<PAGE>
laws of its respective jurisdiction of incorporation and is in good standing as
a foreign corporation in each jurisdiction where the properties owned, leased or
operated, or the business conducted, by it require such qualification, except
for such failure to so qualify or be in such good standing, which, when taken
together with all other such failures, is not reasonably likely to have a
material adverse effect on the financial condition, properties, business or
results of operations of the Company and its subsidiaries taken as a whole.
Each of the Company and its subsidiaries has the requisite corporate power and
authority to carry on its respective businesses as they are now being conducted.
The Company has made available to Purchaser a complete and correct copy of the
Company Certificate and Company By-Laws, each as amended to date. The Company
Certificate and Company By-Laws so delivered are in full force and effect. The
Company has delivered to Purchaser prior to the date hereof (i) a true, correct
and complete list of the subsidiaries and associated entities of the Company
which evidences, among other things, the amount of capital stock or other equity
interests owned by the Company, directly or indirectly, in such subsidiaries or
associated entities, (ii) copies of all joint venture agreements and partnership
agreements to which the Company or any subsidiary of the Company is a party and
(iii) a true, correct and complete list of all entities in which the Company
owns, directly or indirectly, less than a 50% equity interest.
(b) Authorized Capital. The authorized capital stock of the Company
------------------
consists of 10,000,000 Shares, of which 8,068,665 Shares were outstanding on
February 26, 1998, and 2,000,000 shares of Preferred Stock par value $1.00 per
share (the "Preferred Shares"), of which no shares were outstanding as of the
----------------
date hereof. All of the outstanding Shares have been duly authorized and are
validly issued, fully paid and nonassessable. The Company has no Shares or
Preferred Shares reserved for issuance, except that, as of February 26, 1998,
there were an aggregate of 919,150 Shares reserved for issuance under then-
current outstanding stock options pursuant to the 1987 Long-Term Performance
Plan (the "1987 Plan"), the 1989 Long-Term Performance Plan (the "1989 Plan"),
--------- ---------
the 1993 Performance Plan (the "1993 Plan") and the 1996 Long-Term Performance
---------
Plan (the "1996 Plan" and collectively with the Plans listed in this sentence,
---------
the "Stock Plans") and 120,000 Preferred Shares reserved for issuance upon
-----------
exercise of the rights (the "Rights") issued pursuant to the Rights Agreement,
------
dated as of November 13, 1997, between the Company and Harris Trust and Savings
Bank (the "Rights Agreement"). Each of the outstanding shares of capital stock
----------------
of each of the Company's subsidiaries (as defined in Rule 1.02(v) of Regulation
S-X promulgated pursuant to the Exchange Act) is duly authorized, validly
issued, fully paid and nonassessable and, except as set forth in the Disclosure
Letter, owned, either directly or indirectly, by the Company free and clear of
all liens, pledges, security interests, claims or other encumbrances. Except as
set forth above, there are no shares of capital stock of the Company authorized,
issued or outstanding and except as set forth above, there are no pre emptive
rights nor any outstanding subscriptions, options, warrants, rights, convertible
securities or other agreements or commitments of any character relating to the
issued or unissued capital stock or other securities of the Company or any of
its subsidiaries.
-8-
<PAGE>
Immediately prior to the consummation of the Offer and the Merger, no Preferred
Shares or any other securities of the Company will be subject to issuance
pursuant to the Rights Agreement, no Distribution Date (as defined in the Rights
Agreement) shall have occurred and, at or after the Effective Time, the
Surviving Corporation will have no obligation to issue, transfer or sell any
Shares or common stock of the Surviving Corporation pursuant to any Benefit Plan
(as defined in Section 7.1(d)).
(c) Corporate Authority. Subject only to approval of this Agreement
-------------------
by the holders of a majority of the outstanding Shares, the Company has the
requisite corporate power and authority and has taken all corporate action
necessary in order to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement is a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, assuming the due authorization, execution and delivery hereof by
Purchaser and Merger Sub.
(d) Governmental Filings; No Violations. (i) Other than the filings
-----------------------------------
provided for in Section 2.3, as required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") and as required under the Exchange Act
-------
(collectively, the "Regulatory Filings"), no notices, reports or other filings
------------------
are required to be made by the Company with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
the Company from, any governmental or regulatory authority, agency, commission
or other entity, domestic or foreign ("Governmental Entity"), in connection with
-------------------
the execution and delivery of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby, the failure to make or
obtain any or all of which is reasonably likely to have a material adverse
effect on the financial condition, properties, business or results of operations
of the Company and its subsidiaries taken as a whole, or could prevent, delay or
materially burden the transactions contemplated by this Agreement.
(ii) Except as to matters described in the disclosure letter
delivered to Purchaser on or prior to the date hereof (the "Disclosure Letter"),
-----------------
the execution and delivery of this Agreement by the Company do not, and the
consummation by the Company of the transactions contemplated by this Agreement
will not, constitute or result in (i) a breach or violation of, or a default
under, the Company Certificate or Company By-Laws or the comparable governing
instruments of any of its subsidiaries, (ii) a breach or violation of, a default
under or the triggering of any payment or other material obligations pursuant
to, any of the Company's existing Benefit Plans (as defined in Section 7.1(d))
or any grant or award made under any of the foregoing, (iii) a breach or
violation of, or a default under, the acceleration of or the creation of a
lien, pledge, security interest or other encumbrance on assets (with or without
the giving of notice or the lapse of time) pursuant to, any provision of any
agreement, lease, permit, contract, joint venture agreement, partnership
agreement, note, mortgage, indenture, arrangement or other legal obligation
("Contracts") of the Company or
- -----------
-9-
<PAGE>
any of its subsidiaries or any law, rule, ordinance or regulation or judgment,
decree, order, award or governmental or non-governmental permit or license to
which the Company or any of its subsidiaries is subject or (iv) any change in
the rights or obligations of any party under any of the Contracts, except, in
the case of clause (iii) or (iv) above, for such breaches, violations, defaults,
accelerations or changes that, alone or in the aggregate, are not reasonably
likely to have a material adverse effect on the financial condition, properties,
business or results of operations of the Company and its subsidiaries taken as a
whole or that could not prevent, delay or materially burden the transactions
contemplated by this Agreement. The Disclosure Letter (i) specifically
identifies all Contracts that contain any "change of control" or other similar
provisions and (ii) sets forth, to the best knowledge of the officers of the
Company, a list of any consents required under any Contracts to be obtained
prior to consummation of the transactions contemplated by this Agreement
(whether or not subject to the exception set forth with respect to clause (iii)
above). The Company will use its best efforts to obtain the consents referred
to in the Disclosure Letter.
(e) Company Reports; Financial Statements. The Company has delivered
-------------------------------------
to Purchaser each registration statement, schedule, report, proxy statement or
information statement required to be filed or otherwise filed with the SEC (the
"Company Reports") prepared by it since December 31, 1996 (the "Audit Date"),
--------------- ----------
including, without limitation, (i) the Company's Annual Report on Form 10-K/A
for the fiscal year ended December 31, 1996, (ii) the Company's Quarterly
Reports on Form 10-Q/A for the periods ended March 31, 1997, June 30, 1997 and
September 30, 1997, (iii) a Definitive Proxy Statement on Schedule 14A dated
April 7, 1997, (iv) a Form 8-A dated January 6, 1998, and (v) the Form 8-K dated
December 31, 1996 and the Form 8-K dated November 13, 1997, each in the form
(including exhibits and any amendments thereto) filed with the SEC. As of their
respective dates, the Company Reports complied in all material respects with the
applicable requirements under the Exchange Act and did not, and any Company
Reports filed with the SEC subsequent to the date hereof will not, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances in which they were made, not misleading. Each of the
consolidated balance sheets and statements of financial position included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presents the consolidated financial position of the
Company and its subsidiaries as of its date and each of the consolidated
statements of earnings, stockholders' equity and cash flows included in or
incorporated by reference into the Company Reports (including any related notes
and schedules) fairly presents the results of operations, stockholders' equity
and changes in cash flows, as the case may be, of the Company and its
subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments which will not be
material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein. Other than the Company Reports specifically
recited above, the Company has not filed any other
-10-
<PAGE>
definitive reports or statements with the SEC since the Audit Date. The Company
will provide Purchaser with the most current draft version of the Company's
Annual Report on Form 10-K, including documents incorporated therein by
reference, for the year ended December 31, 1997, (the "1997 10-K") promptly
---------
after preparation of such draft. As soon as practicable after receiving its
auditor's opinion with respect to the Company's financial statements for the
fiscal year ended December 31, 1997 (the "1997 Financial Statements"), the
-------------------------
Company will deliver to Purchaser a copy of such 1997 Financial Statements
(including such auditor's opinion) and, either simultaneously therewith or as
soon thereafter as is practicable, a copy of the 1997 10-K in substantially the
form to be filed with the SEC. The 1997 10-K, as filed with the SEC, will
comply with the standards set forth in this Section 6.1(e) for the Company
Reports.
(f) Absence of Certain Changes. Except as disclosed in the Company
--------------------------
Reports filed with the SEC prior to the date hereof or otherwise disclosed in
the Disclosure Letter, since the Audit Date, the Company and its subsidiaries
have conducted their respective businesses only in, and have not engaged in
any material transaction other than according to, the ordinary and usual course
of such businesses and there has not been (i) any material adverse change in the
financial condition, properties, business or results of operations of the
Company and its subsidiaries taken as a whole or any development or combination
of developments of which management of the Company has knowledge that is
reasonably likely to result in any such change; (ii) any material change in the
net projected liability relating to asbestos or silica or projected insurance
recovery related thereto included in the Company Reports or any development or
combination of developments of which management of the Company has knowledge
that is reasonably likely to result in any such change; (iii) any declaration,
setting aside or payment of any dividend or other distribution with respect to
the capital stock of the Company; or (iv) any change by the Company in
accounting principles, practices or methods. Since the Audit Date, except as
provided for herein or as disclosed in the Company Reports filed with the SEC
prior to the date hereof and other than in the ordinary course, there has not
been any increase in the compensation payable or which could become payable by
the Company and its subsidiaries to their officers or key employees, or any
amendment of any Benefit Plans (as defined in Section 7.1).
(g) Litigation and Liabilities. Except as disclosed with reasonable
--------------------------
specificity in the Company Reports filed with the SEC prior to the date hereof
or in the Disclosure Letter, there are no (i) civil, criminal or administrative
actions, suits, claims, hearings, investigations or proceedings (collectively,
"Actions") pending or, to the knowledge of the management of the Company,
- --------
threatened against the Company or any of its subsidiaries or (ii) obligations or
liabilities, whether or not accrued, contingent or otherwise, including, without
limitation, those relating to matters involving any Environmental Law (as
defined in Section 6.1(m)), or any other facts or circumstances of which the
management of the Company is aware that could result in any claims against or
obligations or liabilities of the Company or any of its subsidiaries, that,
alone or in the aggregate, are reasonably likely to
-11-
<PAGE>
have a material adverse effect on the financial condition, properties, business
or results of operations of the Company and its subsidiaries taken as a whole.
The Company has set forth in the Disclosure Letter a true description of all
claims, obligations and liabilities relating to asbestos and silica, including,
without limitation, product and general liability.
(h) Employee Benefits.
-----------------
(i) All bonus, deferred compensation, pension, retirement, profit-
sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase,
restricted stock and stock option, employment, termination, severance,
compensation, medical, health or other plan, contract, policy or arrangement
which covers current or former employees of the Company and its subsidiaries
(the "Employees") and current or former directors of the Company (the
---------
"Compensation and Benefit Plans") 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") are listed in the Disclosure
-----
Letter and any "change of control" or similar provisions therein are
specifically identified in the Disclosure Letter. True and complete copies of
all Compensation and Benefit Plans and such other benefit plans, contracts or
arrangements, including, but not limited to, any trust instruments and insurance
contracts, if any, forming a part of any such plans and agreements, and all
amendments thereto have been made available to Purchaser.
(ii) All Compensation and Benefit Plans are in substantial compliance
with applicable law and all Compensation and Benefit Plans which are employee
benefit plans, other than "multiemployer plans" within the meaning of Sections
3(37) of ERISA, covering employees (the "Plans") to the extent subject to ERISA,
are in substantial compliance with ERISA. 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 Internal Revenue Service Revenue Procedure 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 relating to the Compensation
and Benefit Plans. Neither the Company nor any subsidiary 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 of
its subsidiaries to a material tax or penalty imposed by either Section 4975 of
the Code or Section 502(i) of ERISA.
(iii) 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 subsidiary 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
-12-
<PAGE>
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 its
---------------
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. No notice of a "reportable event", within the meaning of Section 4043 of
ERISA for which the 30-day reporting requirement has not been waived, has been
required to be filed for any Pension Plan or by any ERISA Affiliate within the
12-month period ending on the date hereof.
(iv) All contributions required to be made under the terms of any
Plan have been timely made. 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. Neither the Company nor 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.
(v) Except as set forth in the Disclosure Letter, under each Pension
Plan which is a single-employer plan, as of the last day of the most recent plan
year ended prior to the date hereof, the actuarially determined present value of
all "benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA
(as determined on the basis of the actuarial assumptions contained in the Plan's
most recent actuarial valuation), did not exceed the then current value of the
assets of such Plan, and there has been no material change in the financial
condition of such Plan since the last day of the most recent Plan Year. The
withdrawal liability of the Company and its subsidiaries under each Benefit Plan
which is a multiemployer plan to which the Company, its subsidiaries or an ERISA
Affiliate has contributed during the preceding 12 months, determined as if a
"complete withdrawal", within the meaning of Section 4203 of ERISA, had occurred
as of the date hereof, does not exceed $100,000.
(vi) Neither the Company nor the subsidiaries have any obligations
for retiree health and life benefits under any Plan, except as set forth in the
Disclosure Letter. The Company or its subsidiaries may amend or terminate any
such Plan pursuant to the terms thereof.
(vii) Except as set forth in the Disclosure Letter, the consummation
of the transactions contemplated by this Agreement will not (x) entitle any
employees of the Company or any of its subsidiaries to severance pay, (y)
accelerate the time of payment or vesting or trigger any payment of compensation
or benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any of the Compensation and Benefit Plans or (z) result
in any breach or violation of, or a default under any of the Compensation and
Benefit Plans.
-13-
<PAGE>
(viii) All Compensation and Benefit Plans covering non-U.S. Employees
comply in all material respects with applicable local law. Except as set forth
in the Disclosure Letter, the Company and its subsidiaries have no material
unfunded liabilities with respect to any Pension Plan which covers non-U.S.
Employees.
(ix) The method of allocating the portion of the proceeds of the
Offer from the suspense account which is part of the A.P. Green Industries, Inc.
Employee Stock Ownership Trust, which implements and forms part of the A.P.
Green Investment Plan (collectively, the "ESOP") to participants' accounts in
accordance with Section 7.8(d) hereof will not violate the terms of the ESOP.
(i) Compliance. 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 properties are bound or affected, or
(ii) any Contract 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 properties are bound or affected, except for any such conflicts,
defaults or violations that, individually or in the aggregate, are not
reasonably likely to have a material adverse effect on the financial condition,
properties, business or results of operations of the Company and its
subsidiaries taken as a whole, or could prevent, delay or materially burden the
transactions contemplated by this Agreement.
(j) Brokers and Finders. Neither the Company nor any of its
-------------------
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders, fees in connection
with the transactions contemplated herein, except that the Company has employed
Credit Suisse First Boston as its financial advisor, the arrangements with which
have been disclosed in writing to Purchaser prior to the date hereof.
(k) Other Actions.
-------------
(i) The transactions contemplated hereby have been approved by the
Board of Directors of the Company in accordance with Article Sixth of the
Company Certificate and, as a result thereof, Article Sixth is inapplicable to
the Offer and the Merger.
(ii) The Company has taken all necessary action under the Rights
Agreement to provide that the execution of this Agreement and the consummation
of the transactions contemplated hereby will not cause (i) Merger Sub and/or
Purchaser to become an Acquiring Person (as defined in the Rights Agreement) or
(ii) a Distribution Date or a Stock Acquisition Date (as such terms are defined
in the Rights Agreement) to occur, irrespective of the number of Shares acquired
pursuant to the Offer.
-14-
<PAGE>
(l) Takeover Statutes. No "fair price", "moratorium", "control share
-----------------
acquisition" or other similar antitakeover statute or regulation (including,
without limitation, Section 203 of the DGCL) (each a "Takeover Statute") is
----------------
applicable to the Company, the Shares, the Offer, the Merger or the transactions
contemplated hereby.
(m) Environmental Matters. Except as disclosed in the Disclosure
---------------------
Letter and except to the extent that the Company's noncompliance with the
following would not reasonably be likely to have a material adverse effect on
the on the financial condition, properties, business or results of operations of
the Company and its subsidiaries taken as a whole: (i) the Company and its
subsidiaries have complied at all times with all applicable Environmental Laws;
(ii) all properties currently owned or operated by the Company or any subsidiary
(including soils, groundwater, surface water, buildings or other structures)
have not been contaminated with any Hazardous Substances; (iii) any properties
formerly owned or operated by the Company or any of its subsidiaries were not
contaminated with Hazardous Substances on or prior to such period of ownership
or operation; (iv) neither the Company nor any subsidiary is subject to
liability for any Hazardous Substance disposal or contamination on any third
party property; (v) neither the Company nor any subsidiary is subject to
liability for any release or threat of release of any Hazardous Substance; (vi)
neither the Company nor any subsidiary has received any notice, demand, letter,
claim or request for information indicating that it may be in violation of or
liable under any Environmental Law; (vii) neither the Company nor any subsidiary
is subject to any order, decree, injunction or other arrangement with any
governmental entity or any indemnity or other agreement with any third party
relating to liability under any Environmental Law; (viii) none of the properties
of the Company or any subsidiary contain any underground storage tanks,
asbestos-containing material, silica, lead products, or polychlorinated
biphenyls; (ix) there are no other circumstances or conditions involving the
Company or any subsidiary that could reasonably be expected to result in any
claims, liability, investigations, costs or restrictions on the ownership, use,
or transfer of any property pursuant to any Environmental Law; and (x) the
Company has delivered or made available to Purchaser copies of all environmental
reports, studies, assessments, sampling data and all other information in its
possession relating to asbestos and silica liability and claims including
without limitation product and sales information, filing rates, settlements,
projected claims, legal advice, reserves, insurance and the use and disposal of
asbestos containing material and silica.
As used herein, the term "Environmental Law" means any federal, state
-----------------
or local law, regulation, order, decree, permit, authorization, opinion, common
law or agency requirement relating to: (A) the protection, investigation or
restoration of the environment, health, safety, or natural resources, (B) the
handling, use, presence, disposal, release or threatened release of any
Hazardous Substance, (C) noise, odor, wetlands, pollution, contamination or any
injury or threat of injury to persons or property or (D) standards of conduct
concerning protection of human health (including, without limitation, employee
health and safety), in each case as amended and as now or hereafter in effect,
and the term
-15-
<PAGE>
"Hazardous Substance" means any substance that is: (A) listed, classified or
-------------------
regulated pursuant to any Environmental Law; (B) any petroleum product or by-
product, asbestos-containing material, silica, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive materials or radon; or (C) any
other substance which may be the subject of regulatory action by any
governmental authority pursuant to any Environmental Law.
(n) Tax Matters. 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, has timely filed all
Tax Returns required to be filed by it in the manner provided by law. All such
Tax Returns are true, correct and complete in all material respects. The
Company and each of its subsidiaries have paid all Taxes (including interest and
penalties) due or required to be withheld from amounts owing to any employee,
creditor or third party or have provided adequate reserves in their financial
statements for any Taxes that have not been paid, whether or not shown as being
due on any returns. Except as has been disclosed to Purchaser in the Disclosure
Letter: (i) no material claim for unpaid Taxes has become a lien or encumbrance
of any kind against the property of the Company or any of its subsidiaries or is
being asserted against the Company or any of its subsidiaries; (ii) no audit,
examination, investigation or other proceeding in respect of Taxes is pending,
threatened or being conducted by a Tax Authority; (iii) no extension or waiver
of the statute of limitations on the assessment of any Taxes has been granted by
the Company or any of its subsidiaries and is currently in effect; (iv) neither
the Company nor any of its subsidiaries is a party to, is bound by, or has any
obligation under, or potential liability with regards to, any Tax sharing
agreement, Tax indemnification agreement or similar contract or arrangement; (v)
no power of attorney has been granted by or with respect to the Company or any
of its subsidiaries with respect to any matter relating to Taxes; (vi) neither
the Company nor any of its subsidiaries is a party to any agreement, plan,
contract or arrangement (whether oral or in writing) that would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code; (vii) neither the
Company nor any of its subsidiaries has any deferred intercompany gain or loss
arising as a result of a deferred intercompany transaction within the meaning of
Treasury Regulation Section 1.1502-13 (or similar provision under state, local
or foreign law) or any excess loss accounts within the meaning of Treasury
Regulation Section 1.1502-19; (viii) the Company is not and has not been a
United States real property holding corporation (as defined in Section 897(c)(2)
of the Code) during the applicable period specified in Section 897(c)(1)(ii) of
the Code. As used herein, "Taxes" shall mean any taxes of any kind, including
-----
but not limited to those on or measured by or referred to as income, gross
receipts, capital, sales, use, ad valorem, franchise, profits, license,
withholding, premium, value added, property or windfall profits taxes, customs,
duties or similar fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or additional amounts
imposed by any governmental authority, domestic or
-16-
<PAGE>
foreign. As used herein, "Tax Return" shall mean any return, report or statement
----------
required to be filed with any governmental authority with respect to Taxes.
(o) Intangible Property. Except as set forth in the Disclosure
-------------------
Letter, the Company and its subsidiaries own or have adequate rights to use all
patents, trademarks, trade names, service marks, brands, logos, copyrights,
licenses, trade secrets, customer lists and other proprietary intellectual
property rights (collectively, "Intellectual Property") required for, used in or
---------------------
incident to the business of the Company and its subsidiaries as now conducted or
proposed to be conducted. To the knowledge of the Company, all Intellectual
Property owned by the Company is valid and enforceable. Except as set forth in
the Disclosure Letter, the Company has not received notice, and has no reason to
know of any claim or threatened infringement of the rights of others with
respect to any Intellectual Property used or owned by the Company, the loss of
which could have a material adverse effect on the financial condition,
properties, business or results of operations of the Company and its
subsidiaries taken as a whole. Except as disclosed in the Disclosure Letter,
the Company and its subsidiaries have not been sued within the past two years
(or with respect to a subsidiary of the Company, since such subsidiary was
acquired by the Company if acquired less than two years prior to the date
hereof) for infringing on the Intellectual Property of another entity or person.
To the knowledge of the Company, the Company is not now using, and has not in
the past used without appropriate authorization, any confidential information or
trade secrets of any third party. The Company has not received any notice
alleging such conduct within the past two years and, with respect to notices
received prior to such time, there is no Action pending or, to the knowledge of
the Company, threatened with respect thereto.
6.2. Representations and Warranties of Purchaser and Merger Sub.
----------------------------------------------------------
Purchaser and Merger Sub represent and warrant to the Company that:
(a) Corporate Organization and Qualification. Each of Purchaser and
----------------------------------------
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and is
in good standing as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business conducted, by it require
such qualification except for such failure to so qualify or to be in such good
standing, which, when taken together with all other such failures, is not
reasonably likely to have a material adverse effect on the financial condition,
properties, business or results of operations of Purchaser and its subsidiaries,
taken as a whole. Each of Purchaser and its subsidiaries has the requisite
corporate power and authority to carry on its respective businesses as they are
now being conducted.
(b) Corporate Authority. Purchaser and Merger Sub each has the
-------------------
requisite corporate power and authority and has taken all corporate action
necessary in order to execute and deliver this Agreement and to consummate the
transactions contemplated
-17-
<PAGE>
hereby. This Agreement is a valid and binding agreement of Purchaser and Merger
Sub enforceable against Purchaser and Merger Sub in accordance with its terms,
assuming the due authorization, execution and delivery hereof by the Company.
(c) Governmental Filings; No Violations. (i) Other than the
-----------------------------------
Regulatory Filings, no notices, reports or other filings are required to be made
by Purchaser and Merger Sub with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by Purchaser and
Merger Sub from, any Governmental Entity in connection with the execution and
delivery of this Agreement by Purchaser and Merger Sub and the consummation by
Purchaser and Merger Sub of the transactions contemplated hereby, the failure to
make or obtain any or all of which could prevent, delay or materially burden the
transactions contemplated by this Agreement.
(ii) The execution and delivery of this Agreement by Purchaser and
Merger Sub do not, and the consummation by Purchaser and Merger Sub of the
transactions contemplated by this Agreement will not, constitute or result in
(i) a breach or violation of, or a default under, the Certificate of
Incorporation or By-Laws of Purchaser or Merger Sub or the comparable governing
instruments of any of their subsidiaries or (ii) a breach or violation of, a
default under, the acceleration of or the creation of a lien, pledge, security
interest or other encumbrance on assets (with or without the giving of notice or
the lapse of time) pursuant to, any provision of any Contract of Purchaser or
Merger Sub or any of their subsidiaries or any law, ordinance, rule or
regulation or judgment, decree, order, award or governmental or non-governmental
permit or license to which Purchaser or Merger Sub or any of their subsidiaries
are subject, except, in the case of clause (ii) above, for such breaches,
violations, defaults or accelerations or changes that, alone or in the
aggregate, could not prevent or delay or materially burden the transactions
contemplated by this Agreement.
(d) Funds. Purchaser has or will have the funds necessary to
-----
consummate the transactions contemplated by this Agreement.
ARTICLE VII
COVENANTS
7.1. Interim Operations of the Company. The Company covenants and
---------------------------------
agrees, as to itself and its subsidiaries, that, except as set forth in the
Disclosure Letter, after the date hereof and prior to the Effective Time (unless
Purchaser shall otherwise agree in writing and except as otherwise permitted or
required by this Agreement):
-18-
<PAGE>
(a) the business of the Company and its subsidiaries shall be
conducted only in the ordinary and usual course and, to the extent
consistent therewith, each of the Company and its subsidiaries shall use
its best efforts to preserve its business organization intact and maintain
its existing relations with customers, suppliers, employees and business
associates;
(b) the Company shall not (i) sell or pledge or agree to sell or
pledge any stock owned by it in any of its subsidiaries; (ii) amend the
Company Certificate or Company By-Laws or amend, modify or terminate the
Rights Agreement, or redeem the Rights issued pursuant thereto; (iii)
split, combine or reclassify the outstanding Shares; or (iv) declare, set
aside or pay any dividend payable in cash, stock or property with respect
to the Shares;
(c) neither the Company nor any of its subsidiaries shall (i) issue,
sell, pledge, dispose of or encumber any additional shares of, or
securities convertible or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its capital
stock of any class of the Company or its subsidiaries or any other property
or assets other than, in the case of the Company, Shares issuable pursuant
to options outstanding on the date hereof under the Stock Plans; (ii)
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any assets or incur or modify any indebtedness or other liability
other than in the ordinary and usual course of business; (iii) acquire
directly or indirectly by redemption or otherwise any shares of the
capital stock of the Company; (iv) authorize capital expenditures for items
other than those relating to the Company's Palmetto, South Carolina
facility in excess of $250,000 individually or $1,500,000 in the aggregate;
(v) authorize capital expenditures for items relating to the Company's
Palmetto, South Carolina facility in excess of $8,500,000 in the aggregate
or (vi) make any acquisition of another person or entity (by merger,
consolidation or acquisition of stock or assets) or any investment in,
assets or stock of any other person or entity;
(d) neither the Company nor any of its subsidiaries shall grant any
severance or termination pay to, or enter into any employment or severance
agreement with any director, officer or other employee of the Company or
such subsidiaries; and neither the Company nor any of its subsidiaries
shall establish, adopt, enter into, make any new grants or awards under or
amend, any collective bargaining, bonus, profit shar ing, thrift,
compensation, stock option, restricted stock, pension, retirement, employee
stock ownership, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any directors, officers or employees (the "Benefit Plans");
-------------
-19-
<PAGE>
(e) except in the ordinary and usual course of business and with the
consent of Purchaser, neither the Company nor any of its subsidiaries shall
settle or compromise any material claims or litigation or, modify, amend or
terminate any of its joint venture agreements, partnership agreements or
material Contracts or waive, release or assign any material rights or
claims;
(f) neither the Company nor any of its subsidiaries shall make any
tax election or permit any insurance policy naming it as a beneficiary or a
loss payable payee to be canceled or terminated without notice to
Purchaser, except in the ordinary and usual course of business;
(g) except as may be required as a result of a change in law or in
generally accepted accounting principles, neither the Company nor any of
its subsidiaries shall change any of the accounting practices or principles
used by it;
(h) neither the Company nor any of its subsidiaries shall adopt a
plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization, or other reorganization of
the Company or any of its subsidiaries not constituting an inactive
subsidiary (other than the Merger); and
(i) neither the Company nor any of its subsidiaries will authorize or
enter into an agreement to do any of the foregoing or take any action that
would make any of the representations or warranties of the Company
contained in this Agreement untrue or incorrect as of the date when made if
such action had then been taken, or would result in any of the Offer
Conditions set forth in Annex A not being satisfied.
7.2. Acquisition Proposals. The Company, its affiliates and its and
---------------------
their respective officers, directors, employees, representatives and agents
(including, without limitation, any investment banker, attorney or accountant
retained by the Company or any of its subsidiaries) shall immediately cease all
existing discussions or negotiations, if any, with any parties conducted
heretofore with respect to any acquisition or exchange of all or any material
portion of the assets of, or more than 15% of the equity interest in, the
Company or any of its subsidiaries (by direct purchase from the Company, tender
or exchange offer or otherwise) or any business combination, merger,
consolidation or similar transaction (including an exchange of stock or assets)
with or involving the Company or any subsidiary or division of the Company (an
"Acquisition Transaction"). Neither the Company nor any of its affiliates, nor
- ------------------------
any of its or their respective officers, directors, employees, representatives
or agents (including, without limitation, any investment banker, attorney or
accountant retained by the Company or any of its subsidiaries) shall, directly
or indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Purchaser and Merger Sub, any
affiliate or associate of Purchaser and Merger Sub or any
-20-
<PAGE>
designees of Purchaser and Merger Sub) with respect to any inquiries or the
making of any offer or proposal (including, without limitation, any offer or
proposal to the stockholders of the Company) concerning an Acquisition
Transaction (an "Acquisition Proposal"), unless (i) the Board of Directors of
--------------------
the Company determines in good faith after consultation with outside legal
counsel that such action is necessary in order for its directors to comply with
their respective fiduciary duties under applicable law and (ii) the Board of
Directors of the Company determines in good faith (after consultation with its
financial advisor) that such Acquisition Proposal, if accepted, 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 would, if consummated, result in a transaction more
favorable to the Company's stockholders from a financial point of view than the
transaction contemplated by this Agreement (any such more favorable Acquisition
Proposal being referred to in this Agreement as a "Superior Proposal"). The
-----------------
Company will take the necessary steps to inform the individuals or entities
referred to in the first sentence hereof of the obligations undertaken in this
Section 7.2. The Company will notify Purchaser immediately if any such
inquiries or proposals are received by, any such information is requested from,
or any such negotiations or discussions are sought to be initiated or continued
with the Company, the name of the person making such proposals (unless
identifying such person is prohibited by a binding confidentiality agreement in
effect as of February 25, 1998), the material terms and conditions of such
proposals and thereafter shall keep Purchaser informed, on a current basis, of
the status and terms of such proposals and the status of such negotiations or
discussions. The Company agrees not to release any third party from, or waive
any provisions of, any confidentiality or standstill agreement to which the
Company is a party, unless the Board of Directors of the Company shall have
determined in good faith, based upon the advice of outside counsel to the
Company, that failing to release such third party or waive such provisions would
constitute a breach of the fiduciary duties of the Board of Directors of the
Company under applicable law.
7.3. Meetings of the Company's Stockholders. (a) If required
--------------------------------------
following termination of the Offer, the Company will take, consistent with
applicable law, the Company Certificate and the Company By-Laws, all action
necessary to convene a meeting of holders of Shares as promptly as practicable
following the purchase of Shares pursuant to the Offer to consider and vote upon
the approval of this Agreement and the Merger. Subject to fiduciary
requirements of applicable law, the Board of Directors of the Company shall
recommend such approval and the Company shall take all lawful action to solicit
such approval. At any such meeting of the Company all of the Shares then owned
by the Purchaser Companies will be voted in favor of this Agreement. The
Company's proxy or information statement with respect to such meeting of
shareholders (the "Proxy Statement"), at the date thereof and at the date of
---------------
such meeting, will comply in all material respects with the applicable
requirements under the Exchange Act and will not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not
-21-
<PAGE>
misleading; provided, however, that the foregoing shall not apply to the extent
-------- -------
that any such untrue statement of a material fact or omission to state a
material fact was made by the Company in reliance upon and in conformity with
written information concerning the Purchaser Companies furnished to the Company
by Purchaser specifically for use in the Proxy Statement. The Proxy Statement
shall not be filed, and no amendment or supplement to the Proxy Statement will
be made by the Company, without consultation with Purchaser and its counsel.
(b) Notwithstanding the foregoing, in the event that Merger Sub shall
acquire at least 90% of the outstanding Shares, the Company agrees, at the
request of Merger Sub, subject to Article VIII, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders, in accordance with Section 253 of the DGCL.
7.4. Filings; Other Action. (a) Subject to the terms and conditions
---------------------
herein provided, the Company and Purchaser shall: (i) promptly make their
respective filings and thereafter make any other required submissions under the
HSR Act and other Regulatory Filings with respect to the Offer and the Merger;
and (ii) use all reasonable efforts to promptly take, or cause to be taken, all
other action and do, or cause to be done, all other things necessary, proper or
appropriate under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including but not
limited to cooperating in the preparation and filing of the Offer Documents, the
Schedule 14D-9, the Proxy Statement, any required filings under the HSR Act or
other foreign filings and any amendments to any thereof. The Company shall use
all reasonable efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to Contracts with the Company and its subsidiaries as are necessary for
the consummation of the transactions contemplated by this Agreement and to
fulfill the conditions to the Offer and the Merger. The Company will cooperate
with Purchaser and Merger Sub with respect to consummating the financing for the
Offer and the Merger and any refinancing of the Company's indebtedness.
Notwithstanding anything contained herein to the contrary, Purchaser shall be
under no obligation whatsoever to make or accept or engage in negotiations for
any settlement with any governmental entity or any other arrangement involving
the sale, disposition, or separate holding, through the establishment of a
trust, or otherwise, of the business or any of the assets of the Company or any
of its subsidiaries acquired pursuant to this Agreement, or any portion thereof,
or particular assets of Purchaser or its subsidiaries or any of the Purchaser
Companies in order to complete the transactions contemplated herein.
(b) The Company and Purchaser each shall keep the other apprised of
the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Purchaser or the Company, as the case may be, or any
of their subsidiaries, from any
-22-
<PAGE>
Governmental Entity with respect to the Offer or the Merger or any of the other
transactions contemplated by this Agreement. The parties hereto will consult
and cooperate with one another, and consider in good faith the views of one
another in connection with any analyses, appearances, presentations, memoranda,
briefs, arguments, opinions and proposals made or submitted by or on behalf of
any party hereto in connection with proceedings under or relating to the HSR Act
or any other antitrust law.
7.5. Access. The Company shall (and shall cause each of its
------
subsidiaries to) afford Purchaser's officers, employees, counsel, lenders,
accountants and other authorized representatives ("Representatives") access,
---------------
during normal business hours throughout the period prior to the Effective Time,
to the Representatives of the Company (and each of its subsidiaries) and its
properties, books, Contracts and records and, during such period, the Company
shall (and shall cause each of its subsidiaries to) furnish promptly to
Purchaser all information concerning its business, properties and personnel as
Purchaser or its Representatives may reasonably request, provided that no
--------
investigation pursuant to this Section 7.5 shall affect or be deemed to modify
any representation or warranty made by the Company and provided, further, that
-------- -------
the foregoing shall not require the Company to permit any inspection, or to
disclose any information, which in the reasonable judgment of the Company would
result in the disclosure of any trade secrets of third parties or violate any
obligation of the Company 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 such officer. Upon any termination of this
Agreement, Purchaser will collect and deliver to the Company all documents
obtained by it or any of its Representatives then in their possession and any
copies thereof.
7.6. Notification of Certain Matters. The Company shall give prompt
-------------------------------
notice to Purchaser of: (a) 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 the Company or any of its
subsidiaries subsequent to the date of this Agreement and prior to the Effective
Time, under any Contract to which the Company or any of its subsidiaries is a
party or is subject; (b) any changes or developments relating to any Action
pending or, to the knowledge of management of the Company, threatened against
the Company or any of its subsidiaries existing as of the date hereof; (c) any
new Actions pending or, to the knowledge of management of the Company,
threatened against the Company or any of its subsidiaries since the date hereof;
(d) any material adverse change in the financial condition or results of
operations of the Company and its subsidiaries taken as a whole as compared to
the financial condition and results of operations of the Company and its
subsidiaries disclosed in the consolidated financial statements of the Company
as of and for the year ended December 31, 1997 which are set forth in the
Disclosure Letter or the occurrence of any event which, so far as reasonably can
be foreseen at the time of its
-23-
<PAGE>
occurrence, is reasonably likely to result in any such change; and (e) any
material adverse change in the properties or business of the Company and its
subsidiaries taken as a whole or the occurrence of any event which, so far as
reasonably can be foreseen at the time of its occurrence, is reasonably likely
to result in any such change. 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 contemplated by this Agreement.
7.7. Publicity. The initial press release relating to the execution
---------
of this Agreement shall be a joint press release and thereafter the Company and
Purchaser, unless they have previously agreed in writing to the contrary, will
not issue any press release or otherwise make a public statement with respect to
the transactions contemplated hereby or make any filings with any Governmental
Entity or with any national securities exchange with respect thereto, unless in
the written opinion of counsel to the party desiring to make such disclosure, a
copy of which opinion shall be delivered to the other party as promptly as
practicable under the circumstances, such disclosure is required by law or stock
exchange rule or regulation.
7.8. Stock Options and Employee Benefits.
-----------------------------------
(a) Stock Options - Cash Exchange. Subject to Section 7.8(b),
-----------------------------
immediately prior to the Effective Time, the Company shall take such actions as
may be necessary such that immediately prior to the Effective Time each stock
option outstanding and unexercised pursuant to the Stock Plans (the "Option"),
------
whether or not then exercisable, shall be canceled and shall cease to be
exercisable. In consideration for such cancellation, the holder thereof, as
soon as practicable after the Effective Time, will receive an amount in cash
from Purchaser equal to the result of multiplying the number of shares of
Company Common Stock previously subject to such Option by the difference between
the Merger Consideration and the per share exercise price of such Option.
(b) Stock Options - Option Exchange. (i) The executives of the
-------------------------------
Company that are listed in Exhibit 7.8(b) may, by written notice to Purchaser
received by Purchaser not less than ten (10) business days prior to the
Effective Time, elect to convert the Options held by them, up to the number of
Options so designated in Exhibit 7.8(b), into options ("Purchaser Options") to
-----------------
purchase Purchaser common stock ("Purchaser Common Stock"). Any such election
----------------------
shall identify the Options to be converted into Purchaser Options and shall
become irrevocable upon receipt by Purchaser of the notice of election. If such
election is made, at the Effective Time, each Option to be converted shall be
deemed to constitute an option to acquire Purchaser Common Stock on the same
terms of the applicable Stock Plan and the stock option agreement by which it is
evidenced. From and after the Effective Time, (A) each such Option may be
exercised solely for shares of Purchaser Common Stock, (B) the number of shares
of Purchaser Common Stock subject to such Option shall be equal
-24-
<PAGE>
to the result (rounded down to the nearest whole share) of multiplying the
number of shares of Company Common Stock subject to such Option immediately
prior to the Effective Time by a fraction (the "Conversion Fraction"), where (x)
-------------------
the numerator is equal to the Merger Consideration and (y) the denominator is
equal to the average of the last reported sales prices of the Purchaser Common
Stock on the five business days immediately prior to the date hereof and (C) the
per share exercise price under each such Option shall be equal to the result
(rounded up to the nearest cent) of dividing the per share exercise price under
each such Option by the Conversion Fraction; provided, however, that with
-------- -------
respect to any Option which is an "incentive stock option", within the meaning
of Section 422 of the Code, the adjustments provided by this Section 7.8(b)(i)
shall be effected in a manner consistent with the requirements of Section 424(a)
of the Code. No payment shall be made pursuant to Section 7.8(a) with respect
to any portion of an Option that is converted into a Purchaser Option as
aforesaid.
(ii) (A) At or prior to the Effective Time, Purchaser shall
take all corporate action necessary to reserve for issuance a sufficient number
of shares of Purchaser Common Stock for delivery upon exercise of Options
assumed by it in accordance with Section 7.8(b)(i) and (B) as soon as
administratively feasible following the Effective Time, file a registration
statement on Form S-8 (or any successor or other appropriate form) with respect
to the Purchaser Common Stock subject to such Options (or shall cause such
Option to be deemed an option issued pursuant to a Purchaser stock option plan
for which Purchaser Common Stock have previously been registered pursuant to an
appropriate registration form). Purchaser shall use its best efforts to maintain
the effectiveness of such registration statement (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as the
Options remain outstanding.
(c) Employee Benefits. Purchaser agrees that during the period
-----------------
commencing at the Effective Time and ending on the first anniversary thereof,
the employees of the Company will continue to be provided with benefits under
employee benefit plans (other than stock options or other plans involving the
potential issuance of securities of the Company or Purchaser) which in the
aggregate are substantially comparable to those currently provided by the
Company to such employees; provided, however, that employees covered by
-------- -------
collective bargaining agreements need not be provided with such benefits.
Purchaser will cause each employee benefit plan of Purchaser in which employees
of the Company are eligible to participate to take into account for purposes of
eligibility and vesting thereunder the service of such employees with the
Company as if such service were with Purchaser. Purchaser will, and will cause
the Surviving Corporation to, honor without modification all employee benefit
obligations to current and former employees of the Company accrued as of the
Effective Time and, to the extent set forth in the Disclosure Letter, all
employee severance plans in existence on the date hereof and all employment or
severance agreements adopted by the Board of Directors of the Company and
entered into prior to the date hereof.
-25-
<PAGE>
(d) ESOP Distributions and Termination. As soon as practicable following
----------------------------------
the Effective Time, Purchaser and the Company shall take all actions necessary
or appropriate to cause the A.P. Green Industries, Inc. Employee Stock Ownership
Trust, which implements and forms part of the A.P. Green Investment Plan
(collectively, the "ESOP"), to provide for the use of all proceeds received
pursuant to the Offer from the tender of Shares allocated to the suspense
account of the ESOP, as follows: first, such proceeds shall be applied to repay
any outstanding loan incurred by the ESOP; and secondly, the balance of such
proceeds shall be allocated to participants' Employer Match ESOP account in
proportion to the total aggregate value of such accounts of the participants as
of the accounting date immediately preceding the Effective Time, except to the
extent such allocations could exceed the limits on annual contributions pursuant
to Section 415 of the Code. In addition, as soon as is reasonably practicable
following the Effective Time (or, if deemed appropriate by Purchaser and the
Company, after receipt of a favorable determination letter from the Internal
Revenue Service on the effect of termination of the ESOP) Purchaser and the
Company shall terminate the ESOP and distribute all proceeds to the participants
in accordance therewith. Notwithstanding the foregoing, Purchaser shall have no
obligation to implement this Section 7.8(d) if such implementation would violate
the terms of the ESOP or jeopardize the tax-qualified status of the ESOP.
7.9. Indemnification; Directors' and Officers' Insurance. (a) From
---------------------------------------------------
and after the Effective Time, Purchaser agrees that it will cause the Surviving
Corporation to indemnify and hold harmless each present and former director and
officer of the Company, determined as of the Effective Time (the "Indemnified
-----------
Parties"), against any costs or expenses (including reasonable attorneys' fees),
- -------
judgments, fines, losses, claims, damages or liabilities (collectively, "Costs")
-----
incurred in connection with any Action, whether civil, criminal, administrative
or investigative, arising out of matters existing or occurring at or prior to
the Effective Time, whether asserted or claimed prior to, at or after the
Effective Time, to the fullest extent that the Company is permitted to do so
under Delaware law and the Company Certificate or Company By-Laws in effect on
the date hereof (and Purchaser shall also advance expenses as incurred to the
fullest extent permitted under applicable law provided the person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification);
provided that any determination required to be made with respect to whether an
- --------
officer's or director's conduct complies with the standards set forth under
Delaware law and the Company Certificate and Company By-Laws shall be made by
independent counsel selected by the Surviving Corporation.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 7.9, upon learning of any such Action, shall
promptly notify Purchaser thereof. In the event of any such Action (whether
arising before or after the Effective Time), (i) Purchaser or the Surviving
Corporation shall have the right to assume the defense thereof and Purchaser
shall not be liable to such Indemnified Parties for any legal expenses of other
-26-
<PAGE>
counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if Purchaser or the
Surviving Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that, in such counsel's reasonable judgment, there
are material issues that constitute conflicts of interest between Purchaser or
the Surviving Corporation and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and Purchaser or the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided,
--------
however, that Purchaser shall be obligated pursuant to this paragraph (b) to pay
- -------
for only one firm of counsel for all Indemnified Parties in any jurisdiction,
(ii) the Indemnified Parties will cooperate in the defense of any such matter
and (iii) Purchaser shall not be liable for any settlement effected without its
prior written consent; and provided, further, however, that Purchaser shall not
-------- ------- -------
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 pro hibited by applicable law.
(c) The Surviving Corporation shall be permitted to maintain the
Company's existing officers' and directors' liability insurance ("D&O
---
Insurance") for a period of two years after the Effective Time so long as the
annual premium therefor is not in excess of 150% of the last annual premium paid
prior to the date hereof (the "D&O Premium"); provided, however, if the existing
----------- -------- -------
D&O Insurance expires, is terminated or canceled during such two year period,
the Surviving Corporation will use its best efforts to obtain as much D&O
Insurance as can be obtained for the remainder of such period for a premium not
in excess (on an annualized basis) of the D&O Premium.
7.10. Environmental Filings. The Company shall promptly make all
---------------------
filings, notifications, applications, permit transfers and other submissions
relating to the Offer and Merger that may be required pursuant to any
Environmental Laws including without limitation those relating to the ownership,
operation or transfer of real property, underground storage tanks, waste
disposal locations or landfills and closure and post closure financial
assurances ("Environmental Submissions"). The Company shall provide Purchaser
-------------------------
with copies of all Environmental Submissions at the time of filing and Purchaser
shall cooperate with the Company in the preparation and execution of all
Environmental Submissions.
7.11. Other Actions by the Company.
----------------------------
(a) Takeover Statutes. If any Takeover Statute shall become
-----------------
applicable to the transactions contemplated hereby, the Company and the members
of the Board of Directors of the Company shall grant such approvals and take
such actions as are necessary so that the transactions contemplated hereby may
be consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such
-27-
<PAGE>
statute or regulation on the transactions contemplated hereby.
(b) Rights. Prior to the commencement of the Offer, the Board of
------
Directors of the Company shall amend the Rights Agreement so that the
consummation of the transactions contemplated hereby will not cause (x) Merger
Sub and/or Purchaser to become an Acquiring Person (as defined in the Rights
Agreement) or (y) a Distribution Date or a Stock Acquisition Date (as such terms
are defined in the Rights Agreement) to occur, irrespective of the number of
Shares acquired pursuant to the Offer. In addition, the Board of Directors of
the Company shall either (i) amend the Rights Agreement prior to the
commencement of the Offer so that all outstanding Rights will expire upon the
acceptance of Shares for payment pursuant to the Offer, whether or not tendered
and purchased pursuant to the Offer, and neither the Company, Merger Sub nor
Purchaser shall have any obligations under the Rights or the Rights Agreement to
any holder (or former holder) of Rights following consummation of the Offer or
(ii) redeem all of the outstanding Rights immediately prior to the consummation
of the Offer so that the Company, Merger Sub and Purchaser shall have no
obligations under the Rights or the Rights Agreement following such time and the
holders shall have no rights under the Rights or the Rights Agreement following
such time, other than the redemption payment of $0.001 per Right as provided in
the Rights Agreement.
ARTICLE VIII
CONDITIONS
8.1. Conditions to Obligations of Purchaser and Merger Sub. The
-----------------------------------------------------
respective obligations of Purchaser and Merger Sub to consummate the Merger are
subject to the fulfillment of each of the following conditions, any or all of
which may be waived in whole or in part by Purchaser or Merger Sub, as the case
may be, to the extent permitted by applicable law:
(a) Stockholder Approval. If required, this Agreement shall have
--------------------
been duly approved by the holders of a majority of the Shares, in accordance
with applicable law and the Company Certificate and the Company By-Laws;
(b) Purchase of Shares. Merger Sub (or one of the Purchaser
------------------
Companies) shall have purchased Shares pursuant to the Offer;
(c) Governmental Consents and Regulatory Approvals. The waiting
----------------------------------------------
period applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated and, other than the filings provided for in Section
2.3, all filings required to be made prior to the Effective Time with, and all
consents, approvals and authorizations
-28-
<PAGE>
required to be obtained prior to the Effective Time from, any Governmental
Entity in connection with the execution and delivery of this Agreement and the
consummation of the Merger by the Company, Purchaser and Merger Sub (the
"Regulatory Approvals") shall have been made or obtained (as the case may be);
- ---------------------
(d) Injunction. No United States or state court or other
----------
Governmental Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and prohibits consummation of the transactions
contemplated by this Agreement or imposes material restrictions on Purchaser or
the Company in connection with consummation of the Merger or with respect to
their business operations, either prior to or subsequent to the Merger
(collectively, an "Order"); and
-----
(e) Other Obligations. The Company shall have fulfilled its
-----------------
obligations under Section 7.8(a) and the representations set forth in Section
6.1(k) shall be true and correct as of the Closing Date as if made on such date.
8.2. Conditions to Obligations of the Company. The obligations of
----------------------------------------
the Company to consummate the Merger are subject to the fulfillment of each of
the following conditions, any or all of which may be waived in whole or in part
by the Company to the extent permitted by applicable law:
(a) Stockholder Approval. If required, this Agreement shall have
--------------------
been duly approved by the holders of a majority of the Shares, in accordance
with applicable law and the Company Certificate and the Company By-Laws;
(b) Purchase of Shares. Merger Sub (or one of the Purchaser
------------------
Companies) shall have purchased Shares pursuant to the Offer;
(c) Governmental Consents. The waiting period applicable to the
---------------------
consummation of the Merger under the HSR Act shall have expired or been
terminated; and
(d) Order. There shall be in effect no Order.
-----
ARTICLE IX
TERMINATION
9.1. Termination by Mutual Consent. This Agreement may be terminated
-----------------------------
and the transactions contemplated hereby may be abandoned at any time prior to
the Effective
-29-
<PAGE>
Time, before or after the approval by holders of Shares, by the mutual consent
of Purchaser and the Company, by action of their respective Boards of Directors.
9.2. Termination by either Purchaser or the Company. This Agreement
----------------------------------------------
may be terminated and the transactions contemplated hereby may be abandoned at
any time prior to the Effective Time, before or after the approval by holders of
Shares, by action of the Board of Directors of either Purchaser or the Company
if (i) Merger Sub, or any Purchaser Company, shall have terminated the Offer
without purchasing any Shares pursuant thereto; or (ii) the Merger shall not
have been consummated by August 31, 1998 whether or not such date is before or
after the approval by holders of Shares; or (iii) if required, the approval of
shareholders required by Section 8.1(a) shall not have been obtained at a
meeting duly convened therefor; or (iv) any court of competent jurisdiction or
other Governmental Entity located or having jurisdiction within the United
States or any country in which either the Company or Purchaser, directly or
indirectly, has material assets or operations, shall have issued a final order,
decree or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the Offer or the Merger and such order, decree, ruling or
other action is or shall have become final and nonappealable.
9.3. Termination by Purchaser. This Agreement may be terminated and
------------------------
the transactions contemplated hereby may be abandoned at any time prior to the
Effective Time, before or after the approval by holders of Shares, by action of
the Board of Directors of Purchaser, if (i) the Company shall have breached or
failed to perform in any material respect any of the covenants or agreements
contained in this Agreement to be complied with or performed by the Company
prior to such date of termination which breach or failure shall not have been
cured prior to the earlier of (A) five business days following the giving of
written notice to the Company of such breach or failure and (B) two business
days prior to the date on which the Offer is then scheduled to expire, or any
representation or warranty of the Company set forth in this Agreement shall have
been inaccurate or incomplete when made except for such failures to be complete
or accurate that, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the financial condition,
properties, business or results of operations of the Company and its
subsidiaries taken as a whole or could prevent or materially delay the
transactions contemplated by this Agreement or impair the ability of Purchaser,
Merger Sub, the Company or any of their respective affiliates, following
consummation of the Offer or the Merger, to conduct any material business or
operations in any jurisdiction where they are now being conducted, (ii) the
Board of Directors of the Company (or a special committee thereof) shall have
amended, modified or withdrawn in a manner adverse to Purchaser or Merger Sub
its approval or recommendation of the Offer, this Agreement or the Merger or the
Board of Directors of the Company (or a special committee thereof), upon request
by Purchaser, shall fail to reaffirm such approval or recommendation, or shall
have endorsed, approved or recommended any other Acquisition Proposal, or shall
have resolved to do any of the foregoing, or (iii) if the Company or any of the
other persons or entities described in Section 7.2 shall take any
-30-
<PAGE>
actions that would be proscribed by Section 7.2 but for the exception therein
allowing certain actions to be taken if required by fiduciary obligations under
applicable law as advised in writing by counsel.
9.4. Termination by the Company. This Agreement may be terminated
--------------------------
and the transactions contemplated hereby may be abandoned at any time prior to
the Effective Time, before or after the approval by holders of Shares by action
of the Board of Directors of the Company, (i) if Purchaser or Merger Sub (or
another Purchaser Company) (x) shall have breached or failed to perform in any
material respect any of the covenants or agreements contained in this Agreement
to be complied with or performed by Purchaser or Merger Sub prior to such date
of termination which shall not have been cured prior to the earlier of (A) five
business days following the giving of written notice to Purchaser of such breach
or failure and (B) two business days prior to the date on which the Offer is
then scheduled to expire, or (y) shall have failed to commence the Offer within
the time required in Section 1.1, or (ii) if (w) the Company is not in material
breach of any of the terms of this Agreement, (x) the Board of Directors of the
Company authorizes the Company, subject to complying with the terms of this
Agreement, to enter into a binding written agreement concerning a transaction
that constitutes a Superior Proposal and the Company notifies Purchaser in
writing that it intends to enter into such an agreement, attaching the most
current version of such agreement (which shall include all of the material
terms, including the price proposed to be paid for Shares pursuant thereto) to
such notice, (y) Purchaser does not make, within two business days of receipt of
the Company's written notification of its intention to enter into a binding
agreement for a Superior Proposal, an offer that the Board of Directors of the
Company determines, in good faith after consultation with its financial
advisors, is at least as favorable, from a financial point of view, to the
stockholders of the Company as the Superior Proposal and (z) the Company, prior
to such termination, pays to Purchaser in immediately available funds the fees
required to be paid pursuant to Section 9.5(b).
9.5. Effect of Termination and Abandonment. (a) In the event of the
-------------------------------------
termination of this Agreement pursuant to this Article IX, no party hereto (or
any of its directors or officers) shall have any liability or further obligation
to any other party to this Agreement, except as provided in Section 9.5(b) below
and Section 10.2 and except that nothing herein will relieve any party from
liability for any willful breach of this Agreement; provided, however, that if
-------- -------
this Agreement is terminated by Purchaser pursuant to Section 9.3(i) or the
Company pursuant to Section 9.4(i), the terminating party's rights to pursue all
legal remedies will survive such termination unimpaired.
(b) If (i) (x) the Offer shall have remained open for a minimum of at
least 20 business days, (y) after the date hereof any corporation, partnership,
person, other entity or group (as defined in Section 13(d)(3) of the Exchange
Act) other than Purchaser or Merger Sub or any of their respective subsidiaries
or affiliates (collectively, a "Person") shall have become the beneficial owner
------
of 20% or more of the outstanding Shares or shall have publicly
-31-
<PAGE>
announced a proposal or intention to make an Acquisition Proposal or any Person
shall have commenced, or shall have publicly announced an intention to commence,
a tender offer or exchange offer for 20% or more of the outstanding Shares, and
(z) the Minimum Condition (as defined in Annex A) shall not have been satisfied
and the Offer is terminated without the purchase of any Shares thereunder, or
(ii) Purchaser shall have terminated this Agreement pursuant to Section 9.3(ii)
or Section 9.3(iii) or (iii) the Company shall have terminated this Agreement
pursuant to Section 9.4(ii), then the Company shall promptly, but in no event
later than two days after the date of such termination, pay Purchaser a fee of
$8,000,000 and shall reimburse Purchaser and Merger Sub (not later than one
business day after request by Purchaser or Merger Sub) for all of the out-of-
pocket charges and expenses, including financing fees, incurred by Purchaser or
Merger Sub in connection with this Agreement and the transactions contemplated
by this Agreement up to a maximum amount of $1,500,000, in each case payable by
wire transfer in same day funds. The Company acknowledges that the agreements
contained in this Section 9.5(b) are an integral part of the transactions
contemplated in this Agreement, and that, without these agreements, Purchaser
and Merger Sub would not enter into this Agreement; accordingly, if the Company
fails to promptly pay the amount due pursuant to this Section 9.5(b), and, in
order to obtain such payment, Purchaser or Merger Sub commences a suit which
results in a judgment against the Company for the fee set forth in this
paragraph (b), the Company shall pay to Purchaser or Merger Sub its costs and
expenses (including attorneys' fees) in connection with such suit, together with
interest on the amount of the fee at the prime rate of Bank of America National
Trust and Savings Association on the date such payment was required to be made.
The payments made by the Company pursuant to this Section 9.5(b) are the sole
and exclusive remedy of Purchaser and Merger Sub for any claim that Purchaser or
Merger Sub may have arising from or relating to the events set forth in Section
9.5(b)(i), (ii) or (iii).
ARTICLE X
Miscellaneous and General
10.1. Payment of Expenses. Whether or not the Merger shall be
-------------------
consummated, each party hereto shall, subject to Section 9.5(b), pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the Merger.
10.2. Survival. The agreements of the Company, Purchaser and Merger
--------
Sub contained in Sections 5.2 (Payment for Shares) (but only to the extent that
such Section expressly relates to actions to be taken after the Effective Time),
5.3 (Dissenters' Rights), 5.4 (Transfer of Shares After the Effective Time), 7.8
(Stock Options and Employee Benefits), 7.9 (Indemnification; Directors' and
Officers' Insurance), 7.11 (Other Actions by the Company) and 10.1 (Payment of
Expenses) shall survive the consummation of the Merger.
-32-
<PAGE>
The agreements of the Company, Purchaser and Merger Sub contained in
Confidentiality Agreement, dated as of December 12, 1997 between the Company and
Purchaser and Sections 7.5 (Access), 9.5 (Effect of Termination and
Abandonment), 10.1 (Payment of Expenses), 10.6 (Governing Law), 10.7 (Notices),
10.8 (Severability), 10.9 (Entire Agreement, etc.), 10.10 (Parties in Interest),
10.11 (Definition of "Subsidiary"), 10.12 (Obligation of Purchaser) and 10.13
(Captions) shall survive the termination of this Agreement. All other
representations, warranties, agreements and covenants in this Agreement shall
not survive the consummation of the Merger or the termination of this Agreement.
10.3. Modification or Amendment. Subject to the applicable
-------------------------
provisions of the DGCL, at any time prior to the Effective Time, the parties
hereto may modify or amend this Agreement, by written agreement executed and
delivered by duly authorized officers of the respective parties.
10.4. Waiver of Conditions. The conditions to each of the parties'
--------------------
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
10.5. Counterparts. For the convenience of the parties hereto, this
------------
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
10.6. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware.
10.7. Notices. Any notice, request, instruction or other document to
-------
be given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, if to
-----
Purchaser or Merger Sub, addressed to Purchaser or Merger Sub, as the case may
- -----------------------
be, at Global Industrial Technologies, Inc., 2121 San Jacinto Street, Suite
2500, Dallas, Texas 75201, Attention: Graham L. Adelman, Esq. Senior Vice
President, General Counsel and Secretary (with a copy to James C. Morphy, Esq.,
Sullivan & Cromwell, 125 Broad Street, New York, New York 10004); and if to the
-------------
Company, addressed to the Company at A.P. Green Industries, Inc., Green
- -------
Boulevard, Mexico, Missouri 65265, Attention: Michael B. Cooney, Esq., Senior
Vice President -Law/Administration and Secretary (with a copy to Robert LaRose,
Esq., Thompson Coburn, One Mercantile Center, St. Louis, Missouri, 63101), or to
such other persons or addresses as may be designated in writing by the party to
receive such notice.
10.8. 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
-33-
<PAGE>
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
contemplated hereby 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
contemplated hereby are fulfilled to the fullest extent possible.
10.9. Entire Agreement, etc. This Agreement (including the
---------------------
Disclosure Letter and any exhibits or Annexes hereto) (a) constitutes the entire
agreement, and supersedes all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof, and (b) shall not be assignable by
operation of law or otherwise and is not intended to create any obligations to,
or rights in respect of, any persons other than the parties hereto; provided,
--------
however, that Purchaser may designate, by written notice to the Company, another
- -------
wholly-owned direct or indirect subsidiary to be a Constituent Corporation in
lieu of Merger Sub, in the event of which, all references herein to Merger Sub
shall be deemed references to such other subsidiary except that all
representations and warranties made herein with respect to Merger Sub 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.
10.10. Parties in Interest. This Agreement shall be binding upon and
-------------------
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
10.11. Definition of "Subsidiary". When a reference is made in this
--------------------------
Agreement to a subsidiary of a party, the word "subsidiary" means any
corporation or other organization whether incorporated or unincorporated of
which at least a majority of the securities or interests having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries, or by such party and
one or more of its subsidiaries, and, with respect to the Company, shall also
include Empresa de Refractarios Colombianos S.A. and Materiales Industriales
S.A. (the "Colombian Companies"); provided, however, that any representations
------------------- -------- -------
and warranties relating to the Colombian Companies shall be deemed qualified by
reference to the knowledge of the officers of the Company.
10.12. Obligation of Purchaser. Whenever this Agreement requires
-----------------------
Merger Sub to take any action, such requirement shall be deemed to include an
undertaking on the part of Purchaser to cause Merger Sub to take such action.
-34-
<PAGE>
10.13. Captions. The Article, Section and paragraph captions herein
--------
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
-35-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first hereinabove written.
A.P. GREEN INDUSTRIES, INC.
By
-----------------------------------
Name:
Title:
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
By
-----------------------------------
Name:
Title:
BGN ACQUISITION CORP.
By
-----------------------------------
Name:
Title:
-36-
<PAGE>
ANNEX A
CERTAIN CONDITIONS OF THE OFFER. The capitalized terms used in this
-------------------------------
Annex A have the meanings set forth in the attached Agreement. Notwithstanding
any other provision of the Offer, Merger Sub 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 Merger Sub's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, or may delay the acceptance for payment of or
payment for, any tendered Shares, or may, in its sole discretion, terminate or
amend the Offer as to any Shares not then paid for if, (i) prior to the
expiration of the Offer, (x) a number of Shares which, together with any Shares
owned by Purchaser or Merger Sub, constitutes more than 50% of the voting power
(determined on a fully-diluted basis) of all the securities of the Company
entitled to vote generally in the election of directors or in connection with a
merger shall not have been validly tendered and not withdrawn prior to the
expiration of the Offer (the "Minimum Condition") or (y) any waiting periods
-----------------
under the HSR Act applicable to the purchase of Shares pursuant to the Offer,
and any applicable waiting periods under any foreign statutes or regulations
that are applicable to the Offer or the Merger shall not have expired or been
terminated, or any Regulatory Approvals applicable to the Offer and the Merger
shall not have been obtained on terms satisfactory to Purchaser in its
reasonable judgment, or (ii) on or after March 3, 1998, and at or before the
time of payment for any of such Shares (whether or not any Shares have
theretofore been accepted for payment), any of the following events shall occur:
(a) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the NYSE, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) a commencement or escalation
of a war, armed hostilities or other international or national calamity
directly or indirectly involving the United States, (iv) any limitation
(whether or not mandatory) by any Governmental Entity on, or any other
event which might affect, the extension of credit by banks or other lending
institutions, (v) a material change in United States or any other currency
exchange rates or a suspension of, or limitation on, the markets therefor,
(vi) or in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof,
(vii) any extraordinary or material adverse change in the market price of
the Shares or in the United States securities or financial markets
generally, including, without limitation, a decline of at least 20% in
either the Dow Jones Average of Industrial Stocks or the Standard & Poor's
500 index from the date of the Agreement or (viii) any material adverse
change in the relevant financial markets that could reasonably be expected
to materially and adversely affect the debt facilities related to the
financing of the Offer;
(b) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements contained
in the Agreement or any representation or warranty of the Company set forth
in
A-1
<PAGE>
the Agreement shall have been inaccurate or incomplete in any material
respect when made or thereafter shall become inaccurate or incomplete in
any material respect;
(c) there shall be threatened, instituted or pending any Action
before any court or other Governmental Entity by any Governmental Entity or
instituted or pending any Action by any other person, domestic or foreign:
(i) challenging the acquisition by Purchaser or Merger Sub of Shares,
seeking to restrain or prohibit the consummation of the transactions
contemplated by the Offer or the Merger or other subsequent business
combination, seeking to obtain any material damages or otherwise directly
or indirectly relating to the transactions contemplated by the Offer or the
Merger or other subsequent business combination; (ii) seeking to prohibit,
or impose any material limitations on, Purchaser's or Merger Sub's
ownership or operation of all or any portion of their or the Company's
business or assets (including the business or assets of their respective
affiliates and subsidiaries), or to compel Purchaser or Merger Sub to
dispose of or hold separate all or any portion of Purchaser's or Merger
Sub's or the Company's business or assets (including the business or assets
of their respective affiliates and subsidiaries) as a result of the
transactions contemplated by the Offer or the Merger or other subsequent
business combination; (iii) seeking to make the acceptance for payment,
purchase of, or payment for, some or all of the Shares illegal or render
Merger Sub unable to, or result in a delay in, or restrict, the ability of
Merger Sub to, accept for payment, purchase or pay for some or all of the
Shares; (iv) seeking to impose material limitations on the ability of
Purchaser or Merger Sub effectively to acquire or hold or to exercise full
rights of ownership of the Shares including, without limitation, the right
to vote the Shares purchased by them on an equal basis with all other
Shares on all matters properly presented to the stockholders; or (v) that,
in any event, in the judgment of Purchaser, is reasonably likely to have a
material adverse effect on the financial condition, properties, business or
operations of the Company or Purchaser or Merger Sub (or any of their
respective affiliates or subsi diaries) or the value of the Shares to
Purchaser or Merger Sub or the benefits expected to be derived by Purchaser
or Merger Sub as a result of consummation of the transactions contemplated
by the Offer and the Merger;
(d) any statute, rule, regulation, order or injunction shall be
sought, proposed, enacted, promulgated, entered, enforced or deemed or
become applicable to the Offer, the Merger, the Agreement or other
subsequent business combination, or any other action shall have been taken,
proposed or threatened, by any court or other Governmental Entity other
than the application to the Offer, the Merger, the Agreement or other
subsequent busi-
A-2
<PAGE>
ness combination of waiting periods under the HSR Act, that, in the
judgment of Purchaser, could be expected to, directly or indirectly, result
in any of the effects of, or have any of the consequences sought to be
obtained or achieved in, any Action referred to in clauses (i) through (v)
of paragraph (c) above;
(e) a tender or exchange offer for some portion or all of the Shares
shall have been commenced or publicly proposed to be made by another person
(including the Company or its subsidiaries), or it shall have been publicly
disclosed or Purchaser shall have learned that (i) any person (including
the Company or its subsidiaries), entity or "group" (as defined in Section
13(d) of the Exchange Act and the rules promulgated thereunder) shall have
become the beneficial owner (as defined in Section 13(d) of the Exchange
Act and the rules promulgated thereunder) of more than 20% of any class or
series of capital stock of the Company (including the Shares) other than
for bona fide arbitrage purposes or (ii) any person, entity or group shall
have entered into a definitive agreement or an agreement in principle or
made a proposal with respect to a tender offer or exchange offer for some
portion or all of the Shares or a merger, consolidation or other business
combination with or involving the Company;
(f) any change shall have occurred (or any development shall have
occurred involving a prospective change) or Purchaser or Merger Sub shall
have become aware of any fact (including, but not limited to, any such
change) that has had, or is reasonably likely to have, a material adverse
effect on the financial condition, properties, business or results of
operations of the Company and its subsidiaries taken as a whole;
(g) the Board of Directors of the Company (or a special committee
thereof) shall have amended, modified or withdrawn its approval or
recommendation of the Offer, the Agreement or the Merger, or shall have
failed to publicly reconfirm such approval or recommendation upon request
by Purchaser or Merger Sub, or shall have endorsed, approved or recommended
any other Acquisition Proposal, or shall have resolved to do any of the
foregoing; or
(h) the Agreement shall have been terminated by the Company or
Purchaser or Merger Sub in accordance with its terms or Purchaser or Merger
Sub shall have reached an agreement or understanding in writing with the
Company providing for termination or amendment of the Offer or delay in
payment for the Shares;
A-3
<PAGE>
which, in the sole judgment of Purchaser and Merger Sub, in any such case, and
regardless of the circumstances (including any action or inaction by Purchaser
or Merger Sub) giving rise to any such conditions, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payment for
Shares.
The foregoing conditions are for the sole benefit of Purchaser and
Merger Sub and may be asserted by Purchaser or Merger Sub regardless of the
circumstances (including any action or inaction by Purchaser or Merger Sub)
giving rise to such condition or may be waived by Purchaser or Merger Sub, by
express and specific action to that effect, in whole or in part at any time and
from time to time in its sole discretion. Any determination by Purchaser and
Merger Sub concerning any event described in this Annex A shall be final and
binding upon all parties. The failure by Merger Sub at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
A-4
<PAGE>
EXHIBIT 7.8(b)
--------------
1. Paul F. Hummer, President and Chief Executive Officer of the Company may,
by written notice to Purchaser received by Purchaser not less than ten
(10) business days prior to the Effective Time, elect to convert up to
75,000 Options into Purchaser Options, pursuant to Section 7.8(b) of the
Agreement.
<PAGE>
EXHIBIT 99(c)(2)
[GLOBAL INDUSTRIAL TECHNOLOGIES, INC. LETTERHEAD}
December 12, 1997
A.P. Green Industries, Inc.
Green Boulevard
Mexico, Missouri 65265
Attention: Mr. Paul F. Hummer, Chairman, President
and Chief Executive Officer
Gentlemen:
In connection with the consideration by A.P. Green Industries, Inc. ("Green")
and Global Industrial Technologies, Inc. ("Global") of a possible business
combination transaction (a "Transaction") between Green and Global involving
Green and the refractories business of Global conducted by Harbison-Walker
Refractories Company ("H-W"), a wholly owned subsidiary of Global, Global is
prepared to make available to Green, and it is our understanding that Green is
prepared to make available to Global, certain information concerning the
business, financial condition, operations, assets and liabilities of H-W and
Green, respectively (herein collectively referred to, and further defined below,
as the "Evaluation Material"). The purpose of this letter agreement is to set
forth the understanding of Global and Green (the "Parties") with respect to the
conditions upon which Evaluation Material will be furnished by each to the
other, including their agreement to treat any Evaluation Material (whether
prepared by the Parties, their advisors or otherwise and irrespective of the
form of communication) which has been or will be furnished by or on behalf of
the Parties after the date hereof in accordance with the provisions of this
letter agreement, and to take or abstain from taking certain other actions
hereinafter set forth.
The term "Evaluation Material" shall be deemed to include all data, reports,
interpretations, forecasts and records, financial or otherwise, reflecting
information and concerning Green and H-W which is not available to the general
public and which the Parties, their affiliates or any of their respective
directors, partners, officers, employees, agents or advisors (including without
limitation, attorneys, accountants, consultants, bankers and financial advisors)
(collectively, "Representatives") provide to each other as well as all notes,
analyses, compilations, studies, interpretations or other documents prepared by
the Parties or their Representatives which contain, reflect or are based upon,
in whole or in part, the information furnished to the Parties or their
Representatives pursuant hereto. The term "Evaluation Material" does not
include information which (1) is or becomes generally available to the public
other than as a result of a disclosure by a Party or its Representatives in
violation hereof, (2) was within the possession of a Party or its
Representatives prior to its being furnished to such Party by the other Party or
any Representative of the other Party pursuant hereto, provided that the source
of such information was not known by the Party claiming
<PAGE>
such information is not Evaluation Material to be bound by a confidentiality
agreement with or other direct or indirect contractual, legal or fiduciary
obligation of confidentiality to the other Party or its Representatives with
respect to such information, or (3) becomes available to the Party to which such
information was furnished under this letter agreement on a non-confidential
basis from a sourse other than the other Party or any Representative of the
other Party, provided that such source is not known by the Party claiming such
information is not Evaluation Material to be bound to the other Party or its
Representatives by a confidentiality agreement or other direct or indirect
contractual, legal or fiduciary obligation with respect to such information, or
(4) is demonstrated, to the reasonable satisfaction of the Party that furnished
such information, to have been developed by the other Party or its
Representatives independently from the Evaluation Material.
The Parties hereby agree that, for a period of three years after the date
hereof, they and their Representatives shall use the Evaluation Material solely
for the purpose of evaluating a possible Transaction, the Evaluation Material
will be kept confidential, and they and their Representatives will not disclose
any of the Evaluation Material to any person in any manner whatsoever; provided,
however, that (1) either Party may make any disclosure of such information to
which the other Party gives its prior written consent and (2) any of such
information may be disclosed to those Representatives of a Party who need to
know such information for the sole purpose of evaluating a possible Transaction,
who agree to keep such information confidential, and who agree to be bound by
the terms hereof to the same extent as if they were parties hereto.
Notwithstanding the foregoing, unless and until the Parties reach an agreement
in principle regarding a Transaction, and subject to the following paragraph and
the first full paragraph on page 3, the Parties agree that (1) the Evaluation
Material, (2) the fact that Evaluation Material has been furnished hereunder,
and (3) the fact that discussions are taking place and may take place in the
future between the Parties and their Representatives regarding a Transaction,
will only be disclosed by the Parties or their Representatives to those
corporate officers and other corporate employees of the Parties, and, in the
case of Global, also to those corporate officers and other corporate employees
of H-W, to whom such disclosure is necessary in order for the Parties to
initially evaluate a Transaction and discuss terms for an agreement in
principle. The Parties shall instruct such officers and employees to make no
further disclosure thereof and shall inform them of restrictions imposed by
applicable laws upon the disclosure and use of Evaluation Material. In any
event, each Party shall be responsible for the breach of this letter agreement
by any of its Representatives and agrees, at its sole expense, to take all
reasonable measures (including but not limited to court proceedings) to restrain
its Representatives from prohibited or unauthorized disclosure or use of the
Evaluation Material.
<PAGE>
In addition, unless they have previously agreed in writing to the contrary, the
Parties and their Representatives will not disclose to any other person (1) that
they have furnished Evaluation Material to each other, (2) that discussions or
negotiations have taken place or will take place concerning a possible
Transaction, or (3) any of the terms, conditions or other facts with respect
thereto (including the status thereof), unless in the written opinion of counsel
to the Party desiring to make such disclosure, a copy of which opinion shall be
delivered to the other Party, such disclosure is required by law or stock
exchange rule or regulation and then only with as much prior written notice to
the other Party as is practicable under the circumstances. The term "person" as
used in this letter agreement shall be broadly interpreted to include the media
and any individual, corporation, partnership, group, or other entity.
Until the discussions contemplated by this letter agreement have been
terminated, Green, on the one hand, and Global, on the other, shall not make any
contract with any directors, officers, employees, advisors, customers,
suppliers, lenders or subcontractors of the other Party (other than in the
ordinary course of business) without the express written consent of such other
Party. Each Party shall, as soon as possible after the date hereof, designate
one or more persons to whom contact may be made. All communications regarding
the proposed Transaction, requests for additional information, and discussions
or questions regarding procedures, will be submitted or directed only to those
the person so designated for such purpose.
In the event that a Party or its Representatives are requested or required (by
deposition, interrogatories, requests for information or documents in legal
proceedings, subpoena, civil investigative demand or other similar process) to
disclose any of the Evaluation Material, that Party shall provide the other
Party with prompt written notice of any such request or requirement. In such
event the other Party may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this letter agreement. If, in
the absence of a protective order or other remedy or the receipt of a waiver by
the other Party, the Party which has received such request or is subject to such
requirement and its Representatives are nonetheless, in the written opinion of
counsel to such Party, a copy of which opinion shall be delivered to the other
Party, legally compelled to disclose Evaluation Material to any tribunal or else
stand liable for contempt or suffer other censure or penalty, it or its
Representative may, without liability hereunder, disclose to such tribunal only
that portion of the Evaluation Material which it has been advised by such
counsel that it is legally required to disclose, provided that such Party, at
the expense of the other Party, exercises commercially reasonable efforts to
preserve the confidentiality of the Evaluation Material, including, without
limitation, by cooperating with the other Party to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the Evaluation Material by such tribunal. Such efforts shall be at
the expense of the other Party
<PAGE>
if disclosure to such tribunal was not caused by or resulted from a previous
disclosure by the Party (or its Representatives) that received such request or
became subject to such requirement which was not permitted by this letter
agreement.
If either Party decides that it does not wish to participate in a Transaction,
it will promptly inform the other Party of that decision. In that case, or at
any time upon the request of either Party for any reason or for no reason, each
Party will promptly deliver to the other Party all documents (and all copies
thereof) furnished to it or its Representatives by or on behalf of the other
Party pursuant hereto. In the event of such a decision or request, all other
Evaluation Material prepared by the Parties or their Representatives shall be
immediately destroyed and no copy thereof shall be retained (except as may be
required by regulatory authorities to which you are subject). Notwithstanding
the return or the destruction of the Evaluation Material, the Parties and their
Representatives will continue to be bound by their obligations of
confidentiality and other obligations hereunder for a period of three years
after the date hereof.
In consideration of the Evaluation Material being furnished, the Parties hereby
agree that, for a period of two years from the date hereof, neither of them
will, nor will any of their affiliates (including H-W), solicit to employ
officers or other employees of the other, or any of the other's affiliates
(including H-W), with whom it, its affiliates or its Representatives have had
contact, or who were specifically identified to it or its Representatives during
the period of its investigation of the Company, so long as they are employed by
the other Party or any of the other Party's affiliates (including H-W), without
obtaining the prior written consent of the other Party, provided that either
Party or its affiliates may make general solicitations of employment not
directed to the other Party, its affiliates or its employees.
The parties understand and acknowledge that the stock of Green and Global is
publicly-held. Green warrants to Global that it does not own, directly or
indirectly, any of the capital stock of Global nor does it own any option,
warrant or right to acquire any such stock. Global warrants to Green that it
does not own, directly or indirectly, any of the capital stock of Green nor does
it own any option, warrant or right to acquire any such stock. For a period of
eighteen (18) months from the date hereof, Green agrees that it will not,
directly or indirectly, by purchase or otherwise, through subsidiaries or
associates, acquire, offer to acquire, or agree to acquire ownership of or
warrants or options covering any common shares of Global without the prior
written approval of Global. For a period of eighteen (18) months from the date
hereof, Global agrees that it will not, directly or indirectly, by purchase or
otherwise, through subsidiaries or associates, acquire, offer to acquire, or
agree to acquire ownership of or warrants or options covering any common shares
of Green without the prior written approval of Green.
<PAGE>
The Parties understand and acknowledge that no representation or warranty,
express or implied, is made or shall be deemed to have been made as to the
accuracy or completeness of any Evaluation Material furnished to them. The
Parties agree that neither of them shall have any liability to the other or to
any Representatives of the other relating to or resulting from the use of
Evaluation Material except as may be set forth in a final definitive agreement.
Only those representations or warranties which are made in a final definitive
agreement regarding a Transaction, when, as and if executed and delivered by the
parties, and subject to such limitations and restrictions as may be specified
therein (the "definitive agreement"), will have any legal effect. In
particular, but without prejudice to the generality of the foregoing, no
representation or warranty is given or shall be deemed to have been given as to
the achievement or reasonableness of any projections, management estimates,
prospects or returns contained in the Evaluation Material. The Parties also
understand and acknowledge that the Evaluation Material does not purport to
contain all the information that may be required to evaluate a Transaction and
that they should conduct their own independent analysis of the Green and H-W, as
the case may be, and of the data contained in the Evaluation Material.
Furthermore, the Parties understand and acknowledge that the definitive
agreement will provide that neither of them have not relied on or been induced
to enter into such definitive agreement by any representation, warranty, promise
or assurance save as may be expressly set out in such definitive agreement and
subject to such limitations and restrictions as may be specified therein, and,
unless and to the extent provided to the contrary in a definitive agreement,
that any information provided to either of them that is subject to this letter
agreement which is inconsistent with any representation or warranty shall be
deemed an exception thereto.
The Parties agree that unless and until they have both executed and exchanged a
final definitive agreement providing for a Transaction, neither of them will be
under any legal obligation of any kind whatsoever with respect to a Transaction
or otherwise by virtue of this letter agreement, except the matters specifically
agreed to herein. The Parties further acknowledge and agree that each of them
reserves the right, in its sole discretion, to reject any and all proposals made
by the other, or the other's affiliates or Representatives with regard to a
Transaction, and to terminate discussions and negotiations with the other at any
time for any reason or no reason.
It is understood and agreed that no failure or delay by either Party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder.
<PAGE>
It is understood and agreed that money damages would not be a sufficient remedy
for any breach of this letter agreement by either Party or any of its
Representatives and that each Party shall be entitled to equitable relief;
including injunction and specific performance, as a remedy for any such breach
and each Party hereby waives any requirement for the securing or posting of any
bond in connection with such remedy. Such remedies shall not be deemed to be
the exclusive remedies for a breach of this letter agreement but shall be in
addition to all other remedies available at law or equity to the Parties and H-
W.
This letter agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to the conflicts of law provisions
thereof.
Please confirm the agreement of Green with the foregoing by signing and
returning one copy of this letter agreement to the undersigned, whereupon this
letter agreement shall become a binding agreement between you and the Company as
to the matters specifically agreed to herein.
Very truly yours,
Global Industrial Technologies, Inc.
J.L. Jackson, Chairman of the Board,
President and Chief Executive Officer
Accepted and agreed as of
the date first above written
A.P. Green Industries, Inc.
Paul F. Hummer, Chairman of the Board,
President and Chief Executive Officer
