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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K
Current Report
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 19, 1999
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 005-42674 09265-04802
------------------------ ------------------------ ----------------------
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
2121 San Jacinto Street, Suite 2500, Dallas, Texas 75201
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Address of Principal Executive Offices
Registrant's telephone number, including area code : (214) 953-4500
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Item 5. Other Events.
On May 19, 1999, the Company, UCR, Inc., Ameri-Forge Corporation, GPX Corp.
and AF Acquisition Company entered into a definitive agreement (the "Asset
Purchase Agreement") for the sale of the Company's Ameri-Forge unit to
Tanglewood Companies LP, Houston, TX, for $40 million in cash proceeds which the
Company will use to pay down debt. The transaction contemplated by the Asset
Purchase Agreement (the "Transaction") is subject to customary regulatory
approval and post-closing adjustments and is expected to close within 60 days.
The Company will realize approximately $40 million in tax benefits from the
Transaction, which will offset taxes payable on the sale of APG Lime and
generate tax loss carryforwards to be used against other earnings. The
foregoing description of the Transaction and the Asset Purchase Agreement is
qualified in its entirety by reference to (i) the press release issued in
connection with the Transaction and (ii) the Asset Purchase Agreement, which are
filed as Exhibits hereto and are incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
EXHIBITS
Exhibit 2.1 - Asset Purchase Agreement among Global Industrial Technologies,
Inc., UCR, Inc., Ameri-Forge Corporation, GPX Corp. and AF
Acquisition Company dated as of May 19, 1999.
Exhibit 99.1 - Press release of Global Industrial Technologies, Inc. dated May
20, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
Dated: May 21, 1999 By: /s/ Jeanette H. Quay
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Name: Jeanette H. Quay
Title: Vice President, General Counsel and
Secretary
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Exhibit 2.1
ASSET PURCHASE AGREEMENT
by and among
AF ACQUISITION COMPANY,
UCR, Inc.,
AMERI-FORGE CORPORATION,
GPX CORP.,
and
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
Dated as of May 19, 1999
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TABLE OF CONTENTS
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ARTICLE IDEFINITIONS........................................................................ 1
ARTICLE II SALE AND TRANSFER OF ACQUIRED ASSETS; CLOSING.................................... 8
2.1 Sale of the Acquired Assets; Excluded Assets.............................. 8
2.2 Assumption of Liabilities................................................. 10
2.3 Purchase Price............................................................ 10
2.4 Closing................................................................... 11
2.5 Closing Obligations....................................................... 11
2.6 Closing Financials........................................................ 12
2.7 Final Adjustment to Purchase Price........................................ 13
2.8 Tax Matters............................................................... 13
2.9 SPLIT Loans............................................................... 14
2.10 Linser Backlog............................................................ 14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT,
GPX AND SELLERS.................................................................... 14
3.1 Organization and Good Standing............................................ 15
3.2 Authority; No Conflict.................................................... 15
3.3 [Intentionally omitted]................................................... 16
3.4 Financial Statements...................................................... 16
3.5. Books and Records......................................................... 17
3.6 Title to Properties; Encumbrances......................................... 17
3.7 Condition and Sufficiency of Assets....................................... 18
3.8 Accounts Receivable....................................................... 18
3.9 Inventory................................................................. 18
3.10 No Undisclosed Liabilities................................................ 18
3.11 Taxes..................................................................... 19
3.12 No Material Adverse Effect................................................ 19
3.13 Employee Benefits......................................................... 19
3.14 Compliance with Legal Requirements; Governmental Authorizations........... 19
3.15 Legal Proceedings; Orders. .............................................. 20
3.16 Absence of Certain Changes and Events..................................... 21
3.17 Contracts; No Defaults. .................................................. 22
3.18 Insurance................................................................. 23
3.19 Environmental Matters..................................................... 23
3.20 Employees................................................................. 25
3.21 Labor Relations; Compliance............................................... 25
3.22 Intellectual Property..................................................... 26
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3.23 Certain Payments.......................................................... 26
3.24 Relationships with Related Persons........................................ 26
3.25 Brokers or Finders........................................................ 26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.......................................... 27
4.1 Organization and Good Standing............................................ 27
4.2 Authority; No Conflict.................................................... 27
4.3 Certain Proceedings....................................................... 28
4.4 Brokers or Finders........................................................ 28
4.5 Availability of Funds..................................................... 28
ARTICLE V COVENANTS OF THE PARTIES PRIOR TO CLOSING DATE.................................... 28
5.1 Access and Investigation.................................................. 28
5.2 Operation of the Businesses of Sellers.................................... 28
5.3 Negative Covenant......................................................... 29
5.4 Mutual Cooperation........................................................ 31
5.5 [Intentionally Omitted]................................................... 33
5.6. Payment of Indebtedness by Related Persons................................ 33
5.7 No Negotiation............................................................ 33
5.8 Notice of Environmental Claims............................................ 33
5.9 Assignment of Software.................................................... 33
5.10 Assignment of Confidentiality Agreements.................................. 34
5.11 Change of the Sellers' Names.............................................. 34
5.12 Other Offers.............................................................. 34
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE......................................... 34
6.1 Accuracy of Representations; Covenants; Deliveries........................ 34
6.2 HSR Act Filings........................................................... 35
6.3 No Prohibition............................................................ 35
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ARTICLE VII CONDITIONS PRECEDENT TO PARENT'S, GPX'S AND SELLERS'
OBLIGATION TO CLOSE................................................................ 35
7.1 Accuracy of Representations............................................... 35
7.2 HSR Act Filings........................................................... 36
7.3 No Prohibition............................................................ 36
ARTICLE VIII CERTAIN POST-CLOSING COVENANTS................................................. 36
8.1 Certain Covenants......................................................... 36
8.2 Nonassignability of Assets. ............................................. 37
8.3 Termination of Employees.................................................. 38
8.4. Consent to Engagement..................................................... 38
ARTICLE IX MUTUAL COVENANTS................................................................. 39
9.1 Expenses.................................................................. 39
9.2 Public Announcements...................................................... 39
9.3 Confidentiality........................................................... 39
9.4 Employee Benefits......................................................... 39
9.5 Insurance Coverage........................................................ 41
9.6 Transition Services Agreement............................................. 41
ARTICLE X TERMINATION....................................................................... 41
10.1 Termination Events........................................................ 41
10.2 Effect of Termination..................................................... 42
ARTICLE XI INDEMNIFICATION; REMEDIES......................................................... 42
11.1 Right to Indemnification Not Affected by Knowledge........................ 42
11.2 Indemnification and Payment of Damages by Parent, GPX and Sellers......... 42
11.3 Indemnification and Payment of Damages by Parent,
GPX and Sellers--Environmental Matters........................... 43
11.4 Indemnification and Payment of Damages by Buyer........................... 46
11.5 Time Limitations.......................................................... 47
11.6 Limitations on Amount..................................................... 47
11.7 Procedure for Indemnification--Third-Party Claims......................... 48
11.8 Procedure for Indemnification--Other Claims............................... 49
11.9 Other Matters............................................................. 49
ARTICLE XII GENERAL PROVISIONS.............................................................. 50
12.1 Survival.................................................................. 50
12.2 Further Assurances........................................................ 50
12.3 Waiver.................................................................... 50
12.4 Entire Agreement and Modification......................................... 51
12.5 Notices................................................................... 51
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12.6 Jurisdiction; Service of Process.......................................... 52
12.7 Disclosure Schedules...................................................... 52
12.8 Assignments, Successors and No Third-Party Rights......................... 52
12.9 Severability.............................................................. 52
12.10 Headings; Construction.................................................... 53
12.11 Governing Law............................................................. 53
12.12 Counterparts.............................................................. 53
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ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement (this "Agreement") is made as of May 19,
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1999, by AF Acquisition Company, a Texas corporation ("Buyer"), UCR, Inc., a
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Texas corporation ("UCR"), AFC Acquisition, Inc., a Delaware corporation
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("AFC"), Ameri-Forge Corporation, a Delaware corporation and the sole
stockholder of UCR and AFC (the "Company"), GPX Corp., a Nevada corporation and
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the sole stockholder of the Company ("GPX"), and Global Industrial Technologies,
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Inc., a Delaware corporation and the sole stockholder of GPX ("Parent"). The
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Company, UCR and AFC are each a "Seller" and, collectively, "Sellers".
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RECITALS
Sellers desire to sell, and Buyer desires to purchase, all of the Acquired
Assets (as defined below) of Sellers for the consideration and on the terms set
forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
ARTICLE I
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DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article I:
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"Applicable Contract"--any Contract (a) under which any Seller has or may
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acquire any rights, (b) under which any Seller has or may become subject to any
obligation or liability or (c) by which any Seller or any of the assets owned or
used by it is or may become bound.
"Assigned Contracts"--any Applicable Contract (a) identified on Schedule
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3.17(a), (b) involving performance of services or delivery of goods or materials
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by a Seller in the ordinary course of its business of an amount or value not in
excess of $50,000, (c) involving performance of services or delivery of goods or
materials to a Seller in the ordinary course of its business of an amount or
value not in excess of $50,000 or (d) that is terminable by a Seller at its
discretion, without penalty, upon no more than 30 days' notice, but excluding
(w) any Applicable Contract or commitment for capital expenditures not
identified on Schedule A, (x) any Applicable Contract or commitment to purchase
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roller equipment or to purchase a roller hearth furnace for track links from
Wolfgang Kohnle, which commitments are to be cancelled pursuant to Section
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5.2(c), (y) any Applicable Contract with Linser and (z) any Applicable Contract
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with Armco, Inc. or its Related Persons, other than the lease dated April 15,
1998.
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"Assumed Liabilities"--(a) any current liabilities of Sellers reflected on
-------------------
the Closing Date Balance Sheet (which shall not include any current or deferred
income Tax liabilities) and (b) the Assigned Contracts.
"Balance Sheet"--as defined in Section 3.4.
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"Business Facility"--includes any property (whether real or personal),
-----------------
leaseholds or other interests and any buildings, plants, structures or equipment
(including motor vehicles, tank cars and rolling stock) which any Seller
currently leases, operates or owns or manages in any manner or which any Seller
or any of their respective organizational predecessors formerly leased,
operated, owned or managed in any manner.
"CERCLA"--the United States Comprehensive Environmental Response,
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Compensation and Liability Act, 42 U.S.C. (S) 9601 et seq., as amended.
"Closing"--as defined in Section 2.4.
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"Closing Date"--the date and time as of which the Closing actually takes
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place.
"Code"--the Internal Revenue Code of 1986, as amended, or any successor
----
law.
"Consent"--any approval, consent, ratification, waiver or other
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authorization (including any Governmental Authorization).
"Contract"--any agreement, contract, obligation, promise or undertaking
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(whether written or oral and whether express or implied) that is legally
binding.
"Damages"--includes damages, losses (including, but not limited to, any
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diminution in value), shortages, liabilities (including, without limitation,
STRICT LIABILITY), payments, obligations, penalties, claims, causes of action,
litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses (including, without limitation, fees, disbursements
and expenses of attorneys, accountants and other professional advisors and of
expert witnesses and costs of investigation, testing, sampling, monitoring and
preparation) of any kind or nature whatsoever.
"Disclosure Schedules"--the disclosure schedules delivered by Parent to
--------------------
Buyer concurrently with the execution and delivery of this Agreement.
"Encumbrance"--any charge, claim, community property interest, condition,
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equitable interest, encumbrance, lien, option, pledge, security interest, right
of first refusal or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income or exercise of any other attribute of
ownership, other than liens for ad valorem Taxes not yet due and payable.
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"Environment"--soil, land surface or subsurface strata, surface waters
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(including navigable waters, ocean waters, streams, ponds, drainage basins and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air,
plant and animal life and any other environmental medium or natural resource.
"Environmental Claim"-- any claim; litigation; demand; action; cause of
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action; suit; notice of any actual or alleged violation of, or Remediation
obligations arising under, Environmental Laws; governmental or private
investigation and testing; written or oral notification of status of being
potentially responsible for clean-up of any facility or for being in violation
or in potential violation of any Requirement of Environmental Law; Proceeding
before any Governmental Body; consent or administrative orders, agreements or
decrees; or lien; whether Threatened, sought, brought or imposed, that is
related to, or that seeks to recover or that causes the incurrence of Damages
related to, or seeks to impose liability for: (i) improper use or treatment of
wetlands, pinelands or other protected land or wildlife; (ii) noise; (iii)
radioactive materials (including naturally occurring radioactive materials
["NORM"]); (iv) explosives; (v) pollution, contamination, preservation,
protection, decontamination, remediation or clean-up of the air, surface water,
groundwater, soil or protected lands; (vi) solid, gaseous or liquid waste
generation, handling, discharge, Release, Threatened Release, treatment,
storage, disposal or transportation; (vii) exposure of persons or property to
Materials of Environmental Concern and the effects thereof; (viii) the Release
or Threatened Release (into the indoor or outdoor environment), generation,
processing, use, transfer, transportation, treatment, storage, disposal or
Remediation of Materials of Environmental Concern; (ix) injury to, death of or
threat to the health or safety of any person or persons caused by Materials of
Environmental Concern; (x) destruction caused by Materials of Environmental
Concern or the Release or Threatened Release of any Materials of Environmental
Concern on any property (whether real or personal); (xi) the implementation of
spill prevention and/or disaster plans relating to Materials of Environmental
Concern; (xii) community right-to-know and similar disclosure laws; or (xiii)
maintaining, disclosing or reporting information to Governmental Authorities or
any other third person under any Environmental Law. The term, "Environmental
Claim," also includes, without limitation, any claim based upon any asserted or
actual breach or violation of Requirements of Environmental Law.
"Environmental Laws"-- the laws described on Exhibit A attached hereto and
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incorporated herein for all purposes and any and all other laws, rules,
principles of common law, regulations, ordinances, orders, consent agreements,
orders on consent or published legally-binding guidance documents of any
applicable Governmental Body, or any judicial or administrative decision
governing health or worker protection as it relates to Materials of
Environmental Concern, the Environment or a community's right to know.
"Environmental Permits"--all permits, licenses, certificates,
---------------------
registrations, identification numbers, applications, consents, approvals,
variances, notices of intent and exemptions necessary for the current ownership,
use and/or operation of any current Business Facility to comply with
Requirements of Environmental Laws.
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"ERISA"--the Employee Retirement Income Security Act of 1974, as amended,
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or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"Excluded Assets"--as defined in Section 2.1.
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"Excluded Liabilities"--as defined in Section 2.2.
-------------------- -----------
"GAAP"--generally accepted United States accounting principles, applied on
----
a basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4 were prepared.
-----------
"Governmental Authorization"--any approval, Consent, license, permit,
--------------------------
waiver or other authorization issued, granted, given or otherwise made available
by or under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"Governmental Body"--any:
-----------------
(a) nation, state, county, city, town, village, district or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official or entity and any court or
other tribunal of competent jurisdiction);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power of any nature.
"HSR Act"--the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
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amended, or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"Intellectual Property"--trademarks, service marks, brand names,
---------------------
certification marks, trade dress, assumed names, trade names and other
indications of origin, the goodwill associated with the foregoing and
registrations in the United States of, and applications in the United States to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas, whether
patentable or not in the United States; patents, applications for patents
(including, without limitation, divisions, continuations, continuations in-part
and renewal applications), and any renewals, extensions or reissues thereof, in
the United States; non-public information, trade secrets and confidential
information and rights in the United States to limit the use or disclosure
thereof by any Person; writings and other works, whether copyrightable or not
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in the United States; registrations or applications for registration of
copyrights in the United States, and any renewals or extensions thereof; and any
similar intellectual property or proprietary rights.
"Interim Balance Sheet"--as defined in Section 3.4.
--------------------- -----------
"IRS"--the United States Internal Revenue Service or any successor agency,
---
and, to the extent relevant, the United States Department of the Treasury.
"Knowledge"--with respect to any Person, shall mean the actual knowledge of
---------
such Person after reasonable inquiry or, if such Person is not a natural person,
the chief executive officer, chief financial officer, chief legal officer and
most senior operating officer other than the chief executive officer of such
Person, arising after the conduct by such Person or such officers of a
reasonable investigation with respect to the facts or matters specified.
"Legal Requirement"--any federal, state, local, municipal, foreign,
-----------------
international, multinational or other administrative Order, constitution, law,
ordinance, principle of common law, regulation, statute, treaty or the rules and
regulations of the New York Stock Exchange, Inc.
"Linser"--as defined in Section 2.1.
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"Material Adverse Effect"--means a material adverse effect on the business,
-----------------------
assets or financial condition or results of operations of Sellers, taken as a
whole; provided, however, that an effect resulting from (i) any change in Legal
Requirements or GAAP or interpretation thereof that applies to Sellers, (ii) any
change in economic, business or financial market conditions generally or in the
forged steel flange or undercarriage components markets specifically or (iii)
the announcement and performance of this Agreement and compliance with the
covenants set forth in this Agreement shall not be considered when determining
if a Material Adverse Effect has occurred.
"Materials of Environmental Concern"--(a) those substances included within
----------------------------------
the statutory and/or regulatory definitions or listings of "hazardous
substance," "medical waste," "special waste," "hazardous waste," "extremely
hazardous substance," "regulated substance," "hazardous materials," or "toxic
substances," under any Environmental Law; (b) any material, waste or substance
which is regulated under Environmental Laws or could be expected to serve as the
basis of an Environmental Claim, and which contains: (i) petroleum, oil or a
fraction thereof, (ii) explosives, (iii) radioactive materials (including
naturally occurring radioactive materials), or (iv) solid wastes that pose
imminent and substantial endangerment to health or the environment; and (c) such
other substances, materials, or wastes that are classified or regulated as
hazardous or toxic under any applicable federal, state or local law or
regulation.
"Net Working Capital"--the excess of the current assets of Sellers included
-------------------
in the Acquired Assets over the current liabilities of Sellers included in the
Assumed Liabilities, each as determined in accordance with GAAP.
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"Order"--any award, decision, injunction, judgment, order, ruling, subpoena
-----
or verdict entered, issued, made or rendered by any court, administrative agency
or other Governmental Body or by any arbitrator.
"Organizational Documents"--(a) the articles or certificate of
------------------------
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation or organization of a Person; and (e) any amendment
to any of the foregoing.
"Performed Contracts"--any Applicable Contract for the purchase of goods or
-------------------
services by any Seller under which such Seller (a) has fully performed its
payment obligations, (b) purports to have fully performed its payment
obligations, (c) is required pursuant to Section 5.2(c) to have fully performed
--------------
its payment obligations prior to the Closing, or (d) only has payment
obligations which are or will be current liabilities of Sellers included in the
Assumed Liabilities.
"Person"--any individual, corporation (including any non-profit
------
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or Governmental Body.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
----------
litigation or suit (whether civil, criminal, administrative, investigative or
informal) commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Related Person"--with respect to a particular individual:
--------------
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such individual
or one or more members of such individual's Family;
(c) any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which such individual or one or more members
of such individual's Family serves as a director, officer, partner, executor or
trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
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(c) each Person that serves as a director, officer, partner, executor or
trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material Interest;
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or (c).
For purposes of this definition, (a) the "Family" of an individual includes
------
(i) the individual, (ii) the individual's spouse, (iii) any other natural person
who is related to the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such individual, and
(b) "Material Interest" means direct or indirect beneficial ownership (as
-----------------
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 50% of the
outstanding voting power of a Person.
"Release"--any spilling, leaking, emitting, discharging, depositing,
-------
escaping, leaching, dumping or other releasing into the Environment, whether
intentional or unintentional.
"Remediation"--any action necessary to (i) comply with and ensure
-----------
compliance with the Requirements of Environmental Laws and (ii) protect against
and/or respond to, investigate, remove or remediate or monitor the Release or
Threatened Release of Materials of Environmental Concern.
"Representative"--with respect to a particular Person, any director,
--------------
officer, employee, agent, consultant, advisor or other representative of such
Person, including legal counsel, accountants and financial advisors.
"Requirement(s) of Environmental Law(s)"--all requirements, conditions,
--------------------------------------
restrictions or stipulations of Environmental Laws imposed upon or related to
any Seller or the assets and/or the business of any Seller.
"Seller Employee"--as defined in Section 9.4.
--------------- -----------
"Seller Plan"--as defined in Section 3.13.
----------- ------------
"Subsidiary"--with respect to any Person (the "Owner"), any corporation or
---------- -----
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries.
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"Tax"-- any tax (including, without limitation, any income tax, franchise
---
tax, capital gains tax, gross receipts tax, value-added tax, surtax, excise tax,
ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
inventory tax, occupancy tax, withholding tax, payroll tax, gift tax, estate tax
or inheritance tax), levy, assessment, tariff, impost, imposition, toll, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or collected
by or under the authority of any Governmental Body or payable pursuant to any
tax-sharing agreement or pursuant to any other contract relating to the sharing
or payment of any such tax, levy, assessment, tariff, impost, imposition, toll,
duty, deficiency or fee.
"Tax Return"--any return (including any information return), report,
----------
statement, schedule, notice, form or other document or information filed with or
submitted to, or required to be filed with or submitted to, including any
schedule or attachment thereto, and including any amendment thereof, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release" or "Threatened Release"--as construed pursuant to
----------------- ------------------
CERCLA.
"Threatened"--a claim, Proceeding, dispute, action or other matter will be
----------
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing).
ARTICLE II
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SALE AND TRANSFER OF ACQUIRED ASSETS; CLOSING
2.1 Sale of the Acquired Assets; Excluded Assets.
(a) Subject to the terms and conditions of this Agreement, Sellers will
convey, transfer and deliver to Buyer at the Closing all Seller's right, title
and interest in and to all of Sellers' then existing properties and assets
(real, personal and mixed, tangible and intangible) and business as a going
concern, other than the Excluded Assets (as defined below) (the "Acquired
--------
Assets"). The Acquired Assets to be conveyed, transferred and delivered shall
- ------
include those reflected on the Balance Sheet and the Interim Balance Sheet as
owned by Sellers with only such changes therein as shall have occurred in the
ordinary course of business between the date of the Balance Sheet and the
Closing Date, or otherwise as may be consented to or approved in writing by
Buyer and Parent or permitted by this Agreement. Without limiting the
generality of the foregoing provisions, the Acquired Assets shall include the
following that are owned, leased or licensed by Sellers as of the Closing Date:
all land, buildings, structures, leasehold rights and improvements, machinery,
equipment, furniture, fixtures, supplies, vehicles, rolling stock, goodwill,
inventories, raw materials, work in process, all rights of the Sellers in, to
and under the Assigned Contracts and the Performed Contracts, licenses and
applications therefor, franchises, claims, accounts
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receivable, vendor rebates, prepaid items; all rights and interests in, to and
under any Intellectual Property, including computer software, whether owned or
licensed; shop rights, permits and other rights and privileges; all prints,
drawings, technical records, trade secrets, inventions, know-how, formulae,
processes, procedures, research records, records of inventions, test information
and market surveys; and all books of account and records, sales data, customer
and supplier lists and any other information regarding the businesses or
customers of the Sellers, in any form or medium (excluding the respective minute
books and stock ledgers of the Sellers); and all cash and cash equivalents of
Sellers. The Acquired Assets shall also include any insurance proceeds or other
amounts received by Parent, GPX or Sellers with respect to any Acquired Asset
which is lost, stolen, damaged, destroyed or otherwise the subject of an insured
loss after the date hereof and on or prior to the Closing Date, which insurance
proceeds or other amounts Sellers may not distribute or otherwise pay to Parent
or any of its Subsidiaries.
(b) Notwithstanding the provisions of Section 2.1(a), the Acquired Assets
-------------
shall not include the Excluded Assets, which shall be retained by Parent, GPX or
Sellers, as applicable. The term "Excluded Assets" shall mean:
---------------
(i) any Applicable Contract other than the Assigned Contracts or the
Performed Contracts;
(ii) any and all assets and properties owned, leased or licensed by
Parent, GPX or any of their Subsidiaries (other than Sellers) whether or not
located at or on Sellers' premises and whether or not used by Sellers in their
businesses, none of which assets or properties is reflected on the Balance Sheet
or the Interim Balance Sheet and all of which assets or properties located at or
on Sellers' premises or used by Sellers in their businesses are listed on
Schedule 2.1(b)(ii);
- -------------------
(iii) all rights, claims, credits, Proceedings and judgments of
Sellers relating to any Excluded Asset or any Excluded Liability (as defined
below), including any such items arising under insurance policies and all
guarantees, warranties, indemnities and similar rights in favor of Sellers in
respect of any Excluded Asset or Excluded Liability, and expressly not including
any rights, claims, credits, Proceedings and judgments of Sellers relating to
any Acquired Asset or Assumed Liability, including insurance proceeds;
(iv) all rights of Sellers under this Agreement and the other
agreements and instruments executed and delivered in connection with this
Agreement;
(v) current or deferred income Tax assets;
(vi) any accounts receivable or notes receivable from Herbert Linser,
Linser Industry Services or any Related Persons of Herbert Linser or Linser
Industry Services (individually or collectively, "Linser") and any inventory
------
consigned to Linser;
(vii) the capital stock of UCR, AFC and Linser held by the Company;
-9-
<PAGE>
(viii) all books and records of Sellers which Sellers are required by
any Legal Requirement to retain; and
(ix) all financial and Tax records that form part of either Seller's
general ledger;
provided, however, that Buyer shall be entitled to a copy of any such books and
records described in items (viii) and (ix) above.
2.2 Assumption of Liabilities. Subject to the terms of this Agreement,
at the Closing Buyer will assume the Assumed Liabilities and after the Closing
Buyer shall be obligated to pay, perform and discharge the Assumed Liabilities.
The parties hereby expressly agree and acknowledge that Buyer shall not assume,
or be responsible for, in any manner whatsoever, and Sellers, GPX or Parent (as
the case may be) shall retain and have sole and complete responsibility for, any
claims against, or liabilities, commitments, Contracts, agreements or
obligations of any nature whatsoever of the Sellers other than the Assumed
Liabilities (the "Excluded Liabilities").
--------------------
2.3 Purchase Price.
(a) In full consideration for the Acquired Assets, Buyer shall pay Sellers
a purchase price (the "Purchase Price") equal to the sum of (i) $40,000,000 plus
--------------
(ii) the excess of (A) Net Working Capital as of the Closing Date ("Closing Date
------------
Net Working Capital") over (B) $31,300,000 (which excess may be a positive or
- -------------------
negative number).
(b) For purposes of calculating Closing Date Net Working Capital, (i) the
amount of Sellers' inventory as of the Closing Date shall be the Closing Date
Inventory (defined below) and (ii) the amount of any insurance claims or other
proceeds received by Sellers relating to any asset of the Sellers, other than a
current asset, which is the subject of an insured loss shall not be included in
the current assets of Sellers.
"Closing Date Inventory" shall mean the lesser of (A) $30,500,000 or (B)
----------------------
the value of Sellers' inventory determined as of the Closing Date, which shall
equal the sum of the products of (i) a physical count of the individual
components of the inventory as of the Closing Date multiplied by (ii) the
standard cost of the individual components of the inventory as of the Closing
Date determined in a manner consistent with the method used to prepare Sellers'
consolidated year-end financial statements for the year ended December 31, 1998
(and consistent with Sellers' application of such method for the period since
December 31, 1998) and using lower of cost or market to value purchased
materials, where market value for purchased materials is determined as the
current replacement cost for identical products bought in similar quantities as
originally purchased by Sellers, with such total inventory value to be adjusted
in accordance with GAAP for excess and obsolete inventory in the flange business
and similarly adjusted for obsolete, but not excess, inventory in the
undercarriage components business; provided, however, that if the inventory as
initially determined in accordance with part (B) of this definition (such
initial determination to be the "Preliminary Closing Date Inventory") is less
----------------------------------
than $30,500,000, then the Reduction In Undercarriage Inventory Due To
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<PAGE>
Change In Material Costs (defined below) shall be determined and, for purposes
of part (B) of this definition only, the amount by which the Reduction In
Undercarriage Inventory Due To Change In Material Costs exceeds $1,500,000 shall
be added back to the Preliminary Closing Date Inventory for purposes of
determining the Closing Date Inventory.
"Reduction In Undercarriage Inventory Due To Change In Material Costs"
--------------------------------------------------------------------
shall mean the excess (but not less than zero) of (A) the Preliminary Closing
Date Inventory, modified to value purchased materials in the undercarriage
components business inventory at the valuations used in Sellers' inventory on
the Balance Sheet, over (B) the Preliminary Closing Date Inventory.
(c) Not less than three business days prior to the Closing, Parent shall
provide Buyer with a reasonably prepared projected consolidated balance sheet of
Sellers as of the Closing Date and a reasonably prepared estimate of Net Working
Capital as of the Closing Date ("Estimated Closing Date Net Working Capital"),
------------------------------------------
which estimate shall be used to determine the estimated Purchase Price to be
paid to Sellers at the Closing.
2.4 Closing. The purchase and sale (the "Closing") provided for in this
-------
Agreement will take place at the offices of Locke Liddell & Sapp LLP, 3400 Chase
Tower, 600 Travis, Houston, Texas 77002, at 10:00 a.m. (Houston time) on the
later of (a) June 22, 1999 or (ii) the date that is two business days following
the satisfaction or waiver of all conditions to closing in Articles VI and
-----------
Articles VII (other than those conditions that by their nature are to be
- ------------
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions), or at such other time and place as the parties may agree. Subject
to the provisions of Article X, failure to consummate the purchase and sale
---------
provided for in this Agreement on the date and time and at the place determined
pursuant to this Section 2.4 will not result in the termination of this
-----------
Agreement and will not relieve any party of any obligation under this Agreement.
2.5 Closing Obligations. At the Closing:
(1) Parent, GPX or Sellers, as the case may be, will deliver to Buyer:
(1) one or more bills of sale, deeds, assignments or other
instruments of conveyance in mutually agreed form which shall be effective to
vest in Buyer good and marketable title to the Acquired Assets;
(2) the certificate or certificates required by Section 6.1(c); and
-------------
(3) such other documents as Buyer may reasonably request for the
purpose of (A) evidencing the satisfaction of any condition referred to in
Article VI or (B) otherwise facilitating the consummation or performance of any
- ----------
of the transactions contemplated in this Agreement.
(2) Buyer will deliver to Parent, GPX or Sellers, as the case may be:
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<PAGE>
(1) the estimated Purchase Price in immediately available funds by
wire transfer to one or more accounts specified by Sellers;
(2) an assumption agreement in a mutually agreed form which shall be
effective to evidence Buyer's assumption of the Assumed Liabilities;
(3) the certificate required by Section 7.1(c); and
-------------
(4) such other documents as Parent may reasonably request for the
purpose of (A) evidencing the satisfaction of any condition referred to in
Article VII or (B) otherwise facilitating the consummation of any of the
- -----------
transactions contemplated in this Agreement.
2.6 Closing Financials.
(a) As promptly as possible after the Closing, and in any event not later
than 45 days after the Closing Date, Buyer shall prepare (i) a consolidated
balance sheet (the "Closing Date Balance Sheet") as of the Closing Date
--------------------------
reflecting the Acquired Assets and the Assumed Liabilities prepared in a manner
consistent with the method used to prepare Sellers' consolidated year-end
financial statements for the year ended December 31, 1998, and (ii) a
calculation of Closing Date Net Working Capital. The items prepared and
calculated pursuant to this Section shall hereinafter be collectively referred
to as the "Closing Financials."
------------------
(b) As promptly as reasonably practicable and, in any event, not later
than 45 days after the Closing Date, Buyer shall deliver to Parent the Closing
Financials. If Parent does not object in writing to the Closing Financials
within 30 days after delivery, such Closing Financials shall automatically
become final and conclusive; any such written objection (the "Objection Notice")
----------------
shall set out the reasons for the objection, the amount in dispute (if
determinable) and the basis for the calculation of such amount (if
determinable). In the event that Parent properly objects in writing to the
Closing Financials within said 30-day review period, Parent and Buyer shall
promptly meet and endeavor to reach agreement as to the content of the Closing
Financials. If Parent and Buyer agree in writing on the content of the Closing
Financials, such Closing Financials shall become final and conclusive.
(c) If Buyer and Parent are unable to settle any dispute with respect to
the Closing Financials within 30 days after the delivery by Parent to Buyer of
the Objection Notice, the dispute shall be submitted to Deloitte & Touche LLP,
certified public accountants, or if such firm declines the engagement, then to
such other mutually agreed certified public accounting firm of recognized
national standing other than Buyer's customary accounting firm ("Buyer's
-------
Accountants"), Parent's customary accounting firm ("Parent's Accountants") or
- ----------- --------------------
any accounting firm merged or proposed to be merged with or otherwise acquired
by either Buyer's's Accountants or Parent's Accountants, as is jointly selected
by Buyer and Parent (the firm accepting the engagement being referred to as the
"Accounting Arbiter"), whose decision with respect thereto shall be final and
------------------
binding on the parties in all respects. Buyer and Parent shall cooperate in
completing any dispute resolution as expeditiously as possible and the
Accounting Arbiter may hire such experts as may appear to be appropriate. All
of the costs
-12-
<PAGE>
and expenses of the dispute resolution shall be borne equally by Buyer and
Parent. Dispute resolution under this Section 2.6 shall be in substitution for
-----------
and precludes the bringing of any Proceeding in any court in connection with any
objection made by Buyer or Parent pursuant to this Section.
(d) The determination of the Accounting Arbiter shall be made within 30
days after the date on which the dispute was referred to dispute resolution and
the determination of the Accounting Arbiter shall be final and binding on all
parties. The Closing Date Net Working Capital and the Purchase Price shall be
adjusted in accordance with the determination of the Accounting Arbiter.
2.7 Final Adjustment to Purchase Price. Promptly, and in any event within
five business days, following the final determination of the Closing Date Net
Working Capital pursuant to Section 2.6:
-----------
(a) If the Closing Date Net Working Capital exceeds the Estimated Closing
Date Net Working Capital, Buyer shall pay Sellers such excess, with simple
interest at a rate per annum equal to the prime rate of interest as announced
from time to time by NationsBank, N.A., d/b/a Bank of America, National
Association, successor by merger to Bank of America Texas, N.A. ("Bank of
-------
America"), from the Closing Date until the amount of such excess is paid in
- -------
full; and
(b) If the Estimated Closing Date Net Working Capital exceeds Closing Date
Net Working Capital, Sellers shall pay Buyer such excess with simple interest at
a rate per annum equal to the prime rate of interest as announced from time to
time by Bank of America, from the Closing Date until the amount of such excess
is paid in full.
2.8 Tax Matters.
(a) Allocation of Purchase Price. Buyer shall propose an allocation,
----------------------------
prepared in accordance with Section 1060 of the Code and the Treasury
Regulations thereunder, of Purchase Price among the Acquired Assets. Parent,
GPX and Sellers shall not unreasonably withhold their agreement to any such
allocation of Purchase Price. In the event of any disagreement, Parent and
Buyer will negotiate in good faith and use their respective reasonable efforts
to agree to the final Purchase Price and an allocation of that price among the
Acquired Assets. Buyer and Parent shall use the asset values determined from
such allocation for purposes of all Tax Returns, including IRS Form 8594 or any
equivalent statement.
(b) Transfer Taxes. Sellers, on the one hand, and Buyer, on the other
--------------
hand, shall each pay 50% of any sales, use or other transfer taxes arising from
the consummation of the transactions contemplated in this Agreement.
(c) Liability for Taxes. Except to the extent treated as a liability in
-------------------
the calculation of Closing Date Net Working Capital, Sellers shall be liable
for, and Parent, GPX and Sellers shall indemnify Buyer against, all Taxes
imposed in respect of the Acquired Assets for the period ending on and including
the Closing Date. Except to the extent treated as an asset in the calculation
of Closing Date Net Working Capital, Buyer shall be liable for and shall
indemnify Sellers against Taxes
-13-
<PAGE>
imposed in respect of the Acquired Assets for the period that begins after the
Closing Date. Each party shall pay, when due, the Taxes for which such party is
liable pursuant to this Section 2.8.
-----------
(d) Adjustment to Purchase Price. Any payment by Buyer or Sellers under
----------------------------
this Section 2.8 will be an adjustment to the Purchase Price.
-----------
(e) Refunds of Taxes. Buyer shall pay to Sellers, promptly upon receipt,
----------------
all Tax refunds received by Buyer after the Closing Date in respect of Taxes
paid by Sellers, except to the extent such refundable Taxes were considered
assets in the calculation of Closing Date Net Working Capital.
(f) Survival of Obligations. The obligations of the parties set forth in
-----------------------
this Section 2.8 shall be unconditional and absolute and shall remain in effect
-----------
without limitation as to time and shall not be subject to the limitations of
Section 11.6.
- ------------
2.9 SPLIT Loans. With respect to any loans made by Sellers to SPLIT SRL,
an Italian corporation ("SPLIT"), the parties hereby expressly agree that (a) no
-----
such loans shall be deemed to be current assets for purposes of calculating
Closing Date Net Working Capital pursuant to Section 2.3 and (b) Parent, GPX
-----------
and Sellers are making no representations or warranties in this Agreement or
otherwise regarding the collectibility of such loans.
2.10 Linser Backlog. Sellers shall, and Parent shall cause Sellers to, use
their reasonable best efforts to deliver to Linser prior to Closing any products
ordered by Linser prior to the date hereof. After the date of this Agreement,
Sellers shall not, and Parent shall not permit Sellers to, enter into any
Applicable Contract or other commitment to sell, deliver or otherwise convey
products to Linser. To the extent all ordered products are not shipped to Linser
prior to Closing, Buyer shall ship, or cause to be shipped, all remaining
products ordered by Linser to Parent, or as Parent otherwise directs in writing.
Buyer shall invoice Parent directly for all such shipped products, and Parent
shall pay Buyer directly within 30 days for all such shipped products.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF PARENT, GPX AND SELLERS
Each of Parent, GPX and Sellers, jointly and severally, represent and
warrant to Buyer, except as set forth in the Disclosure Schedules, as of the
date hereof and as of the Closing Date (except that representations and
warranties that are made as of a specific date need only be true as of such
date), as follows:
3.1 Organization and Good Standing.
(a) GPX is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada.
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<PAGE>
(b) Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(c) Schedule 3.1 contains a complete and accurate list for each Seller of
------------
its name, its jurisdiction of incorporation and other jurisdictions in which it
is authorized to do business. Each Seller is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. Each Seller has full corporate power and authority to conduct
its business as it is now being conducted, to own or use the properties and
assets that it purports to own or use and to perform all its obligations under
Applicable Contracts, except for such power, authority, ownership, use and
performance the absence of which would not have a Material Adverse Effect. Each
Seller is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification, except for those
jurisdictions where failure to be so qualified would not have a Material Adverse
Effect.
(d) Parent has delivered or made available to Buyer copies of the
Organizational Documents of each Seller, as currently in effect.
(e) UCR has no Subsidiaries. The Company's only Subsidiaries are UCR and
AFC. GPX owns of record and beneficially all of the outstanding capital stock
of the Company, and the Company owns of record and beneficially all of the
outstanding capital stock of UCR and AFC.
3.2 Authority; No Conflict.
(a) Each of Parent, GPX and each Seller has full corporate power and
authority to execute this Agreement and the other agreements, documents and
other instruments executed and delivered in connection with this Agreement to
which they are a party (the "Seller Ancillary Documents"), and to consummate the
--------------------------
transactions contemplated herein and therein. The execution and delivery by
Parent, GPX and each Seller of this Agreement and the Seller Ancillary Documents
to which any of them is a party, and the consummation by each of them of the
transactions contemplated herein and therein, have been duly authorized by all
necessary corporate action.
(b) This Agreement constitutes the legal, valid and binding obligation of
Parent, GPX and Sellers, enforceable against each of them in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles (the "Bankruptcy and Equity
---------------------
Exception"). Upon the execution and delivery by Parent, GPX and Sellers of the
- ---------
Seller Ancillary Documents to which they are, or are specified to be, parties,
the Seller Ancillary Documents will constitute the legal, valid and binding
obligations of Parent, GPX and Sellers, as the case may be, enforceable against
each of them in accordance with their respective terms, subject to the
Bankruptcy and Equity Exception. Each of Parent, GPX and Sellers has the
absolute and unrestricted right, power and authority to execute and deliver this
Agreement and the Seller Ancillary Documents and to perform their respective
obligations under this Agreement and the Seller Ancillary Documents.
-15-
<PAGE>
(c) Neither the execution and delivery of this Agreement by Parent, GPX
and Sellers nor the consummation or performance of any of the transactions
contemplated in this Agreement by Parent, GPX and Sellers will (with or without
notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A) any
provision of the Organizational Documents of any Seller or (B) any resolution
adopted by the board of directors or the stockholders of any Seller;
(ii) assuming due compliance with all requirements under the HSR Act,
contravene, conflict with or result in a violation of any Legal Requirement or
any Order to which any Seller, Parent or GPX is subject;
(iii) contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by any Seller or that otherwise relates to the business of, or any
of the assets owned or used by, any Seller;
(iv) contravene, conflict with or result in a violation or breach of
any provision of, or give any Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any Applicable Contract; or
(v) result in the imposition or creation of any Encumbrance upon or
with respect to any of the assets owned or used by any Seller;
except, in the case of clause (ii), (iii), (iv) or (v) above, for any
contravention, violation, conflict, breach, default, remedy, acceleration,
failure, cancellation, termination, modification, imposition or creation that is
not reasonably likely to cause a Material Adverse Effect.
3.3 [Intentionally omitted].
3.4 Financial Statements. Parent has delivered or made available to
Buyer: (a) the Company's unaudited consolidated balance sheets (the "Balance
-------
Sheet") as at December 31, 1998 and the related unaudited consolidated
- -----
statements of income and changes in stockholders' equity for the year then
ended; (b) the Company's consolidated balance sheets for each of the fiscal
years ended October 31, 1995, 1996 and 1997, together with the related
consolidated statements of income and changes in stockholders' equity for the
fiscal years then ended, and (c) an unaudited consolidated balance sheet of the
Company as at March 31, 1999 (the "Interim Balance Sheet") and the related
---------------------
unaudited consolidated statement of income for the three months then ended. The
financial statements referred to in this Section 3.4 (the "Financial
----------- ---------
Statements") present fairly, in all material respects, the consolidated
financial position and the consolidated results of operations of the business of
the Company as of the dates thereof and for the periods then ended. The
Financial Statements have been prepared in accordance with GAAP applied on a
consistent basis (except as may be noted therein),
-16-
<PAGE>
except that the Financial Statements (i) are not a complete set of the financial
statements required by GAAP, (ii) do not have full footnote disclosure required
by GAAP, (iii) do not follow the presentation requirements of GAAP, and (iv)
exclude asset impairments recorded by Parent as set forth in Parent's annual
report on Form 10-K for the year ended December 31, 1998 and in Parent's
quarterly report on Form 10-Q for the quarter ended March 31, 1999.
3.5. Books and Records. The books of account, minute books, stock record
books and other records of the Sellers, all of which have been made available to
Buyer, are complete and correct in all material respects and have been
maintained, in all material respects, in accordance with sound business
practices.
3.6 Title to Properties; Encumbrances. Schedule 3.6 contains a complete
------------
and accurate list of all real property, leaseholds or other interests therein
owned, leased or used by the Sellers. Parent has delivered or made available to
Buyer copies of the deeds and other instruments (as recorded) by which Sellers
acquired such real property and interests, and copies of all title insurance
policies, opinions, abstracts and surveys in the possession of Parent, GPX or
Sellers relating to such property or interests. Sellers own (with good and
marketable title in the case of real property, subject only to the matters
permitted by the following sentence) all the properties and assets (whether
real, personal or mixed, and whether tangible or intangible) owned in either
Seller's name or reflected as owned in the books and records of Sellers,
including all of the properties and assets reflected in the Balance Sheet and
the Interim Balance Sheet (except for assets held under capitalized leases and
inventory sold since the date of the Balance Sheet and the Interim Balance
Sheet, as the case may be, in the ordinary course of business), and all of the
properties and assets purchased or otherwise acquired by Sellers since the date
of the Balance Sheet but before the date of this Agreement (except for inventory
acquired and sold since the date of the Balance Sheet in the ordinary course of
business and consistent with past practice), which subsequently purchased or
acquired properties and assets (other than inventory and short-term investments)
are listed in Schedule 3.6. Schedule 3.6 contains a complete and accurate list
------------ ------------
of all of the fixed assets owned by Sellers as of the date hereof. All material
properties and assets reflected in the Balance Sheet and the Interim Balance
Sheet are free and clear of all Encumbrances, except any Encumbrance (a) shown
on the Balance Sheet or the Interim Balance Sheet, (b) incurred in connection
with the purchase of property or assets after the date of the Interim Balance
Sheet, each of which is listed on Schedule 3.6, (c) which would not be
------------
reasonably likely to have a Material Adverse Effect, (d) liens for current taxes
not yet due and payable, and (e) with respect to real property, (i) minor
imperfections of title, if any, none of which is substantial in amount,
materially detracts from the value or impairs the use of the property subject
thereto or impairs the operations of any Seller and (ii) zoning laws and other
land use restrictions that do not impair the present or anticipated use of the
property subject thereto. All buildings, plants and structures owned by Sellers
lie wholly within the boundaries of the real property owned by Sellers and do
not encroach upon the property of, or otherwise conflict with the property
rights of, any other Person.
3.7 Condition and Sufficiency of Assets. Subject to such exceptions as
would not have a Material Adverse Effect, the buildings, plants, structures and
equipment owned, leased or used by
-17-
<PAGE>
Sellers are structurally sound, are in good operating condition and repair and
are adequate for the uses to which they are being put, and none of such
buildings, plants, structures or equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost. The Acquired Assets are sufficient for the continued conduct of
the respective businesses of the Sellers after the Closing in substantially the
same manner as conducted prior to the Closing.
3.8 Accounts Receivable. All of Sellers' accounts receivable that are
reflected on the Balance Sheet or the Interim Balance Sheet or on the accounting
records of Sellers as of the Closing Date (collectively, the "Accounts
--------
Receivable") represent or will represent valid obligations arising from sales
- ----------
actually made or services actually performed in the ordinary course of business.
Unless paid prior to the Closing Date, the Accounts Receivable are or will be,
as of the Closing Date, current and collectible net of the respective reserves
shown on the Balance Sheet or the Interim Balance Sheet or on the accounting
records of Sellers as of the Closing Date, which reserves are adequate and
calculated consistent with past practice. There is no contest, claim or right
of set-off, other than returns in the ordinary course of business, under any
Contract with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable.
3.9 Inventory. All inventory of Sellers, whether or not reflected in the
Balance Sheet or the Interim Balance Sheet, consists of a quality and quantity
usable and salable in the ordinary course of business, except for obsolete items
and items of below-standard quality, all of which have been, or will be, written
off or written down to net realizable value in the Closing Date Balance Sheet.
All inventories not written off have been priced at the lower of cost or market
on a first in, first out basis. The quantities of each item of inventory
(whether raw materials, work-in-process or finished goods) in Sellers' flange
business are not excessive.
3.10 No Undisclosed Liabilities. Sellers have no liabilities or
obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent or otherwise) except for liabilities or obligations (a)
reflected or reserved against in the Balance Sheet, the Interim Balance Sheet or
otherwise set forth in this Agreement or the Disclosure Schedules, (b)
liabilities or obligations incurred in the ordinary course of business since the
date of the Balance Sheet or (c) liabilities that would not reasonably be
expected to have a Material Adverse Effect.
3.11 Taxes.
(a) There are no liens for Taxes (other than for ad valorem Taxes not yet
due and payable) on any of the Acquired Assets.
(b) Buyer is not required to withhold any portion of the Purchase Price
pursuant to Section 1445 or any other provision of the Code.
(c) Sellers have paid when due all Taxes levied on the Acquired Assets.
-18-
<PAGE>
3.12 No Material Adverse Effect. Since the date of the Interim Balance
Sheet, there has not occurred any Material Adverse Effect and no event has
occurred or circumstance exists that is reasonably likely to result in a
Material Adverse Effect.
3.13 Employee Benefits. Schedule 3.13 lists each "Employee Benefit Plan"
------------- ---------------------
(within the meaning of Section 3(3) of ERISA) and any other employee plan or
arrangement maintained by any Seller for or in which any Seller Employee
participates (collectively, the "Seller Plans"). Copies or descriptions of the
------------
Seller Plans will be made available to Buyer upon written request. Each Seller
Plan has been administered and is in material compliance with the terms of such
plan and all applicable laws, rules and regulations where the failure thereof
would have a Material Adverse Effect on the financial condition of any Seller.
No Seller has contributed to any "multi-employer plan" (within the meaning of
Section 3(37) of ERISA) and neither Sellers nor any entity that is treated as a
single employer under Code (S) 414(b), (c), (m) or (o) or ERISA (S) 4001(a) (14)
or 4001(b) ("Controlled Entity") has incurred any withdrawal liability which
-----------------
remains unsatisfied in an amount which would have a Material Adverse Effect on
the financial condition of Sellers. Neither Sellers nor any Controlled Entity
has any liability related to a pension benefit plan which is a defined benefit
plan under Title IV of ERISA which would have a Material Adverse Effect on the
financial condition of Sellers. To Parent's Knowledge, no "prohibited
transaction" as such term is used in Section 406 of ERISA or Section 4575 of the
Code, and no litigation or administrative or other Proceeding involving any
Seller Plan has occurred or is Threatened where an adverse determination would
have a Material Adverse Effect on Sellers.
3.14 Compliance with Legal Requirements; Governmental Authorizations.
(a) The business of Sellers is not being conducted in violation of any
applicable Legal Requirement, all Governmental Authorizations required to
conduct the business of Sellers have been obtained and are valid and are in full
force and effect, and Sellers are in full compliance with all of the terms and
requirements of each such Governmental Authorization, except for any
noncompliance which would not be reasonably likely to have a Material Adverse
Effect, it being understood that nothing in this representation is intended to
address any compliance issue that is (i) related to any Environmental Law or
Environmental Permit or (ii) the subject of any other representation or warranty
set forth herein.
(b) No Seller has received, at any time since January 1, 1997, any notice
or other communication (whether oral or written) from any Person regarding (A)
any actual, alleged, possible or potential violation of, or failure to comply
with, any Legal Requirement or Governmental Authorization, or (B) any actual,
alleged, possible or potential obligation on the part of any Seller to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature, except for notices or communications with respect to violations or
obligations which would not reasonably be expected to have a Material Adverse
Effect.
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3.15 Legal Proceedings; Orders.
(a) Except as set forth on Schedule 3.15, there is no pending Proceeding:
-------------
(i) that has been commenced by or against any Seller that will
materially affect the business of any Seller or the Acquired Assets taken as a
whole; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the transactions
contemplated in this Agreement.
To the Knowledge of Parent, GPX or Sellers, no Proceeding, which if it were
pending would be listed on Schedule 3.15, has been Threatened.
-------------
(b) There is no Order to which any Seller is subject that will materially
affect the business of any Seller or the Acquired Assets taken as a whole.
(c) No officer, director, agent or employee of any Seller is subject to
any Order that prohibits such officer, director, agent or employee from engaging
in or continuing any conduct, activity or practice relating to the business of
any Seller.
(d) Except as set forth on Schedule 3.15:
-------------
(i) each Seller is in compliance in all material respects with the
terms and requirements of each currently effective Order to which it, or any of
the assets owned or used by it, is subject;
(ii) to the Knowledge of the Company, no event has occurred or
circumstance exists that may constitute or result in (with or without notice or
lapse of time) a violation of or failure to comply with any term or requirement
of any Order to which any Seller, or any of the assets owned or used by any
Seller, is subject; and
(iii) no Seller has received any written notice or other written
communication from any Person regarding any actual, alleged, possible or
potential violation of, or failure to comply with, any term or requirement of
any Order to which any Seller, or any of the assets owned or used by any Seller,
is subject.
3.16 Absence of Certain Changes and Events. Since the date of the Balance
Sheet, Sellers have conducted their businesses only in the ordinary course of
business and there has not been any:
(a) amendment to the Organizational Documents of any Seller;
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(b) payment or increase by any Seller of any bonuses, salaries or other
compensation to any stockholder, director, officer or employee, except in the
ordinary course of business, or entry into any employment, severance or similar
Contract with any director, officer or employee;
(c) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement or other employee benefit plan for or with any employees of any
Seller;
(d) damage to or destruction or loss of any asset or property of any
Seller, whether or not covered by insurance, except for such damage, destruction
or loss that would not have a Material Adverse Effect;
(e) entry into, termination of or receipt of notice of termination of (i)
any license, distributorship, dealer, sales representative, joint venture,
credit or similar agreement or (ii) any Contract or transaction involving a
total remaining commitment by or to any Seller of at least $10,000, excluding
any purchase and sales orders relating to inventory entered into or terminated
in the ordinary course of business;
(f) sale (other than sales of inventory in the ordinary course of
business), lease or other disposition of any material asset or property of
Sellers, taken as a whole, or mortgage, pledge or imposition of any Encumbrance
on any material asset or property of Sellers, taken as a whole, including the
sale, lease or other disposition of any of the Intellectual Property owned by
Sellers;
(g) cancellation or waiver of any claims or rights with a value to any
Seller in excess of $10,000;
(h) material change in the accounting methods used by any Seller; or
(i) agreement, whether oral or written, by any Seller to do any of the
foregoing.
3.17 Contracts; No Defaults.
(a) Schedule 3.17(a) contains a complete and accurate list, and Sellers
---------------
have delivered to Buyer true and complete copies, of each of the Assigned
Contracts other than Assigned Contracts (a) involving performance of services or
delivery of goods or materials by a Seller in the ordinary course of its
business of an amount or value not in excess of $50,000, (b) involving
performance of services or delivery of goods or materials to a Seller in the
ordinary course of its business of an amount or value not in excess of $50,000
or (c) that are terminable by a Seller at its discretion, without penalty, upon
no more than thirty (30) days' notice.
(b) Except as set forth on Schedule 3.17(b):
---------------
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<PAGE>
(i) neither Parent nor GPX (and no Related Person of Parent or GPX)
has or may acquire any rights under any Assigned Contract; and
(ii) no employee of any Seller is bound by any Contract that purports
to limit the ability of such employee to (A) engage in or continue any conduct,
activity or practice relating to the business of any Seller, or (B) assign to
any Seller or to any other Person any rights to any invention, improvement or
discovery.
(c) Except as set forth on Schedule 3.17(c), each Assigned Contract is in
----------------
full force and effect and is valid and enforceable in accordance with its terms.
(d) Except as set forth on Schedule 3.17(d):
----------------
(i) each Seller is in compliance in all material respects with all
applicable terms and requirements of each Assigned Contract under which such
Seller has or had any obligation or liability or by which such Seller or any of
the assets owned or used by such Seller is or was bound;
(ii) to the Knowledge of Sellers, each other Person that has or had
any obligation or liability under any Assigned Contract under which a Seller has
or had any rights is in compliance in all material respects with all applicable
terms and requirements of such Assigned Contract;
(iii) to the Knowledge of Sellers, no event has occurred or
circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with or result in a violation or breach of, or give any
Seller or any other Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel, terminate
or modify, any Assigned Contract; and
(iv) no Seller has given to, or received from any other Person, any
written notice or other written communication regarding any actual, alleged,
possible or potential violation or breach of, or default under, any Assigned
Contract.
(e) To the Knowledge of Sellers, there are no renegotiations of, attempts
to renegotiate or outstanding rights to renegotiate any material amounts paid or
payable to any Seller under current or completed Contracts with any Person and
no such Person has made written demand for such renegotiation.
(f) The Assigned Contracts relating to the sale, design, manufacture or
provision of products or services by Sellers have been entered into in the
ordinary course of business and have been entered into without the commission of
any act alone or in concert with any other Person, or any consideration having
been paid or promised, that is or would be in violation of any Legal
Requirement.
3.18 Insurance. Parent, GPX or Sellers have obtained insurance policies
covering Sellers' businesses, operations, properties and assets in amounts and
against losses which Parent, GPX or
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Sellers have reasonably determined are adequate. No insurance has been refused
with respect to any operations, properties or assets of Sellers nor has coverage
of any insurance been limited by any insurance carrier that has carried, or
received any application for, any such insurance during the last three years.
3.19 Environmental Matters.
(a) No Seller, nor any of their respective Business Facilities, is in
violation of, or has violated, or has been or is in non-compliance with, any
Environmental Laws in connection with the ownership, use, maintenance or
operation of, or conduct of the business of any Seller or any of their
respective Business Facilities.
(b) Without in any manner limiting the generality of (a) above:
(i) Except in compliance with Environmental Laws (including,
without limitation, by obtaining necessary Environmental
Permits), no Materials of Environmental Concern have been used,
generated, extracted, mined, beneficiated, manufactured,
stored, treated or disposed of, or in any other way Released
(and there is no Threatened Release) by any Seller, or to the
Knowledge of any Seller, by any other Person, on, under or
about any Business Facility or transferred or transported to or
from any Business Facility by any Seller, or to the Knowledge
of any Seller, by any other Person;
(ii) Sellers are not, to the Knowledge of Sellers, subject to any:
(A) liability in connection with any Release or Threatened
Release of any Materials of Environmental Concern into the
Environment whether on or off any Business Facility; (B)
reclamation, decontamination or Remediation requirements under
Environmental Laws, or any reporting requirements related
thereto; or (C) consent order, compliance order or
administrative order relating to or issued under any
Environmental Law;
(iii) There are no Environmental Claims known, pending or Threatened
against or affecting any Seller, or any of their respective
Business Facilities, and to the Knowledge of the Sellers there
is no event, condition or Release that could reasonably be
expected to form a basis for same;
(iv) Sellers and all of their respective Business Facilities have
and have timely filed applications for renewal of all
Environmental Permits necessary for the operation of the
business of each Seller as presently conducted; Sellers have
all environmental and pollution control equipment necessary to
comply with all Environmental Laws (including, without
limitation, compliance with all applicable Environmental
Permits) for the operation of the businesses of each Seller as
presently conducted, and Sellers and their respective Business
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<PAGE>
Facilities are in compliance with all terms and conditions of
such Environmental Permits;
(v) Regarding all Environmental Permits for which renewal,
amendment or modification is sought and an application is
pending to the Knowledge of Sellers, no material expenditures,
capital improvements or changes in operation will be necessary
as a condition or as a result of such renewal, amendment or
modification;
(vi) To the Knowledge of Sellers, there are no, nor have there ever
been any, storage tanks or solid waste management units located
on or under any Business Facility of any Seller and there is
no, nor has there been any, Release of Materials of
Environmental Concern on or from any Business Facility of any
Seller resulting in an amount or concentration exceeding any
applicable industrial standard published pursuant to
Requirements of Environmental Laws;
(vii) To the Knowledge of Parent or GPX, none of the off-site
locations where Materials of Environmental Concern generated
from any Business Facility of any Seller come to be located or
where any Seller has arranged for their treatment, storage,
recycling or disposal is subject to an existing or potential
claim under Environmental Laws that could reasonably be
expected to result in an Environmental Claim against any Seller
or Buyer;
(viii) No Seller has been named as a potentially responsible party
under, and no Business Facility of any Seller has been
nominated or identified as a facility which is subject to an
existing or potential claim, under CERCLA or comparable
Environmental Laws;
(ix) Sellers are not aware of any current Requirement of
Environmental Laws that will in the next five years require
future compliance costs or capital expenditures on the part of
Sellers in excess of $50,000 above costs currently expended in
the ordinary course of business;
(x) There are no Remediation obligations or undertakings arising
out of or relating to Environmental Laws which any Seller has
agreed to, assumed or retained by written Contract;
(xi) Sellers have filed all notices, notifications, financial
security, waste managements plans or applications which are
required to be obtained or filed pursuant to Environmental Laws
by any of them for the operation of their respective businesses
or the use or operation of any Business Facility of any Seller;
and
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<PAGE>
(c) This Section 3.19 constitutes the sole representation of Parent, GPX
------------
and Sellers with respect to any Environmental Law or any Materials of
Environmental Concern. With respect to any Business Facility formerly leased,
operated, owned or managed by any Seller, the representations of this Section
-------
3.19 shall be construed to relate only to conditions, events, facts or
- ----
circumstances which existed, occurred or commenced prior to the latest date of
any leasehold interest, operation, ownership or management of such Business
Facility by any Seller.
3.20 Employees.
(a) To the Knowledge of Parent, GPX and Sellers, no employee, officer or
director of any Seller is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, noncompetition or proprietary rights
agreement, between such employee, officer or director and any other Person that
in any way adversely affects or will adversely affect (i) the performance of his
duties as an employee, officer or director of such Seller or (ii) the ability of
such Seller to conduct its business. As of the date of this Agreement, no
director, officer or other key employee of any Seller has notified Parent, GPX
or Sellers of an intention to terminate his employment with such Seller.
(b) Schedule 3.20 lists each employment, consulting, contracting,
-------------
retention, change in control, severance, management or other similar Applicable
Contract to which any Seller is a party or by which any Seller is bound
("Employment Agreement").
--------------------
3.21 Labor Relations; Compliance. No Seller is a party to any collective
bargaining agreement. There has not been, there is not pending or existing and,
to the Knowledge of Parent, GPX or Sellers, there is not Threatened, (a) any
strike, slowdown, picketing, work stoppage or employee grievance process, (b)
any Proceeding against or affecting any Seller relating to the alleged violation
of any Legal Requirement pertaining to labor relations or employment matters,
including any charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity Commission or
any comparable Governmental Body, organizational activity or other labor or
employment dispute against or affecting any Seller or its premises, or (c) any
application for certification of a collective bargaining agent. There is no
lockout of any employees by any Seller, and no such action is contemplated by
any Seller. Subject to such exceptions as would not have a Material Adverse
Effect, each Seller has complied in all respects with all Legal Requirements
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health and plant
closing. No Seller is liable for the payment of any compensation, Damages,
Taxes, fines, penalties or other amounts, however designated, for failure to
comply with any of the foregoing Legal Requirements.
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<PAGE>
3.22 Intellectual Property.
(a) Schedule 3.22(a) sets forth a list of (i) all material patents,
----------------
patent applications, registered trademarks, trademark applications, registered
copyrights, copyright applications and other Intellectual Property that are
owned by Sellers and used in their business; and (ii) all agreements under which
Sellers are licensed or otherwise permitted, or license or otherwise permit a
third party, to use patents, trademarks, copyrights and other Intellectual
Property which are material to the business of Sellers.
(b) Sellers directly or indirectly own, or are licensed or otherwise
possess valid rights to use, all Intellectual Property used in their businesses
as currently conducted, with such exceptions as would not be reasonably likely
to have a Material Adverse Effect, and no Person is challenging or, to the
Knowledge of Parent, GPX or Sellers, infringing or otherwise violating the
Intellectual Property of Sellers, except in each case for challenges,
infringements or violations which would not be reasonably likely to have a
Material Adverse Effect.
3.23 Certain Payments. No Seller or any director, officer, agent or
employee of any Seller, or any other Person associated with or acting for or on
behalf of any Seller has (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback or other payment to any Person, private or public,
regardless of form, whether in money, property or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of any Seller or any Related
Person of any Seller or (iv) in violation of any Legal Requirement, or (b)
established or maintained any asset with a value over $50,000 or fund that has
not been recorded in the books and records of Sellers.
3.24 Relationships with Related Persons. Neither Parent and GPX nor any
Related Person of Parent or GPX or of any Seller has, or has had, any material
ownership interest in any property (whether real, personal or mixed and whether
tangible or intangible), used in or pertaining to Sellers' businesses.
3.25 Brokers or Finders. Other than Wasserstein Perella & Co., Inc. and
J.P. Morgan & Co., Inc., Parent, GPX and Sellers have not employed any broker,
finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to a broker's, finder's
or similar fee or commission in connection therewith or upon the consummation
thereof or if the Closing does not occur. Parent and GPX agree to bear all
costs they incur, including fees and expenses of Wasserstein Perella & Co., Inc.
and J.P. Morgan & Co., Inc., in connection with the transactions contemplated by
this Agreement.
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ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Parent, GPX and Sellers, except as set
forth in the Disclosure Schedules, as of the date hereof and as of the Closing
Date (except that representations and warranties that are made as of a specific
date need only be true as of such date), as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas.
4.2 Authority; No Conflict.
(a) Buyer has full corporate power and authority to execute this Agreement
and other agreements, documents and other instruments executed and delivered in
connection with this Agreement to which Buyer is a party (the "Buyer Ancillary
---------------
Documents"), and to consummate the transactions contemplated herein and therein.
- ---------
The execution and delivery by Buyer of this Agreement and the Buyer Ancillary
Documents, and the consummation by Buyer of the transactions contemplated herein
and therein, have been duly authorized by all necessary corporate action.
(b) This Agreement constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, subject to the
Bankruptcy and Equity Exception. Upon the execution and delivery by Buyer of the
Buyer Ancillary Documents, the Buyer Ancillary Documents will constitute the
legal, valid and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms, subject to the Bankruptcy and Equity
Exception. Buyer has the absolute and unrestricted right, power and authority to
execute and deliver this Agreement and the Buyer Ancillary Documents and to
perform its obligations under this Agreement and the Buyer Ancillary Documents.
(c) Except as set forth in Schedule 4.2, neither the execution and
------------
delivery of this Agreement by Buyer nor the consummation or performance of any
of the transactions contemplated in this Agreement by Buyer will give any Person
the right to prevent, delay or otherwise interfere with any of the transactions
contemplated in this Agreement pursuant to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or stockholders
of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be subject;
or
(iv) any Contract to which Buyer is a party or by which Buyer may be
bound.
Except for filings required under the HSR Act, Buyer is not and will not be
required to obtain any Consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
transactions contemplated in this Agreement.
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4.3 Certain Proceedings. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
transactions contemplated in this Agreement. To Buyer's Knowledge, no such
Proceeding has been Threatened.
4.4 Brokers or Finders. Buyer has not employed any broker, finder,
consultant or intermediary in connection with the transactions contemplated by
this Agreement who would be entitled to a broker's, finder's or similar fee or
commission in connection therewith or upon the consummation thereof or if the
Closing does not occur.
4.5 Availability of Funds. On the Closing Date, Buyer shall have
sufficient funds available to enable it to consummate the purchase of the
Acquired Assets on the terms and conditions contemplated in this Agreement.
ARTICLE V
---------
COVENANTS OF THE PARTIES PRIOR TO CLOSING DATE
5.1 Access and Investigation.
(a) Between the date hereof and the Closing Date, Parent and GPX shall,
and shall cause each Seller to, afford Buyer and its Representatives reasonable
access, during regular business hours and upon reasonable advance notice, to the
real property owned or leased by Sellers and to the officers and key employees
of Sellers, and shall furnish, or cause to be furnished, to Buyer any financial
and operating data and other information that is available with respect to the
business and properties of Sellers as Buyer shall from time to time reasonably
request; provided that the foregoing shall not require Parent or GPX to permit,
or cause Sellers to permit, any inspection, or to disclose any information, that
in their reasonable judgment would result in the disclosure of any trade secrets
of third parties or violate any of Parent's, GPX's or Sellers' obligations with
respect to confidentiality if Parent and GPX shall have used their reasonable
best efforts to obtain the Consent of such third party to such inspection or
disclosure.
(b) All information provided or obtained pursuant to clause (a) above
shall be held by Buyer in accordance with and subject to the terms of the
Confidentiality Agreement, dated March 4, 1999 between Tanglewood Investments,
Inc. and Parent (the "Confidentiality Agreement").
-------------------------
5.2 Operation of the Businesses of Sellers. Except as otherwise permitted
by Buyer in writing (such permission not to be unreasonably withheld) upon the
request of Parent, between the date of this Agreement and the Closing Date, each
Seller will, and Parent and GPX will cause each Seller to:
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(a) conduct the business of such Seller only in the ordinary course of
business or, with respect to current assets, consistent with such Seller's
current plan to phase out its undercarriage components business;
(b) use commercially reasonable efforts to preserve intact the current
business organization of such Seller, keep available the services of the current
officers, employees and agents of such Seller, and maintain the relations and
good will with suppliers, customers, landlords, creditors, employees, agents and
others having business relationships with such Seller;
(c) pay all amounts due or to be due to vendors from the Sellers for pins
and bushing equipment and the Brinnell hardness tester as set forth on Schedule
--------
5.2(c); provided, however, that all of such payments shall be made directly by
- -----
Parent or GPX and shall not be made by any Seller or from the funds of any
Seller, and neither Sellers nor Buyer shall owe Parent or GPX for any amount so
expended. Notwithstanding the preceding sentence, Parent and GPX shall cause
Sellers to cancel their commitments to purchase approximately $10,000,000 worth
of roller equipment from certain vendors and their commitments to purchase a
roller hearth furnace for track links from Wolfgang Kohnle; provided, however,
that any penalty, liquidated damages or other amounts due upon such cancellation
shall be paid by Parent and GPX, and such payment shall not be made by any
Seller or from the funds of any Seller, and neither Sellers nor Buyer shall owe
Parent or GPX for any amount so expended; and, provided, further, that Parent,
GPX and Sellers, jointly and severally, shall indemnify and hold harmless Buyer
from and against any and all Proceedings that may arise from such cancellation;
(d) at the request of Buyer, to terminate, in a manner reasonably
acceptable to Buyer, any Applicable Contracts between any Seller and Linser;
provided, however, that any penalty, liquidated damages or other amounts due
upon such termination shall be paid by Parent and GPX, and such payment shall
not be made by any Seller or from the funds of any Seller, and neither Sellers
nor Buyer shall owe Parent or GPX for any amount so expended; and, provided,
further, that Parent, GPX and Sellers, jointly and severally, shall indemnify
and hold harmless Buyer from and against any and all Proceedings that may arise
from such termination;
(e) confer with Buyer concerning operational matters of a material nature
of such Seller; and
(f) report periodically to Buyer concerning the status of the business,
operations and finances of such Seller.
5.3 Negative Covenant. Without the prior written consent of Buyer, which
consent shall not be unreasonably withheld, each Seller shall not, and Parent
and GPX shall not permit any Seller to:
(a) other than in the ordinary course of business or pursuant to the terms
of any existing Applicable Contract, enter into any employment agreement or
increase the rate of compensation payable or to become payable by any Seller to
any of its directors, officers, employees or agents or
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increase or agree to increase the benefits payable under any bonus, insurance,
pension or other Seller Plan, payment or arrangement;
(b) enter into any Contract or series of related Contracts, or make any
commitment, whether directly or by way of guarantee or otherwise, for capital
expenditures not in the ordinary course of business or aggregating in excess of
$10,000;
(c) incur or agree to incur, or otherwise guarantee or become liable for,
any indebtedness for money borrowed;
(d) fail to use commercially reasonable efforts to maintain its material
tangible properties in good condition and repair, reasonable wear and tear
excepted;
(e) except as otherwise expressly contemplated herein, loan or advance any
funds to, or borrow or take down any funds from, any Person, whether under an
existing agreement or not, except for extensions of credit in the ordinary
course of business for merchandise purchased and customary advances to salesmen
against commissions;
(f) incur or agree to incur, or otherwise guarantee or become liable for,
any commitment, obligation or liability, absolute or contingent, other than in
the ordinary course of business;
(g) change its accounting practices or policies or its application
thereof;
(h) except in the ordinary course of business, enter into, become a party
to, waive any material right under or cancel any material Applicable Contract,
lease, commitment, option or agreement, or make or permit to be made any
material amendment or termination of any Applicable Contract, lease, commitment,
option or agreement;
(i) except in the ordinary course of business or, with respect to current
assets, consistent with such Seller's current plan to phase out its
undercarriage components business, intentionally make or permit any material
change in its assets, liabilities or financial condition;
(j) dispose of or acquire assets with an aggregate book value or purchase
price, respectively, exceeding $10,000, except for any purchases and sales of
inventory at fair value in the ordinary course of business; or, with respect to
current assets, consistent with such Seller's current plan to phase out its
undercarriage components business;
(k) enter into or assume any mortgage, pledge, conditional sale or other
title retention agreement, or cause any Encumbrance of any kind to attach upon
any of its material assets, whether now owned or hereafter acquired, except for
capital leases and liens for Taxes, assessments or governmental charges or
levies which are not delinquent;
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<PAGE>
(l) declare, set aside, pay or make any distribution of such Seller's
assets other than current assets in respect of any capital stock or other
securities of such Seller, or purchase, cancel, retire, redeem or otherwise
acquire, or agree to purchase, cancel, retire, redeem or otherwise acquire, any
capital stock or other securities of such Seller for consideration consisting of
such Seller's assets other than current assets;
(m) dissolve, liquidate, reorganize, merge, consolidate or otherwise make
any change in its corporate structure or existence;
(n) enter into any business dealing or transaction, directly or
indirectly, with any stockholder or any other Related Person of any Seller, make
any payments to any stockholder or any Related Person of any Seller or conduct
or account for any existing transaction with any stockholder or any Related
Person of any Seller on other than an arm's length basis;
(o) except in the ordinary course of business, enter into any lease of
personal property;
(p) enter into any lease of real property;
(q) use of any of its material assets for other than proper corporate
purposes and in the ordinary course of business;
(r) knowingly waive any material right with respect to any Acquired Asset
without receiving fair consideration;
(s) violate or continue to violate any Legal Requirement, the violation of
which might reasonably be expected to have a Material Adverse Effect; or
(t) agree to do any of the things described in clauses (a) through (u) of
this Section 5.3.
-----------
5.4 Mutual Cooperation.
(a) All parties to this Agreement will cooperate with each other and use
(and will cause their respective Subsidiaries to use) their respective best
efforts to take or cause to be taken all actions, and do or cause to be done all
things, necessary, proper or advisable on their part under this Agreement and
applicable laws, rules and regulations to consummate the transactions
contemplated in this Agreement as soon as practicable, including preparing and
filing as promptly as practicable all documentation to effect all necessary
notices, reports and other filings, responding promptly to any requests for
further information and to obtain as promptly as practicable all Consents,
registrations, approvals, permits and authorizations necessary or advisable to
be obtained from any third party and/or any Governmental Body in order to
consummate the transactions contemplated in this Agreement as promptly as
practicable. Subject to applicable laws relating to the exchange of
information, the parties hereto will have the right to review in advance, and to
the extent practicable each will consult each other on, all the information
relating to such parties and any of their respective
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Subsidiaries, that appear in any filing made with, or written materials
submitted to, any third party and/or any Governmental Body in connection with
the transactions contemplated in this Agreement. In exercising the foregoing
right, the parties hereto will act reasonably and as promptly as practicable.
(b) The parties hereto will, upon written request by another party,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with any statement, filing, notice or
application made by or on behalf of a party or parties to this Agreement to any
third party and/or any Governmental Body in connection with the transactions
contemplated in this Agreement.
(c) Parent and Buyer each will keep each other apprised of the status of
matters relating to completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of notice or other written
communications received by Parent (or its affiliates) or the Buyer (or its
affiliates), as the case may be, from any third party and/or any Governmental
Body with respect to the transactions contemplated in this Agreement.
(d) Without limiting the generality of the undertakings pursuant to this
Section 5.4, Parent and GPX (in the case of clauses (i) and (iii)), on the one
- -----------
hand, and Buyer (in all cases set forth below), on the other hand, agree to take
or cause to be taken the following actions: (i) provide promptly to any
federal, state, local or foreign court or Governmental Body with jurisdiction
over enforcement of any applicable antitrust laws ("Government Antitrust
--------------------
Entity") information and documents requested by any Government Antitrust Entity
- ------
or necessary, proper or advisable to permit consummation of the transactions
contemplated in this Agreement; (ii) the proffer by Buyer of its willingness to
sell or otherwise dispose of, or hold separate and agree to sell or otherwise
dispose of, such Acquired Assets or the assets, categories of assets or
businesses of Buyer or Buyer's Subsidiaries (and to enter into agreements with
the relevant Government Antitrust Entity giving effect thereto) no later than 90
days from the date hereof if such action should be reasonably necessary or
advisable to avoid the commencement of a Proceeding to delay, restrain, enjoin
or otherwise prohibit consummation of the transactions contemplated in this
Agreement by any Government Antitrust Entity; and (iii) take promptly, in the
event that any permanent or preliminary injunction or other Order is entered or
becomes reasonably foreseeable to be entered in any Proceeding that would make
consummation of the transactions contemplated in this Agreement in accordance
with the terms of this Agreement unlawful or that would prevent or delay
consummation of the transactions contemplated in this Agreement, any and all
steps (including the appeal thereof, the posting of a bond or the taking of the
steps contemplated by clause (ii) of this paragraph) necessary to vacate, modify
or suspend such injunction or Order so as to permit such consummation on a
schedule as close as possible to that contemplated in this Agreement.
(e) Notwithstanding anything to the contrary in Section 5.4(a), neither
party shall be required to make any payment (other than pursuant to Legal
Requirements) or grant any concession to any Person to obtain a Consent.
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5.5 [Intentionally Omitted.]
5.6. Payment of Indebtedness by Related Persons. Except as expressly
provided in this Agreement, Parent and GPX will cause all indebtedness owed to
any Seller by Parent, GPX or any Related Person of Parent or GPX to be paid in
full prior to Closing. Parent and GPX will, prior to Closing, cause all
indebtedness owed by any Seller to Parent, GPX or any Related Person of Parent
or GPX to be converted into or contributed to the capital of the Seller owing
such amounts.
5.7 No Negotiation. Except as otherwise contemplated in the Agreement,
Parent and GPX agree that between the date hereof and the earlier of (a) the
Closing Date or (b) the termination of this Agreement pursuant to Article X,
---------
Parent and GPX will refrain, and will cause each of their respective
Subsidiaries, including, without limitation, Sellers, affiliates, directors,
officers and Representatives to refrain, (x) from directly or indirectly
effecting, or agreeing to effect, (i) the sale of any securities or any material
portion of the assets, other than finished goods inventory sold in the ordinary
course of business, of any Seller to any Person, (ii) any merger, consolidation,
share exchange or other business combination of any Seller with any Person,
(iii) the issuance or sale of any capital stock of any Seller to any Person or
(iv) any other recapitalization, refinancing or reorganization of any Seller and
(y) from directly or indirectly initiating, soliciting, encouraging or engaging
in any discussions, negotiations, inquiries or proposals with or from any Person
for, or providing any information regarding any Seller to any Person with
respect to, any potential transaction referenced in clause (x) of this Section
-------
5.7. If Parent, GPX or Sellers receive any inquiry or proposal with respect to
- ---
any matter referenced in clause (x) of this Section 5.7, Parent will immediately
-----------
notify Buyer in writing of the receipt thereof and provide Buyer with the
relevant details of any such inquiry or proposal and of any contact with any
Person relating thereto.
5.8 Notice of Environmental Claims. Parent shall give prompt written
notice to Buyer of the commencement of any new Environmental Claim arising
between the date of this Agreement and the Closing Date.
5.9 Assignment of Software. Not later than 30 days after the Closing
Date, Parent, GPX and Sellers shall assign or sublicense to Buyer, in a manner
reasonably acceptable to Buyer, any computer software or other Intellectual
Property used by any Seller in the course of such Seller's business and shall
provide to Buyer any necessary computers or other hardware not now owned by
Sellers and necessary for the operations of the businesses of Sellers, which
computers or other hardware shall be reasonably acceptable to Buyer. Buyer
shall reimburse Parent, GPX or the Sellers for any costs so incurred to provide
such items, such costs not to exceed $50,000.
5.10 Assignment of Confidentiality Agreements. Parent and GPX shall
assign to Buyer, in a manner reasonably acceptable to Buyer, all of Parent's and
GPX's respective rights under any confidentiality agreements relating to Sellers
and the Acquired Assets.
5.11 Change of the Sellers' Names. Parent and GPX shall cause each Seller
to amend Sellers' Organizational Documents, effective as of or prior to the
Closing Date, to change each
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Seller's name to a name that is not confusingly similar to its present name and
in the case of the Company, does not contain the word "Ameri-Forge",
"Ameriforge" or any derivative thereof.
5.12 Other Offers. Not later than the Closing Date, Parent shall deliver
to Buyer true, correct and complete copies of all written proposals, indications
or expressions of interest, offers to buy, or similar correspondence with
respect to the purchase of all or any substantial portion of the assets (other
than purchases of inventory in the ordinary course of business) or equity
securities of any Seller which were received by Parent, GPX or Sellers since
December 31, 1998.
ARTICLE VI
----------
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Acquired Assets and to take the other
actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived in writing by Buyer, in whole or in part):
6.1 Accuracy of Representations; Covenants; Deliveries.
(a) Each of the representations and warranties of Parent, GPX and Sellers
contained in Article III of this Agreement shall be true and correct in all
-----------
respects when made and as of the Closing Date, in each case with the same effect
as though such representations and warranties had been made on and as of the
Closing Date (except that representations and warranties that are made as of a
specific date need be true and correct in all respects only as of such date),
unless the failures of any or all such representations or warranties to be so
true and correct, individually or in the aggregate, has not had or is not
reasonably likely to have, a Material Adverse Effect.
(b) Each of the covenants and agreements of Parent, GPX and Sellers to be
performed on or prior to the Closing Date shall have been duly performed in all
material respects.
(c) Buyer shall have received at the Closing certificates to the foregoing
effect, dated as of the Closing Date and executed on behalf of Parent, GPX and
Sellers by their respective Chief Executive Officers or any of their respective
Vice Presidents.
(d) Each document required to be delivered pursuant to Section 2.5(a) must
--------------
have been delivered.
6.2 HSR Act Filings. Each party shall have duly filed with the Federal
Trade Commission (the "FTC") and the Antitrust Division of the United States
---
Department of Justice (the "Antitrust Division") the notification and report
------------------
form required under the HSR Act with respect to the sale and purchase of the
Acquired Assets and the waiting period required by the HSR Act, and any
extensions thereof obtained by request or other action of the FTC and/or the
Antitrust Division, shall have expired or been earlier terminated by the FTC or
the Antitrust Division.
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6.3 No Prohibition. No Governmental Body shall have enacted, issued,
promulgated, enforced or entered any Legal Requirement or non-appealable Order
which is in effect on the Closing Date and prohibits the consummation of the
Closing, or is reasonably likely to cause a Material Adverse Effect or to cause
Buyer or any Person affiliated with Buyer to suffer any material adverse
consequence under any applicable Legal Requirement or Order.
ARTICLE VII
-----------
CONDITIONS PRECEDENT TO PARENT'S, GPX'S
AND SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell, transfer and convey the Acquired Assets, and
the obligation of Parent, GPX and Sellers to take the other actions required to
be taken by them at the Closing, is subject to the satisfaction, at or prior to
the Closing of each of the following conditions (any of which may be waived by
in writing by Parent, GPX or Sellers, in whole or in part):
7.1 Accuracy of Representations; Covenants; Deliveries.
(a) Each of the representations and warranties of Buyer contained in
Article IV of this Agreement shall be true and correct in all respects when made
- ----------
and as of the Closing Date, in each case with the same effect as though such
representations and warranties had been made on and as of the Closing Date
(except that representations and warranties that are made as of a specific date
need be true and correct in all respects only as of such date), unless the
failures of any or all such representations or warranties to be so true and
correct, individually or in the aggregate, has not had or is not reasonably
likely to have, a material adverse consequence on Parent and its Subsidiaries,
taken as a whole.
(b) Each of the covenants and agreements of Buyer to be performed on or
prior to the Closing Date shall have been duly performed in all material
respects.
(c) Parent, GPX and Sellers shall have received at the Closing
certificates to the foregoing effect, dated as of the Closing Date and executed
on behalf of Buyer by its Chief Executive Officer or any of its Vice Presidents.
(d) Each document required to be delivered pursuant to Section 2.5(b) must
--------------
have been delivered.
7.2 HSR Act Filings. Each party shall have filed with the FTC and the
Antitrust Division the notification and report form required under the HSR Act
with respect to the sale and purchase of the Acquired Assets and the waiting
period required by the HSR Act, and any extensions thereof obtained by request
or other action of the FTC and/or the Antitrust Division, shall have expired or
been earlier terminated by the FTC or Antitrust Division.
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7.3 No Prohibition. No Governmental Body shall have enacted, issued,
promulgated, enforced or entered any Legal Requirement or non-appealable Order
which is in effect on the Closing Date and prohibits the consummation of the
Closing.
ARTICLE VIII
------------
CERTAIN POST-CLOSING COVENANTS
8.1 Certain Covenants.
(a) After the Closing, Parent and its Subsidiaries shall not conduct, and
shall not be Related Persons of:
(i) any business using the name "Ameri-Forge," "UCR" or "AFC"; or
(ii) any business that competes with any business conducted as of the
date hereof by any Seller anywhere in Texas or any other state or
jurisdiction in which any Seller conducted business as of the date hereof,
provided that the obligations of Parent and its Subsidiaries under this
clause (ii) shall terminate three years after the Closing Date (the
"Noncompete Term").
---------------
Notwithstanding the foregoing provisions of this paragraph (a), Parent and
its Subsidiaries may be passive investors owning, in the aggregate, no more than
five percent (5%) of the outstanding equity securities of any corporation the
equity securities of which are listed on a national securities exchange or
traded in the NASDAQ National Market System and with which Parent and its
Subsidiaries have no other connection whatsoever.
(b) Unless otherwise required by law or expressly authorized in writing by
Buyer, Parent, GPX and Sellers shall not, and shall use their respective best
efforts to cause each of their respective Related Persons not to, disclose to
any Person not in the employ of Buyer, other than a potential or actual
acquisition or business combination partner of Parent, which shall agree to be
bound by the provisions of this Section 8.1(b), any information concerning any
--------------
of the Acquired Assets or the businesses conducted by Sellers prior to the
Closing Date not rightfully in the public domain, including, without limitation,
lists of customers or suppliers, pricing strategies, business files and records,
trade secrets and financial information.
(c) During the Noncompete Term, Parent, GPX and Sellers shall not, and
shall use their respective best efforts to cause each of their respective
Related Persons not to, offer to employ or employ any Seller Employee employed
by Buyer.
(d) During the Noncompete Term, Parent, GPX and Sellers shall not, and
shall use their respective best efforts to cause each of their respective
Related Persons not to, engage or participate in any effort or act to induce any
customer, supplier, associate, employee, sales agent or independent contractor
of Buyer to take any action which has the purpose of being disadvantageous to
Buyer.
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<PAGE>
(e) Parent, GPX and Sellers acknowledge that the damages that would be
suffered by Buyer as a result of any breach of the provisions of this Section
-------
8.1 may not be calculable and that an award of a monetary judgment for such a
- ---
breach would be an inadequate remedy. Consequently, Buyer shall have the right,
in addition to any other rights it may have, to obtain, without the requirement
of posting any bond, in any court of competent jurisdiction, injunctive relief
to restrain any breach or Threatened breach of any provision of this Section 8.1
-----------
or otherwise to specifically enforce any of the provisions hereof. This remedy
is in addition to Damages for any loss directly or indirectly suffered by Buyer
and reasonable attorneys' fees.
(f) The parties hereto agree that the duration and area for which the
covenants in this Section 8.1 are to be effective are reasonable. In the event
-----------
that any court of competent jurisdiction finally determines that the time period
or the geographic scope of any such covenant is unreasonable or excessive and
any covenant is to that extent made unenforceable, the parties agree that the
restrictions of this Section 8.1 shall remain in full force and effect for the
-----------
greatest time period and within the greatest geographic area that would not
render it unenforceable. The parties intend that each of the covenants in
Sections 8.1(a), (b), (c) and (d) shall be deemed to be a separate covenant.
- ------------------------- ---
(g) The covenants of Parents and its Subsidiaries contained in this
Section 8.1 are independent of any covenants of Buyer contained herein or in
- -----------
any other document or instrument delivered in connection herewith or pursuant
hereto, and any breach by Buyer of any such covenant shall not justify any
breach by Parent and its Subsidiaries of their covenants under this Section 8.1.
-----------
8.2 Nonassignability of Assets. Notwithstanding anything in this
Agreement to the contrary, except to the extent the provisions hereof are waived
by Buyer, this Agreement shall not constitute an agreement to sell, assign,
sublease, transfer, convey or deliver any asset or any claim or right or any
benefit arising under or resulting from such asset if such sale, assignment,
sublease, transfer, conveyance or delivery is prohibited by any applicable Legal
Requirement or would require the Consent of any Governmental Body or other
Person and such Consent is not obtained prior to Closing. In the event that the
Closing proceeds without the sale, assignment, sublease, transfer, conveyance or
delivery of any such asset, then following the Closing, the parties shall use
their reasonable best efforts, and cooperate with each other, to obtain promptly
such Consents; provided, however, that, subject to Section 2.8(b), no party
--------------
shall be required to pay any consideration therefor other than filing,
recordation or similar fees which shall be paid by the party who is required by
any Legal Requirements or course of dealing to do so. Pending receipt of such
Consent, the parties shall cooperate with each other in any mutually agreeable,
reasonable and lawful arrangements designed to provide to Buyer the benefits of
use of such asset. Once Consent for the sale, assignment, sublease, transfer,
conveyance or delivery of any such asset not sold, assigned, subleased,
transferred, conveyed or delivered at the Closing is obtained, Sellers shall
sell, assign, transfer, convey and deliver such asset to Buyer at no additional
cost to Buyer. To the extent that any such asset cannot be transferred or the
full benefits of use of any such asset cannot be provided to Buyer following the
Closing pursuant to this Section 8.2, Buyer and Parent and its Subsidiaries
-----------
shall enter into such arrangements (including subleasing, sublicensing or
subcontracting) to provide to Buyer the economic
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<PAGE>
(taking into account Tax costs and benefits) and operational equivalent, to the
extent permitted, of obtaining such Consent and the performance by Buyer of the
obligations thereunder. Parent and its Subsidiaries shall hold in trust for and
pay to Buyer promptly upon receipt thereof, all income, proceeds and other
monies received by Parent or its Subsidiaries in connection with their use of
any asset (net of any Taxes and any other costs imposed upon Parent and its
Subsidiaries) and Buyer shall promptly pay directly or reimburse Parent or its
Subsidiaries for any costs of repair made at Buyer's request or Damages arising
out of or in connection with Buyer's use of any such asset in connection with
the arrangements under this Section 8.2.
8.3 Termination of Employees. In the event that (a) within four months
of the Closing Date, Buyer terminates the employment of any Seller Employee
employed by a Seller primarily in connection with Sellers' flange business or
(b) within eight months of the Closing Date, Buyer terminates any Seller
Employee not described in clause (a) above, Parent, GPX or Sellers shall pay
all severance or termination pay and all accrued vacation, salary, wages and
other compensation payments or benefits, if any, which may arise or become
payable under any Seller Plan as of the date of this Agreement, Employment
Agreement or applicable Legal Requirements relating to severance or termination
pay; provided, however, Buyer shall discharge and be solely responsible for all
other liabilities, obligations, costs and expenses which arise or become payable
as a result of or in connection with the termination of any Seller Employee,
including, without limitation, any liabilities, obligations, costs and expenses
with respect to arising under or relating to any action for wrongful termination
or to the Worker Adjustment and Retraining Notification Act and any other
similar state or local "plant-closing" act (collectively, "WARN"); and provided,
----
further, that in the event Buyer is required to comply with WARN in connection
with the termination of any such Seller Employee, the time periods described in
clause (a) or (b) above for the termination of such Seller Employee shall be
extended by two months.
8.4. Consent to Engagement. Parent, on behalf of itself and its
Subsidiaries, consents to the employment or engagement of Marty Barrett by Buyer
or its Related Persons, whether under an employment agreement, consulting
agreement or otherwise.
ARTICLE IX
----------
MUTUAL COVENANTS
9.1 Expenses. Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the transactions contemplated herein, including all fees and expenses of its
Representatives. Parent and GPX will pay all amounts payable to J. P. Morgan &
Co. Incorporated and Wasserstein Parella & Co., Inc. in connection with this
Agreement and the transactions contemplated hereby.
9.2 Public Announcements. Neither party shall make any voluntary public
announcement in connection with the transactions contemplated by this Agreement
until after the
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Closing, except as required by any Legal Requirement as reasonably determined by
such party. Unless consented to by all parties hereto in advance or except as
required by any Legal Requirement as reasonably determined by Parent, prior to
the Closing, Parent and GPX shall, and shall cause Sellers to, keep the
provisions of this Agreement strictly confidential and make no disclosure
thereof to any Person, other than to a potential or actual acquisition or
business combination partner of Parent which shall agree to be bound by the
provisions of this Section 9.2. The parties will consult with each other
-----------
concerning the means by which Sellers' employees, customers and suppliers and
others having dealings with Sellers will be informed of the transactions
contemplated hereby. Buyer shall receive prior notice of any initial or formal
communication to such Persons, and Buyer shall have the right to be present for
such initial or formal communication or any other business communication to such
Persons.
9.3 Confidentiality. Between the date of this Agreement and the Closing
Date, each party will maintain in confidence, and cause its directors, officers,
employees and Representatives to maintain in confidence, any written, oral or
other information obtained in confidence from another party in connection with
this Agreement or the transactions contemplated hereby unless such information
is already known to such party or to others not bound by a duty of
confidentiality or unless such information becomes publicly available through no
fault of such party, unless the use of such information is necessary or
appropriate in making any filing or obtaining any Consent or approval required
for the consummation of the transactions contemplated hereby, or unless the
furnishing or use of such information is required by any Proceeding. If the
transactions contemplated by this Agreement are not consummated, each party will
return or destroy such written information as may reasonably be requested.
9.4 Employee Benefits.
(a) Seller Plans. The term "Seller Employee" shall refer to any individual
------------ ---------------
who was employed by a Seller prior to the Closing Date and who continues his or
her employment with Buyer following the Closing Date. With respect to Seller
Employees and Seller Plans, Sellers covenant and agree that (i) the
participation of Seller Employees in Seller Plans shall terminate as of the
Closing Date and the appropriate Seller shall retain all responsibilities,
rights, liabilities and obligations with respect to such Seller Plans and any
other plan or program maintained by an ERISA Affiliate (as defined below),
including specifically, but not by way of limitation, all liabilities relating
to or arising from acts or omissions in the administration and operation of
Seller Plans and any other plan or program maintained by an ERISA Affiliate, and
(ii) the appropriate Seller shall be fully responsible for benefits earned,
accrued or incurred by the Seller Employees prior to the Closing Date, including
specifically, but not by way of limitation, Seller Plans' benefits and benefits
under any other plan or program maintained by an ERISA Affiliate resulting from
contributions made, expenses incurred and events occurring prior to the Closing
Date (whether or not submitted for payment prior to the Closing Date).
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<PAGE>
(b) Buyer shall take all necessary actions that are appropriate to
facilitate the coverage of Seller Employees under Buyer's employee benefits
plans as newly hired employees, subject to the terms and conditions of those
plans, from and after the Closing Date.
(c) No Seller Employee hired by Buyer shall receive credit for his or her
service with a Seller under any Buyer employee benefit plan or program,
including, but not limited to, any stock option plan or non-qualified deferred
compensation plan.
(d) Except to the extent such liability is accrued on the Closing Date
Balance Sheet, Sellers and any trade or business (whether or not incorporated)
which is treated as a single employer with Sellers (an "ERISA Affiliate") shall
---------------
retain responsibility for, and will make, payment of any accrued but unused
vacation days and sick pay that may become payable under any Seller Plan or
other policies or programs of Sellers, or by operation of applicable Legal
Requirements, including, but not limited to, amounts payable as a result of the
transactions contemplated by this Agreement.
(e) Sellers and their ERISA Affiliates shall be responsible for any
liabilities that may arise with respect to application of Code Section 4980B and
Sections 601-609 of ERISA with respect to any Seller Employee, former employees
or qualified beneficiaries prior to Closing and for all liabilities under Code
Section 4980B and ERISA Sections 601-609 as a result of the transactions
contemplated in this Agreement, as well as for any prior violations of these
laws by Sellers or an ERISA Affiliate. Buyer shall not be deemed a successor
employer with respect to any Seller Plan, including, but not limited to, plans
affected by Code Section 4980B and ERISA Sections 601-609. Notwithstanding any
other provision in this Agreement, Parent, GPX and Sellers shall indemnify Buyer
for any Damages Buyer may incur in connection with Sellers' responsibilities and
liabilities under this paragraph.
(f) Sellers have not incurred any liability under, and have complied in
all respects with, WARN or similar state laws, and do not expect to incur any
such liability as a result of actions taken or not taken in connection with this
Agreement. Sellers shall retain all responsibility and liability under WARN or
similar state laws that may be incurred in connection with or as a result of the
transactions contemplated in this Agreement. Parent, GPX and Sellers shall
indemnify Buyer for any Damages Buyer may incur in connection with Sellers'
responsibilities and liabilities under this paragraph.
9.5 Insurance Coverage. To the extent that Buyer suffers any Damages,
whether indemnifiable or not, in connection with its ownership or use of the
Acquired Assets, which Damages are covered under any insurance policy providing
coverage with respect to any period ending on or prior to the Closing Date and
naming any of Parent, GPX or Sellers as the beneficiary or loss payee, Parent,
GPX or Seller, as the case may be, shall cooperate in good faith with Buyer to
provide Buyer with the benefits of such coverage, whether by assigning the right
to make any claim for such Damages to Buyer or otherwise.
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9.6 Transition Services Agreement. Prior to the Closing, Buyer and
Parent shall use their respective best efforts to enter into a mutually
agreeable transition services agreement which will provide that during the
period beginning on the Closing Date and ending 120 days thereafter, Parent
shall provide or cause to be provided to Buyer operational and administrative
services, including, without limitation, management information services and
payroll services, substantially equivalent to the support and services Parent
currently provides to Sellers. Buyer and Parent agree to enter into good faith
negotiations promptly after the date of this Agreement to agree upon the
reasonable fees to be paid by Buyer to Parent in connection with the provision
of services and to agree upon the other terms of such agreement.
ARTICLE X
---------
TERMINATION
10.1 Termination Events.
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by Buyer in the event that Parent, GPX or Seller has breached any
covenant in this Agreement in any material respect, Buyer has notified Parent in
writing of such breach and such breach has not been cured within 30 days after
receipt of the notice of such breach;
(b) (i) by Buyer if any condition in Article VI has not been satisfied
----------
as of the Closing Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date, or (ii) by Parent, if any condition in Article VII has
-----------
not been satisfied as of the Closing Date or if satisfaction of such a condition
is or becomes impossible (other than through the failure of Parent or its
Subsidiaries to comply with their obligations under this Agreement) and Parent
has not waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Parent; or
(d) by either Buyer or Parent if the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement to comply
fully with its obligations under this Agreement) on or before July 31, 1999, or
such later date as the parties may agree upon.
10.2 Effect of Termination. Each party's right of termination under
Section 10.1 is in addition to any other rights it may have under this Agreement
- ------------
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 10.1, all
------------
further obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 9.1 and 9.3 will survive; provided, however,
------------ ---
that if this Agreement is terminated by a party because of the willful breach of
the Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's willful failure to comply with its obligations under
this
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Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired; and, provided, further, that if Buyer
terminates this Agreement because of any breach of this Agreement by Parent, GPX
or Sellers, other than a willful breach of this Agreement, or because of any
failure, other than a willful failure, on the part of Parent, GPX or Sellers to
comply with any of their obligations under this Agreement, then Buyer's right to
pursue any legal remedy shall be limited to reimbursement for its reasonable
out-of-pocket expenses incurred in connection with the transactions contemplated
hereby (whether incurred before or after the date of this Agreement) which shall
not exceed $1,000,000.
ARTICLE XI
----------
INDEMNIFICATION; REMEDIES
11.1 Right to Indemnification Not Affected by Knowledge. The right to
indemnification in accordance with the provisions of this Article will not be
affected by any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification in accordance with the provisions of this Article.
11.2 Indemnification and Payment of Damages by Parent, GPX and Sellers.
Parent, GPX and Sellers, jointly and severally, will indemnify and hold harmless
Buyer and its Representatives, stockholders, controlling persons and other
Related Persons (collectively, the "Buyer Indemnified Persons") for, and will
-------------------------
pay to the Buyer Indemnified Persons the amount of, any Damages sustained or
incurred by any Buyer Indemnified Person to the extent relating to, resulting
from or arising out of, or any allegation by any third party of:
(a) any breach of any representation or warranty made by Parent, GPX and
Sellers in this Agreement without giving effect to any supplement to the
Disclosure Schedules, and determined without regard to any materiality or
knowledge qualification contained in or otherwise applicable to such
representation or warranty;
(b) any breach by Parent, GPX or Sellers of any covenant or obligation of
Parent, GPX or Sellers in this Agreement;
(c) the Excluded Assets or the Excluded Liabilities;
(d) any Proceeding involving any challenge to, or seeking Damages or
other relief in connection with, any of the transactions contemplated in this
Agreement; or
(e) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person
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with Parent, GPX or Sellers (or any Person acting on their behalf) in connection
with any of the transactions contemplated in this Agreement.
Except in cases of fraud, Buyer acknowledges that its sole and exclusive
remedy after the Closing with respect to any and all claims and Damages relating
to this Agreement and any transactions contemplated herein shall be pursuant to
the Purchase Price adjustment procedure in Article II and the indemnification
----------
provisions set forth in this Article, and in furtherance of the foregoing, Buyer
hereby waives, from and after the Closing, any and all rights, claims and causes
of action it may have against Parent, GPX or Sellers, or any of their respective
affiliates, directors, officers or employees, arising under or based upon any
Legal Requirement or arising under or based upon common law or otherwise (except
in cases of fraud or pursuant to the Purchase Price adjustment procedure in
Article II or the indemnification provisions set forth in this Article);
- ----------
provided, however, that Buyer shall be entitled, if applicable, to specific
performance, injunctive relief and other equitable remedies; and provided,
further, that notwithstanding the time limitations set forth in Sections 11.5
-------------
and 12.1, nothing in this Agreement shall be construed to serve as a release or
----
waiver of any rights, claims, or remedies which any Person may have or acquire
at law or in equity, including without limitation, pursuant to Environmental
Laws or common law, with respect to (i) any Environmental Claim asserted against
Buyer or for which Buyer otherwise becomes liable or (ii) any actual or
Threatened violation of or non-compliance with, or Remediation obligation
arising under, any Environmental Laws, all of which rights, claims, and remedies
are expressly preserved and retained.
11.3 Indemnification and Payment of Damages by Parent, GPX and Sellers--
Environmental Matters.
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<PAGE>
(a) Environmental Indemnification. Notwithstanding any other provision of
-----------------------------
this Agreement, Parent, GPX and Sellers, jointly and severally, agree to
indemnify, defend and hold harmless the Buyer Indemnified Persons (as defined in
Section 11.2 above) from and against any and all Damages resulting from,
- ------------
relating to or arising out of (i) any Environmental Claim asserted against
Buyer; (ii) any actual or imminent Threatened violation of or non-compliance
with, or Remediation obligation required under, any Environmental Laws; (iii)
the presence of any Materials of Environmental Concern on, in, under, or
affecting or emanating from, all or any portion of any of the Business
Facilities of any Seller in an amount or concentration exceeding any applicable
industrial standard published pursuant to Environmental Laws; and (iv) the
storage, disposal or treatment, or transportation for storage, disposal or
treatment, of Materials of Environmental Concern; in each case to the extent
related to or arising out of any event, condition, circumstance, activity,
practice, incident, action or plan existing or occurring prior to the Closing
relating in any way to any Seller or any of their respective Business
Facilities, including, without limitation, the ownership, operation or use of
any of their Business Facilities and the conduct of the businesses of Sellers
prior to the Closing; provided however that any latent condition existing on or
before the Closing Date and which continues after the Closing Date and is first
discovered after the Closing Date (even if with the passage of time such
condition has become worse or more serious or results in greater Damages) shall
be construed to be a condition wholly existing before the Closing Date absent
Buyer's negligence and provided Buyer provides notice thereof to Sellers, Parent
and GPX as provided hereunder.
(b) Response Action. If any investigation or monitoring or any clean-up,
---------------
containment, restoration, removal or other Remediation (collectively the
"Response Action") is required under any applicable Environmental Law or in
---------------
order to comply with any agreements assigned under this Agreement affecting any
Business Facility or other property because of, or in connection with, any
occurrence or event described in paragraph (a) above, Parent, GPX and Sellers
shall jointly and severally have the obligation to either perform or cause to be
performed the Response Action in compliance with Requirements of Environmental
Laws, or shall promptly reimburse the Buyer Indemnified Persons for the cost of
such Response Action. In the event that Parent, GPX and Sellers elect to
perform the Response Action, all Response Action shall be performed by one or
more contractors, selected by Parent, GPX or Sellers, as the case may be, and
approved in advance in writing by the Buyer Indemnified Persons, with such
approval not to be unreasonably withheld, and under the supervision of a
consulting engineer, selected by Parent, GPX or Sellers, as the case may be,
and approved in advance in writing by the Buyer Indemnified Persons with such
approval not to be unreasonably withheld. Otherwise, the Buyer Indemnified
Persons shall select the contractor(s) and the consulting engineer with approval
by Seller not to be unreasonably withheld. All costs and expenses of such
Response Action shall be paid either directly, or in the form of reimbursement
to the Buyer Indemnified Persons, by Parent, GPX or Sellers, as the case may be,
including, without limitation, the charges of such contractor(s) and/or the
consulting engineer, and, if the Buyer must undertake Response Action, the Buyer
Indemnified Persons' reasonable attorneys' fees and costs incurred in connection
with monitoring or review of such Response Action. In the event Parent, GPX or
Sellers shall fail to timely commence, or cause to be commenced, or fail to
diligently prosecute to completion, such Response Action, the Buyer Indemnified
Persons may cause such Response Action to be performed after giving Parent, GPX
and Sellers at least fifteen days advance written notice of
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the intention to perform such Response Action, and all costs and expenses
thereof, or incurred in connection therewith, shall be Damages. All such Damages
shall be due and payable upon demand therefor by an Buyer Indemnified Person.
(c) Limitations. Any Response Action may utilize the most cost effective
-----------
method permitted under Environmental Laws and may include the use of risk
assessment, institutional controls, deed notice and use restrictions provided
(i) Parent, GPX and Sellers provide Buyer at least fifteen days advance written
notice prior to the implementation of any proposed final remedy and (ii) such
Response Action does not materially interfere with any then current use of a
Business Facility or materially interfere with the future use of the Business
Facility for industrial purposes. Except as set forth below, Response Action
costs shall not include any investigation costs not required by Environmental
Laws, any remediation costs which are not required under any applicable
Environmental Law and, except as set forth below, expressly exclude Buyer's
internal costs, any legal fees or disbursements, any costs arising out of
Buyer's own negligence or willful misconduct, any loss of value of any property
for non-industrial purposes, and any damages arising out of Buyer's negligent or
wrongful actions or omissions to the extent resulting in Response Action costs
that would not otherwise be incurred. Response Action costs shall not include
the removal of any tank, electrical equipment, PCBs or asbestos that comply with
applicable Environmental Laws at Closing and from which no Release has occurred.
Parent's, GPX's and Sellers' right to manage any such environmental
investigation or remediation is subject to the duty of Sellers, Parent and GPX
to consult in good faith with the Buyer and to provide copies of all relevant
documentation generated in connection with the management of any Response Action
including, without limitation, the provision of any documentation provided to
any Governmental Body at the same time such documentation is provided to a
Governmental Body. Any Response Action undertaken by Sellers, Parent and GPX
hereunder shall not materially interfere with the then current use of the
affected property or materially interfere with the future use of such property
for industrial purposes. The parties shall reasonably cooperate with each other
and shall provide each other with copies of all reports, studies, maps, site
plans and other information in its possession relating to site conditions or the
Response Action. If a Buyer Indemnified Party must perform Response Action
because of a failure by Sellers, Parent or GPX to perform such Response Action
after notice by Buyer as provided hereunder, Response Action costs shall
include all of Buyer's reasonable investigation costs, internal costs,
consulting costs, legal fees and disbursements. If Sellers, Parent, and/or GPX
are conducting a Response Action, Response Action costs shall also include
Buyer's reasonable investigation costs, internal costs, consulting costs, legal
fees and disbursements incurred to monitor or review such Response Action if
Buyer's review or monitoring reveals that such Response Action was not conducted
in material compliance with applicable Environmental Laws or this Agreement.
(d) Dispute Resolution. In the event that a dispute exists as to whether
------------------
a matter is subject to environmental indemnification or payment or regarding the
reasonableness of any cost or expense proposed or incurred, or otherwise
associated with any Response Action or as to the appropriateness of any action
taken (or proposed to be taken) or any remedy proposed or selected for any
Response Action, then the following procedure may be invoked. Within five
business days of a party's receipt of documents, instruments or agreements
describing or relating to a disputed
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matter, the party raising the dispute will provide to the other party notice
that it objects to the matter at issue (an "Objection Notice"). Within five
----------------
business days after receipt of the Objection Notice, each party shall appoint an
independent third party environmental expert (collectively, the "Selecting
---------
Consultants") who, within five business days after their appointment,
- -----------
collectively shall designate a third party environmental consultant (the "Third
-----
Party Environmental Consultant") to make a determination with respect to such
- ------------------------------
matter. The Third Party Environmental Consultant must be unaffiliated with each
of the Selecting Consultants and have neither any relationship nor conflict of
interest with Sellers, GPX, Parent, or Buyer. Sellers, GPX, Parent and Buyer
shall agree to release the Third Party Environmental Consultant of and from
liability for the ultimate correctness of its decision, except for gross
negligence, clear abuse of discretion, or fraud. The Selecting Consultants will
provide simultaneous written notice to the parties of the Third Party
Environmental Consultant's designation within five business days after its or
his appointment. Within ten business days thereafter, the parties will each send
to the Third Party Environmental Consultant all information it deems relevant to
the dispute including, but not limited to, an outline of the party's position
regarding the disputed matter. Such Third Party Environmental Consultant will
review such information within ten business days of the day it receives the
information package from each of the parties and render its decision with
respect thereto, and provide written notice of the same to each party. The Third
Party Environmental Consultant's costs of review will be borne by the party
whose position is not substantially adopted by the Third Party Environmental
Consultant. Any costs charged by or associated with the Selecting Consultants
shall be borne by the party that appointed the specific Selecting Consultant.
With respect to time periods identified in this Section 11.3(d) where notice is
---------------
directed to more than one person or entity, the date of receipt of such notice
shall be deemed the date the last party receives the notice at issue.
11.4 Indemnification and Payment of Damages by Buyer. Buyer will
indemnify and hold harmless Parent, GPX and Sellers and their respective
Representatives, stockholders, controlling persons and other Related Persons
(collectively, the "Seller Indemnified Persons") for, and will pay to Seller
--------------------------
Indemnified Persons the amount of any Damages sustained or incurred by any
Seller Indemnified Person to the extent relating to, resulting from or arising
out of, or any allegation by any third party of:
(a) any breach of any representation or warranty made by Buyer in this
Agreement (determined without regard to any materiality or knowledge
qualification contained in or otherwise applicable to such representation or
warranty);
(b) any breach by Buyer of any covenant or obligation of Buyer in this
Agreement;
(c) the Assumed Liabilities; or
(d) any claim by any Person for brokerage or finder's fees or commissions
or similar payments based upon any agreement or understanding alleged to have
been made by such Person with Buyer (or any Person acting on its behalf) in
connection with any of the transactions contemplated herein.
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<PAGE>
Except in cases of fraud, Parent, GPX and Sellers acknowledge that their
sole and exclusive remedy after the Closing with respect to any and all claims
and Damages relating to this Agreement and any transactions contemplated herein
shall be pursuant to the Purchase Price adjustment procedure in Article II and
----------
the indemnification provisions set forth in this Article, and in furtherance of
the foregoing, Parent, GPX and Sellers hereby waive, from and after the Closing,
any and all rights, claims and causes of action any of them may have against
Buyer or any of its affiliates, directors, officers or employees arising under
or based upon any Legal Requirement or arising under or based upon common law or
otherwise (except in cases of fraud or pursuant to the Purchase Price adjustment
procedure in Article II or the indemnification provisions set forth in this
----------
Article); provided, however, that Parent, GPX and Sellers shall be entitled, if
applicable, to specific performance, injunctive relief and other equitable
remedies; and provided, further, that notwithstanding the time limitations set
forth in Sections 11.5 and 12.1, nothing in this Agreement shall be construed to
------------- ----
serve as a release or waiver of any rights, claims, or remedies which any Person
may have or acquire at law or in equity, including without limitation, pursuant
to Environmental Laws or common law, with respect to (i) any Environmental Claim
asserted against any Seller or for which any Seller otherwise becomes liable or
(ii) any actual or Threatened violation of or non-compliance with, or
Remediation obligation arising under, any Environmental Laws, all of which
rights, claims, and remedies are expressly preserved and retained.
11.5 Time Limitations. The obligation of any party to indemnify and hold
harmless any indemnified party shall terminate when the applicable
representation or warranty or covenant terminates pursuant to Section 12.1 or,
------------
in the case of the indemnification obligations under Section 11.3, on the fifth
------------
anniversary of the Closing Date; provided, however, that such obligations to
indemnify and hold harmless shall not terminate with respect to any item as to
which an indemnified party shall have, before the expiration of the applicable
period, previously made a claim by delivering a notice of such claim in
accordance with this Article to an indemnifying party.
11.6 Limitations on Amount.
(a) No party will have any liability (for indemnification or otherwise)
with respect to any individual occurrences, events, circumstances, acts or
omissions, or a group of related occurrences, events, circumstances, acts or
omissions under Section 11.2(a) or (b), 11.3 or 11.4(a) or (b) where the Damages
--------------- --- ---- ------- ---
relating thereto are less than $10,000, and such Damages from separate unrelated
occurrences, events, circumstances, acts or omission shall not be aggregated for
purposes of clause (b) of this Section 11.6.
------------
(b) No party will have any liability (for indemnification or otherwise)
with respect to the matters described in Sections 11.2(a), 11.3 or 11.4(a) until
---------------- ---- -------
the total of all Damages with respect to such matters exceeds $500,000 and then
only for the amount by which such Damages exceed $500,000.
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<PAGE>
(c) Notwithstanding anything herein to the contrary, the aggregate amount
of Damages which any party shall be required to indemnify pursuant to Sections
11.2, 11.3 or 11.4 shall not, under any circumstances, exceed $12,000,000.
- ---- ---- ----
(d) Notwithstanding anything to the contrary herein, this Section 11.6
------------
will not apply to any breach of any party's representations and warranties
involving fraud.
11.7 Procedure for Indemnification--Third-Party Claims.
(a) Promptly (but in no event more than 30 days) after receipt by a Buyer
Indemnified Person or a Seller Indemnified Person (an "indemnified party") under
-----------------
Sections 11.2, 11.3 or 11.4 of notice of the commencement of any Proceeding
- ------------- ---- ----
against it, such indemnified party will, if a claim is to be made against an
indemnifying party under any such Section, give notice to the indemnifying party
of the commencement of such claim, but the failure to notify the indemnifying
party will not relieve the indemnifying party of any liability that it may have
to any indemnified party, except to the extent that the indemnifying party
demonstrates that the defense of such action is prejudiced by the indemnifying
party's failure to give such notice. Thereafter the indemnified party shall
deliver to the indemnifying party, promptly following receipt thereof, copies of
all notices and documents (including court papers) received by the indemnified
party relating to such claim.
(b) If any Proceeding referred to in Section 11.7(a) is brought against
---------------
an indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will be entitled to
participate in such Proceeding and, to the extent that it wishes, to assume the
defense of such Proceeding with counsel satisfactory to the indemnified party
and, after notice from the indemnifying party to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party will
not, as long as it diligently conducts such defense, be liable to the
indemnified party under this Article XI for any fees of other counsel or any
----------
other expenses with respect to the defense of such Proceeding, in each case
subsequently incurred by the indemnified party in connection with the defense of
such Proceeding. If the indemnifying party assumes the defense of a Proceeding,
all the indemnified parties shall cooperate fully in the defense or prosecution
thereof. Such cooperation shall include the retention and (upon the
indemnifying party's request) the provision to the indemnifying party of records
and information that are reasonably requested by the indemnifying party or that
are reasonably relevant to such Proceeding, and making employees available on a
mutually convenient basis during normal business hours to provide additional
information and explanation of any material provided hereunder. If the
indemnifying party assumes the defense of a Proceeding, the indemnifying party
shall not, without the indemnified party's prior written consent, settle or
compromise any Proceeding or consent to the entry of any judgment with respect
to any Proceeding unless such settlement, compromise or judgment: (i) contains
no finding or admission of any violation of Legal Requirements or any violation
of the rights of any Person and no effect on any other claims that may be made
against the indemnified party; (ii) requires solely the payment of money
damages by the indemnifying party; and (iii) includes as an unconditional term
thereof the release by the claimant or the plaintiff of the indemnified party
from all liability in respect of such Proceeding. An indemnified party shall be
entitled to reimbursement for all costs, fees
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and expenses (including the fees and expenses of counsel employed by the
indemnified party) for any period during which an indemnifying party has not
assumed the defense thereof (other than during any period in which the
indemnified party shall have failed to give notice of the Proceeding as provided
above).
(c) Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its Related Persons other than as a result of monetary
damages for which it would be entitled to indemnification under this Agreement,
the indemnified party may, by notice to the indemnifying party, assume the
exclusive right to defend, compromise or settle such Proceeding, but the
indemnifying party will not owe any indemnification payment to the indemnified
party with respect to, or be bound by, any determination of a Proceeding so
defended or any compromise or settlement effected without its consent.
(d) Parent, GPX and Sellers hereby consent to the non-exclusive
jurisdiction of any court in which a Proceeding is brought against any
Indemnified Person for purposes of any claim that an Indemnified Person may have
under this Agreement with respect to such Proceeding or the matters alleged
therein, and agree that process may be served on Parent, GPX and Sellers with
respect to such a claim anywhere in the world.
11.8 Procedure for Indemnification--Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought. If the indemnifying
party disputes its liability with respect to such claim, the parties shall
proceed in good faith to negotiate a resolution of such dispute prior to
pursuing other remedies.
11.9 Other Matters.
(a) Each indemnified party shall make commercially reasonably efforts to
mitigate any claim or liability that an indemnified party asserts under this
Article. In the event that an indemnified party shall fail to make such
commercially reasonable efforts to mitigate any claim or liability, then
notwithstanding anything else to the contrary contained herein, the indemnifying
party shall not be required to indemnify any indemnified party for any Damages
that could reasonably be expected to have been avoided if the indemnified party
had made such efforts.
(b) The Purchase Price adjustment procedure provided by Article II of
----------
this Agreement shall not be subject to the provisions of this Article.
Notwithstanding any provision of this Agreement to the contrary, all parties
hereto agree that, should it be necessary, an equitable adjustment will be made
to prevent duplicate recovery for indemnification set forth in Article XI hereof
----------
or pursuant to the Purchase Price adjustment procedure set forth in Article II
----------
hereof with respect to the same item.
(c) Any claim for indemnification under this Agreement shall, to the
extent practicable, describe the claim in reasonable detail, include copies of
any material written evidence thereof and indicate the estimated amount of such
claim.
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<PAGE>
(d) All indemnification payments made pursuant to this Article shall be
treated as adjustments to the Purchase Price for all Tax purposes.
(e) The amount of any Damages for which indemnification is provided under
this Article shall be (i) reduced by any net amounts recovered from an
unaffiliated third party by the indemnified party under insurance policies and
arrangements with respect to such Damages, (ii) reduced by the present value of
any Tax benefits realized by the indemnified party from the incurrence or
payment of any such Damages, net of the present value of any Tax detriments
realized or suffered by the indemnified party associated with the
indemnification provided under this Article, and (iii) shall be reduced by any
amounts already taken into account pursuant to the Purchase Price adjustment
provisions of Article II.
----------
ARTICLE XII
-----------
GENERAL PROVISIONS
12.1 Survival. The agreements of the parties contained in Article II
----------
(Sale and Transfer of Acquired Assets; Closing), Article VIII (Certain Post-
------------
Closing Covenants), Article IX (Mutual Covenants), Article XI (Indemnification)
---------- ----------
and Article XII (General Provisions) shall indefinitely survive the consummation
-----------
of the transactions contemplated in this Agreement. The representations and
warranties of Parent, GPX and Sellers contained in Section 3.19 shall survive
------------
until the fifth anniversary of the Closing Date. The representations and
warranties of Parent, GPX and Sellers contained in Sections 3.11 and 3.13 shall
------------- ----
survive until the expiration of the applicable statutes of limitation. All other
representations, warranties, covenants, obligations and agreements in this
Agreement shall survive the consummation of the transactions contemplated by
this Agreement until the second anniversary of the Closing Date.
Notwithstanding anything to contained herein to the contrary, the parties
expressly agree that, for all purposes of this Agreement, any and all of the
representations and warranties made in this Agreement are not made and shall not
be deemed to have been made on any date after the Closing Date.
12.2 Further Assurances. The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
12.3 Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party, (b) no waiver that may be
given by a party will be
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applicable except in the specific instance for which it is given and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
12.4 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by all of the parties to this Agreement.
12.5 Notices. All notices, consents, waivers and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
If to Buyer, to: AF Acquisition Company
c/o Tanglewood Investments, Inc.
5051 Westheimer, Suite 300
Houston, Texas 77056
Attn: James Nelson
Telecopy: (713) 629-5499
with a copy (which shall Locke Liddell & Sapp LLP
not constitute notice) to: 3400 Chase Tower
600 Travis Street
Houston, Texas 77002
Attn: Gene G. Lewis
Telecopy: (713) 223-3717
If to Parent, GPX or Global Industrial Technologies, Inc.
Sellers, to: 2121 San Jacinto, Suite 2500
Dallas, Texas 75201
Attn: Alfred L. Williams
Telecopy: (214) 953-4596
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with a copy (which shall Sullivan & Cromwell
not constitute notice) to: 125 Broad Street
New York, New York 10021
Attn: James C. Morphy
Telecopy: (212) 558-3588
12.6 Jurisdiction; Service of Process. Any process against Parent, GPX,
Sellers or Buyer in, or in connection with, any suit, action or Proceeding
arising out of or relating to this Agreement or any of the transactions
contemplated by this Agreement may be served personally or by certified mail at
the address set forth in Section 12.5 with the same effect as though served on
------------
such party personally. Parent, GPX and Sellers and Buyer hereby irrevocably
submit in any suit, action or Proceeding arising out of or relating to this
Agreement or any of the transactions contemplated by this Agreement to the
exclusive jurisdiction and venue of any federal or state court located in Harris
County and waive any and all objections to jurisdiction and review or venue that
it or they may have under the laws of Texas or the United States.
12.7 Disclosure Schedules.
(a) The inclusion of any matter in any schedule to this Agreement shall
also be deemed to be an inclusion for the purposes of each other representation
and warranty to which it may relate; provided that for all such other purposes
there are sufficient facts disclosed to reasonably inform Buyer of the purpose
for which such disclosure is made, and provided further that any item intended
to be included on Schedule 3.17(a) must be expressly set forth therein.
----------------
(b) Any inclusion in the Disclosure Schedules shall expressly not be
deemed to constitute an admission by Parent, GPX or Sellers, or otherwise imply,
that any such matter is material or creates measures for materiality for the
purpose of this Agreement.
12.8 Assignments, Successors and No Third-Party Rights. Subject to the
terms hereof, this Agreement will apply to, be binding in all respects upon and
inure to the benefit of the successors and permitted assigns of the parties, but
no such assignment shall release the assigning party of its obligations and
liabilities under this Agreement.
Except for the provisions of Section 8.3, nothing expressed or referred to
-----------
in this Agreement will be construed to give any Person other than the parties to
this Agreement any legal or equitable right, remedy or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns.
12.9 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. If any provision of this
Agreement, or the application thereof to any Person or any circumstance, is
invalid or unenforceable, (a) a suitable and equitable provision shall be
substituted
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therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision, and (b) the
remainder of this Agreement and the application of such provision to other
Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
12.10 Headings; Construction. The headings of Articles and Sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Article " or "Articles " and
to "Section" or "Sections" refer to the corresponding Article or Articles and
Section or Sections of this Agreement. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
12.11 Governing Law. This Agreement will be governed by the laws of the
State of Texas without regard to conflicts of laws principles.
12.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
-53-
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
AF ACQUISITION COMPANY
By: /s/ Michael L. Tiner
--------------------------------------
Name: Michael L. Tiner
Title: President
UCR, INC.
By: /s/ J. H. Quay
--------------------------------------
Name: J. H. Quay
Title: Vice President and Secretary
AMERI-FORGE CORPORATION
By: /s/ J. H. Quay
--------------------------------------
Name: J. H. Quay
Title: Vice President and Secretary
GPX CORP.
By: /s/ J. H. Quay
--------------------------------------
Name: J. H. Quay
Title: Vice President and Secretary
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
By: /s/ A. L. Williams
--------------------------------------
Name: A. L. Williams
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
AFC ACQUISITION, INC.
By: /s/ J. H. Quay
--------------------------------------
Name: Jeanette H. Quay
Title: Vice President, General Counsel and
Secretary
<PAGE>
EXHIBIT A
---------
ENVIRONMENTAL LAWS
A. FEDERAL
-------
Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. (S)(S) 9601 et seq.
Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq.
Clean Water Act, 33 U.S.C. (S) 1251 et seq.
Safe Drinking Water Act, 42 U.S.C. (S)(S) 300f-300j.
Clean Air Act, 42 U.S.C. (S) 7401 et seq.
Solid Waste Disposal Act, 42 U.S.C. (S)(S) 6901 et. seq.
The Oil Pollution Act of 1990, 33 U.S.C. (S)2701 et seq.
Hazardous Materials Transportation Act, 49 U.S.C. (S) 651 et seq.
Emergency Planning and Community Right to Know Act of 1986, 42 U.S.C. (S)
11001 et seq.
Those portions of the Occupational Health and Safety Act of 1970, 29 U.S.C.
(S) 651, et seq. relating to environmental protection or Materials of
Environmental Concern.
B. TEXAS
-----
Those portions of the Texas Health & Safety Code relating to environmental
protection or Materials of Environmental Concern.
Those portions of the Texas Natural Resources Code relating to
environmental protection or Materials of Environmental Concern.
Those portions of the Texas Water Code relating to environmental protection
or Materials of Environmental Concern.
The laws cited above shall be deemed to include any amendments to them and
regulations promulgated under them from time to time.
1
<PAGE>
Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact: George Pasley
V. P. Communications
214-953-4510
Website: prnewswire.com/gix
Global Announces Sale of Ameri-Forge Unit
Dallas, TX (May 20, 1999) - Global Industrial Technologies, Inc. (NYSE: GIX)
announced today that it has entered into a definitive agreement for the sale of
its Ameri-Forge unit to Tanglewood Companies LP, Houston, TX, for $40 million in
cash proceeds which Global will use to pay down debt. The transaction is
subject to customary regulatory approval and post-closing adjustments and is
expected to close within 60 days. The Company will realize approximately $40
million in tax benefits from the transaction, which will offset taxes payable on
the sale of APG Lime and generate tax loss carryforwards to be used against
other earnings.
Global announced in March its intention to pursue a sale of Ameri-Forge as part
of its strategy of disposing of non-core businesses and focusing on its core
refractories business.
The Company noted that the expected proceeds from the planned sale are less than
the original estimate used to record the loss on disposal of Ameri-Forge as
reflected in the December 31, 1998 consolidated financial statements.
Accordingly, an additional $40 million pre-tax charge will be made to the
discontinued operations results previously reported for the first quarter ended,
March 31, 1999. There will be no change in the income from continuing
operations which, for the quarter, was $3.4 million or $0.15 per share.
Global is a major manufacturer of technologically advanced industrial products
that support high-growth markets around the world. Products include modular
cells for refining nonferrous metals; premium refractories for lining heat-
containing industrial vessels such as steel furnaces; raw materials used to make
refractory products; processing and recycling equipment.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Global Industrial Technologies, Inc. (the "Company") and certain other persons
named below may be deemed to be participants in the solicitations of proxies
against the proposals of WHX Corporation. The participants in this solicitation
may include (i) the
<PAGE>
directors of the Company: David H. Blake, Richard W. Vieser, Samuel B. Casey,
Jr., Rawles Fulgham and Graham L. Adelman and (ii) the following executive
officers and employees of the Company: Rawles Fulgham (Chairman and Chief
Executive Officer), Graham L. Adelman (President and Chief Operating Officer),
Alfred L. Williams (Senior Vice President and Chief Financial Officer), Donna
Reeves (Vice President and Controller), Jeanette H. Quay (Vice President,
General Counsel and Secretary), James Alleman (Vice President-Human Resources),
and George Pasley (Vice President-Communications), Juan M. Bravo (Vice
President). As of the date of this communication, none of the foregoing
participants individually beneficially own in excess of .1% of the Company's
common stock or in the aggregate in excess of 2% of the Company's common stock.
