-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MJ9/RcQBdQFYgz2h91Ewxj5ZE/872ESuO1c38WQHsI6RRIN1MF0EJk2KeRPqXx5U aUsnkAMM6JJ7B6C3H2qPxw== 0000950130-98-001095.txt : 19980309 0000950130-98-001095.hdr.sgml : 19980309 ACCESSION NUMBER: 0000950130-98-001095 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19980306 SROS: NYSE GROUP MEMBERS: BGN ACQUISITION CORP GROUP MEMBERS: GLOBAL INDUSTRIAL TECHNOLOGIES INC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GREEN A P INDUSTRIES INC CENTRAL INDEX KEY: 0000826619 STANDARD INDUSTRIAL CLASSIFICATION: STRUCTURAL CLAY PRODUCTS [3250] IRS NUMBER: 430899374 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-39125 FILM NUMBER: 98558946 BUSINESS ADDRESS: STREET 1: GREEN BLVD CITY: MEXICO STATE: MO ZIP: 65265 BUSINESS PHONE: 5734733626 MAIL ADDRESS: STREET 1: GREEN BLVD CITY: MEXICO STATE: MO ZIP: 65265 FORMER COMPANY: FORMER CONFORMED NAME: A P GREEN INDUSTRIES INC DATE OF NAME CHANGE: 19900619 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GLOBAL INDUSTRIAL TECHNOLOGIES INC CENTRAL INDEX KEY: 0000887941 STANDARD INDUSTRIAL CLASSIFICATION: ABRASIVE ASBESTOS & MISC NONMETALLIC MINERAL PRODUCTS [3290] IRS NUMBER: 751384259 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 2121 SAN JACINTO ST STE 2500 STREET 2: SAN JACINTO TWR CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2149534500 MAIL ADDRESS: STREET 1: P.O. BOX 219022 CITY: DALLAS STATE: TX ZIP: 75221 FORMER COMPANY: FORMER CONFORMED NAME: INDRESCO INC DATE OF NAME CHANGE: 19930328 SC 14D1 1 SCHEDULE 14D-1 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ---------------- A.P. GREEN INDUSTRIES, INC. (NAME OF SUBJECT COMPANY) BGN ACQUISITION CORP. GLOBAL INDUSTRIAL TECHNOLOGIES, INC. (BIDDERS) COMMON STOCK, PAR VALUE $1.00 PER SHARE (INCLUDING THE ASSOCIATED RIGHTS) (TITLE OF CLASS OF SECURITIES) 393059100 (CUSIP NUMBER OF CLASS OF SECURITIES) GRAHAM L. ADELMAN, ESQ. SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY GLOBAL INDUSTRIAL TECHNOLOGIES, INC. 2121 SAN JACINTO, SUITE 2500 DALLAS, TEXAS 75201 (214) 953-4500 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS) COPIES TO: JAMES C. MORPHY, ESQ. SULLIVAN & CROMWELL 125 BROAD STREET NEW YORK, NEW YORK 10004 (212) 558-4000 CALCULATION OF FILING FEE - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TRANSACTION VALUATION* AMOUNT OF FILING FEE** - ------------------------------------------------------------------------------- $190,783,156 $38,156.63 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- * For purposes of calculating the amount of filing fee only. The amount assumes the purchase of (i) 8,068,665 shares of Common Stock, par value $1.00 per share, issued and outstanding as of February 26, 1998, according to the Subject Company, and (ii) 919,150 options on the Common Stock issued and outstanding as of February 26, 1998, according to the Subject Company, with an average exercise price of $7.56. ** 1/50 of 1% of the transaction value. [_]Checkbox if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: None Filing Party: N/A Page 1 of 5 Pages Form of Registration No.: N/A Date filed: N/A Exhibit Index on page 5 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is A.P. Green Industries, Inc., a Delaware corporation (the "Company"), and the address of its principal executive offices is Green Boulevard, Mexico, Missouri 65265. (b) The class of securities to which this statement relates is the Common Stock, par value $1.00 per share (the "Common Stock"), including the associated rights to purchase Series B Junior Participating Preferred Stock (the "Rights" and together with the Common Stock, the "Shares"), of the Company. The information set forth in the Introductory Section and Section 1 of the Offer to Purchase (the "Offer to Purchase") annexed hereto as Exhibit (a)(1) is incorporated herein by reference. (c) The information set forth in Section 6 of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d); (g) The information set forth in Section 9 of the Offer to Purchase is incorporated herein by reference. The name, business address, present principal occupation or employment, the material occupations, positions, offices or employments for the past five years and citizenship of each director and executive officer of Global Industrial Technologies, Inc., a Delaware corporation ("Purchaser") and of BGN Acquisition Corp., a Delaware corporation (the "Merger Sub") and a direct wholly owned subsidiary of Purchaser, and the name, principal business and address of any corporation or other organization in which such occupations, positions, offices and employments are or were carried on are set forth in Schedule A to the Offer to Purchase and incorporated herein by reference. (e); (f) During the last five years, neither Purchaser nor the Merger Sub, nor, to the best of Purchaser's knowledge, any of the directors or executive officers of the Purchaser or the Merger Sub has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which any such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such law. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a)-(b) The information set forth in the Introductory Section and Sections 10 and 11 of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a)-(b) The information set forth in Section 12 of the Offer to Purchase is incorporated herein by reference. See also Exhibits (b)(1) and (b)(2). ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. The information set forth in the Introductory Section and Sections 7 and 11 of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a)-(b) The information set forth in Sections 9 and 11 of the Offer to Purchase is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the Introductory Section and Sections 9, 10 and 11 of the Offer to Purchase is incorporated herein by reference. 2 ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in Section 16 of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 9 of the Offer to Purchase is incorporated herein by reference. Purchaser is subject to the periodic reporting requirements of Section 13(a) of the Exchange Act. The financial statements of Purchaser set forth in Item 8 of Purchaser's Annual Report on Form 10-K for the fiscal year ended October 31, 1997 and in Item 1 of Purchaser's Quarterly Report on Form 10-Q for the quarter ended January 31, 1998, are hereby incorporated by reference, which reports may be obtained from the Securities and Exchange Commission in the manner set forth with respect to information concerning the Company in Section 8 of the Offer to Purchase and should also be available for inspection at the New York Stock Exchange, 20 Broad Street, New York, New York 10005. ITEM 10. ADDITIONAL INFORMATION. (a)-(c) The information set forth in Section 15 of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 7 of the Offer to Purchase is incorporated herein by reference. (e) Not applicable. (f) Not applicable. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase, dated March 6, 1998. (a)(2) Letter of Transmittal with respect to the Shares. (a)(3) Form of letter, dated March 6, 1998, to brokers, dealers, commercial banks, trust companies and nominees. (a)(4) Form of letter, dated March 6, 1998, to clients to be used by brokers, dealers, commercial banks, trust companies and nominees. (a)(5) Press Release, dated March 4, 1998. (a)(6) Press Release, dated March 6, 1998. (a)(7) Form of newspaper advertisement, dated March 6, 1998. (a)(8) Notice of Guaranteed Delivery. (a)(9) IRS Guidelines to Substitute Form W-9. (b)(1) Credit Agreement, dated as of September 23, 1994, among Indresco Inc., Various Financial Institutions and Bank of America Illinois, as Agent. (b)(2) Seventh Amendment to Credit Agreement, dated as of February 19, 1998, among Purchaser, GPX Corp. and Bank of America National Trust and Savings Association. (c)(1) Agreement and Plan of Merger, dated as of March 3, 1998, among the Company, Purchaser and the Merger Sub. Confidentiality Agreement, dated December 12, 1997, between Purchaser and the (c)(2) Company. (d) None. (e) Not applicable. (f) None.
3 SIGNATURES After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. GLOBAL INDUSTRIAL TECHNOLOGIES, INC. /s/ Graham L. Adelman By: _________________________________ Name: Graham L. Adelman Title: Senior Vice President, General Counsel and Secretary BGN ACQUISITION CORP. /s/ Graham L. Adelman By: _________________________________ Name: Graham L. Adelman Title: Senior Vice President Dated: March 6, 1998 4 EXHIBIT INDEX
EXHIBIT PAGE NUMBER EXHIBIT NAME NUMBER ------- ------------ ------ (a)(1) Offer to Purchase, dated March 6, 1998. ...................... (a)(2) Letter of Transmittal with respect to the Shares. ............ (a)(3) Form of letter, dated March 6, 1998, to brokers, dealers, commercial banks, trust companies and nominees. ............. (a)(4) Form of letter to clients to be used by brokers, dealers, commercial banks, trust companies and nominees. ............. (a)(5) Press Release, dated March 4, 1998. .......................... (a)(6) Press Release, dated March 6, 1998. .......................... (a)(7) Form of newspaper advertisement, dated March 6, 1998. ........ (a)(8) Notice of Guaranteed Delivery. ............................... (a)(9) IRS Guidelines to Substitute Form W-9. ....................... (b)(1) Credit Agreement, dated as of September 23, 1994, among Indresco Inc., Various Financial Institutions and Bank of America Illinois, as Agent. ................................. (b)(2) Seventh Amendment to Credit Agreement, dated as of February 19, 1998, among Purchaser, GPX Corp. and Bank of America National Trust and Savings Association. ..................... (c)(1) Agreement and Plan of Merger, dated as of March 3, 1998, among the Company, Purchaser and the Merger Sub.................... (c)(2) Confidentiality Agreement, dated December 12, 1997, between Purchaser and the Company. .................................. (d) None. ........................................................ (e) Not applicable. .............................................. (f) None. ........................................................
EX-99.A.1 2 OFFER TO PURCHASE DTD 3/6/1998 EXHIBIT 99(a)(1) OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE SERIES B JUNIOR PARTICIPATING PREFERRED STOCK) OF A.P. GREEN INDUSTRIES, INC. AT $22.00 NET PER SHARE BY BGN ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING A NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $1.00 (THE "COMMON STOCK") (INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE SERIES B JUNIOR PARTICIPATING PREFERRED STOCK) (THE "RIGHTS" AND COLLECTIVELY WITH THE COMMON STOCK, THE "SHARES") OF A.P. GREEN INDUSTRIES, INC. (THE "COMPANY") REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK ON A FULLY DILUTED BASIS BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, AND (2) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED. CERTAIN OTHER CONDITIONS TO CONSUMMATION OF THE OFFER ARE DESCRIBED IN SECTION 13. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. IMPORTANT Any stockholder desiring to tender all or any portion of his Shares should either (1) complete and sign the Letter of Transmittal or a facsimile thereof in accordance with the instructions in the Letter of Transmittal, including any required signature guarantees, and mail or deliver the Letter of Transmittal or such facsimile with such stockholder's certificate(s) for the tendered Shares and any other required documents to the Depositary, (2) follow the procedure for book-entry tender of Shares set forth in Section 3, or (3) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. Stockholders having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee are urged to contact such broker, dealer, commercial bank, trust company or other nominee if they desire to tender Shares so registered. Unless the context requires otherwise, all references to Shares herein shall include the associated Rights. The Rights are presently evidenced by the certificates for the Common Stock and a tender by a stockholder of such stockholder's shares of Common Stock will also constitute a tender of the associated Rights. A stockholder who desires to tender Shares and whose certificates for such Shares are not immediately available, or who cannot comply with the procedure for book-entry transfer on a timely basis, may tender such Shares by following the procedures for guaranteed delivery set forth in Section 3. Questions and requests for assistance may be directed to the Information Agent (as defined herein) or to the Dealer Manager (as defined herein) at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Requests for additional copies of this Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent or to brokers, dealers, commercial banks or trust companies. --------------- The Dealer Manager for the Offer is: WASSERSTEIN PERELLA & CO., INC. The date of this Offer to Purchase is March 6, 1998. --------------- TABLE OF CONTENTS
PAGE ---- Introduction..................................................... 1 1. Terms of the Offer............................................... 2 2. Acceptance for Payment and Payment for Shares.................... 3 3. Procedure for Tendering Shares................................... 4 4. Rights of Withdrawal............................................. 7 5. Certain Federal Income Tax Consequences of the Offer............. 8 6. Price Range of Shares; Dividends................................. 8 7. Effect of the Offer on Market for the Shares, Stock Exchange Listing, and Exchange Act Registration.......................... 9 8. Certain Information Concerning the Company....................... 10 9. Certain Information Concerning Purchaser and the Merger Sub...... 12 10. Background of the Offer; Contacts with the Company............... 14 11. Purpose of the Offer; Plans for the Company; The Merger.......... 16 12. Source and Amount of Funds....................................... 24 13. Certain Conditions of the Offer.................................. 25 14. Dividends and Distributions...................................... 27 15. Certain Legal Matters............................................ 28 16. Fees and Expenses................................................ 30 17. Miscellaneous.................................................... 30 Schedule A. Information concerning the Directors and Executive Offi- cers of Purchaser and the Merger Sub........................ 31
TO THE HOLDERS OF SHARES OF A.P. GREEN INDUSTRIES, INC.: INTRODUCTION BGN Acquisition Corp., a Delaware corporation (the "Merger Sub") and wholly owned subsidiary of Global Industrial Technologies, Inc., a Delaware corporation ("Purchaser"), hereby offers to purchase all of the outstanding shares of Common Stock, par value $1.00 per share (the "Common Stock"), of A.P. Green Industries, Inc., a Delaware corporation (the "Company"), including the associated rights to purchase Series B Junior Participating Preferred Stock (the "Rights") issued pursuant to the Rights Agreement, dated as of November 13, 1997 (the "Rights Agreement"), between the Company and Harris Trust and Savings Bank, as Rights Agent (the Common Stock and the Rights together are referred to herein as the "Shares"), at $22.00 per Share, net to the seller in cash, on the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, together with any amendments or supplements hereto or thereto, collectively constitute the "Offer"). Tendering stockholders will not be obligated to pay brokerage fees or commissions or, subject to Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by the Merger Sub pursuant to the Offer. The Merger Sub will pay all charges and expenses of Harris Trust and Savings Bank (the "Depositary") and Georgeson & Company Inc. (the "Information Agent"). Unless the context requires otherwise, all references to Shares herein shall include the associated Rights, and all references to the Rights shall include all benefits that may inure to the holders of the Rights pursuant to the Rights Agreement. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING A NUMBER OF SHARES REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, AND (2) ANY WAITING PERIOD UNDER THE HART-SCOTT- RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR ACT") APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED. CERTAIN OTHER CONDITIONS TO CONSUMMATION OF THE OFFER ARE DESCRIBED IN SECTION 13. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. The Offer is being made pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), dated as of March 3, 1998, among the Company, Purchaser and the Merger Sub, pursuant to which, after the completion of the Offer, the Merger Sub will be merged with and into the Company (the "Merger") and each issued and outstanding Share (other than Shares owned by Purchaser, the Merger Sub or any other subsidiary of Purchaser (collectively, the "Purchaser Companies") or Shares that are held by stockholders exercising appraisal rights ("Dissenting Stockholders") pursuant to Section 262 of the Delaware General Corporation Law (the "DGCL")), shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive, without interest, an amount in cash equal to $22.00 (the "Merger Consideration"). As a result of the Merger, the Company (sometimes referred to herein as the "Surviving Corporation") will become a wholly owned subsidiary of Purchaser. According to the Company, as of February 26, 1998 there were 8,068,665 Shares outstanding and there were 919,150 Shares reserved for issuance under then-current outstanding stock options pursuant to the Company's stock option and incentive plans. 1 THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 1. TERMS OF THE OFFER. On the terms and subject to the conditions set forth in the Offer (including the terms and conditions set forth in Section 13 (the "Offer Conditions") and, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the Merger Sub will accept for payment, and pay for, any and all Shares validly tendered on or prior to the Expiration Date (as defined herein) and not withdrawn as permitted by Section 4. The term "Expiration Date" means 12:00 Midnight, New York City time, on April 2, 1998, unless and until the Merger Sub shall, in its sole discretion, have extended the period for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date on which the Offer, as so extended by the Merger Sub, shall expire. Rights are presently evidenced by the certificates for the Common Stock and the tender by a stockholder of his shares of Common Stock will also constitute a tender of the associated Rights. Pursuant to the Offer, no separate payment will be made by the Merger Sub for the Rights pursuant to the Offer. Pursuant to the Merger Agreement, the Board of Directors of the Company, at its meeting on March 2, 1998, took all necessary action under the Rights Agreement to provide that the execution of the Merger Agreement and the consummation of the transactions contemplated thereby will not cause (i) the Merger Sub and/or Purchaser to become an Acquiring Person (as defined herein) or (ii) a Distribution Date (as defined herein) or a Stock Acquisition Date (as such term is defined in the Rights Agreement) to occur, irrespective of the number of Shares acquired pursuant to the Offer. See Section 11. Subject to the applicable rules and regulations of the Securities and Exchange Commission (the "SEC"), the Merger Sub expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering stockholder to withdraw such stockholder's Shares. See Section 4. Subject to the applicable regulations of the SEC, the Merger Sub also expressly reserves the right, in its sole discretion, at any time or from time to time, (i) to delay acceptance for payment of or, regardless of whether such Shares were theretofore accepted for payment, payment for any tendered Shares or to terminate or amend the Offer as to any Shares not then paid for, on the occurrence of any of the conditions specified in Section 13 and (ii) to waive any condition or otherwise amend the Offer in any respect, by giving oral or written notice of such delay, termination or amendment to the Depositary and by making a public announcement thereof. If the Merger Sub accepts any Shares for payment pursuant to the terms of the Offer, it will accept for payment all Shares validly tendered prior to the Expiration Date and not withdrawn, and, subject to (i) above, will promptly pay for all Shares so accepted for payment. The Merger Sub confirms that its reservation of the right to delay payment for Shares which it has accepted for payment is limited by Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which requires that a tender offeror pay the consideration offered or return the tendered securities promptly after the termination or withdrawal of a tender offer. Any extension, delay, termination or amendment of the Offer will be followed as promptly as practicable by public announcement thereof, such announcement in the case of an extension to be issued no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that any material change in the information published, sent or given to stockholders in connection with the Offer be promptly disseminated to stockholders in a manner reasonably designed to inform stockholders of such change) and without limiting the manner in which the Merger Sub may choose to make any public announcement, the Merger Sub shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release or other announcement. 2 The Merger Sub confirms that if it makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, the Merger Sub will extend the Offer to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. If, prior to the Expiration Date, the Merger Sub, in its sole discretion, shall decrease the percentage of Shares being sought or the consideration offered to holders of Shares, such decrease shall be applicable to all holders whose Shares are accepted for payment pursuant to the Offer and, if at the time notice of any increase or decrease is first published, sent or given to holders of Shares, the Offer is scheduled to expire at any time earlier than the tenth business day from and including the date that such notice is first so published, sent or given, the Offer will be extended until the expiration of such ten business day period. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 A.M. through 12:00 Midnight, New York City time. The Offer is being mailed to holders of Shares from a list provided to the Merger Sub by the Company. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. On the terms and subject to the conditions of the Offer (including the Offer Conditions and, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Merger Sub will accept for payment, and will pay for, Shares validly tendered and not withdrawn as promptly as practicable after the later of (i) the expiration or termination of the waiting period under the HSR Act applicable to the purchase of Shares pursuant to the Offer, and any similar waiting periods under any foreign statutes or regulations that are applicable to the Offer and the Merger having expired or been terminated and the date all required filings, consents, approvals, and authorizations of any Governmental Entity (as defined in the Merger Agreement) shall have been obtained on terms satisfactory to Purchaser in its reasonable discretion and (ii) the Expiration Date, if at the time of the later of the occurrence of (i) and (ii) above, the Minimum Condition (as defined herein) has been satisfied or waived, provided that the Merger Sub reserves the right, in its sole discretion, to extend the Offer from time to time notwithstanding the prior satisfaction of the Offer Conditions. See Sections 13 and 15. Purchaser filed a Notification and Report Form under the HSR Act on March 4, 1998, and, accordingly, unless earlier terminated or extended by a request for additional information, the waiting period under the HSR Act is scheduled to expire at 11:59 p.m., New York City time, on March 19, 1998. See Section 15. In addition, subject to applicable rules of the SEC, the Merger Sub expressly reserves the right to delay acceptance for payment of or payment for Shares in order to comply, in whole or in part, with any applicable law. See Section 13. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares (or a confirmation of a book-entry transfer of such Shares (a "Book-Entry Confirmation") into the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer Facilities")), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other required documents. For purposes of the Offer, the Merger Sub will be deemed to have accepted for payment Shares validly tendered and not withdrawn as, if and when the Merger Sub gives oral or written notice to the Depositary of its acceptance for payment of such Shares pursuant to the Offer. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for the tendering stockholders for the purpose of receiving payments from the Merger Sub and transmitting such payments to the tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT. If any tendered Shares are not accepted for payment pursuant to the terms and conditions of the Offer for any reason, or if certificates are submitted for more Shares than are tendered, certificates for such unpurchased Shares will be returned, without expense to the tendering stockholder (or, in the case of Shares tendered by book-entry transfer of such Shares into the Depositary's account at a Book-Entry Transfer Facility pursuant to the 3 procedures set forth in Section 3, such Shares will be credited to an account maintained with such Book-Entry Transfer Facility), as soon as practicable following expiration or termination of the Offer. The Merger Sub reserves the right to transfer or assign in whole or in part from time to time to one or more direct or indirect subsidiaries of Purchaser the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Merger Sub of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. PROCEDURE FOR TENDERING SHARES. Valid Tender. To tender Shares pursuant to the Offer, either (a) a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) in accordance with the instructions of the Letter of Transmittal, with any required signature guarantees, certificates for Shares to be tendered, and any other documents required by the Letter of Transmittal, must be received by the Depositary prior to the Expiration Date at one of its addresses set forth on the back cover of this Offer to Purchase, (b) such Shares must be delivered pursuant to the procedures for book-entry transfer described below (and a Book-Entry Confirmation of such delivery received by the Depositary, including an Agent's Message (as defined herein) if the tendering stockholder has not delivered a Letter of Transmittal), prior to the Expiration Date, or (c) the tendering stockholder must comply with the guaranteed delivery procedures set forth below. The term "Agent's Message" means a message, transmitted by a Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares and, if applicable, Rights which are the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Merger Sub may enforce such agreement against the participant. Pursuant to the Rights Agreement, until the close of business on the Distribution Date, the Rights will be transferred with and only with the certificates for Shares and the surrender for transfer of any certificates for Common Stock will also constitute the transfer of the Rights associated with the Shares represented by such certificate. Pursuant to the Rights Agreement, the Company has taken all necessary action to ensure that no Distribution Date will occur by reason of the commencement or consummation of the Offer or any of the transactions contemplated by the Merger Agreement. See Section 11. If separate certificates representing the Rights are issued to holders of Shares prior to the time a holder's Shares are tendered pursuant to the Offer, certificates representing a number of Rights equal to the number of shares of Common Stock tendered must be delivered to the Depositary, or, if available, a Book-Entry Confirmation received by the Depositary with respect thereto, in order for such shares of Common Stock to be validly tendered. If the Distribution Date occurs and separate certificates representing the Rights are not distributed prior to the time Shares are tendered pursuant to the Offer, Rights may be tendered prior to a stockholder receiving the certificates for Rights by use of the guaranteed delivery procedure described below. A tender of shares of Common Stock constitutes an agreement by the tendering stockholder to deliver certificates representing all Rights formerly associated with the number of shares of Common Stock tendered pursuant to the Offer to the Depositary prior to expiration of the period permitted by such guaranteed delivery procedures for delivery of certificates for, or a Book- Entry Confirmation with respect to, Rights (the "Rights Delivery Period"). However, after expiration of the Rights Delivery Period, the Merger Sub may elect to reject as invalid a tender of shares of Common Stock with respect to which certificates for, or a Book-Entry Confirmation with respect to, the number of Rights required to be tendered with such Common Stock have not been received by the Depositary. Nevertheless, the Merger Sub will be entitled to accept for payment shares of Common Stock tendered by a stockholder prior to receipt of the certificates for the Rights required to be tendered with such shares of Common Stock, or a Book-Entry Confirmation with respect to such Rights, and either (a) subject to complying with applicable rules and regulations of the SEC, withhold payment for such shares of Common Stock pending receipt of the certificates for, or a Book-Entry Confirmation with respect to, such Rights or (b) make 4 payment for shares of Common Stock accepted for payment pending receipt of the certificates for, or a Book-Entry Confirmation with respect to, such Rights in reliance upon the agreement of a tendering stockholder to deliver Rights and such guaranteed delivery procedures. Any determination by the Merger Sub to make payment for shares of Common Stock in reliance upon such agreement and such guaranteed delivery procedures or, after expiration of the Rights Delivery Period, to reject a tender as invalid will be made in the sole and absolute discretion of the Merger Sub. Book-Entry Delivery. The Depositary will establish accounts with respect to the Shares at the Book-Entry Transfer Facilities for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in any of the Book-Entry Transfer Facilities' systems may make a book-entry transfer of Shares by causing a Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with such Book-Entry Transfer Facility's procedures for such transfer. Although delivery of Shares may be effected through book-entry transfer, either the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any other required documents, must, in any case, be transmitted to and received by the Depositary by the Expiration Date at one of its addresses set forth on the back cover of this Offer to Purchase, or the tendering stockholder must comply with the guaranteed delivery procedures described below. If the Distribution Date occurs, the Depositary will also make a request to establish an account with respect to the Rights at each of the Book-Entry Transfer Facilities, but no assurance can be given that book-entry transfer of Rights will be available. If book-entry transfer of Rights is available, the foregoing book- entry transfer procedures will also apply to Rights. If book-entry transfer of Rights is not available and the Distribution Date occurs, a tendering stockholder will be required to tender Rights by means of physical delivery of certificates for Rights to the Depositary (in which event references in this Offer to Purchase to Book-Entry Confirmations with respect to Rights will be inapplicable). DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. THE METHOD OF DELIVERY OF SHARES, RIGHTS, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT THE STOCKHOLDER USE PROPERLY INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Signature Guarantees. Except as otherwise provided below, all signatures on a Letter of Transmittal must be guaranteed by a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (an "Eligible Institution"). Signatures on a Letter of Transmittal need not be guaranteed (a) if the Letter of Transmittal is signed by the registered holders (which term, for purposes of this section, includes any participant in any of the Book-Entry Transfer Facilities' systems whose name appears on a security position listing as the owner of the Shares or Rights) of Shares (or Rights, if applicable) and such registered holder has not completed the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal, or (b) if such Shares and Rights are tendered for the account of an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. If the certificates for Shares or Rights are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made or certificates for Shares or Rights not tendered or not accepted for payment are to be returned to a person other than the registered holder of the certificates surrendered, then the tendered certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered holders or owners 5 appear on the certificates, with the signatures on the certificates or stock powers guaranteed as described above. See Instructions 1 and 5 of the Letter of Transmittal. Guaranteed Delivery. A stockholder who desires to tender Shares (or Rights, if applicable) pursuant to the Offer and whose certificates for Shares (or Rights, if applicable) are not immediately available (including because certificates for Rights have not yet been distributed by the Rights Agent), or who cannot comply with the procedure for book-entry transfer on a timely basis, or who cannot deliver all required documents to the Depositary prior to the Expiration Date, may tender such Shares (and/or Rights, if applicable) by following all of the procedures set forth below: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Merger Sub, is received by the Depositary (as provided below) prior to the Expiration Date; and (iii) the certificates for all tendered Shares and/or Rights, in proper form for transfer (or a Book-Entry Confirmation with respect to all such Shares and/or Rights), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal), and any other required documents, are received by the Depositary (a) in the case of Shares, within three trading days after the date of execution of such Notice of Guaranteed Delivery or (b) in the case of Rights, within a period ending on the later of (1) three trading days after the date of execution of such Notice of Guaranteed Delivery or (2) three trading days after the date certificates for Rights are distributed to stockholders by the Rights Agent. A "trading day" is any day on which the New York Stock Exchange (the "NYSE") is open for business. The Notice of Guaranteed Delivery may be delivered by hand to the Depositary or transmitted by telegram, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. Other Requirements. Notwithstanding any provision hereof, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (a) certificates for (or a timely Book-Entry Confirmation with respect to) such Shares and, if the Distribution Date occurs, certificates for (or a timely Book-Entry Confirmation, if available, with respect to) the associated Rights, unless the Merger Sub elects to make payment for such shares of Common Stock pending receipt of the certificates for, or a Book-Entry Confirmation with respect to, such Rights as described above, (b) a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal), and (c) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when certificates for Shares (or Rights, if applicable) or Book-Entry Confirmations with respect to Shares (or Rights, if available) are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE OF THE SHARES BE PAID BY THE MERGER SUB, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. Tender Constitutes an Agreement. The valid tender of Shares and, if applicable, Rights pursuant to one of the procedures described above will constitute a binding agreement between the tendering stockholder and the Merger Sub on the terms and subject to the conditions of the Offer. Appointment. By executing a Letter of Transmittal as set forth above, the tendering stockholder irrevocably appoints designees of the Merger Sub as such stockholder's proxies, each with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by the Merger Sub and with respect to any and all cash dividends, distributions, rights, other Shares or other securities issued or issuable in respect of such Shares on or after the date of this Offer to Purchase. All such proxies will be considered coupled with an interest in the tendered Shares, including the associated Rights. Such appointment is effective when, and only to the extent that, the Merger Sub deposits the 6 payment for such Shares with the Depositary. Upon the effectiveness of such appointment, all prior powers of attorney, proxies and consents given by such stockholder will be revoked, and no subsequent powers of attorney, proxies and consents may be given (and, if given, will not be deemed effective). The Merger Sub's designees will, with respect to the Shares for which the appointment is effective, be empowered to exercise all voting and other rights of such stockholder as they, in their sole discretion, may deem proper at any annual, special or adjourned meeting of the stockholders of the Company, by written consent in lieu of any such meeting or otherwise. The Merger Sub reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Merger Sub's payment for such Shares, the Merger Sub must be able to exercise full voting rights with respect to such Shares. Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of any tender of Shares or Rights will be determined by the Merger Sub in its sole discretion, which determination will be final and binding. The Merger Sub reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of or payment for which may, in the opinion of the Merger Sub's counsel, be unlawful. The Merger Sub also reserves the absolute right to waive any defect or irregularity in the tender of any Shares or Rights of any particular stockholder whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares or Rights will be deemed to have been validly made until all defects and irregularities relating thereto have been cured or waived. None of the Merger Sub, the Depositary, the Information Agent, the Dealer Manager or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. The Merger Sub's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and Instructions thereto) will be final and binding. Backup Withholding. In order to avoid "backup withholding" of Federal income tax on payments of cash pursuant to the Offer, a stockholder surrendering Shares in the Offer must, unless an exemption applies, provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") on a Substitute Form W-9 and certify under penalties of perjury that such TIN is correct and that such stockholder is not subject to backup withholding. If a stockholder does not provide such stockholder's correct TIN or fails to provide the certifications described above, the Internal Revenue Service (the "IRS") may impose a penalty on such stockholder and payment of cash to such stockholder pursuant to the Offer may be subject to backup withholding of 31%. All stockholders surrendering Shares pursuant to the Offer should complete and sign the main signature form and the Substitute Form W-9 included as part of the Letter of Transmittal to provide the information and certification necessary to avoid backup withholding (unless an applicable exemption exists and is proved in a manner satisfactory to the Merger Sub and the Depositary). Certain stockholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. Non- corporate foreign stockholders should complete and sign the main signature form and a Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See Instruction 9 to the Letter of Transmittal. 4. RIGHTS OF WITHDRAWAL. Tenders of Shares made pursuant to the Offer are irrevocable except that Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by the Merger Sub pursuant to the Offer, may also be withdrawn at any time after May 4, 1998. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the names in which the certificate(s) evidencing the Shares to be withdrawn are registered, if different from that of the person who tendered such Shares. The signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution, unless such Shares have been tendered for the account of any Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry tender as set forth in Section 3, any notice of withdrawal must specify the name and number of the account at 7 the Book-Entry Transfer Facility to be credited with the withdrawn Shares. If certificates for Shares to be withdrawn have been delivered or otherwise identified to the Depositary, the name of the registered holder and the serial numbers of the particular certificates evidencing the Shares to be withdrawn must also be furnished to the Depositary as aforesaid prior to the physical release of such certificates. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Merger Sub, in its sole discretion, which determination shall be final and binding. None of Purchaser, the Merger Sub, the Dealer Manager, the Depositary, the Information Agent, or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give such notification. Withdrawals of tenders of Shares may not be rescinded, and any Shares properly withdrawn will be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by following one of the procedures described in Section 3 at any time prior to the Expiration Date. If the Merger Sub extends the Offer, is delayed in its acceptance for payment of Shares, or is unable to accept for payment Shares pursuant to the Offer, for any reason, then, without prejudice to the Merger Sub's rights under this Offer, the Depositary may, nevertheless, on behalf of the Merger Sub, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights as set forth in this Section 4. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER. Sales of Shares pursuant to the Offer and the exchange of Shares for cash pursuant to the Merger will be taxable transactions for Federal income tax purposes and may also be taxable under applicable state, local and other tax laws. For Federal income tax purposes, a stockholder whose Shares are purchased pursuant to the Offer or who receives cash as a result of the Merger will realize gain or loss equal to the difference between the adjusted basis of the Shares sold or exchanged and the amount of cash received therefor. Such gain or loss will be capital gain or loss if the Shares are held as capital assets by the stockholder and generally will be long-term capital gain or loss for stock held for more than one year. Long-term capital gain of a non- corporate stockholder is generally subject to a maximum tax rate of 28% in respect of property held for more than one year and to a maximum rate of 20% in respect of property held in excess of 18 months. THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE TO STOCKHOLDERS IN SPECIAL SITUATIONS SUCH AS STOCKHOLDERS WHO RECEIVED THEIR SHARES UPON THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION AND STOCKHOLDERS WHO ARE NOT UNITED STATES PERSONS. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX LAWS. 6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are traded on the NYSE under the symbol "APK". Prior to October 1, 1997, the Shares were traded on The Nasdaq Stock Market's National Market (the "Nasdaq National Market") under the symbol "APGI." The following table sets forth, based upon public sources, for the calendar quarters indicated, the high and low quoted sale prices for the Shares on the NYSE and the Nasdaq National Market and the amount of cash dividends paid per share: 8
SALES PRICE ------------- CALENDAR YEAR HIGH LOW DIVIDENDS ------------- ------ ------ --------- 1996: First Quarter................................... $10.00 $ 8.25 $0.035 Second Quarter.................................. 10.75 8.00 0.035 Third Quarter................................... 12.00 9.81 0.040 Fourth Quarter.................................. 11.50 9.25 0.040 1997: First Quarter................................... 10.25 8.25 0.040 Second Quarter.................................. 10.50 7.75 0.040 Third Quarter................................... 14.25 9.00 0.040 Fourth Quarter.................................. 14.19 10.88 0.040 1998: First Quarter (through March 5, 1998)........... 21.69 10.13 0.040
The Rights trade together with the Common Stock. On March 3, 1998, the last full trading day prior to the public announcement of the terms of the Offer and the Merger, the quoted closing price on the NYSE was $17.69 per Share. On March 5, 1998, the last full trading day prior to commencement of the Offer, the reported closing price on the NYSE was $21.63 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. 7. EFFECT OF THE OFFER ON MARKET FOR THE SHARES, STOCK EXCHANGE LISTING, AND EXCHANGE ACT REGISTRATION. Market for Shares. The purchase of Shares by the Merger Sub pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and may reduce the number of holders of Shares, which could adversely affect the liquidity and market value of the remaining Shares held by the public. Stock Quotation. The Shares are quoted on the NYSE. According to the NYSE's published guidelines, the NYSE would consider delisting the shares of Common Stock if, among other things, the number of record holders of at least 100 shares of Common Stock should fall below 1,200, the number of publicly held shares of Common Stock (exclusive of holdings of officers and directors of the Company and their immediate families and other concentrated holdings of 10% or more ("NYSE Excluded Holdings'')) should fall below 600,000, or the aggregate market value of the publicly held shares of Common Stock (exclusive of NYSE Excluded Holdings) should fall below $5,000,000. According to information furnished to Purchaser by the Company, as of the close of business on February 26, 1998, there were 3,600 holders of record of shares of Common Stock not including beneficial holders of Common Stock held in street name, and there were 8,068,665 Shares outstanding. If the Common Stock were to be delisted, the associated Rights would be delisted as well. If the NYSE were to delist the Shares, the market for the Shares could therefor be adversely affected. It is possible that the Shares would be traded or quoted on other securities exchanges or in the over-the-counter market, and that price quotations would be reported by such exchanges, or other sources. The extent of the public market for the shares of Common Stock and associated Rights and the availability of such quotations would, however, depend upon the number of stockholders and/or the aggregate market value of the shares of Common Stock and associated Rights remaining at such time, the interest in maintaining a market in the shares of Common Stock and associated Rights on the part of securities firms, the possible termination of registration of the Shares under the Exchange Act and other factors. Margin Regulations. The shares of Common Stock are presently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of such shares of Common Stock. Depending upon factors similar to those described above regarding listing and market 9 quotations, the shares of Common Stock might no longer constitute "margin securities" for the purposes of the Federal Reserve Board's margin regulations in which event the shares of Common Stock would be ineligible as collateral for margin loans made by brokers. Exchange Act Registration. The shares of Common Stock and associated Rights are currently registered under the Exchange Act. Such registration may be terminated by the Company upon application to the SEC if the outstanding shares of Common Stock and associated Rights are not listed on a national securities exchange and if there are fewer than 300 holders of record of shares of Common Stock and associated Rights. Termination of registration of the shares of Common Stock and associated Rights under the Exchange Act would reduce the information required to be furnished by the Company to its stockholders and to the SEC and would make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b) and the requirement to furnish a proxy statement in connection with stockholders' meetings pursuant to Section 14(a) and the related requirement to furnish an annual report to stockholders, no longer applicable with respect to the shares of Common Stock and Rights. Furthermore, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 under the Securities Act of 1933, as amended, may be impaired or eliminated. If registration of the shares of Common Stock under the Exchange Act were terminated, the shares of Common Stock would no longer be eligible for listing on the NYSE or for continued inclusion on the Federal Reserve Board's list of "margin securities". The Merger Sub intends to seek to cause the Company to apply for termination of registration of the shares of Common Stock and associated Rights as soon as possible after consummation of the Offer if the requirements for termination of registration are met. 8. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company is a Delaware corporation with its principal executive offices located at Green Boulevard, Mexico, Missouri 65265. The Company has described its business in publicly available information in the manner set forth below. The Company, until the acquisition of APG Lime Corp., a Delaware corporation, in 1987, operated under the name A.P. Green Refractories Co. The Company mines, processes, manufactures and distributes specialty minerals and mineral-based products, including industrial lime and refractories products, in the United States and international markets. The Company operates 23 plants in the United States, Canada, Mexico, the United Kingdom and Indonesia. 10 Set forth below is certain summary consolidated financial information for each of the Company's three fiscal years in the period ended December 31, 1996 and for the nine months ended September 30, 1997 and 1996. The consolidated financial information presented below reflects historical financial information for the three fiscal years ended December 31, 1996 reported in the Company's 1996 Annual Report on Form 10-K/A and historical unaudited financial information for the nine months ended September 30, 1997 and 1996 as reported in the Company's Quarterly Report on Form 10-Q/A for the third quarter ended September 30, 1997. More comprehensive financial information is included in such reports (including management's discussion and analysis of financial condition and results of operation) and other documents filed by the Company with the SEC, and the following summary is qualified in its entirety by reference to such reports and other documents and all of the financial information and notes contained therein. Copies of such reports and other documents may be examined at or obtained from the SEC and the NYSE in the manner set forth below. THE COMPANY SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31, ----------------- -------------------------- 1997 1996 1996 1995 1994 -------- -------- -------- -------- -------- CONSOLIDATED STATEMENTS OF EARNINGS DATA Net sales........................ $207,365 $195,720 $258,461 $249,715 $195,918 Cost of sales.................... 170,160 161,511 214,353 208,309 161,420 -------- -------- -------- -------- -------- Gross profit..................... 37,205 34,209 44,108 41,406 34,498 Selling and administrative ex- penses.......................... 27,846 27,015 36,087 31,312 25,707 Net earnings..................... 5,163 4,337 4,673 8,800 6,418 Net earnings per common share.... $0.64 $0.54 $0.58 $1.09 $0.80 Weighted average number of common shares.......................... 8,035 8,043 8,038 8,060 8,050 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION DATA Current assets................... $113,710 $113,266 $119,537 $123,246 $128,612 Total assets..................... 319,901 355,129 355,129 373,568 373,122 Current liabilities.............. 44,118 43,996 43,996 43,423 50,047 Total liabilities................ 195,072 235,331 235,331 257,554 266,084 Total stockholders' equity....... $122,210 $117,710 $ 17,710 $113,999 $107,038
Except as otherwise set forth herein, the information concerning the Company contained in this Offer to Purchase has been taken from or based upon publicly available documents and records on file with the SEC and other public sources and is qualified in its entirety by reference thereto. Although Purchaser, the Merger Sub, the Information Agent and the Dealer Manager have no knowledge that would indicate that any statements contained herein based on such documents and records are untrue, Purchaser, the Merger Sub, the Information Agent and the Dealer Manager cannot take responsibility for the accuracy or completeness of the information contained in such documents and records, or for any failure by the Company to disclose events which may have occurred or may affect the significance or accuracy of any such information but which are unknown to Purchaser, the Merger Sub, the Information Agent or the Dealer Manager. In the course of the discussions between Company management and Purchaser, Purchaser was provided with certain financial information and projections prepared by Company management. The projections indicate estimated primary earnings per share for the Company of $1.12, $1.24 and $1.38, for 1998, 1999 and 2000, respectively. 11 The Company has advised Purchaser that (i) it does not, as a matter of course, make public forecasts as to future revenues or profits and (ii) the foregoing projections were based on estimates and assumptions that are inherently subject to significant economic and competitive uncertainties, all of which are difficult to predict and many of which are beyond the Company's control. Accordingly, there can be no assurance that the projected results can be realized or that actual results will not be materially higher or lower than those projected. The projections were not prepared with a view to public disclosure or compliance with the published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants regarding projections or forecasts. None of the Company, Purchaser or the Merger Sub or their respective advisors assumes any responsibility for the accuracy of the projections. The inclusion of the foregoing projections should not be regarded as an indication that the Company, Purchaser, the Merger Sub or any other person who received such information considers it an accurate prediction of future events. Neither the Company nor Purchaser intends to update, revise or correct such projections if they become inaccurate (even in the short term). The Company is subject to the information and reporting requirements of the Exchange Act and in accordance therewith is obligated to file reports and other information with the SEC relating to its business, financial condition and other matters. Information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities, any material interests of such persons in transactions with the Company and other matters is required to be disclosed in proxy statements distributed to the Company's stockholders and filed with the SEC. Such reports, proxy statements and other information should be available for inspection at the public reference room at the SEC's offices at 450 Fifth Street, N.W., Washington, DC 20549, and also should be available for inspection and copying at the regional offices of the SEC located at Seven World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies may be obtained, by mail, upon payment of the SEC's customary charges, by writing to its principal office at 450 Fifth Street, N.W., Washington, DC 20549 and can be assessed electronically on the SEC's Website at http://www.sec.gov. Such material should also be available for inspection at the offices of the NYSE, 20 Broad Street, New York, New York 10005. 9. CERTAIN INFORMATION CONCERNING PURCHASER AND THE MERGER SUB. The Merger Sub is a Delaware corporation and to date has engaged in no activities other than those incident to its formation and the commencement of the Offer. The Merger Sub is a direct wholly owned subsidiary of Purchaser. The principal executive offices of Purchaser and the Merger Sub are located at 2121 San Jacinto Street, Dallas, Texas 75201. Purchaser is a major manufacturer of technologically advanced industrial products that support high-growth markets worldwide. Purchaser conducts its business in five segments. Refractory Products manufactures a broad line of refractory products through its wholly owned subsidiary, Harbison-Walker Refractories Company. Minerals manufactures refractory products and the raw materials needed to produce them. Industrial Tool produces pneumatic, electric and fixturized tools used in auto, aircraft and light industrial assembly; automated assembly systems; and tube cleaners and expanders. Specialty Equipment Products manufactures a variety of equipment for various industrial applications. Forged Products manufactures forged steel flanges used to connect components of closed systems for processing and transporting liquids and gases, and has undertaken the manufacture of undercarriage parts and components for track-mounted vehicles. Purchaser has entered into an agreement to sell its Industrial Tool division. Purchaser was incorporated in Delaware in 1972 under the name Dresser Finance Corporation, a wholly owned subsidiary of Dresser Industries, Inc. In 1992, Dresser Industries, Inc. distributed the stock of Dresser Finance Corporation to its stockholders in a tax-free spinoff and Purchaser changed its name to INDRESCO Inc. As a result of a reorganization on November 1, 1995 into a holding company structure, all issued shares of INDRESCO Inc. common stock were converted on that date on a share-for-share basis into shares of Common Stock, $0.25 par value, of Global Industrial Technologies, Inc. The corporate headquarters is located at 2121 San Jacinto Street, Dallas, Texas 75201 and the telephone number is (214) 953- 4500. 12 Additional information concerning Purchaser is set forth in Purchaser's Annual Report on Form 10-K for the year ended October 31, 1997 and subsequent Quarterly Reports on Form 10-Q, which reports may be obtained from the SEC and the NYSE in the manner set forth with respect to information concerning the Company in Section 8. Set forth below is certain summary consolidated financial information for each of Purchaser's three fiscal years in the period ended October 31, 1997 and for the three months ended January 31, 1998 and 1997. The consolidated financial information presented below reflects historical financial information for the three fiscal years ended October 31, 1997 reported in Purchaser's 1997 Annual Report on Form 10-K except with respect to earnings per share data which have been restated to conform with Statement of Accounting Standards No. 128, which was adopted by Purchaser during the quarter ended January 31, 1998, and historical unaudited financial information for the three months ended January 31, 1998 and 1997 as reported in Purchaser's Quarterly Report on Form 10-Q for the first fiscal quarter ended January 31, 1997. More comprehensive financial information is included in such reports (including management's discussion and analysis of financial condition and results of operation) and other documents filed by the Company with the SEC, and the following summary is qualified in its entirety by reference to such reports and other documents and all of the financial information and notes contained therein. Copies of such reports and other documents may be examined at or obtained from the SEC and the NYSE in the manner set forth below. PURCHASER SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED JANUARY 31, YEARS ENDED OCTOBER 31, ------------------- ---------------------------- 1998 1997 1997 1996 1995 --------- --------- --------- -------- -------- CONSOLIDATED STATEMENTS OF EARNINGS DATA: Net sales and operating reve- nues........................ $ 137,100 $ 132,000 $ 601,200 $646,300 $594,300 Total costs and expenses..... 136,400 147,500 609,100 592,500 554,600 Earnings (loss) before income taxes....................... 800 (11,400) (6,700) 55,400 42,500 Earnings (loss) per common share--basic................ $0.04 $(0.50) $(0.20) $2.01 $1.70 Earnings (loss) per common share--diluted.............. $0.04 $(0.50) $(0.20) $1.98 $1.69 THREE MONTHS ENDED JANUARY 31, YEARS ENDED OCTOBER 31, ------------------- ---------------------------- 1998 1997 1997 1996 1995 --------- --------- --------- -------- -------- CONSOLIDATED BALANCE SHEETS DATA Current assets............... $ 367,000 $ 369,700 $ 356,100 $375,500 $318,800 Total assets................. 837,600 739,300 807,000 752,600 584,400 Current liabilities.......... 261,700 194,700 245,400 207,200 217,700 Total liabilities............ 555,300 445,000 522,900 452,700 322,800 Shareholders' equity......... $ 282,300 $ 294,300 $ 284,100 $299,900 $261,600
Statements Purchaser may publish, including those in this Offer to Purchase, that are not strictly historical are "forward-looking" statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although Purchaser believes the expectations reflected in such forward- looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be realized. Forward-looking statements involve known and unknown risks which may cause Purchaser's actual results and corporate developments to differ materially from those expected. Factors that could cause results and developments to differ materially from Purchaser's expectations include, without limitation, changes in manufacturing and shipment schedules, delays in completing plant construction and acquisitions, currency exchange rates, new product and technology developments, competition within each business segment, cyclicity of the markets for the products of a major segment, litigation, significant cost variances, the effects of acquisitions and divestitures, and other risks described from time to time in Purchaser's SEC reports including quarterly reports on Form 10-Q, annual reports on Form 10-K and reports on Form 8-K. 13 The name, citizenship, business address, present principal occupation, and material positions held during the past five years of each of the directors and executive officers of Purchaser and the Merger Sub are set forth in Schedule A to this Offer to Purchase. Neither Purchaser nor the Merger Sub, nor, to the best of their knowledge, any of the persons listed in Schedule A hereto nor any associate or majority- owned subsidiary of any of the foregoing, beneficially owns or has a right to acquire any equity securities of the Company. Neither Purchaser nor the Merger Sub, nor, to the best of their knowledge, any of the persons or entities referred to above, nor any director, executive officer or subsidiary of any of the foregoing, has effected any transaction in such equity securities during the past 60 days. Neither Purchaser nor the Merger Sub nor, to the best of their knowledge, any of the persons listed in Schedule A hereto, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies. Except as set forth in Sections 10 and 11, there have been no contacts, negotiations or transactions since November 1, 1994 between Purchaser or the Merger Sub, or, to the best of their knowledge, any of the persons listed in Schedule A hereto, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors, or a sale or other transfer of a material amount of assets. Except as described in Sections 10 and 11, neither Purchaser nor the Merger Sub, nor, to the best of their knowledge, any of the persons listed in Schedule A hereto, has since November 1, 1994 had any transaction with the Company or any of its executive officers, directors or affiliates that would require disclosure under the rules and regulations of the SEC applicable to the Offer. 10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. In connection with the preparation of its 1998 strategic plan, in September 1997 Purchaser hired Beach Consulting Partners to provide certain management consulting services, including reviewing Purchaser's strategic position and opportunities for earnings growth in each of its lines of business. Purchaser also engaged Wasserstein Perella & Co., Inc. ("Wasserstein Perella") on November 14, 1997 to provide certain financial advisory services in connection with the preparation of Purchaser's 1998 long term strategic plan. On November 19, 1997, Mr. Jackson received a telephone call from Mr. Hummer in which Mr. Hummer inquired about Purchaser's interest in discussing a possible acquisition of the Company. Mr. Jackson and Mr. Hummer agreed to meet to discuss preliminarily a possible transaction between the two parties. The meeting was scheduled for December 1, 1997 at the offices of Purchaser. In preparation for the December 1, 1997 meeting, Juan M. Bravo, the President of Harbison-Walker Refractories Company ("H-W Refractories"), the refractory subsidiary of Purchaser, traveled to the Company's headquarters in Mexico, Missouri and met with representatives of the Company to discuss the concept of merging the Company with Purchaser or a subsidiary of Purchaser. On December 1, 1997, Mr. Hummer and Michael B. Cooney, Senior Vice President Law/Administration and Secretary of the Company, met with Mr. Jackson, Graham L. Adelman, Senior Vice President, General Counsel and Secretary of Purchaser, Mr. Bravo and Dirk H. Hilkmann, Vice President--Planning and Development of H- W Refractories at Purchaser's offices in Dallas, Texas. At this meeting the parties discussed the perceived benefits that would accrue from a combination of the two companies. The parties also discussed a number of transaction structuring issues on a preliminary basis. As the parties had not yet executed a confidentiality agreement at this date, no proprietary information with respect to the respective businesses was discussed and no nonpublic financial information was exchanged. Both parties agreed that further discussions should continue with respect to a possible business combination. On December 5, 1997, management of the Company selected Credit Suisse First Boston Corporation ("Credit Suisse First Boston") as its financial advisor. Commencing on December 4, 1997, a number of telephone calls were exchanged between management of the Company and management of Purchaser with respect to the negotiation and execution of a confidentiality 14 agreement between the parties. The definitive Confidentiality Agreement was executed by the parties on December 12, 1997. At a December 17, 1997 meeting of the Purchaser's Board of Directors, Mr. Jackson informed the Board regarding Purchaser's discussions to date with the Company. Wasserstein Perella presented a preliminary analysis of a potential acquisition of the Company in the context of a possible use of proceeds from the proposed sale of Purchaser's Industrial Tool business. On January 7, 1998, Mr. Hummer, Mr. Cooney, John L. Kelsey, Vice President, Refractory Marketing and Gary L. Roberts, Vice President and Chief Financial Officer of the Company, met with Messrs. Jackson, Adelman, Bravo and Hilkmann at the offices of Purchaser in Dallas, Texas. At this meeting the parties discussed potential structures for a transaction. Purchaser advised the Company at this meeting that its preferred structure for acquisition of the Company was a complete acquisition of the Company for cash or an establishment of a joint venture in which Purchaser would control at least 80% of the equity interest. Mr. Jackson and Mr. Hummer also met privately to discuss personnel and operational matters in the context of an acquisition transaction. At a meeting of the Board of Directors of Purchaser on January 18 and 19, 1998, management presented its proposed strategic plan. Beach Consulting Partners made a presentation to the Board regarding the results of its management consulting study and the proposed strategic plan and Wasserstein Perella presented a valuation analysis relating to the proposed strategic plan. After extensive discussion, the Board of Directors of Purchaser adopted the proposed 1998 long term strategic plan and authorized management to pursue a potential acquisition of the Company. Purchaser engaged Wasserstein Perella effective January 18, 1998 to provide financial advisory services related to the possible acquisition of the Company. Following the meeting and over the next several weeks, Purchaser made various due diligence requests of the Company and conducted meetings with respect to operational issues and tours of the Company's facilities. Discussions were also held between representatives of Credit Suisse First Boston and Wasserstein Perella regarding the scope of due diligence required and the timetable for making written proposals to the Company with respect to the structure and financial terms of a proposed transaction. On February 9, 1998, Mr. Hummer met with Mr. Jackson at Purchaser's offices in Dallas to discuss the business of Purchaser and the possibility of Mr. Hummer and certain other of the Company's executive officers continuing with the combined operations. The terms of the Termination Compensation Agreements between the Company and Messrs. Hummer, Cooney and Roberts and Mr. Max C. Aiken, Executive Vice President Refractory Operations of the Company, were discussed in the context of the proposed structure of an acquisition transaction by Purchaser. Mr. Jackson also inquired as to the interest of certain executive officers in converting a portion of their Company Options to Purchaser Options. On February 18, 1998, Mr. Hummer met again with Mr. Jackson in Dallas. At this meeting, Mr. Jackson expressed Purchaser's strong interest in acquiring the Company. Mr. Hummer also disclosed to Mr. Jackson a grant of the severance enhancement agreements to five additional officers and one other employee of the Company by which each such person would receive a severance payment equal to six months' salary, in addition to the Company's normal severance benefits, if the officer or employee were terminated by an acquiring company within one year after the date of consummation of the acquisition. On February 23, 1998, a telephonic meeting of the Board of Directors was held to consider extending a non-binding proposal to the Company to acquire all of its outstanding Common Stock for cash. After discussions with Purchaser's counsel and consideration of a valuation analysis by Wasserstein Perella, the Board of Directors of Purchaser authorized its management to make a non-binding written proposal to the Company to acquire all of the Company's outstanding Common Stock (on a fully diluted basis) for $22.00 per Share in cash. The proposal was conveyed later in the day to the Company through Credit Suisse First Boston and was conditioned upon the completion of several items of due diligence, the negotiation of a definitive agreement with respect to a tender offer and merger and the approval of the transaction by the Boards of Directors of both companies. On February 24, 1998, a telephonic meeting of the Board of Directors of the Company was held to discuss, among other items, the written proposal that had been submitted by Purchaser to the Company. With the advice 15 and assistance of Credit Suisse First Boston and the Company's outside legal counsel, there was a consensus of the Company's Board that the Purchaser's proposal should be pursued. If negotiations resulted in a definitive agreement, the Company's Board of Directors instructed management to report back to it with management's recommendation. On February 25, 1998, Purchaser requested an exclusivity agreement by which the Company would agree to pursue negotiations with respect to a definitive acquisition agreement solely with Purchaser during an agreed-upon period of time. The Company indicated its agreement to enter into such an agreement and the parties negotiated and executed an exclusivity letter which extended through midnight on March 4, 1998. On February 26 and 27, 1998, representatives of management of Purchaser and the Company met in St. Louis, Missouri with their respective legal and financial advisors to negotiate a definitive Merger Agreement. The form of the Merger Agreement, pursuant to which Purchaser agreed to initiate the Offer for all of the Shares for a price of $22.00, net to the seller in cash, and to consummate the Merger for the balance of the Shares not purchased in the Offer at $22.00 in cash, was presented to their respective Boards of Directors for approval in the afternoon and evening of March 2, 1998. On March 2, 1998, the Board of Directors of Purchaser met, at which meeting Mr. Jackson and other officers of Purchaser updated the Board of Directors of Purchaser concerning the discussions with the Company. Purchaser's counsel advised the Purchaser's Board concerning the proposed Merger Agreement, and Purchaser's financial advisors, Wasserstein Perella, advised the Board of Directors of Purchaser concerning the financial terms of the proposed transaction. Wasserstein Perella orally delivered its opinion to the Board of Directors of Purchaser that as of March 2, 1998, the $22.00 per Share cash consideration to be paid by Purchaser pursuant to the Merger and Offer is fair to Purchaser from a financial point of view. Wasserstein Perella subsequently delivered to Purchaser its written opinion, subject to the assumptions, limitations and other matters described therein, confirming its oral opinion delivered at the March 2, 1998, meeting of the Board of Directors of Purchaser. The Board of Directors of Purchaser unanimously approved the Offer and the Merger Agreement. On March 2, 1998, the Board of Directors of the Company met, at which meeting Mr. Hummer and other officers of the Company updated the Board of Directors of the Company concerning the discussions with Purchaser. The Company's counsel advised the Company's Board concerning the proposed Merger Agreement, and the Company's financial advisors, Credit Suisse First Boston, advised the Board of Directors of the Company concerning the financial terms of the proposed transaction. Credit Suisse First Boston delivered its opinion to the Board of Directors of the Company that as of March 2, 1998, the $22.00 per Share cash consideration to be received by stockholders of the Company pursuant to the Merger and Offer is fair to such stockholders from a financial point of view. The Board of Directors of the Company unanimously determined that the Offer and the Merger is fair to and in the best interests of the Company and its stockholders and unanimously approved the Offer and the Merger Agreement and unanimously recommended that the Company's stockholders accept the Offer and tender their Shares pursuant to the Offer. The final terms of the definitive Merger Agreement were agreed to and the Merger Agreement was executed on March 3, 1998 and a public announcement of the execution of the Merger Agreement was made prior to the opening of trading on the NYSE on March 4, 1998. 11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; THE MERGER. Purpose. The purpose of the Offer is to acquire for cash as many outstanding Shares as possible as a first step in acquiring the entire equity interest in the Company. If the Merger Sub acquires a majority of the outstanding Shares pursuant to the Offer, it will have the vote necessary under the DGCL to approve the Merger. Under the DGCL, if the Merger Sub owns at least 90% of the outstanding Shares, the Merger may be effected without the vote of the Company's stockholders. Therefore, if 7,261,799 Shares (or such greater number as may be necessary if options are exercised) are acquired pursuant to the Offer or otherwise, the Merger Sub will be able to and intends to effect the Merger without a meeting of holders of Shares. The Merger Agreement provides that, promptly after expiration of the Offer and receipt of any required approval by the Company's stockholders of the Merger Agreement and the satisfaction or waiver of certain other conditions, the Merger Sub will be merged into the Company. Upon consummation of the 16 Merger, each then outstanding Share (other than Shares owned by the Purchaser Companies or Shares that are held by Dissenting Stockholders) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive the Merger Consideration. The respective obligations of the Company, Purchaser and the Merger Sub to consummate the Merger are subject to the fulfillment of certain conditions set forth in the Merger Agreement, any or all of which may be waived in whole or in part by Purchaser or the Merger Sub, as the case may be, to the extent permitted by applicable law, including (i) if required by the DGCL, the approval by the holders of a majority of the Shares of the Merger Agreement, in accordance with applicable law and the certificate of incorporation and by- laws of the Company, (ii) the purchase by the Merger Sub (or one of the Purchaser Companies) of Shares pursuant to the Offer, and (iii) there being no statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) enacted, issued, promulgated, enforced or entered by any United States or state court or other Governmental Entity of competent jurisdiction or regulatory authority in effect which prohibits consummation of the transactions contemplated by the Merger Agreement (collectively, an "Order"). Termination Provisions. According to its terms, the Merger Agreement may be terminated and the transactions contemplated thereby abandoned at any time prior to the Effective Time, before or after approval by holders of Shares, by the mutual consent of Purchaser and the Company, by action of their respective Boards of Directors. In addition, the Merger Agreement may be terminated and the transactions contemplated thereby abandoned at any time prior to the Effective Time, before or after approval by holders of Shares, by action of the Board of Directors of either Purchaser or the Company if (i) the Merger Sub, or any Purchaser Company, shall have terminated the Offer without purchasing any Shares pursuant thereto; or (ii) the Merger shall not have been consummated by August 31, 1998, whether or not such date is before or after the approval by holders of Shares; or (iii) if required, the approval of stockholders of the Company shall not have been obtained at a meeting duly convened therefor; or (iv) any court of competent jurisdiction or other Governmental Entity located or having jurisdiction within the United States or any country in which either the Company or Purchaser, directly or indirectly, has material assets or operations, shall have issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the Offer or the Merger and such order, decree, ruling or other action is or shall have become final and nonappealable. The Merger Agreement may also be terminated and the transactions contemplated thereby may be abandoned at any time prior to the Effective Time, before or after the approval by holders of Shares, by action of the Board of Directors of Purchaser if (i) the Company shall have breached or failed to perform in any material respect any of the covenants or agreements contained in the Merger Agreement to be complied with or performed by the Company prior to such date of termination which breach or failure shall not have been cured prior to the earlier of (A) five business days following the giving of written notice to the Company of such breach or failure and (B) two business days prior to the date on which the Offer is then scheduled to expire, or any representation or warranty of the Company set forth in the Merger Agreement shall have been inaccurate or incomplete when made except for such failures to be complete or accurate that, individually or in the aggregate, could not reasonably be expected to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole or could prevent or materially delay the transactions contemplated by the Merger Agreement or impair the ability of Purchaser, the Merger Sub, the Company or any of their respective affiliates, following consummation of the Offer or the Merger, to conduct any material business or operations in any jurisdiction where they are now being conducted, (ii) the Board of Directors of the Company (or a special committee thereof) shall have amended, modified or withdrawn in a manner adverse to Purchaser or the Merger Sub its approval or recommendation of the Offer, the Merger Agreement or the Merger or the Board of Directors of the Company, upon request by Purchaser, shall fail to reaffirm such approval or recommendation, or shall have endorsed, approved or recommended any other Acquisition Proposal (as defined in the Merger Agreement), or shall have resolved to do any of the foregoing, or (iii) the Company or any of the other persons or entities described in Section 7.2 of the Merger Agreement shall take any actions that would be proscribed by Section 7.2 of the Merger Agreement but for the exception therein allowing certain actions to be taken if required by fiduciary obligations under applicable law as advised in writing by counsel. The Merger Agreement may be terminated and the transactions contemplated thereby may be abandoned at any time prior to the Effective Time, before or after the approval by holders of Shares, by action of the Board of Directors of the Company, (i) if Purchaser or 17 the Merger Sub (or another Purchaser Company) (x) shall have breached or failed to perform in any material respect with any of the covenants or agreements contained in the Merger Agreement to be complied with or performed by Purchaser or the Merger Sub prior to such date of termination which shall not have been cured prior to the earlier of (A) five business days following the giving of written notice to Purchaser of such breach or failure and (B) two business days prior to the date on which the Offer is then scheduled to expire, or (y) shall have failed to commence the Offer within the time required in Section 1.1 of the Merger Agreement, or (ii) if (w) the Company is not in material breach of any of the terms of the Merger Agreement, (x) the Board of Directors of the Company authorizes the Company, subject to complying with the terms of the Merger Agreement, to enter into a binding written agreement concerning a transaction that constitutes a Superior Proposal (as defined in the Merger Agreement) and the Company notifies Purchaser in writing that it intends to enter into such an agreement, attaching the most current version of such agreement (which shall include all of the material terms, including the price proposed to be paid for Shares pursuant thereto) to such notice, (y) Purchaser does not make, within two business days of receipt of the Company's written notification of its intention to enter into a binding agreement for a Superior Proposal, an offer that the Board of Directors of the Company determines, in good faith after consultation with its financial advisors, is at least as favorable, from a financial point of view, to the stockholders of the Company as the Superior Proposal and (z) the Company, prior to such termination, pays to Purchaser in immediately available funds the fees required to be paid pursuant to Section 9.5(b) of the Merger Agreement. In the event of the termination of the Merger Agreement, no party to the Merger Agreement (or any of its directors or officers) shall have any liability or further obligation to any other party to the Merger Agreement, except as provided in Sections 9.5(b) and 10.2 therein and except that nothing therein will relieve any party from liability for any willful breach of the Merger Agreement; provided, however, that if the Merger Agreement is terminated by Purchaser pursuant to Section 9.3(i) or the Company pursuant to Section 9.4(i) therein, the terminating party's rights to pursue all legal remedies will survive such termination unimpaired. If (i) (x) the Offer shall have remained open for a minimum of at least 20 business days, (y) after the date of the Merger Agreement any corporation, partnership, person, other entity or group (as defined in Section 13(d)(3) of the Exchange Act) other than Purchaser or the Merger Sub or any of their respective subsidiaries or affiliates (collectively, a "Person") shall have become the beneficial owner of 20% or more of the outstanding Shares or shall have publicly announced a proposal or intention to make an Acquisition Proposal or any Person shall have commenced, or shall have publicly announced an intention to commence, a tender offer or exchange offer for 20% or more of the outstanding Shares, and (z) the Minimum Condition shall not have been satisfied and the Offer is terminated without the purchase of any Shares thereunder, or (ii) Purchaser shall have terminated the Merger Agreement pursuant to Section 9.3(ii) or Section 9.3(iii) thereof or (iii) the Company shall have terminated the Merger Agreement pursuant to Section 9.4(ii) thereof; then the Company shall promptly, but in no event later than two days after the date of such termination, pay Purchaser a fee of $8,000,000 and shall reimburse Purchaser and the Merger Sub (not later than one business day after request by Purchaser or the Merger Sub) for all of the out-of-pocket charges and expenses, including financing fees, incurred by Purchaser or the Merger Sub in connection with the Merger Agreement and the transactions contemplated by the Merger Agreement up to a maximum amount of $1,500,000, in each case payable by wire transfer in same day funds. The Company thereby acknowledged that the agreements described above are an integral part of the transactions contemplated in the Merger Agreement, and that, without these agreements, Purchaser and the Merger Sub would not have entered into the Merger Agreement; accordingly, if the Company fails to promptly pay the amount due pursuant to Section 9.5(b) of the Merger Agreement, and, in order to obtain such payment, Purchaser or the Merger Sub commences a suit which results in a judgment against the Company for the fee set forth in such Section, the Company shall pay to Purchaser or the Merger Sub its costs and expenses (including attorneys' fees) in connection with such suit, together with interest on the amount of the fee at the prime rate of Bank of America National Trust and Savings Association on the date such payment was required to be made. The payments made by the Company pursuant to Section 9.5(b) of the Merger Agreement are the sole and exclusive remedy of Purchaser and the Merger Sub for any claim that Purchaser or the Merger Sub may have arising from or relating to the events set forth in Section 9.5(b)(i), (ii) or (iii) of the Merger Agreement. 18 Amendment. Subject to the applicable provisions of the DGCL, at any time prior to the Effective Time, the Merger Agreement may be modified or amended by written agreement executed and delivered by duly authorized officers of the respective parties. Treatment of Options. The Merger Agreement provides that, immediately prior to the Effective Time, the Company shall take such actions as may be necessary such that immediately prior to the Effective Time each stock option outstanding and unexercised (the "Option") pursuant to the Company's stock option and incentive plans (the "Stock Plans"), whether or not then exercisable, shall be canceled and shall cease to be exercisable. In consideration for such cancellation, the holder thereof, upon surrender of such Option, will receive an amount in cash from the Company equal to the result of multiplying the number of shares of Common Stock previously subject to such Option by the difference between the Merger Consideration and the per share exercise price of such Option. The Merger Agreement provides that Paul F. Hummer II may, by written notice to Purchaser received by Purchaser not less than ten (10) business days prior to the Effective Time, elect to convert the 75,000 Options held by him, into options ("Purchaser Options") to purchase Purchaser common stock ("Purchaser Common Stock"). Any such election shall identify the Options to be converted into Purchaser Options and shall become irrevocable upon receipt by Purchaser of the notice of election. If such election is made, at the Effective Time, each Option to be converted shall be deemed to constitute an option to acquire Purchaser Common Stock on the same terms of the applicable Stock Plan and the stock option agreement by which it is evidenced. From and after the Effective Time, (A) each such Option may be exercised solely for shares of Purchaser Common Stock, (B) the number of shares of Purchaser Common Stock subject to such Option shall be equal to the result (rounded down to the nearest whole share) of multiplying the number of shares of Common Stock subject to such Option immediately prior to the Effective Time by a fraction (the "Conversion Fraction"), where (x) the numerator is equal to the Merger Consideration and (y) the denominator is equal to the average of the last reported sales prices of the Purchaser Common Stock on the five business days immediately prior to the date of the Merger Agreement and (C) the per share exercise price under each such Option shall be equal to the result (rounded up to the nearest cent) of dividing the per share exercise price under each such Option by the Conversion Fraction; provided, however, that with respect to any Option which is an "incentive stock option", within the meaning of Section 422 of the Internal Revenue Code, the adjustments provided by the Merger Agreement shall be effected in a manner consistent with the requirements of Section 424(a) of the Internal Revenue Code. No payment shall be made pursuant to the Merger Agreement with respect to any portion of an Option that is converted into a Purchaser Option. Pursuant to the Merger Agreement, at or prior to the Effective Time, Purchaser shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Purchaser Common Stock for delivery upon exercise of Options assumed by it in accordance with the Merger Agreement as soon as administratively feasible following the Effective Time, file a registration statement on Form S-8 (or any successor or other appropriate form) with respect to the Purchaser Common Stock subject to such Options (or shall cause such Option to be deemed an option issued pursuant to a Purchaser stock option plan for which Purchaser Common Stock have previously been registered pursuant to an appropriate registration form). Purchaser shall use its best efforts to maintain the effectiveness of such registration statement (and maintain the current status of the prospectus or prospectuses contained therein) for so long as the Options remain outstanding. Indemnification of Officers and Directors. The Merger Agreement provides that, from and after the Effective Time, Purchaser agrees that it will cause the Surviving Corporation to indemnify and hold harmless each present and former director and officer of the Company, determined as of the Effective Time (the "Indemnified Parties"), against any costs or expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages or liabilities (collectively, "Costs") incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent that the Company is permitted to do so under Delaware law and the Company 19 Certificate or Company By-Laws in effect on the date of the Merger Agreement (and Purchaser shall also advance expenses as incurred to the fullest extent permitted under applicable law provided the person to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification); provided that any determination required to be made with respect to whether an officer's or director's conduct complies with the standards set forth under Delaware law and the Company Certificate and Company By-Laws shall be made by independent counsel selected by the Surviving Corporation. Pursuant to the Merger Agreement, any Indemnified Party wishing to claim indemnification, upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify Purchaser thereof. In the event of any such claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), (i) Purchaser or the Surviving Corporation shall have the right to assume the defense thereof and Purchaser shall not be liable to such Indemnified Parties for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, except that if Purchaser or the Surviving Corporation elects not to assume such defense or counsel for the Indemnified Parties advises that, in such counsel's reasonable judgment, there are material issues that constitute conflicts of interest between Purchaser or the Surviving Corporation and the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to them, and Purchaser or the Surviving Corporation shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as statements therefor are received; provided, however, that Purchaser shall be obligated to pay for only one firm of counsel for all Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of any such matter and (iii) Purchaser shall not be liable for any settlement effected without its prior written consent; and provided, further, however, that Purchaser shall not have any obligation hereunder to any Indemnified Party when and if a court of competent jurisdiction shall ultimately determine, and such determination shall have become final, that the indemnification of such Indemnified Party in the manner contemplated by the Merger Agreement is prohibited by applicable law. Pursuant to the Merger Agreement, the Surviving Corporation shall be permitted to maintain the Company's existing officers' and directors' liability insurance ("D&O Insurance") for a period of two years after the Effective Time so long as the annual premium therefor is not in excess of 150% of the last annual premium paid prior to the date of the Merger Agreement (the "D&O Premium"); provided, however, if the existing D&O Insurance expires, is terminated or canceled during such two-year period, the Surviving Corporation will use its best efforts to obtain as much D&O Insurance as can be obtained for the remainder of such period for a premium not in excess (on an annualized basis) of the D&O Premium. Treatment of Employee Benefits. Pursuant to the Merger Agreement, Purchaser agrees that during the period commencing at the Effective Time and ending on the first anniversary thereof, the employees of the Company will continue to be provided with benefits under employee benefit plans (other than stock options or other plans involving the issuance of securities of the Company or Purchaser) which in the aggregate are substantially comparable to those currently provided by the Company to such employees; provided, however, that employees covered by collective bargaining agreements need not be provided with such benefits. Purchaser will cause each employee benefit plan of Purchaser in which employees of the Company are eligible to participate to take into account for purposes of eligibility and vesting thereunder the service of such employees with the Company as if such service were with Purchaser. Purchaser will, and will cause the Surviving Corporation to, honor without modification all employee benefit obligations to current and former employees of the Company accrued as of the Effective Time and, to the extent set forth in the Disclosure Letter, all employee severance plans in existence on the date of the Merger Agreement and all employment or severance agreements entered into prior to the date of the Merger Agreement. ESOP Distributions and Termination. As soon as practicable following the Effective Time, Purchaser and the Company shall take all actions necessary or appropriate to cause the A.P. Green Industries, Inc. Employee Stock Ownership Trust, which implements and forms part of the A.P. Green Investment Plan (collectively, the "ESOP"), to provide for the use of all proceeds received pursuant to the Offer from the tender of Shares allocated to the suspense account of the ESOP, as follows: first, such proceeds shall be applied to repay any 20 outstanding loan incurred by the ESOP; and secondly, the balance of such proceeds shall be allocated to participants' Employer Match ESOP account in proportion to the total aggregate value of such accounts of the participants as of the accounting date immediately preceding the Effective Time, except to the extent such allocations could exceed the limits on annual contributions pursuant to Section 415 of the Code. In addition, as soon as is reasonably practicable following the Effective Time (or, if deemed appropriate by Purchaser and the Company, after receipt of a favorable determination letter from the Internal Revenue Service on the effect of termination of the ESOP) Purchaser and the Company shall terminate the ESOP and distribute all proceeds to the participants in accordance therewith. Notwithstanding the foregoing, Purchaser shall have no obligation to implement this Section 7.8(d) if such implementation would violate the terms of the ESOP or jeopardize the tax- qualified status of the ESOP. Composition of the Board of Directors. Pursuant to the Merger Agreement, if requested by Purchaser, the Company will, subject to compliance with applicable law and promptly following the purchase by the Merger Sub of Shares pursuant to the Offer, take all actions necessary to cause persons designated by Purchaser to become directors of the Company so that the total number of such persons equals not less than the product of (i) the total number of directors on the Board of Directors of the Company (giving effect to the directors elected pursuant to the Merger Agreement) and (ii) a fraction the numerator of which is the aggregate number of Shares beneficially owned by the Merger Sub or any affiliate of the Merger Sub and the denominator of which is the total number of Shares then outstanding. In furtherance thereof, the Company will increase the size of the Board of Directors of the Company, or use its reasonable efforts to secure the resignation of directors, or both, as is necessary to permit Purchaser's designees to be elected to the Board of Directors of the Company. At such time, the Company, if so requested, will use its reasonable efforts to cause persons designated by Purchaser to constitute the same proportionate representation of each committee of the Board of Directors of the Company, each board of directors of each subsidiary of the Company and each committee of each such board (in each case to the extent of the Company's ability to elect such persons). No directors appointed by Purchaser shall be entitled to receive any compensation or benefits currently in effect for the Company's non-employee directors. The Company's obligations to appoint designees to the Board of Directors of the Company shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions required pursuant to such Section and Rule in order to fulfill its obligations under the Merger Agreement and shall include in the Schedule 14D-9, or in a separate Rule 14f-1 information statement provided to stockholders, such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1 to fulfill its obligations under the Merger Agreement. Purchaser and the Merger Sub will supply to the Company and will be solely responsible for any information with respect to either of them and their nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1. Acquisition Proposals. Pursuant to the Merger Agreement, the Company has agreed that neither it nor its affiliates and its and their respective officers, directors, employees, representatives and agents (including, without limitation, any investment banker, attorney or accountant retained by the Company or any of its subsidiaries) shall immediately cease all existing discussions or negotiations, if any, with any parties conducted before the date of the Merger Agreement with respect to any acquisition or exchange of all or any material portion of the assets of, or more than 15% of the equity interest in, the Company or any of its subsidiaries (by direct purchase from the Company, tender or exchange offer or otherwise) or any business combination, merger, consolidation or similar transaction (including an exchange of stock or assets) with or involving the Company or any subsidiary or division of the Company (an "Acquisition Transaction"). Neither the Company nor any of its affiliates, nor any of its or their respective officers, directors, employees, representatives or agents (including, without limitation, any investment banker, attorney or accountant retained by the Company or any of its subsidiaries) shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Purchaser and the Merger Sub, any affiliate or associate of Purchaser and the Merger Sub or any designees of Purchaser and the Merger Sub) with respect to any inquiries or the making of any offer or proposal (including, without limitation, any offer or proposal to the stockholders of the Company) concerning an Acquisition Transaction (an "Acquisition Proposal"), unless (i) the Board of Directors of the Company determines in good faith after consultation with outside legal counsel that such action is necessary in order for its directors to comply with 21 their respective fiduciary duties under applicable law and (ii) the Board of Directors of the Company determines in good faith (after consultation with its financial advisor) that such Acquisition Proposal, if accepted, is reasonably likely to be consummated (taking into account all legal, financial and regulatory aspects of the proposal, the person making the proposal and all other relevant factors) and would, if consummated, result in a transaction more favorable to the Company's stockholders from a financial point of view than the transaction contemplated by the Merger Agreement (any such more favorable Acquisition Proposal being referred to in the Merger Agreement as a "Superior Proposal"). The Company will take the necessary steps to inform the individuals or entities referred to in the first sentence of this paragraph of the obligations undertaken pursuant to the Merger Agreement. The Company will notify Purchaser immediately if any such inquiries or proposals are received by, any such information is requested from, or any such negotiations or discussions are sought to be initiated or continued with the Company, the name of the person making such proposals, the material terms and conditions of such proposals and thereafter shall keep Purchaser informed, on a current basis, of the status and terms of such proposals and the status of such negotiations or discussions. The Company agreed not to release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which the Company is a party, unless the Board of Directors of the Company shall have determined in good faith, based upon the advice of outside counsel to the Company, that failing to release such third party or waive such provisions would constitute a breach of the fiduciary duties of the Board of Directors of the Company under applicable law. Covenants. The Merger Agreement also contains certain other restrictions as to the conduct of business by the Company pending the Merger, as well as representations and warranties of each of the parties customary in transactions of this kind. Appraisal Rights. No appraisal rights are available in connection with the Offer. However, if the Merger is consummated, each stockholder of the Company who has neither voted in favor of the Merger nor consented thereto in writing will be entitled to an appraisal by the Delaware Court of Chancery of the fair value of his Shares, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with a fair rate of interest, if any, to be paid. In determining such fair value, the Court may consider all relevant factors. The value so determined could be more or less than the consideration to be paid in the Offer and the Merger. Any judicial determination of the fair value could be based upon considerations other than or in addition to the market value of the Shares, including, among other things, asset values and earning capacity. Rule 13e-3. Rule 13e-3 under the Exchange Act, which Purchaser does not believe would be applicable to the Merger, would require, among other things, that certain financial information concerning the Company and certain information relating to the fairness of the proposed transaction and the consideration offered to stockholders of the Company therein, be filed with the SEC and disclosed to stockholders of the Company prior to consummation of the transaction. Rights Agreement. Set forth below is a summary description of the Rights as filed with the Company's Registration Statement on Form 8-A dated November 13, 1997, relating to the Rights. On November 13, 1997, the Board of Directors of the Company declared a dividend of one Right for each outstanding share of Common Stock. The dividend was payable on January 7, 1998 (the "Record Date") to the stockholders of record on that date. Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of a Preferred Share of the Company at a price of $45.00 per one one-hundredth of a Preferred Share (the "Purchase Price"), subject to adjustment. The description and terms of the Rights are set forth in the Rights Agreement. Initially, the Rights will be evidenced by the stock certificates representing shares of Common Stock then outstanding, and no separate Right Certificates, as defined in the Rights Agreement, will be distributed. Until the earlier to occur of (i) 10 days following a public announcement that a person or group of affiliated or associated persons (an "Acquiring Person") have acquired beneficial ownership of 20% or more of the outstanding shares of Common Stock or (ii) 10 business days (or such later date as may be determined by action of a majority of the Continuing Directors prior to such time as any person or group of affiliated persons becomes an Acquiring Person) following the commencement of, or announcement of an intention to make, without the prior written 22 approval of a majority of the Continuing Directors, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 20% or more of the voting power of the Company (the earlier of such dates being called the "Distribution Date"), the Rights will be evidenced, with respect to any of the shares of Common Stock certificates outstanding as of the Record Date, by such share of Common Stock certificate to which a copy of this Summary of Rights may be attached. The Rights Agreement provides that, until the Distribution Date (or earlier redemption or expiration of the Rights), the Rights will be transferred with and only with the Common Stock. Until the Distribution Date (or earlier redemption or expiration of the Rights), new Common Stock certificates issued after the Record Date upon transfer or new issuance of Common Stock will contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date (or earlier redemption or expiration of the Rights) the surrender for transfer of any certificates for Common Stock outstanding as of the Record Date will also constitute the transfer of the Rights associated with the Common Stock represented by such certificate. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Right Certificates") will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date and such separate Right Certificates alone will evidence the Rights. The Rights are not exercisable until the Distribution Date. The Rights will expire on January 6, 2008 (the "Final Expiration Date"), unless the Final Expiration Date is extended or unless the Rights are earlier redeemed or exchanged by the Company, in each case, as described below. The Purchase Price payable, and the number of Preferred Shares or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination of reclassification of, the Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights or warrants to subscribe for or purchase Preferred Shares at a price, or securities convertible into Preferred Shares with a conversion price, less than the then-current market price of the Preferred Shares or (iii) upon the distribution to holders of the Preferred Shares of evidences of indebtedness or assets (excluding regular periodic cash dividends paid out of earnings or retained earnings or dividends payable in Preferred Shares) or of subscription rights or warrants (other than those referred to above). The number of outstanding Rights and the number of one one-hundredths of a Preferred Share issuable upon exercise of each Right are also subject to adjustment in the event of a stock split of the Common Stock or a stock dividend on the Common Stock payable in shares of Common Stock or subdivisions, consolidations or combinations of the Common Stock occurring, in any such case, prior to the Distribution Date. Preferred Shares purchasable upon exercise of the Rights will not be redeemable. Each Preferred Share will be entitled to a minimum preferential quarterly dividend payment of $1 per share but will be entitled to an aggregate dividend of 100 times the dividend declared per share of Common Stock. In the event of liquidation, the holders of the Preferred Shares will be entitled to a minimum preferential liquidation payment of $100 per share but will be entitled to an aggregate payment of 100 times the payment made per share of Common Stock. Each Preferred Share will have 100 votes, voting together with the shares of Common Stock. Finally, in the event of any merger, consolidation or other transaction in which Common Shares are exchanged, each Preferred Share will be entitled to receive 100 times the amount received per share of Common Stock. These rights are protected by customary anti-dilution provisions. Because of the nature of the Preferred Shares' dividend, liquidation and voting rights, the value of the one one-hundredth interest in a Preferred Share purchasable upon exercise of each Right should approximate the value of one share of Common Stock. The Preferred Shares rank junior to all other series of the Company's preferred stock. In the event that the Company is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets or earning power are sold, proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then current exercise price of the Right, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the exercise price of the Right. In the event that any person or group of affiliated or associated persons becomes an Acquiring Person, proper provision shall be made so that each holder 23 of a Right, other than Rights beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter have the right to receive upon exercise that number of shares of Common Stock having a market value of two times the exercise price of the Right (or, if such number of shares of Common Stock is not authorized, the Company may issue cash, debt, stock or a combination thereof in exchange for the Rights). At any time after any Person becomes an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding Common Stock, the Board of Directors of the Company may exchange the Rights (other than Rights owned by such person or group which will have become void) in whole or in part, at an exchange ratio of one shares of Common Stock, or one one-hundredth of a Preferred Share (or of a share of a class or series of the Company's preferred stock having equivalent rights, preferences and privileges or the Company may issue cash, debt or other property or any combination thereof), per Right (subject to adjustment). With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in such Purchase Price. No fractional Preferred Shares will be issued (other than fractions which are integral multiples of one one-hundredth of a Preferred Share, which may, at the election of the Company, be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Shares on the last trading day prior to the date of exercise. At any time prior to the earliest of (i) the time that a person has become an Acquiring Person or (ii) the final Expiration Date, the Board of Directors of the Company may redeem the Rights in whole, but not in part, at a price of $.001 per Right (the "Redemption Price"). The redemption of the Rights may be made effective at such time on such basis with such conditions as the Board of Directors in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. The terms of the Rights may be amended by the Board of Directors of the Company without the consent of the holders of the Rights, including an amendment to lower certain thresholds described above to any percentage which is (i) greater than the largest percentage of the outstanding shares of Common Stock then known to the Company to be beneficially owned by any person or group of affiliated or associated persons (other than the Company, any Subsidiary of the Company, employee benefit plans of the Company or any Subsidiary, or any entity holding shares of Common Stock pursuant to the terms of any such plan) and (ii) not less than 10%, except that from and after such time as any person or group of affiliated or associated persons becomes an Acquiring Person no such amendment may adversely affect the interests of the holders of the Rights. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. Pursuant to the Merger Agreement, the Board of Directors of the Company, at its meeting on March 2, 1998, took all necessary action under the Rights Agreement to provide that the execution of the Merger Agreement and the consummation of the transactions contemplated thereby will not cause (i) the Merger Sub and/or Purchaser to become an Acquiring Person or (ii) a Distribution Date or a Stock Acquisition Date (as defined in the Rights Agreement) to occur, irrespective of the number of Shares acquired pursuant to the Offer. In addition, pursuant to the Merger Agreement, the Board of Directors of the Company approved the amendment of the Rights Agreement on March 2, 1998 so that (i) the consummation of the transactions contemplated thereby will not cause (x) the Merger Sub and/or Purchaser to become an Acquiring Person or (y) a Distribution Date or a Stock Acquisition Date (as defined in the Rights Agreement) to occur, irrespective of the number of Shares acquired pursuant to the Offer and (ii) all outstanding Rights will expire upon the acceptance of Shares for payment pursuant to the Offer, whether or not tendered and purchased pursuant to the Offer, and neither the Company, the Merger Sub nor Purchaser shall have any obligations under the Rights Agreement to any holder (or former holder) of Rights following consummation of the Offer. 12. SOURCE AND AMOUNT OF FUNDS. The Merger Sub estimates that the total amount of funds required to purchase all of the outstanding Shares pursuant to the Offer and the Merger and to pay related fees and expenses will be approximately $192,000,000. 24 The Merger Sub expects to obtain these funds from capital contributions or advances made by Purchaser. Purchaser currently plans to obtain the funds for such capital contributions or advances from the sale of its Industrial Tool business to Cooper Industries for $217.5 million. Purchaser has been notified that the waiting period under the HSR Act applicable to the Industrial Tool transaction expired on March 5, 1998. Accordingly, Purchaser believes that the sale of its Industrial Tool business will be consummated prior to the Expiration Date and that it will have the necessary funds to make the above- referenced capital contributions or advances. If the consummation of the Industrial Tool transaction is delayed beyond the Expiration Date, Purchaser plans to obtain the funds for such capital contributions or advances from a combination of its working capital and borrowings under the Credit Agreement, dated as of September 23, 1994, as amended by the Seventh Amendment to Credit Agreement, dated as of February 19, 1998, among Purchaser and Bank of America National Trust and Savings Association (the "Credit Facility") which provides a commitment of $200,000,000, which can only be drawn in connection with the undertaking described herein, and to the extent utilized, will be a term loan due August 31, 1998. The Credit Facility is provided by Bank of America National Trust and Savings Association as agent (the "Agent") and lender (the "Lender"). Under the Credit Agreement, Purchaser may request that the Lender make a loan which bears interest by reference to a rate that, according to the terms of the Credit Facility, and at the discretion of Purchaser, varies according to rates offered for eurodollar deposits, the federal funds rate, or the reference rate announced from time to time by Bank of America. Further, Purchaser has agreed to pay a facility fee to the Lender, the amount of which is conditioned to amounts borrowed related to this undertaking. The covenants in the Credit Facility restrict or limit, among other things, (i) the incurrence of certain debt by Purchaser's subsidiaries, (ii) liens on the assets of Purchaser and its subsidiaries, (iii) certain mergers, consolidations and sales of assets by Purchaser and its subsidiaries and (iv) the use of proceeds of the loans made under the Credit Facility. In addition, the Credit Facility requires that Purchaser and its restricted subsidiaries, on a consolidated basis, satisfy an indebtedness/capitalization ratio, an indebtedness/net cash flow ratio and an interest coverage ratio. The foregoing description is qualified in its entirety by reference to the Credit Facility, which is incorporated herein by reference and a copy of which has been filed with the SEC as an exhibit to Purchaser's Tender Offer Statement on Schedule 14D-1. The Credit Facility may be examined and copies may be obtained at the place and in the manner set forth in Section 8. It is anticipated that the indebtedness incurred by Purchaser in connection with the Offer and the Merger will be paid from funds generated internally by Purchaser and its subsidiaries (including, after the Merger, if consummated, dividends paid by the Surviving Corporation and its subsidiaries), through additional borrowings, through application of proceeds of dispositions or through a combination of two or more such sources. No final decisions have been made, however, concerning the method Purchaser will employ to repay such indebtedness. Such decisions, when made, will be based on Purchaser's review from time to time of the advisability of particular actions, as well as on prevailing interest rates and financial and other economic conditions. 13. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer, the Merger Sub shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating to the Merger Sub's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, or may delay the acceptance for payment of or payment for, any tendered Shares, or may, in its sole discretion, terminate or amend the Offer as to any Shares not then paid for if, (i) prior to the expiration of the Offer, (x) a number of Shares which, together with any Shares owned by Purchaser or the Merger Sub, constitutes more than 50% of the voting power (determined on a fully-diluted basis) of all the securities of the Company entitled to vote generally in the election of directors or in connection with a merger shall not have been validly tendered and not withdrawn prior to the expiration of the Offer (the "Minimum Condition") or (y) any waiting periods under the HSR Act applicable to the purchase of Shares 25 pursuant to the Offer and any applicable waiting periods under any foreign statutes or regulations that are applicable to the Offer or the Merger shall not have expired or been terminated, or any required filings, consents, approvals, and authorizations of any Governmental Entity applicable to the Offer or the Merger shall not have been obtained on terms satisfactory to Purchaser in its reasonable judgment, or (ii) on or after March 3, 1998 and at or before the time of payment for any of such Shares (whether or not any Shares have theretofore been accepted for payment), any of the following events shall occur: (a) there shall have occurred (i) any general suspension of, or limitation on prices for, trading in securities on the NYSE, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) a commencement or escalation of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States, (iv) any limitation (whether or not mandatory) by any Governmental Entity on, or any other event that might affect, the extension of credit by banks or other lending institutions, (v) a material change in United States or any other currency exchange rates or a suspension of, or limitation on, the markets therefor, (vi) or in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof, (vii) any extraordinary or material adverse change in the market price of the Shares or in the United States securities or financial markets generally, including, without limitation, a decline of at least 20% in either the Dow Jones Average of Industrial Stocks or the Standard & Poor's 500 index from the date of the Merger Agreement, or (viii) any material adverse change in the relevant financial markets that could reasonably be expected to materially and adversely affect the debt facilities related to the financing of the Offer; (b) the Company shall have breached or failed to perform in any material respect any of its obligations, covenants or agreements contained in the Merger Agreement or any representation or warranty of the Company set forth in the Merger Agreement shall have been inaccurate or incomplete in any material respect when made or thereafter shall become inaccurate or incomplete in any material respect; (c) there shall be threatened, instituted or pending any action, litigation, proceeding, investigation or other application (an "Action") before any court or other Governmental Entity by any Governmental Entity or instituted or pending any Action by any other person, domestic or foreign: (i) challenging the acquisition by Purchaser or the Merger Sub of Shares, seeking to restrain or prohibit the consummation of the transactions contemplated by the Offer or the Merger or other subsequent business combination, seeking to obtain any material damages or otherwise directly or indirectly relating to the transactions contemplated by the Offer or the Merger or other subsequent business combination; (ii) seeking to prohibit, or impose any material limitations on, Purchaser's or the Merger Sub's ownership or operation of all or any portion of their or the Company's business or assets (including the business or assets of their respective affiliates and subsidiaries), or to compel Purchaser or the Merger Sub to dispose of or hold separate all or any portion of Purchaser's or the Merger Sub's or the Company's business or assets (including the business or assets of their respective affiliates and subsidiaries) as a result of the transactions contemplated by the Offer or the Merger or other subsequent business combination; (iii) seeking to make the acceptance for payment, purchase of, or payment for, some or all of the Shares illegal or render the Merger Sub unable to, or result in a material delay in, or restrict, the ability of the Merger Sub to, accept for payment, purchase or pay for some or all of the Shares; (iv) seeking to impose material limitations on the ability of Purchaser or the Merger Sub effectively to acquire or hold or to exercise full rights of ownership of the Shares including, without limitation, the right to vote the Shares purchased by them on an equal basis with all other Shares on all matters properly presented to the stockholders; or (v) that, in any event, in the judgment of Purchaser is reasonably likely to have a material adverse effect on the financial condition, properties, business or operations of the Company or Purchaser or the Merger Sub (or any of their respective affiliates or subsidiaries) or the value of the Shares to Purchaser or the Merger Sub or the benefits expected to be derived by Purchaser or the Merger Sub as a result of consummation of the transactions contemplated by the Offer and the Merger; (d) any statute, rule, regulation, order or injunction shall be sought, proposed, enacted, promulgated, entered, enforced or deemed or become applicable to the Offer, the Merger, the Merger Agreement or other subsequent business combination or any other action shall have been taken, proposed or threatened by any 26 court or other Governmental Entity other than the application to the Offer, the Merger, the Merger Agreement or other subsequent business combination of waiting periods under the HSR Act, that, in the judgment of Purchaser, could be expected to, directly or indirectly, result in any of the effects of, or have any of the consequences sought to be obtained or achieved in, any Action referred to in clauses (i) through (v) of paragraph (c) above; (e) a tender or exchange offer for some portion or all of the Shares shall have been commenced or publicly proposed to be made by another person (including the Company or its subsidiaries), or it shall have been publicly disclosed or Purchaser shall have learned that (i) any person (including the Company or its subsidiaries), entity or "group" (as defined in Section 13(d) of the Exchange Act and the rules promulgated thereunder) shall have become the beneficial owner (as defined in Section 13(d) of the Exchange Act and the rules promulgated thereunder) of more than 20% of any class or series of capital stock of the Company (including the Shares) other than for bona fide arbitrage purposes or (ii) any person, entity or group shall have entered into a definitive agreement or an agreement in principle or made a proposal with respect to a tender offer or exchange offer for some portion or all of the Shares or a merger, consolidation or other business combination with or involving the Company; (f) any change shall have occurred (or any development shall have occurred involving a prospective change) or Purchaser or the Merger Sub shall have become aware of any fact (including, but not limited to, any such change) that has had, or is reasonably likely to have, a material adverse effect on the Company and its subsidiaries taken as a whole; (g) the Board of Directors of the Company (or a special committee thereof) shall have amended, modified or withdrawn its approval or recommendation of the Offer, the Merger Agreement or the Merger, or shall have failed to publicly reconfirm such approval or recommendation upon request by Purchaser or the Merger Sub, or shall have endorsed, approved or recommended any other Acquisition Proposal, or shall have resolved to do any of the foregoing; or (h) the Merger Agreement shall have been terminated by the Company or Purchaser or the Merger Sub in accordance with its terms or Purchaser or the Merger Sub shall have reached an agreement or understanding in writing with the Company providing for termination or amendment of the Offer or delay in payment for the Shares; which, in the sole judgment of Purchaser and the Merger Sub, in any such case, and regardless of the circumstances (including any action or inaction by Purchaser or the Merger Sub) giving rise to any such conditions, makes it inadvisable to proceed with the Offer and/or with such acceptance for payment of or payment for Shares. The foregoing conditions are for the sole benefit of Purchaser and the Merger Sub and may be asserted by Purchaser or the Merger Sub regardless of the circumstances (including any action or inaction by Purchaser or the Merger Sub) giving rise to such condition or may be waived by Purchaser or the Merger Sub, by express and specific action to that effect, in whole or in part at any time and from time to time in its sole discretion. Any determination by Purchaser and the Merger Sub concerning any event described in this section will be final and binding upon all parties. The failure by the Merger Sub at any time to exercise any of the foregoing rights will not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and other circumstances will not be deemed a waiver with respect to any other facts and circumstances, and each such right will be deemed an ongoing right that may be asserted at any time and from time to time. A public announcement will be made of a material change in, or waiver of, such conditions, and the Offer may, in certain circumstances, be extended in connection with any such change or waiver. 14. DIVIDENDS AND DISTRIBUTIONS. If, on or after March 3, 1998, the Company should split, combine or otherwise change the Shares or its capitalization or shall disclose that it has taken any such action, then the Merger Sub, in its discretion, may make such adjustments in the Merger Consideration and other terms of the Offer as it deems appropriate to reflect such split, combination or other change. 27 If, on or after March 3, 1998, the Company should declare or pay any cash or stock dividend (other than the regular quarterly cash dividends not in excess of $0.04 per share of Common Stock at the normal time at which such dividends are declared and paid) or other distribution on or issue any rights with respect to the shares of Common Stock, payable or distributable to stockholders of record on a date occurring on or after March 3, 1998 and prior to the transfer to the name of the Merger Sub or its nominees or transferees on the Company's stock transfer records of the shares of Common Stock purchased pursuant to the Offer, then, without prejudice to the Merger Sub's rights under Section 13, (i) the price payable by the Merger Sub pursuant to the Offer will be reduced by the amount of any such cash dividend or distribution and (ii) the whole of any non-cash dividend or distribution (including additional shares of Common Stock or rights as aforesaid) received by a tendering stockholder shall be required to be promptly remitted and transferred by the tendering stockholder to the Depositary for the account of the Merger Sub, accompanied by appropriate documentation of transfer. Pending such remittance or appropriate assurance thereof, the Merger Sub will be, subject to applicable law, entitled to all rights and privileges as owner of any such non-cash dividend, distribution or right and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Merger Sub in its sole discretion. 15. CERTAIN LEGAL MATTERS General. Except as otherwise disclosed herein, based upon an examination of publicly available filings with respect to the Company, Purchaser and the Merger Sub are not aware of any licenses or other regulatory permits which appear to be material to the business of the Company and which might be adversely affected by the acquisition of Shares by the Merger Sub pursuant to the Offer or of any approval or other action by any governmental, administrative or regulatory agency or authority which would be required for the acquisition or ownership of Shares by the Merger Sub pursuant to the Offer. Should any such approval or other action be required, it is currently contemplated that such approval or action would be sought or taken. There can be no assurance that any such approval or action, if needed, would be obtained or, if obtained, that it will be obtained without substantial conditions or that adverse consequences might not result to the Company's or Purchaser's business or that certain parts of the Company's or Purchaser's business might not have to be disposed of in the event that such approvals were not obtained or such other actions were not taken, any of which could cause the Merger Sub to elect to terminate the Offer without the purchase of the Shares thereunder. The Merger Sub's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions. See Section 13. Antitrust Compliance. Under the HSR Act, certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice (the "Antitrust Division") and the Federal Trade Commission (the "FTC") and certain waiting period requirements have been satisfied. The acquisition of Shares by the Merger Sub is subject to these requirements. See Section 2 of this Offer to Purchase as to the effect of the HSR Act on the timing of the Merger Sub's obligation to accept Shares for payment. Pursuant to the HSR Act, Purchaser filed a Notification and Report Form with respect to the acquisition of Shares pursuant to the Offer and the Merger with the Antitrust Division and the FTC on March 4, 1998. Under the provisions of the HSR Act applicable to the purchase of Shares pursuant to the Offer, such purchases may not be made until the expiration of a 15-calendar day waiting period following the filing by Purchaser. Accordingly, the waiting period under the HSR Act will expire at 11:59 p.m., New York City time, on March 19, 1998, unless early termination of the waiting period is granted or Purchaser receives a request for additional information or documentary material prior thereto. Pursuant to the HSR Act, Purchaser has requested early termination of the waiting period applicable to the Offer. There can be no assurances given, however, that the 15-day HSR Act waiting period will be terminated early. If either the FTC or the Antitrust Division were to request additional information or documentary material from Purchaser, the waiting period would expire at 11:59 p.m., New York City time, on the tenth calendar day after the date of substantial compliance by Purchaser with such request. Thereafter, the waiting period could be extended only by agreement or by court order. If the acquisition of Shares is delayed pursuant to a request by the FTC or the Antitrust Division for additional information or documentary material pursuant to the HSR Act, the purchase of and payment for Shares will be 28 deferred until ten calendar days after the request is substantially complied with unless the waiting period is sooner terminated by the FTC or the Antitrust Division. See Section 2. Only one extension of such waiting period pursuant to a request for additional information is authorized by the HSR Act, except by agreement or by court order. Any such extension of the waiting period will not give rise to any withdrawal rights not otherwise provided for by applicable law. See Section 4. Although the Company is required to file certain information and documentary material with the Antitrust Division and the FTC in connection with the Offer, neither the Company's failure to make such filings nor a request from the Antitrust Division or the FTC for additional information or documentary material made to the Company will extend the waiting period. The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the proposed acquisition of Shares by the Merger Sub pursuant to the Offer. At any time before or after the Merger Sub's purchase of Shares, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the acquisition of Shares pursuant to the Offer or seeking divestiture of Shares acquired by the Merger Sub or the divestiture of substantial assets of Purchaser, the Company or any of their respective subsidiaries. Private parties may also bring legal action under the antitrust laws under certain circumstances. There can be no assurance that a challenge to the Offer on antitrust grounds will not be made or, if a challenge is made, what the result will be. See Section 13 of this Offer to Purchase for certain conditions to the Offer that could become applicable in the event of such a challenge. Foreign Approvals. The Company owns property or conducts business in various foreign countries and jurisdictions. In connection with the acquisition of the Shares pursuant to the Offer, the laws of certain of those foreign countries and jurisdictions may require the filing of information with, or the obtaining of the approval of governmental authorities in such countries and jurisdictions, including the Regulatory Approvals. The governments in such countries and jurisdictions might attempt to impose additional conditions on the Company's operations conducted in such countries and jurisdictions as a result of the acquisition of the Shares pursuant to the Offer. There can be no assurance that Purchaser will be able to cause the Company or its subsidiaries to satisfy or comply with such laws or that compliance or non-compliance will not have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole or impair Purchaser, the Merger Sub or the Company or any of their respective affiliates, following consummation of the Offer or Merger, to conduct any material business or operations in any jurisdiction where they are now being conducted. See Section 13. State Takeover Laws. A number of states have adopted laws and regulations applicable to offers to acquire securities of corporations which are incorporated in such states and/or which have substantial assets, stockholders, principal executive offices or principal places of business therein. In Edgar v. MITE Corporation, the Supreme Court of the United States held that the Illinois Business Takeover Statute, which made the takeover of certain corporations more difficult, imposed a substantial burden on interstate commerce and was therefore unconstitutional. In CTS Corporation v. Dynamics Corporation of America, the Supreme Court held that as a matter of corporate law, and in particular, those laws concerning corporate governance, a state may constitutionally disqualify an acquiror of "Control Shares" (ones representing ownership in excess of certain voting power thresholds (e.g. 20%, 33% or 50%) of a corporation incorporated in its state and meeting certain other jurisdictional requirements from exercising voting power with respect to those shares without the approval of a majority of the disinterested stockholders. Purchaser does not believe that any state takeover laws apply to the Offer and it has not complied with any state takeover laws. See Section 11. Should any government official or third party seek to apply any state takeover law to the Offer, Purchaser will take such action as then appears desirable. If it is asserted that one or more state takeover laws applies to the Offer and it is not determined by an appropriate court that such act or acts do not apply or are invalid as applied to the Offer, the Merger Sub might be required to file certain information with, or receive approvals from, the relevant state authorities. In addition, if enjoined, the Merger Sub might be unable to accept for payment any Shares tendered pursuant to the Offer, or be delayed in consummating the Offer. In such case, the Merger Sub may not be obligated to accept for payment any Shares tendered. See Section 13. 29 Federal Reserve Board Regulations. Regulations G, T, U and X (the "Margin Regulations") promulgated by the Federal Board place restrictions on the amount of credit that may be extended for the purpose of purchasing margin stock (including the Shares) if such credit is secured directly or indirectly by margin stock. Purchaser and the Merger Sub will attempt to ensure that the financing of the acquisition of the Shares will be in compliance with the Margin Regulations. 16. FEES AND EXPENSES. Purchaser and the Merger Sub have retained Wasserstein Perella to act as the Dealer Manager and to provide certain financial advisory services in connection with the proposed acquisition of the Company. In connection with such services Purchaser has agreed to pay Wasserstein Perella a transaction fee of $1,650,000 upon consummation of the Offer. Purchaser and the Merger Sub have agreed to reimburse Wasserstein Perella for its reasonable out-of-pocket expenses, including the fees and expenses of its counsel, for acting as financial advisor and Dealer Manager, and have agreed to indemnify Wasserstein Perella against certain liabilities and expenses for acting as financial advisor and Dealer Manager, including liabilities under the federal securities laws. The Merger Sub has also retained Georgeson & Company Inc. to act as the Information Agent in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telegraph and personal interviews and may request brokers, dealers and other nominee stockholders to forward materials relating to the Offer to beneficial owners of Shares. The Information Agent will receive reasonable and customary compensation for such services, plus reimbursement of out-of-pocket expenses and the Merger Sub will indemnify the Information Agent against certain liabilities and expenses in connection with the Offer, including liabilities under the federal securities laws. The Merger Sub will pay the Depositary reasonable and customary compensation for its services in connection with the Offer, plus reimbursement for out-of- pocket expenses, and will indemnify the Depositary against certain liabilities and expenses in connection therewith, including liabilities under the federal securities laws. Brokers, dealers, commercial banks and trust companies will be reimbursed by the Merger Sub for customary mailing and handling expenses incurred by them in forwarding material to their customers. 17. MISCELLANEOUS. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. However, the Merger Sub may, in its sole discretion, take such action as it may deem necessary to make the Offer in any such jurisdiction and extend the Offer to holders of Shares in such jurisdiction. Neither Purchaser nor the Merger Sub is aware of any jurisdiction in which the making of the Offer or the acceptance of Shares in connection therewith would not be in compliance with the laws of such jurisdiction. Purchaser and the Merger Sub have filed with the SEC a Statement on Schedule 14D-1 pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, furnishing certain additional information with respect to the Offer, and may file amendments thereto. Such Statement and any amendments thereto, including exhibits, may be examined and copies may be obtained from the principal office of the SEC in the manner set forth in Section 8. No person has been authorized to give any information or make any representation on behalf of Purchaser or the Merger Sub not contained in this Offer to Purchase or in the Letter of Transmittal and, if given or made, such information or representation must not be relied upon as having been authorized. BGN Acquisition Corp. March 6, 1998 30 SCHEDULE A INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND THE MERGER SUB The following tables set forth the name, business address, present principal occupation and material positions held within the past five years of each director and executive officer of Purchaser and the Merger Sub. Unless otherwise specified, each person listed below is a citizen of the United States and has his or her principal business address at 2121 San Jacinto Street, Suite 2500, Dallas, Texas 75201. PURCHASER
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL POSITIONS NAME AND BUSINESS ADDRESS HELD DURING THE PAST FIVE YEARS --------------------------------- ------------------------------------------- David H. Blake................... Director since 1992. Dean, Graduate School of Management, University of California, Irvine, since 1997; Dean, Edwin L. Cox School of Business, Southern Methodist University, from January 1990 to December 1996; Dean and Professor, Graduate School of Management, Rutgers-The State University of New Jersey, January 1983 to December 1989, Director, Procom Technology Inc. Richard W. Vieser................ Director since 1992. Chairman of the Board, President and Chief Executive Officer, FL Industries, Inc., electrical equipment and high efficiency industrial and commercial heating and cooling equipment, June 1985 until retirement November 1989; Chairman of the Board, President and Chief Executive Officer, Lear Siegler, Inc., March 1987 until retirement November 1989; Chairman and Chief Executive Officer, FL Aerospace Corp., September 1986 until retirement November 1989. Director, Ceridian Corporation (formerly Control Data Corporation), Dresser Industries, Inc., Sybron Corporation, Varian Associates, Inc. and Berg Electronics. Samuel B. Casey, Jr.............. Director since 1992. Chairman of the Board, Dixon Ticonderoga Company, manufacturer and marketer of writing products, October 1985 until retirement February 1989. Director, Dresser Industries, Inc. and Dixon Ticonderoga Company. Rawles Fulgham................... Director since 1992. Senior Advisor, Merrill Lynch & Co. Inc., financial services, Dallas, Texas, since September 1989; Advisor to certain Committees of the Board of Directors of Dorchester Hugoton Limited since August 1995; Executive Director, Merrill Lynch Private Capital, Inc., private financings, from August 1982 to September 1989. Director, BancTec, Inc., NCH Corporation, and Dresser Industries, Inc. J. L. Jackson.................... Director since 1992. Chairman of the Company since January 1, 1994; Chief Executive Officer of the Company since October 1993; President and Chief Operating Officer since February 1997; President from July 1994 to December 1995; Vice Chairman of the Company from October 1993 to December 1993; for more than five years, business consultant to the petroleum industry; President and Chief Operating Officer, Diamond Shamrock Corporation, 1983-1986.
31
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL POSITIONS NAME AND BUSINESS ADDRESS HELD DURING THE PAST FIVE YEARS --------------------------------- ------------------------------------------- Graham L. Adelman................ Senior Vice President and General Counsel of the Company since July 1995; Secretary of the Company since July 1996; Senior Vice President, General Counsel and Secretary of The Western Company of North America from 1990 to April 1995. Juan M. Bravo.................... Vice President of the Company and President of Harbison-Walker Refractories Company since March 1996; President of Harbison- Walker International Division from November 1995 to March 1996; President and Chief Executive Officer of Refmex from January 1995 to November 1995; Vice President of Chemical and Refractories Division of Penoles S.A. De C.V., Mexico from 1990 to December 1994. Gary G. Garrison................. Chief Financial Officer of the Company since December 1994; Vice President-- Finance and Controller of the Company since September 1993; Treasurer of the Company since May 1992; Senior Vice President-- Administration of the Finance Division of Komatsu Dresser Company October 1988 to April 1992; Vice President of Dresser Finance Corporation November 1984 to May 1992. Thomas R. Hurst.................. Vice President of the Company since June 1994; President of Industrial Tool Division of the Company since August 1992; President of Industrial Tool Division of Dresser Industries, Inc. from May 1983 to July 1992. Jim Alleman...................... Vice President, Human Resources of the Company since August 1997; Senior Vice President, Human Resources of Lomas Financial Corporation, Inc. from February 1994 to July 1997; Vice President of Human Resources for Pacific Enterprises Oil Company (USA) from October 1991 to July 1993; Director of Strategic Planning for Pacific Enterprises Oil Company (USA) from August 1990 to September 1991; Director of Human Resources for Terra Resources, Inc. from July 1988 to July 1990. George W. Pasley................. Vice President--Communications of the Company since September 1996; Business Consultant from September 1995 to August 1996; Chief Financial Officer of Maxus Energy Corp. from September 1994 to September 1995; Senior Vice President of Maxus Energy Corp. from October 1991 to August 1994. Mark D. Stott.................... Vice President--Planning and Development of the Company since August 1996; Director of Business Analysis of Motorola, Inc. from 1993 to 1996; Senior Manager of Motorola, Inc. from 1988 to 1991.
32 Facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent by each stockholder of the Company or his broker-dealer, commercial bank, trust company or other nominee to the Depositary as follows: The Depositary for the Offer is: HARRIS TRUST AND SAVINGS BANK Facsimile Transmission By Hand/Overnight Delivery: By Registered or Number: Harris Trust and Savings Bank Certified Mail: (For Eligible c/o Harris Trust Company Harris Trust and Savings Institutions Only) of New York Bank (212) 701-7636 88 Pine Street c/o Harris Trust Company Confirm Receipt of 19th Floor of New York Facsimile by Telephone: New York, NY 10005 P.O. Box 1010 (212) 701-7624 Wall Street Station New York, NY 10268-1010 Any questions or requests for assistance or additional copies of the Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and locations listed below. You may also contact your broker, dealer, commercial bank or trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: GEORGESON & COMPANY INC. -------------- WALL STREET PLAZA NEW YORK, NEW YORK 10005 BANKS AND BROKERS CALL COLLECT: (212) 440-9800 ALL OTHERS CALL TOLL-FREE: (800) 223-2064 The Dealer Manager for the Offer is: WASSERSTEIN PERELLA & CO., INC. 31 WEST 52ND STREET NEW YORK, NEW YORK 10019 (212) 969-2700 EX-99.A.2 3 LETTER OF TRANSMITTAL EXHIBIT 99(a)(2) LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS TO PURCHASESERIES B JUNIOR PARTICIPATING PREFERRED STOCK) OF A.P. GREEN INDUSTRIES, INC. AT $22.00 NET PER SHARE BY BGN ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: HARRIS TRUST AND SAVINGS BANK Facsimile Transmission Number: By Hand/Overnight Delivery: By Registered or Certified Mail: (For Eligible Institutions Only) Harris Trust and Savings Bank Harris Trust and Savings Bank (212) 701-7636 c/o Harris Trust Company c/o Harris Trust Company Confirm Receipt of of New York of New York Facsimile by Telephone: 88 Pine Street P.O. Box 1010 (212) 701-7624 19th Floor Wall Street Station New York, NY 10005 New York, NY 10268-1010 ------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. - ------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED - ------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARES TENDERED CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY) - ------------------------------------------------------------------- TOTAL NUMBER OF SHARES NUMBER CERTIFICATE REPRESENTED BY OF SHARES NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2) ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- TOTAL SHARES - ------------------------------------------------------------------- (1) Need not be completed by Book-Entry Stockholders. (2) Unless otherwise indicated, it will be assumed that all Shares described above are being tendered. See Instruction 4. This Letter of Transmittal is to be used either if certificates for Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in Section 3 of the Offer to Purchase (as defined below)) is utilized, if delivery of Shares is to be made by book-entry transfer to an account maintained by the Depositary (as defined in the Introduction of the Offer to Purchase) at a Book-Entry Transfer Facility (as defined in Section 2 of the Offer to Purchase) pursuant to the procedures set forth in Section 3 of the Offer to Purchase. Stockholders who deliver Shares by book-entry transfer are referred to herein as "Book-Entry Stockholders" and other stockholders are referred to herein as "Certificate Stockholders." Stockholders whose certificates for Shares are not immediately available or who cannot comply with the procedure for book-entry transfer on a timely basis, or who cannot deliver all required documents to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), may tender their Shares in accordance with the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK- ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. [_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY FINANCIAL INSTITUTIONS THAT ARE PARTICIPANTS IN THE SYSTEM OF ANY BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution ___________________________________________ Check Box of Book-Entry Transfer Facility: [_]The Depository Trust Company [_]Philadelphia Depository Trust Company Account Number __________________________________________________________ Transaction Code Number _________________________________________________ [_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Owner(s) __________________________________________ Date of Execution of Notice of Guaranteed Delivery ______________________ Name of Institution which Guaranteed Delivery ___________________________ If delivered by book-entry transfer, check box: [_]The Depository Trust Company [_]Philadelphia Depository Trust Company Account Number __________________________________________________________ Transaction Code Number _________________________________________________ NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to BGN Acquisition Corp., a Delaware corporation (the "Merger Sub") and a wholly owned subsidiary of Global Industrial Technologies, Inc., a Delaware corporation ("Purchaser"), the above-described shares, par value $1.00 per share (the "Common Stock"), including the associated rights to purchase Series B Junior Participating Preferred Stock (the "Rights" and, together with the Common Stock, the "Shares"), of A.P. Green Industries, Inc., a Delaware corporation (the "Company"), pursuant to the Offer to Purchase, dated March 6, 1998 (the "Offer to Purchase"), all of the outstanding Shares at a price of $22.00 per Share, net to the seller in cash, on the terms and subject to the conditions set forth in the Offer to Purchase, receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with the Offer to Purchase, constitute the "Offer"). The undersigned understands that the Merger Sub reserves the right to transfer or assign, from time to time, in whole or in part, to one or more of its affiliates, the right to purchase the Shares tendered herewith. On the terms and subject to the conditions of the Offer (including the Offer Conditions and together with, if the Offer is extended or amended, the terms and conditions of such extension or amendment), subject to, and effective upon, acceptance for payment of, and payment for, the Shares tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Merger Sub, all right, title and interest in and to all of the Shares being tendered hereby and any and all cash dividends, distributions, rights, other Shares or other securities issued or issuable in respect of such Shares on or after March 3, 1998 (collectively, "Distributions"), and appoints Harris Trust and Savings Bank (the "Depositary") the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and any Distributions) with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to the fullest extent of such stockholder's rights with respect to such Shares (and any Distributions) (a) to deliver such Share Certificates (as defined herein) (and any Distributions) or transfer ownership of such Shares (and any Distributions) on the account books maintained by a Book-Entry Transfer Facility, together in either such case with all accompanying evidences of transfer and authenticity, to or upon the order of the Merger Sub, (b) to present such Shares (and any Distributions) for transfer on the books of the Company and (c) to receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any Distributions), all in accordance with the terms and the conditions of the Offer. The undersigned hereby irrevocably appoints the designees of the Merger Sub, and each of them, the attorneys-in-fact and proxies of the undersigned, each with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares tendered hereby which have been accepted for payment and with respect to any Distributions. The designees of the Merger Sub will, with respect to the Shares (and any associated Distributions) for which the appointment is effective, be empowered to exercise all voting and any other rights of such stockholder, as they, in their sole discretion, may deem proper at any annual, special or adjourned meeting of the Company's stockholders, by written consent in lieu of any such meeting or otherwise. This proxy and power of attorney shall be irrevocable and coupled with an interest in the tendered Shares. Such appointment is effective when, and only to the extent that, the Merger Sub deposits the payment for such Shares with the Depositary. Upon the effectiveness of such appointment, without further action, all prior powers of attorney, proxies and consents given by the undersigned with respect to such Shares (and any associated Distributions) will be revoked, and no subsequent powers of attorney, proxies, consents or revocations may be given (and, if given, will not be deemed effective). The Merger Sub reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Merger Sub's acceptance for payment of such Shares, the Merger Sub must be able to exercise full voting rights with respect to such Shares (and any associated Distributions), including voting at any meeting of stockholders. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares (and any Distributions) tendered hereby and, when the same are accepted for payment by the Merger Sub, the Merger Sub will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances, and the same will not be subject to any adverse claim. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or the Merger Sub to be necessary or desirable to complete the sale, assignment and transfer of the Shares (and any Distributions) tendered hereby. In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of the Merger Sub any and all Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer; and, pending such remittance or appropriate assurance thereof, the Merger Sub shall be entitled to all rights and privileges as owner of any such Distributions and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Merger Sub in its sole discretion. All authority conferred or agreed to be conferred pursuant to this Letter of Transmittal shall not be affected by, and shall survive, the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. The undersigned understands that the valid tender of Shares pursuant to one of the procedures described in Section 3 of the Offer to Purchase will constitute a binding agreement between the undersigned and the Merger Sub upon the terms and subject to the conditions of the Offer. Unless otherwise indicated herein under "Special Payment Instructions," please issue the check for the purchase price and/or return any certificates for Shares not tendered or accepted for payment in the name(s) of the registered owner(s) appearing under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price and/or return any certificates for Shares not tendered or accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered owner(s) appearing under "Description of Shares Tendered." In the event that both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and/or issue any certificates for Shares not tendered or accepted for payment (and any accompanying documents, as appropriate) in the name of, and deliver such check and/or return such certificates (and any accompanying documents, as appropriate) to, the person or persons so indicated. The undersigned recognizes that the Merger Sub has no obligation pursuant to the Special Payment Instructions to transfer any Shares from the name of the registered owner thereof if the Merger Sub does not accept for payment any of the Shares so tendered. SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 5 AND 7) To be completed ONLY if certifi- To be completed ONLY if certifi- cate(s) for Shares not tendered cate(s) for Shares not tendered or not accepted for payment or not accepted for payment and/or the check for the purchase and/or the check for the purchase price of Shares accepted for pay- price of Shares accepted for pay- ment are to be issued in the name ment are to be sent to someone of someone other than the under- other than the undersigned, or to signed. the undersigned at an address other than that shown above. Issue: [_] Check [_] Certificate(s) to: Deliver: [_] Check [_] Certificate(s) to: Name: ____________________________ (PLEASE PRINT) Name: ____________________________ Address: _________________________ (PLEASE PRINT) __________________________________ Address: _________________________ (INCLUDE ZIP CODE) __________________________________ __________________________________ (INCLUDE ZIP CODE) (TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER) IMPORTANT SIGN HERE (ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW) ............................................................................ ............................................................................ (SIGNATURE(S) OF HOLDER(S)) Dated: ....... 1998 (Must be signed by registered owner(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered owner(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5.) Name(s)..................................................................... ..................................................................... (PLEASE PRINT) Capacity (full title)....................................................... Address..................................................................... ..................................................................... (INCLUDE ZIP CODE) Area Code and Telephone Number.............................................. Tax Identification or Social Security No. ........................................................ GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature........................................................ Name........................................................................ (PLEASE TYPE OR PRINT) Address..................................................................... ..................................................................... (INCLUDE ZIP CODE) Name of Firm................................................................ Dated: ....... 1998 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a financial institution (including most commercial banks, savings and loan associations and brokerage houses) which is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (an "Eligible Institution"). Signatures on this Letter of Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed by the registered owners (which term, for purposes of this document, includes any participant in any of the Book-Entry Transfer Facilities' systems whose name appears on a security position listing as the owner of the Shares) of Shares tendered herewith and such registered owner has not completed the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on this Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. See Instruction 5 of this Letter of Transmittal. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES OR BOOK-ENTRY CONFIRMATIONS. This Letter of Transmittal is to be used either if certificates are to be forwarded herewith or if tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. Certificates for all physically tendered Shares ("Share Certificates"), or confirmation of any book-entry transfer into the Depositary's account at one of the Book-Entry Transfer Facilities of Shares tendered by book-entry transfer, as well as this Letter of Transmittal properly completed and duly executed with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein on or prior to the Expiration Date (as defined in the Offer to Purchase). Stockholders whose certificates for Shares are not immediately available or who cannot deliver all other required documents to the Depositary on or prior to the Expiration Date or who cannot comply with the procedures for book-entry transfer on a timely basis may nevertheless tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Purchaser must be received by the Depositary prior to the Expiration Date; and (iii) Share Certificates or confirmation of any book-entry transfer into the Depositary's account at a Depository Institution of Shares tendered by book-entry transfer, as well as a Letter of Transmittal, properly completed and duly executed with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and all other documents required by this Letter of Transmittal, must be received by the Depositary within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery. If Share Certificates are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT SUCH CERTIFICATES AND DOCUMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering stockholders, by execution of this Letter of Transmittal (or facsimile thereof), waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto. 4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer than all the Shares evidenced by any certificate submitted are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such cases, new certificate(s) for the remainder of the Shares that were evidenced by the old certificate(s) will be sent to the registered owner, unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered owners of the Shares tendered hereby, the signature must correspond with the names as written on the face of the certificates without alteration, enlargement or any other change whatsoever. If any of the Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the tendered Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to the Parent of their authority so to act must be submitted. If this Letter of Transmittal is signed by the registered owner(s) of the Shares listed and transmitted hereby, no endorsements of certificates or separate stock powers are required unless payment is to be made to, or certificates for Shares not tendered or accepted for payment are to be issued in the name of, a person other than the registered owner(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered owner of the certificate(s) listed, the certificate(s) must be endorsed or accompanied by the appropriate stock powers, in either case signed exactly as the name or names of the registered owner or holders appears on the certificate(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. 6. STOCK TRANSFER TAXES. The Merger Sub will pay any stock transfer taxes with respect to the transfer and sale of Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or (in the circumstances permitted hereby) if certificates for Shares not tendered or accepted for payment are to be registered in the name of, any person other than the registered owner, or if tendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered owner or such person) payable on account of the transfer to such person will be deducted from the purchase price if satisfactory evidence of the payment of such taxes, or exemption therefrom, is not submitted. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF TRANSMITTAL. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in the name of, and/or certificates for Shares not tendered or accepted for payment are to be issued or returned to, a person other than the signer of this Letter of Transmittal or if a check and/or such certificates are to be mailed to a person other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. 8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses set forth below or from your broker, dealer, commercial bank or trust company. Additional copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer materials may be obtained from the Information Agent. 9. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN"), generally the stockholder's social security or federal employer identification number, on Substitute Form W-9 below. Failure to provide the information on the form may subject the tendering stockholder to 31% federal income tax backup withholding on the payment of the purchase price. The box in Part 3 of the form may be checked if the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% of all payments of the purchase price thereafter until a TIN is provided to the Depositary. IMPORTANT: THIS LETTER OF TRANSMITTAL (TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE. IMPORTANT TAX INFORMATION Under the federal income tax law, a stockholder whose tendered Shares are accepted for purchase is required by law to provide the Depositary (as payer) with such stockholder's correct TIN on Substitute Form W-9 below and to certify that such TIN is correct (or that such stockholder is awaiting a TIN) or otherwise establish a basis for exemption from backup withholding. If such stockholder is an individual, the TIN is his or her social security number. If a stockholder fails to provide a TIN to the Depositary, such stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such stockholder with respect to Shares purchased pursuant to the Offer may be subject to backup withholding of 31% (see below). Certain stockholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, that stockholder must generally submit a Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. A Form W-8 can be obtained from the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the stockholder or payee. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. The box in Part 3 of the Substitute Form W-9 may be checked if the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the stockholder or other payee must also complete the Certification of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. If a stockholder's TIN is provided to the Depositary within 60 days of the date of the Substitute Form W-9, payment will be made to such stockholder without the imposition of backup withholding. If a stockholder's TIN is not provided to the Depositary within such 60-day period, the Depositary will make such payment, subject to backup withholding. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments made to a stockholder whose tendered Shares are accepted for purchase, the stockholder is required to notify the Depositary of its correct TIN by completing Substitute Form W-9 certifying that the TIN provided on such Form is correct (or that such stockholder is awaiting a TIN, in which case the stockholder should check the box in Part 3 of the Substitute Form W-9) and that (A) such stockholder is exempt from backup withholding, (B) such stockholder has not been notified by the Internal Revenue Service that such stockholder is subject to backup withholding as a result of failure to report all interest or dividends or (C) the Internal Revenue Service has notified the stockholder that the stockholder is no longer subject to backup withholding. The stockholder must sign and date the Substitute Form W-9 where indicated, certifying that the information on such Form is correct. Alternatively, a stockholder that qualifies as an exempt recipient (other than a stockholder required to complete Form W-8 as described above) should write "Exempt" in Part 1 of the Substitute Form W-9, enter its correct TIN and sign and date such Form where indicated. WHAT NUMBER TO GIVE THE DEPOSITARY The stockholder is required to give the Depositary the social security number or employer identification number of the record owner of the Shares or of the last transferee appearing on the transfers attached to, or endorsed on, the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS (SEE INSTRUCTION 9) PAYER: HARRIS TRUST AND SAVINGS BANK - -------------------------------------------------------------------------------- SUBSTITUTE PART 1--PLEASE PROVIDE YOUR Social security number FORM W-9 TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND OR DATING BELOW. Employer identification number ----------------------- ----------------------------------------------------------- PART 2--CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me); and (2) I am not subject to backup withholding because DEPARTMENT OF THE (i) I am exempt from backup withholding, (ii) I TREASURY INTERNAL have not been notified by the Internal Revenue REVENUE SERVICE Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (iii) the IRS has notified me that I am no longer subject to backup withholding. ----------------------------------------------------------- Certification Instructions--You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to backup with- holding because of under-reporting PART 3-- interest or dividends on your tax re- Awaiting TIN [_] PAYER'S REQUEST FOR turn. However, if after being noti- TAXPAYER fied by the IRS that you were subject IDENTIFICATION to backup withholding you received NUMBER (TIN) another notification from the IRS stating that you are no longer sub- ject to backup withholding, do not cross out item (2). SIGNATURE ______________ DATE _______ NAME (Please Print): _________________ - -------------------------------------------------------------------------------- NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. - -------------------------------------------------------------------------------- CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (i) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (ii) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within 60 days, 31% of all reportable payments made to me thereafter will be withheld until I provide a taxpayer identification number to the Depositary. ------------------------------------ ------------------------------------ Signature Date - ------------------------------------ Name (Please Print ) - -------------------------------------------------------------------------------- The Information Agent for the Offer is: GEORGESON & COMPANY INC. ------------- Wall Street Plaza New York, New York 10005 Bankers and Brokers Call Collect (212) 440-9800 All others Call Toll Free (800) 223-2064 The Dealer Manager for the Offer is: WASSERSTEIN PERELLA & CO., INC. 31 West 52nd Street New York, New York 10019 (212) 969-2700 March 6, 1998 EX-99.A.3 4 FORM OF LETTER DTD 3/6/98 TO BROKERS, DEALERS EXHIBIT 99(a)(3) OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE SERIES B JUNIOR PARTICIPATING PREFERRED STOCK) OF A.P. GREEN INDUSTRIES, INC. AT $22.00 NET PER SHARE BY BGN ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED. March 6, 1998 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been engaged by BGN Acquisition Corp., a Delaware corporation (the "Merger Sub") and a wholly owned subsidiary of Global Industrial Technologies, Inc., a Delaware corporation ("Purchaser"), to act as Dealer Manager in connection with the Merger Sub's offer to purchase all outstanding shares of Common Stock, par value $1.00 per share (the "Common Stock"), including the associated rights to purchase Series B Junior Participating Preferred Stock (the "Rights" and, together with the Common Stock, the "Shares"), of A.P. Green Industries, Inc., a Delaware corporation (the "Company"), at $22.00 per Share, net to the seller in cash, on the terms and subject to the conditions set forth in the Offer to Purchase, dated March 6, 1998, and the related Letter of Transmittal (which, together with any amendments or supplements thereto collectively constitute the "Offer"). Please furnish copies of the enclosed materials to those of your clients for whom you hold Shares registered in your name or in the name of your nominee. Enclosed herewith are the following documents: 1. Offer to Purchase, dated March 6, 1998; 2. Letter of Transmittal to be used by stockholders of the Company in accepting the Offer; 3. Letter to Stockholders of the Company from the President and Chief Executive Officer of the Company, accompanied by the Company's Solicitation/Recommendation Statement on Schedule 14D-9; 4. A printed form of letter that may be sent to your clients for whose account you hold Shares in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 5. Notice of Guaranteed Delivery; 6. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and 7. Return envelope addressed to Harris Trust and Savings Bank, the Depositary. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS DESCRIBED IN SECTION 13 OF THE OFFER TO PURCHASE. WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. The Offer is being made pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), dated as of March 3, 1998, among the Company, Purchaser and the Merger Sub, pursuant to which, after the completion of the Offer, the Merger Sub will be merged with and into the Company (the "Merger") and each issued and outstanding Share (other than Shares owned by Purchaser, the Merger Sub or any other subsidiary of Purchaser or Shares that are held by stockholders exercising appraisal rights pursuant to Section 262 of the Delaware General Corporation Law) shall by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive, without interest, an amount in cash equal to $22.00. As a result of the Merger, the Company will become a wholly owned subsidiary of Purchaser. The Merger Agreement is more fully described in Section 11 of the Offer to Purchase. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares or timely confirmation of the book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message (as defined in the Offer to Purchase)) and (iii) any other documents required by such Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT PURSUANT TO THE OFFER. Neither Purchaser nor the Merger Sub will pay any fees or commissions to any broker or dealer or other person (other than the Dealer Manager, as disclosed in the Offer to Purchase) in connection with the solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed upon request for customary mailing and handling expenses incurred by you in forwarding the enclosed offering materials to your clients. Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of the enclosed Offer to Purchase. Requests for additional copies of the enclosed materials may be directed to the Information Agent or to brokers, dealers, commercial banks or trust companies. Very truly yours, Wasserstein Perella & Co., Inc. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR ANY OTHER PERSON THE AGENT OF PURCHASER, THE MERGER SUB, THE DEALER MANAGER, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL. 2 EX-99.A.4 5 FORM OF LETTER TO CLIENTS TO BE USED BY BROKERS EXHIBIT 99(a)(4) OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE SERIES B JUNIOR PARTICIPATING PREFERRED STOCK) OF A.P. GREEN INDUSTRIES, INC. AT $22.00 NET PER SHARE BY BGN ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED. March 6, 1998 To Our Clients: Enclosed for your consideration is an Offer to Purchase, dated March 6, 1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") relating to the offer by BGN Acquisition Corp., a Delaware corporation (the "Merger Sub") and a wholly owned subsidiary of Global Industrial Technologies, Inc., a Delaware corporation ("Purchaser"), to purchase for cash, all of the outstanding shares of Common Stock, par value $1.00 per share (the "Common Stock"), including the associated rights to purchase Series B Junior Participating Preferred Stock (the "Rights"), of A.P. Green Industries, Inc., a Delaware corporation (the "Company") (the Common Stock and the Rights together are referred to herein as the "Shares"), on the terms and subject to the conditions set forth in the Offer (together with, if the Offer is extended or amended, the terms of such extension or amendment). Also enclosed is the letter to stockholders of the Company from the President and Chief Executive Officer of the Company accompanied by the Company's Solicitation/Recommendation Statement on Schedule 14D-9. WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish to tender any of or all the Shares held by us for your account, pursuant to the terms and conditions set forth in the Offer. Your attention is directed to the following: 1. The Offer price is $22.00 per Share, net to the Seller in cash, without interest thereon, upon the terms and subject to the conditions of the Offer. 2. The Offer is being made for all of the outstanding Shares. 3. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER (AS DEFINED BELOW) ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AGREEMENT (AS DEFINED BELOW) AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. 4. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer a number of Shares representing at least a majority of the outstanding Shares on a fully diluted basis. The Offer is also subject to certain other conditions described in Section 13 of the Offer to Purchase. 5. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED BY THE MERGER SUB (THE "EXPIRATION DATE"). 6. The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of March 3, 1998 (the "Merger Agreement"), among the Company, Purchaser and the Merger Sub, pursuant to which, after the completion of the Offer, the Merger Sub will be merged with and into the Company (the "Merger") and each issued and outstanding Share (other than Shares owned by Purchaser, the Merger Sub or any other subsidiary of Purchaser or Shares that are held by stockholders exercising appraisal rights pursuant to Section 262 of the Delaware General Corporation Law) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive, without interest, an amount in cash equal to $22.00. As a result of the Merger, the Company will become a wholly owned subsidiary of Purchaser. The Merger Agreement is more fully described in Section 11 of the Offer to Purchase. 7. Any stock transfer taxes applicable to a sale of Shares to the Merger Sub will be borne by the Merger Sub, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Your instructions to us should be forwarded promptly to permit us to submit a tender on your behalf prior to the Expiration Date. If you wish to have us tender any of or all of the Shares held by us for your account, please so instruct us by completing, executing, detaching and returning to us the instruction form on the detachable part hereof. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the Expiration Date. Payment for Shares accepted for payment pursuant to the Offer will be in all cases made only after timely receipt by Harris Trust and Savings Bank (the "Depositary"), of (a) certificates for (or a timely Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to) such Shares, (b) a Letter of Transmittal, properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer effected pursuant to the procedure set forth in Section 3 of the Offer to Purchase, an Agent's Message, and (c) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when certificates for Shares or Book-Entry Confirmations with respect to Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING PAYMENT PURSUANT TO THE OFFER. The Offer is not being made to, nor will tenders be accepted from, or on behalf of, holders of Shares in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities or blue sky laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed made on behalf of the Merger Sub by Wasserstein Perella & Co., Inc., the Dealer Manager for the Offer, or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. An envelope in which to return your instructions to us is enclosed. If you authorize tender of your Shares, all such Shares will be tendered unless otherwise indicated in such instruction form. Please forward your instructions to us as soon as possible to allow us ample time to tender Shares on your behalf prior to the expiration of the Offer. 2 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE SERIES B JUNIOR PARTICIPATING PREFERRED STOCK) OF A.P. GREEN INDUSTRIES, INC. The undersigned acknowledge(s) receipt of your letter, the Offer to Purchase, dated March 6, 1998 (the "Offer to Purchase"), and the related Letter of Transmittal relating to shares of Common Stock, par value $1.00 per share (the "Common Stock"), including the associated rights to purchase Series B Junior Participating Preferred Stock (the "Rights"), of A.P. Green Industries, Inc., a Delaware corporation. The Common Stock and the Rights together are referred to herein as the "Shares." This will instruct you to tender the number of Shares indicated below held by you for the account of the undersigned, on the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal. Number of Shares to be Tendered:* SIGN HERE _______________________________ Shares -------------------------------------- Daytime Area Code -------------------------------------- and Telephone No. ____________________ SIGNATURE(S) Taxpayer Identification -------------------------------------- No. or Social Security No. ___________ -------------------------------------- Dated: _________________________, 1997 (PLEASE PRINT NAME(S) AND ADDRESS(ES)) - ------- * Unless otherwise indicated, it will be assumed that all your Shares are to be tendered. 3 EX-99.A.5 6 PRESS RELEASE DATED MARCH 4, 1998 EXHIBIT 99(a)(5) [GLOBAL INDUSTRIAL TECHNOLOGIES] FOR IMMEDIATE RELEASE INVESTOR CONTACT: GEORGE PASLEY MEDIA CONTACT: LARRY NANCE V.P. COMMUNICATIONS MANAGER, CORPORATE RELATIONS/PUBLIC AFFAIRS 214-953-4510 214-953-4518 WEB SITE: PRNEWSWIRE.COM/GIX GLOBAL INDUSTRIAL TECHNOLOGIES TO ACQUIRE A.P. GREEN ---------------------------------------------------- -COMBINATION OF HARBISON-WALKER AND A.P. GREEN TO CREATE LEADING REFRACTORIES --------------------------------------------------------------------------- BUSINESS IN WESTERN HEMISPHERE: GENERATE OPPORTUNITIES FOR ECONOMIES OF SCALE- - ----------------------------------------------------------------------------- - -COMPANY ALSO SIGNS DEFINITIVE AGREEMENT FOR SALE OF INTOOL FOR $217.5MILLION- - ---------------------------------------------------------------------------- DALLAS, TX, March 4, 1998 -- Global Industrial Technologies, Inc. (NYSE: GIX) announced today that it has signed a definitive agreement to purchase for cash all outstanding shares of A.P. Green Industries, Inc. (NYSE: APK) at $22 per share, or approximately $195 million. The Company also said it signed a definitive agreement for the previously announced sale of its Industrial Tool business to Cooper Industries (NYSE:CBE) of Houston, Texas, for $217.5 million. "These transactions further our efforts to create one of the world's leading refractories companies, and sharpen our focus on industrial businesses in which we see strong opportunities for substantial future profit growth," said J.L. Jackson, Chairman and Chief Executive of Global Industrial Technologies. "A.P. Green also brings to Global an attractive and profitable lime business, which makes up 38% of their operating income and will provide product diversity after integration into our Minerals operation." "With the sale of INTOOL for a price of approximately nine times EBITDA, we have created significant value, which we will redeploy into a major opportunity to expand the profit potential, and growth of our Harbison-Walker subsidiary," Jackson said. "The critical mass we will possess in that business, our proven ability to operate as a low-cost producer, and the economies of scale and synergies we expect to achieve as a result of the combination will help us generate enhanced returns from this business. As a result of these benefits, we expect our acquisition of Green to be modestly accretive to earnings in fiscal 1998, and significantly accretive to earnings in 1999 and beyond notwithstanding a restructuring charge associated with this transaction. Further, we expect profit contributions from this acquisition to build as we integrate Green's operations with Harbison-Walker's over the next two years. Once fully integrated, we believe that annual cost reductions in the range of $15-$20 million are achievable after an assumed potential 15% reduction of A.P. Green's sales." "The decisions we announce today were arrived at following an extensive evaluation of our businesses both with resources within the Company and with outside consultants, together with a full review of all options that could help us deliver the greatest possible value to shareholders," continued Jackson. "Our major presence in the refractories market, together with our forged products business and its exciting new undercarriage operation, represent a solid core from which to build returns for shareholders." Global's acquisition of Green, which will be effected by means of a tender offer, was approved unanimously by the Boards of Directors of both companies. The tender offer will commence within five business days and once initiated, will be open for 20 business days unless further extended. Global's tender offer is conditioned upon, among other things, customary regulatory approvals and there being validly tendered and not withdrawn at least a majority of the outstanding shares of A.P. Green. After the consummation of the tender offer, Global has agreed to acquire any of the remaining outstanding shares of Green pursuant to a second-step merger in which holders of such shares will receive $22 per share. Juan Bravo, president of Harbison-Walker stated: "We are very excited about the prospects of the Harbison-Walker/Green operation. The combined business will operate plants in 6 countries around the world, with revenues of more than $650 million. We believe that together, the management and employees of the combined company can create significant value for Global shareholders." Wasserstein Perella is the Financial Advisor for Global Industrial Technologies in its acquisition of A.P. Green. Offering materials will be available from the Information Agent, Georgeson & Company Inc. The depositary for the offer is Harris Trust and Savings Bank. A.P. Green, with headquarters in Mexico, Mo., reported sales and operating revenues of $277.9 million last year. It has 22 plants located in the U.S., Canada, Mexico, Colombia, the U.K. and Indonesia, manufacturing refractory products used in the processing of steel and other metals, chemicals, glass, ceramics, paper and cement. A.P. Green also produces lime used in the manufacture of steel, aluminum, pulp and paper processing, soil stabilization for road construction, and water purification. The Company expects to close its sale of INTOOL to Cooper Industries by the end of the calendar first quarter. INTOOL reported sales of $113.2 million and operating earnings of $19.7 million for 1997. Cooper is a global, diversified, manufacturer of electrical products, tools and hardware, and automotive products with 1997 revenues of -2- $5.3 billion. INTOOL will become a part of Cooper Power Tools Division. "From what was a small division of Dresser Industries, we have built a profitable and thriving business at INTOOL through internal growth, our 1995 acquisition of Rotor Tool, and our establishment of a new start-up division, ITD Automation," said Jackson. "We are pleased that the managers and employees of INTOOL are becoming part of a company that recognizes the value of INTOOL's brands, products and people and are committed to being a leader in the industrial tool business." Global Industrial Technologies is a major manufacturer of technologically advanced industrial products that support high-growth markets around the world. Its Harbison-Walker subsidiary operates 15 refractory plants in five countries, including the United States, Canada, Mexico, Chile and Germany. Statements the Company may publish, including those in this announcement, that are not strictly historical are "forward-looking" statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be realized. Forward-looking statements involve known and unknown risks which may cause the Company's actual results and corporate developments to differ materially from those expected. Factors that could cause results and developments to differ materially from the Company's expectations include, without limitation, changes in manufacturing and shipment schedules, delays in completing plant construction and acquisitions, currency exchange rates, new product and technology developments, competition within each business segment, cyclicity of the markets for the products of a major segment, litigation, significant cost variances, the effects of acquisitions and divestitures, and other risks described from time to time in the Company's SEC reports including quarterly reports on Form 10-Q, annual reports on Form 10-K and reports on Form 8-K. -3- EX-99.A.6 7 PRESS RELEASE DATED MARCH 6, 1998 Exhibit 99(a)(6) [Letterhead of Global Industrial Technologies, Inc.] FOR IMMEDIATE RELEASE - - - - - - - - - - - - - - - - - - - - - - Investor Contact: George Pasley Media Contact: Larry Nance V.P. Communications Manager, Corporate Relations/Public Affairs 214-953-4510 214-953-4518 Web site: prnewswire.com/gix GLOBAL INDUSTRIAL TECHNOLOGIES, INC. COMMENCES TENDER OFFER FOR A.P. GREEN INDUSTRIES, INC. Dallas, TX (March 6, 1998) - Global Industrial Technologies, Inc. (NYSE: GIX) today commenced its previously announced cash tender offer for all of the outstanding common shares of A.P. Green Industries, Inc. (NYSE: APK) at a price of $22.00 per share, net to the seller, in cash. The tender offer is scheduled to expire at 12:00 midnight, Eastern Time, on Thursday, April 2, 1998, unless extended. The complete terms and conditions of the offer are set forth in the Offer to Purchase, copies of which are available by contacting the information agent, Georgeson & Company Inc. at 800-223-2064. Global Industrial Technologies, Inc. also said it filed a Premerger Notification and Report Form with the Federal Trade Commission and the Antitrust Division of the Department of Justice under the Hart-Scott-Rodino Act on Wednesday, March 4, 1998. Wasserstein Perella & Co., Inc. is the Dealer Manager for the Offer. Global Industrial Technologies, Inc. is a major manufacturer of technologically advanced industrial products that support high-growth markets around the world. Its Harbison-Walker subsidiary operates 15 refractory plants in five countries, including the United States, Canada, Mexico, Chile and Germany. EX-99.A.7 8 FORM OF NEWSPAPER ADVERTISEMENT DTD 3/6/98 EXHIBIT 99(a)(7) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase, dated March 6, 1998 and the related Letter of Transmittal and any amendments or supplements thereto, and is being made to all holders of Shares. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of Purchaser by Wasserstein Perella & Co., Inc. or one or more registered brokers or dealers that are licenced under the laws of such jurisdiction. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE SERIES B JUNIOR PARTICIPATING PREFERRED STOCK) OF A.P. GREEN INDUSTRIES, INC. AT $22.00 NET PER SHARE BY BGN ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC. BGN Acquisition Corp., a Delaware corporation (the "Merger Sub") and a wholly owned subsidiary of Global Industrial Technologies, Inc., a Delaware corporation ("Purchaser"), is offering to purchase all of the outstanding shares of common stock, par value $1.00 per share (the "Common Stock"), of A.P. Green Industries, Inc., a Delaware corporation (the "Company"), including the associated rights to purchase Series B Junior Participating Preferred Stock of the Company (the "Rights" and, together with the Common Stock, the "Shares"), of the Company at $22.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated March 6, 1998, and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). Tendering stockholders will not be obligated to pay brokerage fees or commissions or, subject to Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by the Merger Sub pursuant to the Offer. The purpose of the Offer is to acquire for cash as many of the outstanding Shares as possible as a first step in acquiring the entire equity interest in the Company. Following the consummation of the Offer, Purchaser intends to effect the merger described below. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 2, 1998 UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING A NUMBER OF SHARES REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, AND (2) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED. CERTAIN OTHER CONDITIONS TO CONSUMMATION OF THE OFFER ARE DESCRIBED IN SECTION 13 OF THE OFFER TO PURCHASE. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of March 3, 1998 (the "Merger Agreement"), among the Company, Purchaser and the Merger Sub, pursuant to which, after the completion of the Offer, the Merger Sub will be merged with and into the Company (the "Merger") and each outstanding and issued Share (other than Shares owned by Purchaser, the Merger Sub or any other subsidiary of Purchaser or Shares that are held by stockholders exercising appraisal rights pursuant to Section 262 of the Delaware General Corporation Law), will, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive, without interest, an amount in cash equal to $22.00. As a result of the Merger, the Company will become a wholly owned subsidiary of Purchaser. The Merger Agreement is more fully described in Section 11 of the Offer to Purchase. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. For purposes of the Offer, the Merger Sub will be deemed to have accepted for payment Shares validly tendered and not withdrawn as, if and when the Merger Sub gives oral or written notice to Harris Trust and Savings Bank (the "Depositary") of its acceptance for payment of such Shares pursuant to the Offer. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for the tendering stockholders for the purpose of receiving payments from the Merger Sub and transmitting such payments to the tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares (or confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility")) pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) in accordance with the instructions of the Letter of Transmittal, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message (as defined in Section 3 of the Offer to Purchase)) and (iii) any other documents required by such Letter of Transmittal. Subject to the applicable rules and regulations of the Securities and Exchange Commission, the Merger Sub expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary. Any such extension will also be publicly announced by press release issued no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled expiration date of the Offer. Tenders of Shares made pursuant to the Offer are irrevocable except that Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) and, unless theretofore accepted for payment by the Merger Sub pursuant to the Offer, may also be withdrawn at any time after May 4, 1998. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the names in which the certificate(s) evidencing the Shares to be withdrawn are registered, if different from that of the person who tendered such Shares. If certificates for Shares to be withdrawn have been delivered or otherwise identified to the Depositary, the name of the registered holder and the serial numbers of the particular certificates evidencing the Shares to be withdrawn must also be furnished to the Depositary as aforesaid prior to the physical release of such certificates and, unless such Shares have been tendered for the account of any Eligible Institution (as defined in Section 3 of the Offer to Purchase), the signature on the notice of withdrawal must be guaranteed by an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer as set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's procedures for such withdrawal, in which case a notice of withdrawal will be effective if delivered to the Depositary in writing. Withdrawals of tenders of Shares may not be rescinded, and any Shares properly withdrawn will thereafter be deemed not validly tendered for the purposes of the Offer. However, withdrawn Shares may be retendered by again following one of the procedures described in Section 3 of the Offer to Purchase at any time on or prior to the Expiration Date. The information required to be disclosed by paragraph (e)(1)(vii) of Rule 14d-6 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided the Merger Sub with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the Letter of Transmittal and, if required, other relevant materials, will be mailed by the Merger Sub to record holders of Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. THE OFFER TO PURCHASE AND THE LETTER OF THE TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Questions and requests for assistance may be directed to the Information Agent or to the Dealer Manager at their respective addresses and telephone numbers set forth below. Requests for additional copies of the Offer to Purchase, the related Letter of Transmittal and other tender offer materials may be directed to the Information Agent or the Dealer Manager. Such additional copies will be furnished at the Merger Sub's expense. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Merger Sub, in its sole discretion, which determination shall be final and binding. The Merger Sub will not pay any fees or commissions to any broker or dealer or any other person (other than the Dealer Manager) for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: [GEORGESON & COMPANY INC. -- LOGO] Wall Street Plaza New York, New York 10005 Banks and Brokers call collect (212) 440-9800 ALL OTHERS CALL TOLL-FREE 1-800-223-2064 The Dealer Manager for the Offer is: WASSERSTEIN PERELLA & CO., INC. 31 West 52nd Street New York, New York 10019 (212) 969-2700 EX-99.A.8 9 NOTICE OF GUARANTEED DELIVERY EXHIBIT 99(a)(8) NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE SERIES B JUNIOR PARTICIPATING PREFERRED STOCK) OF A.P. GREEN INDUSTRIES, INC. As set forth in Section 3 of the Offer to Purchase (as defined below), this form or one substantially equivalent may be used to accept the Offer (as defined below) if certificates for shares of Common Stock, par value $1.00 per share (the "Common Stock"), including the associated rights to purchase Series B Junior Participating Preferred Stock (the "Rights" and, collectively with the Common Stock, the "Shares"), of A.P. Green Industries, Inc., a Delaware corporation (the "Company"), are not immediately available, or if the procedure for book-entry transfer cannot be complied with on a timely basis, or all required documents cannot be delivered to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). This form may be delivered by hand to the Depositary or transmitted by telegram, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution (as defined in Section 3 of the Offer to Purchase). See Section 3 of the Offer to Purchase. The Depositary: HARRIS TRUST AND SAVINGS BANK Facsimile Transmission By Hand/Overnight Delivery: By Registered or Number: Harris Trust and Savings Bank Certified Mail: (For Eligible c/o Harris Trust Company Harris Trust and Savings Institutions Only) of New York Bank (212) 701-7636 88 Pine Street c/o Harris Trust Company Confirm Receipt of 19th Floor of New York Facsimile by Telephone: New York, NY 10005 P.O. Box 1010 (212) 701-7624 Wall Street Station New York, NY 10268-1010 -------------- DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. Ladies and Gentlemen: The undersigned hereby tenders to BGN Acquisition Corp., a Delaware corporation (the "Merger Sub") and a wholly owned subsidiary of Global Industrial Technologies, Inc., a Delaware corporation, on the terms and subject to the conditions set forth in the Offer to Purchase, dated March 6, 1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"), receipt of which is hereby acknowledged, the number of Shares set forth below, all pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Number of Shares: ____________________ Name(s) of Record Holder(s) __________ Certificate Nos. -------------------------------------- (if available): ______________________ -------------------------------------- (CHECK ONE BOX IF SHARES WILL BE PLEASE PRINT TENDERED BY BOOK-ENTRY TRANSFER) Address(es): _________________________ [_] The Depository Trust Company [_] Philadelphia Depository Trust -------------------------------------- Company ZIP CODE Account Number: ______________________ Dated: _______________________________ Daytime Area Code and Tel. No.: ________________________ Signature(s): ________________________ 2 GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program, hereby guarantees to deliver to the Depositary either the certificates representing the Shares tendered hereby, in proper form for transfer, or a Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to such Shares, in any such case together with a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase), and any other required documents, within THREE trading days after the date hereof. The Eligible Institution that completes this form must communicate this guarantee to the Depositary and must deliver the Letter of Transmittal and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to such Eligible Institution. Name of Firm: --------------------------- -------------------------------------- AUTHORIZED SIGNATURE Address: ------------------------------- Name: ZIP CODE --------------------------------- PLEASE PRINT - -------------------------------------- Title: ---------------------------------- Area Code and Tel. No.: --------------------- Dated: --------------------------------- NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.A.9 10 IRS GUIDELINES TO SUBSTITUTE FORM W-9 EXHIBIT 99(a)(9) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER NAME AND IDENTIFICATION NUMBER TO GIVE THE PAYER. Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen; i.e., 00-0000000. The table below will help determine the name and number to give the payer. - ----------------------------------- -----------------------------------
GIVE THE NAME AND SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT NUMBER OF - --------------------------------------------- 1. An individual's account The individual 2. Two or more individuals The actual owner (joint account) of the account or, if combined funds, any one of the individuals (1) 3. Custodian account of a The minor (2) minor (Uniform Gift to Minors Act) 4.a. The usual revocable The grantor- savings trust account trustee (1) (grantor is also trustee) b. So-called trust account The actual owner that is not a legal or (1) valid trust under State law 5. Sole proprietorship The owner (3) account - ---------------------------------------------
GIVE THE NAME AND EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT NUMBER OF -- 6. Sole proprietorship The owner (3) account 7. A valid trust, estate, The legal entity or pension trust (4) 8. Corporate account The corporation 9. Association, club, The organization religious, charitable, educational or other tax-exempt organization account 10. Partnership The partnership 11. A broker or registered The broker or nominee nominee 12. Account with the The public Department of entity Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments --
(1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your Social Security Number or Employer Identification Number. (4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) NOTE: If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card (for individuals), or Form SS-4, Application for Employer Identification Number (for businesses and all other entities), at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING The following is a list of payees specifically exempted from backup withholding depending upon the type of payment (see below): (1) A corporation. (2) An organization exempt from tax under section 501(a), or an IRA or a custodial account under section 403(b)(7). (3) The United States or any agency or instrumentality thereof. (4) A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. (5) A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. (6) An international organization or any agency or instrumentality thereof. (7) A foreign central bank of issue. (8) A dealer in securities or commodities required to register in the U.S. or a possession of the U.S. (9) A futures commission merchant registered with the Commodity Futures Trading Commission. (10) A real estate investment trust. (11) An entity registered at all times during the tax year under the Investment Company Act of 1940. (12) A common trust fund operated by a bank under section 584(a). (13) A financial institution. (14) A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. (15) A trust exempt from tax under section 664 or described in section 4947. For Interest and dividends, all listed payees are exempt except item (9). For broker transactions, payees listed in items (1) through (13) and a person registered under the Investment Advisers Act of 1940 who regularly acts as a broker are exempt. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART 1 OF THE FORM, AND RETURN IT TO THE PAYER. If you are a nonresident alien or a foreign entity not subject to backup withholding, give the payer a completed Form W-8, Certificate of Foreign Status. PRIVACY ACT NOTICE. Section 6109 requires most recipients of dividend, Interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. The IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable Interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail to furnish your correct taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or Imprisonment. FOR ADDITIONAL INFORMATION CON- TACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.B.1 11 CREDIT AGREEMENT DATED SEPTEMBER 23, 1994 EXHIBIT 99(b)(1) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CREDIT AGREEMENT dated as of September 23, 1994 among INDRESCO INC., VARIOUS FINANCIAL INSTITUTIONS and BANK OF AMERICA ILLINOIS, as Agent - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TABLE OF CONTENTS PAGE SECTION DEFINITIONS........................................... 1.1 Definitions........................................... 1.2 Computations........................................... 1.3 Cross-References; Section Captions..................... SECTION 2 COMMITMENTS OF THE LENDERS; TYPES OF LOANS; BORROWING AND CONVERSION PROCEDURES................. 2.1 Commitments............................................ 2.2 Various Types of Loans................................. 2.3 Borrowing Procedures................................... 2.4 Conversion Procedures.................................. 2.5 Warranty Upon Conversion............................... 2.6 Conditions 2.7 Pro Rata Treatment..................................... 2.8 Commitments Several.................................... 2.9 Extension of the Termination Date...................... SECTION 3 NOTES EVIDENCING LOANS................................. 3.1 Notes.................................................. 3.2 Recordkeeping.......................................... SECTION 4 INTEREST............................................... 4.1 Interest Rates......................................... 4.2 Interest Payment Dates................................. 4.3 Interest Periods....................................... 4.4 Setting and Notice of Eurodollar Rates................. 4.5 Computation of Interest................................ 4.6 Limitation on Interest................................. SECTION 5 FEES................................................... 5.1 Non-Use Fee............................................ 5.2 Agent's Fee............................................ SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS; PREPAYMENTS.......................................... 6.1 Reduction or termination of the Commitments............ 6.2 Prepayments............................................ SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.................................................. 7.1 Making of Payments..................................... 7.2 Application of Certain Payments........................ 7.3 Due Date Extension..................................... -i- PAGE 7.4 Setoff................................................ 7.5 Proration of Payments................................. 7.6 Taxes................................................. SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS................................... 8.1 Increased Costs....................................... 8.2 Basis for Determining Interest Rate Inadequate or Unfair.................................. 8.3 Changes in Law Rendering Eurodollar Loans Unlawful 8.4 Funding Losses........................................ 8.5 Right of Lenders to Fund through Other Offices............................................... 8.6 Discretion of Lenders as to Manner of Funding............................................. 8.7 Mitigation of Circumstances; Replacement of Affected Lender..................................... 8.8 Conclusiveness of Statements; Survival of Provisions............................................ SECTION 9 WARRANTIES............................................ 9.1 Organization, Power, etc.............................. 9.2 Authorization; No Conflict............................ 9.3 Validity and Binding Nature........................... 9.4 No Default............................................ 9.5 Financial Statements.................................. 9.6 No Material Adverse Change; Solvency.................. 9.7 Litigation; Labor Controversies; Contingent Liabilities......................................... 9.8 Ownership of Properties............................... 9.9 Subsidiaries.......................................... 9.10 Purpose............................................... 9.11 Regulation U.......................................... 9.12 Compliance with Laws, etc............................. 9.13 Investment Company Act................................ 9.14 Public Utility Holding Company Act.................... 9.15 Environmental Warranties.............................. 9.16 Pension and Welfare Plans............................. 9.17 Taxes................................................. 9.18 Accuracy of Information............................... SECTION 10 COVENANTS............................................. 10.1 Reports, Certificates and Other Information........... 10.1.1 Annual Financial Statements........................... -ii- PAGE 10.1.2 Quarterly Financial Statements............................... 10.1.3 Compliance Certificate....................................... 10.1.4 SEC and Other Reports........................................ 10.1.5 Other Information............................................ 10.2 Notice of Default, Litigation, etc........................... 10.3 Maintenance of Existence, etc................................ 10.4 Foreign Qualification........................................ 10.5 Books, Records and Access.................................... 10.6 Insurance.................................................... 10.7 Maintenance of Property...................................... 10.8 Taxes........................................................ 10.9 Compliance with Laws......................................... 10.10 Further Assurance............................................ 10.11 Pension Plans................................................ 10.12 Merger, Purchase and Sale.................................... 10.13 Indebtedness/Capitalization Ratio............................ 10.14 Indebtedness/Net Cash Flow Ration............................ 10.15 Interest Coverage Ratio...................................... 10.16 Restricted Payments.......................................... 10.17 Indebtedness................................................. 10.18 Liens........................................................ 10.19 Other Agreements............................................. 10.20 Use of Proceeds.............................................. 10.21 Transactions with Affiliates................................. 10.22 Environmental Liabilities.................................... SECTION 11 CONDITIONS OF LENDING........................................ 11.1 Initial Loan................................................. 11.1.1 Notes........................................................ 11.1.2 Resolutions.................................................. 11.1.3 Consents, etc................................................ 11.1.4 Incumbency and Signature Certificates........................ 11.1.5 Opinion of Counsel for the Company........................... 11.1.6 Other........................................................ 11.2 All Loans.................................................... 11.2.1 No Default................................................... 11.2.2 No Material Adverse Change................................... 11.2.3 Confirmatory Certificate..................................... SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT........................... 12.1 Events of Default............................................ 12.1.1 Non-Payment of Obligation.................................... 12.1.2 Non-Performance of Other Obligations......................... 12.1.3 Default on Other Indebtedness................................ 12.1.4 Bankruptcy, Insolvency, etc.................................. -iii- PAGE 12.1.5 Default on Other Contractual Obligations....................... 12.1.6 Pension Plans.................................................. 12.1.7 Breach of Warranty............................................. 12.1.8 Judgments...................................................... 12.1.9 Material Adverse Change........................................ 12.2 Effect of Event of Default..................................... SECTION 13 THE AGENT...................................................... 13.1 Authorization.................................................. 13.2 Indemnification................................................ 13.3 Exculpation.................................................... 13.4 Credit Investigation........................................... 13.5 Agent and Affiliates........................................... 13.6 Action on Instructions of the Required Lenders........................................................ 13.7 Funding Reliance............................................... 13.8 Resignation.................................................... SECTION 14 GENERAL........................................................ 14.1 Waiver; Amendments............................................. 14.2 Confirmations.................................................. 14.3 Notices........................................................ 14.4 Subsidiary References.......................................... 14.5 Regulation U................................................... 14.6 Costs, Expenses and Taxes...................................... 14.7 Indemnification by the Company................................. 14.8 Successors and Assigns......................................... 14.9 Assignments; Participations.................................... 14.9.1 Assignments.................................................... 14.9.2 Participations................................................. 14.10 Governing Law.................................................. 14.11 Counterparts................................................... 14.12 Forum Selection and Consent to Jurisdiction............................................... 14.13 Waiver of Jury Trial........................................... SCHEDULE I Commitments and Percentages SCHEDULE 9.7 Litigation, Labor Controversies, Contingent Liabilities SCHEDULE 9.8 Properties SCHEDULE 9.9 Subsidiaries SCHEDULE 9.15 Environmental Matters SCHEDULE 10.17 Existing Indebtedness SCHEDULE 10.18 Existing Liens -iv- PAGE EXHIBIT A Form of Note (Section 3.1) EXHIBIT B Form of Compliance Certificate (Section 10.1.3) EXHIBIT C Form of Opinion of Counsel for the Company (Section 11.1.5) EXHIBIT D Form of Assignment Agreement (Section 14.9) EXHIBIT E Form of Joinder Agreement (Section 2.1) -v- CREDIT AGREEMENT ---------------- This CREDIT AGREEMENT, dated as of September 23, 1994 (as amended or otherwise modified from time to time, this "Agreement"), is entered into among INDRESCO INC., a Delaware corporation (the "Company"), the undersigned financial institutions (collectively the "Lenders" and individually each a "Lender") and BANK OF AMERICA ILLINOIS (in its individual capacity, "BofA"), as agent for the Lenders. In consideration of the premises and the mutual agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1 DEFINITIONS AND INTERPRETATION. 1.1 Definitions. When used herein the following terms shall have the ----------- following meanings (such definitions to be applicable to both the singular and plural forms of such terms): Acquired Assets means any assets (including the capital stock of any --------------- Person) acquired by the Company or any of its Subsidiaries pursuant to transactions of the type described in clauses (a) and (d) of Section 10.12. ----------- --- ------------- Adjusted EBIT means, for any period, the sum of (w) Consolidated Net ------------- Income for such period, without giving effect to the amount of any income or loss that is attributable to the Company's interest in Komatsu Dresser Company, plus (x) Consolidated Interest Expense for such period, plus (y) all United - ---- ---- States Federal, state, local and foreign income taxes of the Company and its Subsidiaries for such period, plus (z) any non-cash write-offs relating to ---- acquisitions during such period (but not more than $10,000,000 in the aggregate for such period). Adjusted Indebtedness means all Indebtedness of the Company and its --------------------- Subsidiaries excluding (i) Suretyship Liabilities of the Company or any Subsidiary of obligations of third parties (i.e., Persons other than the Company and its Subsidiaries) which do not constitute Indebtedness to the extent such Suretyship Liabilities do not exceed $1,000,000, (ii) Subordinated Debt and (iii) only at times through and including October 31, 1994, (a) Suretyship Liabilities of the Company in respect of obligations of KDC Financial Corp. or KDC Financial Limited Partnership for which (x) Komatsu America Corporation has agreed to indemnify the Company (but only to the extent that Komatsu Ltd. has guaranteed payment of such indemnity) and (b) Suretyship Liabilities of the Company in respect of Indebtedness for borrowed money of Komatsu Dresser Company in an aggregate amount not exceeding $45,000,000. Affected Lender means any Lender that has given notice to the Company --------------- (which has not been rescinded) of (i) any obligation by the Company to pay any amount pursuant to Section 7.6 or 8.1 or (ii) the occurrence of any circumstance ----------- --- of the nature described in Section 8.2 or 8.3. ----------- ---- Affected Loan -- see Section 8.3. ------------- ----------- Affiliate means, with respect to any Person, any other Person which, --------- directly or indirectly, controls, is controlled by or is under common control with such Person. For purposes of this definition, "control" (together with the correlative meanings of "controlled by" and "under common control with") means possession, directly or indirectly, of the power (a) to vote 20% or more of the securities (on a fully diluted basis) having ordinary voting power for the directors or managing general partners (or their equivalent) of such Person or (b) to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise. Agent means BofA in its capacity as agent for the Lenders hereunder ----- and any successor thereto in such capacity. Agreement -- see the Preamble. --------- -------- Alternate Reference Rate means at any time the greater of (a) the ------------------------ Federal Funds Rate plus 1/2 of 1% and (b) the Reference Rate. Assignee -- see Section 14.9.1. -------- --------------- Assignment Agreement -- see Section 14.9.1. -------------------- -------------- BofA - see Preamble. ---- -------- -2- Business Day means any day (other than a Saturday or Sunday) on which ------------ banks are open for commercial banking business in Chicago and, in the case of a Business Day which relates to a Eurodollar Loan, on which dealings are carried on in the interbank eurodollar market at the location of BofA's Eurodollar office. Capitalized Lease Liabilities means all monetary obligations of the ----------------------------- Company or any of its Subsidiaries under any leasing or similar arrangement which, in accordance with GAAP, would be classified as capitalized leases, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. CERCLA means the Comprehensive Environmental Response, Compensation ------ and Liability Act of 1980, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. Code means the Internal Revenue Code of 1986, as amended, reformed or ---- otherwise modified from time to time, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of the Code shall be construed to also refer to any successor sections. Commitment as to any Lender means the commitment of such Lender to ---------- make Loans hereunder, as adjusted from time to time pursuant to Section 6.1 or ----------- Section 14.9. The amount of the initial Commitment of each Lender is set forth - ------------ on the Schedule I attached to this Agreement. ---------- Company -- see the Preamble. ------- -------- Compliance Certificate means a certificate duly executed by the ---------------------- Company's chief financial officer, chief accounting officer or Treasurer in the form of Exhibit B hereto, together with such changes as the Required Lenders may --------- request from time to time for purposes of monitoring the compliance of the Company and its Subsidiaries herewith. -3- Consolidated Interest Expense means, for any period, the aggregate ----------------------------- interest expense of the Company and its Subsidiaries, as determined in accordance with those generally accepted accounting principles applied in the preparation of the financial statements referred to in Section 9.5. ----------- Consolidated Net Income means, for any period, all amounts which, in ----------------------- conformity with those generally accepted accounting principles applied in the preparation of the financial statements referred to in Section 9.5, would be ----------- included under net income on a consolidated income statement of the Company and its Subsidiaries. Contractual Obligation means, relative to any Person, any provision of ---------------------- any security issued by such Person or of any Instrument or undertaking to which such Person is a party or by which it or any of its properties, assets or revenues are bound. Dollar and the sign "$" mean lawful money of the United States of ------ - America. Effective Date -- see Section 11.1. -------------- ------------ Environmental Action means: -------------------- (a) any complaint, claim (whether absolute or contingent, matured or unmatured), citation, demand, inquiry or inquiries, notice of violation, correspondence, report, action, assertion of potential responsibility, lien, encumbrance, or proceeding (whether formal or informal), brought or issued by any governmental unit, agency, or body which relates to any of the following: (i) Environmental Laws; (ii) public health risks; (iii) the environmental condition of any real property that at any time was, is or hereafter will be owned, leased, operated or otherwise used or controlled by the Company or any of its Subsidiaries (the "Premises"), or any portion thereof, any -------- property near the Premises, or any property at which the -4- Company or any of its Affiliates is conducting or has conducted operations (including actual or alleged damage or injury to wildlife, biota, air, surface or subsurface soil or water, or other natural resources); or (iv) the use, exposure, release, generation, manufacture, transportation to or from, handling, storage, treatment, recycling, reclamation, reuse, emission, disposal or presence of any Hazardous Material either on the Premises, any adjacent property or property at which the Company or any of its Subsidiaries is conducting or has conducted operations, or the transportation of any Hazardous Material by the Company, any of its Subsidiaries or any of their respective agents, employees, consultants, or independent contractors for sale, treatment, storage, recycling, reclamation, reuse or disposal; (b) any violation or claim of violation by the Company or any of its Subsidiaries of any Environmental Laws; (c) any Lien for damages caused by, or the recovery of any costs incurred for the investigation, remediation or cleanup of, any release or threatened release of any Hazardous Material; or (d) the destruction or loss of use of property, or the injury, illness or death of any officer, director, employee, agent, representative, tenant or invitee of the Company or any of its Subsidiaries or the injury, illness or death of any other Person, in each case arising from or relating to the operations of the business of the Company or any of its Subsidiaries or the environmental condition of the Premises, any adjacent property or any property at which the Company or any of its Subsidiaries is conducting or has conducted operations. -5- Environmental Laws means: ------------------ (a) any federal statute, law, code, rule, regulation, ordinance, order, standard, permit, license or requirement (including consent decrees, judicial decisions and administrative orders), together with all related amendments, implementing regulations and reauthorizations, pertaining to the protection, preservation, conservation or regulation of the environment, including (without limitation): CERCLA; RCRA; the Toxic Substances Control Act, 15 U.S.C. (S)2601 et seq.; the Clean Air -- --- Act, 42 U.S.C. (S)7401 et seq.; and the Clean Water Act, 33 U.S.C. -- --- (S)1251 et seq.; -- --- (b) any state or local statute, law, code, rule, regulation, ordinance, order, standard, permit, license or requirement (including consent decrees, judicial decisions and administrative orders), together with all related amendments, implementing regulations and reauthorizations, pertaining to the protection, preservation, conservation or regulation of the environment; and (c) any federal, state or local legislation enacted in the future pertaining to the protection, preservation, conservation or regulation of the environment, and all related amendments, implementing regulations and reauthorizations (provided that no such future legislation shall be deemed to be an Environmental Law hereunder until it is actually enacted). ERISA means the Employee Retirement Income Security Act of 1974, as ----- amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor selections. ERISA Affiliate means any corporation, trade or business that is, --------------- along with the Company or any Subsidiary, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in section 414(b) or 414(c) respectively, of the Code or section 4001 of ERISA. -6- Eurocurrency Reserve Percentage means, with respect to any Eurodollar ------------------------------- Loan for any Interest Period, a percentage (expressed as a decimal) equal to the daily average during such Interest Period of the percentage in effect on each day of such Interest Period, as prescribed by the Federal Reserve Board, for determining the aggregate maximum reserve requirements applicable to "Eurocurrency Liabilities" pursuant to Regulation D or any other then applicable regulation of such Board of Governors which prescribes reserve requirements applicable to "Eurocurrency Liabilities" as presently defined in Regulation D. As of the date of this Agreement, the Eurocurrency Reserve Percentage is 0%. Eurodollar Loan means any Loan which bears interest at a rate --------------- determined by reference to the Eurodollar Rate (Reserve Adjusted). Eurodollar Office means with respect to any Lender the office or ----------------- offices of such Lender which shall be making or maintaining the Eurodollar Loans of such Lender hereunder or such other office or offices through which such Lender determines its Eurodollar Rate. A Eurodollar Office of any Lender may be, at the option of such Lender, either a domestic or foreign office. Eurodollar Rate means, with respect to any Eurodollar Loan for any --------------- Interest Period, the rate per annum at which Dollar deposits in immediately available funds are offered to the Eurodollar Office of BofA two Business Days prior to the beginning of such Interest Period by major banks in the interbank eurodollar market as at or about 10:00 a.m., Chicago time, for delivery on the first day of such Interest Period, for the number of days comprised therein and in an amount equal or comparable to the amount of the Eurodollar Loan of BofA for such Interest Period. Eurodollar Rate (Reserve Adjusted) means, with respect to any ---------------------------------- Eurodollar Loan for any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the following formula: Eurodollar Rate = Eurodollar Rate --------------- (Reserve Adjusted) 1-Eurocurrency Reserve Percentage -7- Event of Default means any of the events described in Section 12.1. ---------------- ------------ Federal Funds Rate means, for any day, the rate set forth in the daily ------------------ statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor publication, the "Composite 3:30 p.m. Quotations") for such day under the caption "Federal Funds Effective Rate". If such rate is not published in the Composite 3:30 p.m. Quotations for any Business Day, the rate for such day will be the arithmetic mean of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m., New York City time, on such day by each of three leading brokers of Federal funds transactions in New York City, selected by the Agent. The rate for any day which is not a Business Day shall be the rate for the immediately preceding Business Day. Federal Reserve Board means the Board of Governors of the Federal --------------------- Reserve System or any successor thereto. Floating Rate Loan means any Loan which bears interest at or by ------------------ reference to the Alternate Reference Rate. GAAP means generally accepted accounting principles as in effect on ---- the date hereof in the United States of America. Group - see Section 2.2. ----- ----------- Hazardous Material means: (a) any "hazardous substance" as defined by ------------------ CERCLA, and including the judicial interpretation thereof; (b) any "pollutant or contaminant" as defined in 42 U.S.C. (S)9601(33); (c) any material now defined as "hazardous waste" by RCRA; (d) any petroleum product, including crude oil and any fraction thereof; (e) natural gas, natural gas liquids, liquified natural gas, or synthetic gas usable for fuel; (f) any "hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910; (g) any radioactive material, including any source material, special nuclear material or by-product material as defined at 42 U.S.C. (S)2011 et seq., and any amendments thereto and reauthorizations -- --- thereof; and (h) any other substance, regardless of physical form, that is regulated under any -8- past, present or future federal, state or local government statute, rule or regulation. Impermissible Qualification means, relative to the opinion or --------------------------- certification of any independent public accountant as to any qualification or exception to such opinion or certification: (a) which is of a "going concern" or similar nature; (b) which relates to the limited scope of examination of matters relevant to such financial statement; or (c) which relates to the treatment or classification of any item in such financial statement and which, as a condition to this removal, would require an adjustment to such item the effect of which would be to cause the Company or any of its Subsidiaries to be in default of any of their respective obligations under Section 10. ---------- Indebtedness of any Person means, without duplication: ------------ (a) all of such Person's obligations for borrowed money (including all notes payable and drafts accepted representing extensions of credit) and all of such Person's obligations evidenced by bonds, debentures, notes or other similar instruments on which interest charges are customarily paid; (b) all of such Person's Capitalized Lease Liabilities; (c) all indebtedness secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), regardless of whether such indebtedness shall have been assumed by such Person or is limited in recourse; provided, however, that, for purposes of determining the amount -------- ------- of any Indebtedness of the type described in this clause (c), if recourse ---------- with respect to such Indebtedness is limited to -9- such property, the amount of such Indebtedness shall be limited to the fair market value of such property; and (d) all Suretyship Liabilities of such Person (excluding Suretyship Liabilities of the Company or any Subsidiary in respect of obligations of the Company or any Subsidiary). Indebtedness/Capitalization Ratio means, at any time, the ratio of (a) --------------------------------- Adjusted Indebtedness to (b) the sum of Adjusted Indebtedness plus stockholders' ---- equity of the Company plus Subordinated Debt. ---- Indebtedness/Net Cash Flow Ratio means, for any period, the ratio of -------------------------------- (a) Adjusted Indebtedness as at the last day of such period; to (b) the amount ("Net Cash Flow") equal to: (i) the sum of (A) Consolidated Net Income for such period, plus ---- (B) all depreciation and amortization of assets (including goodwill and other intangible assets) of the Company and its Subsidiaries that have been deducted in determining Consolidated Net Income for such period, plus ---- (C) the absolute value of all extraordinary losses for such period, plus ---- (D) Consolidated Interest Expense for such period, -10- plus ---- (E) all United States Federal, state, local and foreign income taxes of the Company and its Subsidiaries for such period, plus ---- (F) any non-cash write-offs relating to acquisitions during such period (but not more than $10,000,000 in the aggregate for such period), minus ----- (ii) an amount equal to the sum of (A) the absolute value of the amount of all capital expenditures of the Company and its Subsidiaries, as determined in accordance with those generally accepted accounting principles applied in the preparation of the financial statements referred to in Section 9.5, made during ----------- such period (including, without limitation, the aggregate amount of Capitalized Lease Liabilities incurred during such period by the Company and its Subsidiaries (excluding, however, any portion thereof allocable to interest expense)), plus ---- (B) all extraordinary gains for such period; provided that with respect to Acquired Assets the Company shall prepare - -------- historical financial statements for the period from the beginning of the period for which Net Cash Flow is being calculated to the time of the acquisition of such Acquired Assets (it being understood such statements may contain (x) adjustments to reflect cost savings due to factors such as overlapping functions and/or personnel between the Company and its Subsidiaries and any Acquired Assets and any costs which will be incurred by the Company -11- or any Subsidiary in connection with the Acquired Assets such as costs for facility closures or terminated personnel and (y) such other adjustments as may be agreed to by the Required Lenders) and items relating to Acquired Assets shall be included in the computation of Net Cash Flow to the same extent as if the Company or its Subsidiaries owned the Acquired Assets from the beginning of the period for which Net Cash Flow is being calculated. Instrument means any contract, agreement, indenture, mortgage, ---------- document or writing (whether by formal agreement, letter, or otherwise) under which any obligation is evidenced, assumed or undertaken, or any Lien (or right or interest therein) is granted or perfected. Interest Coverage Ratio means, as of the last day of any fiscal ----------------------- quarter of the Company, the ratio of (x) Adjusted EBIT for the 12-month period ending on such day to (y) Consolidated Interest Expense for such period. Interest Period - see Section 4.3. --------------- ----------- Investment means, relative to any Person: ---------- (a) any loan or advance made by such Person to any other Person (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business consistent with past practice); (b) any Suretyship Liabilities of such Person; and (c) any ownership or similar interest held by such Person in any other Person. The amount of any Investment shall be the original principal or capital amount thereof less all returns of principal or equity thereon (and without adjustment by reason of the financial condition of such other Person) and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property. Lender - see the Preamble. ------ -------- -12- Lien means any security interest, mortgage, pledge, hypothecation, ---- assignment, deposit arrangement, encumbrance, lien (statutory or other), charge against or interest in property to secure payment of a debt or performance of an obligation or other priority or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor under any conditional sale or other title retention agreement and the interest of a lessor under any capitalized lease). Loan - see Section 2.1. ---- ----------- Margin means (a) if the Interest Coverage Ratio is equal to or greater ------ than 3.75 to 1, 0.35%, (b) if the Interest Coverage Ratio is equal to or greater than 2.5 to 1 but is less than 3.75 to 1, 0.425%, and (c) if the Interest Coverage Ratio is less than 2.5 to 1, 0.6%. The margin initially shall be 0.35% and shall be adjusted, to the extent applicable, 50 days (or, in the case of the last fiscal quarter of any year, 90 days) after the end of each fiscal quarter based on the Interest Coverage Ratio as of the last day of such fiscal quarter; it being understood that if the Company fails to deliver the financial statements required by Section 10.1.1 or 10.1.2, as applicable, by the 50th day -------------- ------ (or, if applicable, the 90th day) after any such fiscal quarter, the Margin shall be 0.6% until such statements are delivered. Margin Stock means any "margin stock" as defined in Regulation U of ------------ the Federal Reserve Board. Materially Adverse Effect means, relative to any occurrence of ------------------------- whatever nature (including (a) any adverse determination in any litigation, arbitration, or governmental investigation or proceeding or (b) any merger, consolidation, exchange of stock, sale of assets or equity interests or acquisition of assets or equity interests), a materially adverse effect on the assets, business, revenues, financial condition, prospects or operations of the Company and its Subsidiaries on a consolidated and combined basis, taken as a whole. Multiemployer Plan means a multiemployer plan within the meaning of ------------------ section 3(37) of ERISA maintained or contributed to by the Company, any of its Subsidiaries or any other ERISA Affiliate. -13- Note - see Section 3.1. ---- ----------- Organic Document means, relative to any Person, its certificate of ---------------- incorporation, by-laws, partnership agreement or other constitutive documents and all shareholder or partner agreements, voting trusts, and similar arrangements applicable to any of its capital stock or other equity interests. Participant - see Section 14.9.2. ----------- -------------- PBGC means a "pension plan", as such term is defined in section 3(2) ---- of ERISA, which is subject to title IV of ERISA (other than a Multiemployer Plan), and to which the Company, any of its Subsidiaries or any ERISA Affiliate may have any liability, including any liability by reason of having been a "substantial employer" within the meaning of section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA. Percentage means as to any Lender the percentage which such Lender's ---------- Commitment is of the aggregate Commitments (or, if the Commitments have terminated, which the principal amount of such Lender's outstanding Loans is of the principal amount of all outstanding Loans). The Percentages of the Lenders as of the Effective Date are set forth on the Schedule I attached to this ---------- Agreement. Person means any natural person, corporation, partnership, trust, ------ association, governmental authority or unit, or any other entity, whether acting in an individual, fiduciary or other capacity. RCRA means the Resource Conservation and Recovery Act, 42 U.S.C. ---- (S)6901 et seq. and any successor statute of similar import, together with the -- --- regulations thereunder, in each case as in effect from time to time. Reference Rate means at any time per annum then most recently -------------- announced by BofA as its reference rate at Chicago, Illinois. Release has the meaning that CERCLA assigns to such term. ------- -14- Reportable Event has the meaning that ERISA assigns to such term. ---------------- Required Lenders means Lenders having an aggregate Percentage of 66- ---------------- 2/3% or more. Significant Affiliate means any Subsidiary, Komatsu Dresser Company, --------------------- KDC Financial Corp., KDC Financial Limited Partnership and KOMDRESCO Ltd.; provided that each of Komatsu Dresser Company, KDC Financial Corp. and KDC - -------- Financial Limited Partnership shall cease to be Significant Affiliates when the Company and its Subsidiaries no longer own an equity interest in such entity. Solvent means, with respect to any Person at any time, a condition ------- under which (a) the fair value and present fair saleable value of such Person's total assets is, on the date of determination, greater than such Person's total liabilities (including contingent and unliquidated liabilities) at such time; (b) the fair value and present fair saleable value of such Person's assets is greater than the amount that will be required to pay such Person's probable liability on its existing debts as they become absolute and matured ("debts", for this purpose, includes all legal liabilities, whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent); (c) such Person is and shall continue to be able to pay all of its liabilities as such liabilities mature; and (d) such Person does not have unreasonably small capital with which to engage in its current and in its anticipated business. For purposes of this definition: (i) the amount of a Person's contingent or unliquidated liabilities at any time shall be that amount which, in light of all the facts and circumstances then existing, represents the amount which can reasonably be -15- expected to become an actual or matured liability; (ii) the "fair value" of an asset shall be the amount which may be realized within a reasonable time either through collection or sale of such asset at its regular market value; (iii) the "regular market value" of an asset shall be the amount which a capable and diligent business person could obtain for such asset from an interested buyer who is willing to purchase such asset under ordinary selling conditions; and (iv) the "present fair saleable value" of an asset means the amount which can be obtained if such asset is sold with reasonable promptness in an arms-length transaction in an existing and not theoretical market. Subordinated Debt means Debt of the Company having maturities and ----------------- other terms, and which is subordinated to the obligations of the Company hereunder in a manner, approved in writing by the Required Lenders (such approval not to be unreasonably withheld). Subsidiary means any Person of which or in which the Company and/or ---------- its other Subsidiaries own, directly or indirectly, 50% or more of (a) the combined voting power of all classes of stock having general voting power under ordinary circumstances to elect a majority of the board of directors of such Person, if it is a corporation, (b) the capital interest or profits interest of such Person, if it is a partnership, joint venture or similar entity, or (c) the beneficial interest of such Person, if it is a trust, association or other unincorporated organization; provided, however, that the defined term -------- ------- "Subsidiary" shall not include Komatsu Dresser Company, KDC Financial Corp., KDC - ----------- Financial Limited Partnership, KOMDRESCO Ltd., Tswana Equipment Proprietary, Ltd. or SDC Corporation. Unless the context otherwise requires, each reference to a "Subsidiary" herein shall be a reference to a Subsidiary of the Company. -16- Suretyship Liability means any agreement, undertaking or other -------------------- contractual arrangement (other than letters of credit and reimbursement agreements relating to letters of credit) by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to or otherwise to invest in a debtor, or otherwise to assure a creditor against loss) any indebtedness, obligation or other liability (including accounts payable) of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person. The amount of any Person's obligation under any Suretyship Liability shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount of the indebtedness, obligation or other liability guaranteed thereby; provided -------- that the amount of any Suretyship Liability that does not have a stated or determinable amount shall be the amount that the Person obligated thereon reasonably estimates in good faith as its probable liability with respect thereto. Taxes with respect to any Person means taxes, duties, imposts, fees, ----- deductions, withholding, assessments or other governmental charges or levies imposed upon such Person, its income or any of its properties, franchises or assets. Termination Date means September 22, 1995, as such date may from time ---------------- to time be extended in accordance with Section 2.9, or such other date on which ----------- the Commitments shall terminate pursuant to Section 6.1 or 12.2. ----------- ---- Total Commitment Amount means the aggregate amount of all Lenders' ----------------------- Commitments (as such amount is reduced from time to time pursuant to Section ------- 6.1). Type of Loan or Borrowing - see Section 2.2. The types of Loans or ------------------------- ----------- borrowings under this Agreement are as follows: Floating Rate Loans or borrowings and Eurodollar Loans or borrowings. Unmatured Event of Default means any event which if it continues -------------------------- uncured will, with lapse of time or notice or lapse of time and notice, constitute an Event of Default. -17- Welfare Plan means a "welfare plan", as such term is defined in ------------ section 3(1) of ERISA. 1.2 Computations. Where the character or amount of any asset or ------------ liability or any item of income or expense is required to be determined, or any consolidation or other accounting computation is required to be made, for purposes of this Agreement, such determination or calculation shall, to the extent applicable and except as otherwise specified in this Agreement, be made in accordance with GAAP. 1.3 Cross-References; Section Captions. A Section, an Exhibit or a ---------------------------------- ------- ------- Schedule is, unless otherwise stated, a reference to a section hereof or an - -------- exhibit or schedule hereto, as the case may be. Section captions are for convenience only and shall not affect the interpretation of this Agreement. SECTION 2 COMMITMENTS OF THE LENDERS; TYPES OF LOANS; BORROWING AND CONVERSION PROCEDURES. 2.1 Commitments. Subject to the terms and conditions of this ----------- Agreement, each of the Lenders, severally and for itself alone, agrees to make loans to the Company on a revolving basis (collectively the "Loans" and individually each a "Loan") from time to time before the Termination Date in such Lender's Percentage of such aggregate amounts as the Company may from time to time request from all Lenders; provided, however, that (i) the aggregate -------- ------- principal amount of all Loans which any Lender shall be committed to have outstanding hereunder shall not at any one time exceed the amount of such Lender's Commitment; and (ii) the aggregate principal amount of all Loans which all Lenders shall be committed to have outstanding hereunder shall not at any one time exceed the Total Commitment Amount. At any time prior to, and provided the Company has not previously reduced the Commitments pursuant to Section 6.1, ----------- one or more additional Lenders may at the request of the Company and with the consent of all Lenders (which consent shall not be unreasonably withheld), become parties to the Credit Agreement by executing and delivering a Joinder Agreement in the form of Exhibit E, and contemporaneously with the effectiveness --------- of any such Joinder Agreement the Total Commitment Amount shall be increased by the amount of the Commitment of the Lender being added by such Joinder -18- Agreement, provided that the Total Commitment Amount shall not exceed -------- $150,000,000. 2.2 Various Types of Loans. Each Loan shall be either a Floating ---------------------- Rate Loan or a Eurodollar Loan (each a "type" of Loan), as the Company shall specify in the related notice of borrowing or conversation pursuant to Section ------- 2.3 or 2.4. Eurodollar Loans having the same Interest Period are sometimes - --- --- called a "Group" or collectively "Groups." Floating Rate Loans and Eurodollar Loans may be outstanding at the same time, provided that (i) not more than ten -------- different Groups of Loans shall be outstanding at any one time and (ii) the aggregate principal amount of each Group of Loans shall at all times (including after giving effect to any conversion or continuation of any Loans) be at least $2,000,000 and an integral multiple of $500,000. 2.3 Borrowing Procedures. The Company shall give written or -------------------- telephonic notice to the Agent of each proposed borrowing not later than (a) in the case of a Floating Rate borrowing, 10:00 a.m., Chicago time, on the proposed date of such borrowing, and (b) in the case of a Eurodollar borrowing, 10:00 a.m., Chicago time, at least three Business Days prior to the proposed date of such borrowing. Each such notice shall be effective upon receipt by the Agent and shall specify the date, amount and type of borrowing and, in the case of a Eurodollar borrowing, the initial Interest Period therefor. Promptly upon receipt of such notice, the Agent shall advise each Lender thereof. Not later than noon, Chicago time, on the date of a proposed borrowing, each Lender shall provide the Agent at the principal office of the Agent in Chicago with immediately available funds covering such Lender's Percentage of such borrowing and, subject to the satisfaction of the conditions precedent set forth in Section 11 with respect to such borrowing, the Agent shall pay over such funds - ---------- to the Company on the requested borrowing date. Each borrowing shall be on a Business Day. Subject to the last sentence of Section 2.2 in the case of ----------- Eurodollar Loans, each borrowing shall be in an aggregate amount of at least $2,000,000 and an integral multiple of $500,000. 2.4 Conversion Procedures. Subject to the provisions of the last --------------------- sentence of Section 2.2, the Company may convert all or any part of any ----------- outstanding Loan into a Loan of a different type by giving written or telephonic notice to the Agent not later than (a) in the case of -19- conversion into a Floating Rate Loan, 10:00 a.m., Chicago time, on the proposed date of such conversion, and (b) in the case of a conversion into a Eurodollar Loan, 10:00 a.m., Chicago time, at least three Business Days prior to the proposed date of such conversion. Each such notice shall be effective upon receipt by the Agent and shall specify the date and amount of such conversion, the Loan to be so converted, the type of Loan to be converted into and, in the case of a conversion into a Eurodollar Loan, the initial Interest Period therefor. Promptly upon receipt of such notice, the Agent shall advise each Lender thereof. Subject to Section 2.6, such Loan shall be so converted on the ----------- requested date of conversion. Each conversion shall be on a Business Day. 2.5 Warranty upon Conversion. Each notice of conversion pursuant to ------------------------ Section 2.4 shall automatically constitute a warranty by the Company to the - ----------- Agent and each Lender to the effect that, on the date of such requested conversion, no Event of Default or unmatured Event of Default shall have then occurred and be continuing. 2.6 Conditions. Notwithstanding any other provision of this ---------- Agreement, no Lender shall be obligated to make any Loan, or to convert into or permit the continuation at the end of the applicable Interest Period of any Eurodollar Loan, if an Event of Default or Unmatured Event of Default exists or would result therefrom. 2.7 Pro Rata Treatment. All borrowings, conversions and repayments ------------------ shall be effected so that after giving effect thereto each Lender will have a pro rata share (according to its Percentage) of all types and Groups of Loans. 2.8 Commitments Several. The failure of any Lender to make a ------------------- requested Loan on any date shall not relieve any other Lender of its obligation (if any) to make a Loan on such date, but no Lender shall be responsible for the failure of any other Lender to make any Loan to be made by such other Lender. 2.9 Extension of the Termination Date. --------------------------------- (a) At least 60 but not more than 90 days before any scheduled Termination Date, the Company may, by delivery of a written request to the -20- Agent, request that each Lender agree to extend the then-scheduled Termination Date by 364 days. (b) The Agent shall, upon receipt of any such extension request, promptly notify each Lender thereof, and request that each Lender promptly advise the Agent of its approval or rejection of such request. (c) Upon receipt of such notification from the Agent, each Lender may, in its sole discretion, agree to extend for 264 days, or decline to extend, the Termination Date, and each Lender shall, within 30 days of receipt of the notice described in clause (b), notify the Agent of ---------- its approval or denial of such request. If any Lender does not so notify the Agent, such Lender shall be deemed to have denied such extension request. The Agent shall, no later than 45 days following its receipt of any extension request from the Company, notify the Company as to the Lenders which have approved or denied such request. (d) If all of the Lenders approve any such request, the Termination Date shall be extended to the date which is 364 days after the Termination Date in effect immediately prior to such extension. If fewer than all of the Lenders approve any such request, the Termination Date shall not be extended. SECTION 3 NOTES EVIDENCING LOANS. 3.1 Notes. The Loans of each Lender shall be evidenced by a promissory ----- note (as amended, supplemented, replaced or otherwise modified from time to time, individually each a "Note" and collectively for all Lenders the "Notes") substantially in the form set forth in Exhibit A, with appropriate insertions, --------- dated the Effective Date (or such other date as shall be satisfactory to the Agent), payable to the order of such Lender in the principal amount of the Commitment of such Lender (or, if less, in the aggregate unpaid principal amount of such Lender's Loans) on the Termination Date. -21- 3.2 Recordkeeping. Each Lender shall record in its records, or at ------------- its option on the schedule attached to its Note, the date and amount of each Loan made by such Lender, each repayment or conversion thereof and, in the case of each Eurodollar Loan, the dates on which each Interest Period for such loan shall begin and end. The aggregate unpaid principal amount so recorded shall be rebuttable presumptive evidence of the principal amount owing and unpaid on such Note. The failure to so record any such amount or any error in so recording any such amount shall not, however, limit or otherwise affect the obligations of the Company hereunder or under any Note to repay the principal amount of the Loans evidenced by such Note together with all interest accruing thereon. SECTION 4 INTEREST. 4.1 Interest Rates. The Company promises to pay interest on the -------------- unpaid principal amount of each Loan for the period commencing on and including the date of such Loan to but excluding the date such Loan is paid in full, as follows: (a) at all times while such Loan is a Floating Rate Loan, at a rate per annum equal to the Alternate Reference Rate from time to time in effect; and (b) at all times while such Loan is a Eurodollar Loan, at a rate per annum equal to the Eurodollar Rate (Reserve Adjusted) applicable to each Interest Period for such Loan plus the Margin from time to time in effect; provided, however, that if any principal of any Loan is not paid when due - -------- ------- (whether by acceleration or otherwise), such principal shall bear interest, from the due date thereof until paid in full, at a rate per annum equal to the sum of the Alternate Reference Rate from time to time in effect (but not less than the applicable interest rate in effect for such Loan at such due date) plus 2%. 4.2 Interest Payment Dates. Accrued interest on each Floating Rate ---------------------- Loan shall be payable on the last day of each calendar quarter and at maturity. Accrued interest on each Eurodollar Loan shall be payable on the last day of each Interest Period relating to such Loan and at maturity. -22- After maturity, accrued interest on all Loans shall be payable on demand. 4.3 Interest Periods. Each "Interest Period" for a Eurodollar Loan ---------------- shall commence on the date such Eurodollar Loan is made or converted from a Floating Rate Loan, or on the expiration of the immediately preceding Interest Period for such Eurodollar Loan, and shall end on the date which is one, two or three months thereafter, as the Company may specify: (a) in the case of an Interest Period which commences on the date of Eurodollar Loan is made or converted from a Floating Rate Loan, in the related notice or borrowing or conversion pursuant to Section 2.3 or 2.4, ----------- --- or (b) in the case of succeeding Interest Period with respect to any Eurodollar Loan, by written or telephonic notice to the Agent not later than 10:00 a.m., Chicago time, at least three Business Days prior to the first day of such succeeding Interest Period, it being understood that (i) each such notice shall be effective upon receipt by the Agent (which shall promptly advise each Lender thereof) and (ii) if the Company fails to give such notice, such Loan shall automatically become a Floating Rate Loan at the end of its then-current Interest Period. Each Interest Period for a Eurodollar Loan that begins on the last day of a calendar month (or on a day for which there is no numerically corresponding day in the appropriate subsequent month) shall end on the last Business Day of the appropriate subsequent calendar month. Each Interest Period for a Eurodollar Loan which would otherwise end on a day which is not a Business Day shall end on the immediately succeeding Business Day (unless such immediately succeeding Business Day is the first Business Day of a calendar month, in which case such Interest Period shall end on the immediately preceding Business Day). The Company may not select any Interest Period which would end after the scheduled Termination Date. 4.4 Setting and Notice of Eurodollar Rates. The applicable -------------------------------------- Eurodollar Rate for each Interest Period shall be determined by the Agent, and notice thereof shall be given -23- by the Agent promptly to the Company and each Lender. Each determination of the applicable Eurodollar Rate by the Agent shall be conclusive and binding upon the parties hereto, in the absence of demonstrable error. The Agent shall, upon written request of the Company or any Lender, deliver to the Company or such Lender a statement showing the computations used by the Agent in determining any applicable Eurodollar Rate hereunder. 4.5 Computation of Interest. Interest shall be computed for the ----------------------- actual number of days elapsed on the basis of a year of 160 days. The applicable interest rate for each Floating Rate Loan shall change simultaneously with each change in the Alternate Reference Rate. 4.6 Limitation on Interest. It is the intention of the parties ---------------------- hereto to conform strictly to applicable usury laws and, anything herein or in any Note to the contrary notwithstanding, the obligations of the Company to each Lender under this Agreement and any Note shall be subject to the limitation that payments of interest shall not be required to the extent that receipt thereof would be contrary to provisions of law applicable to such Lender limiting rates of interest which may be charged or collected by such Lender. Accordingly, if the transactions contemplated hereby or by any Note would be usurious under any applicable law, rule, regulation, order or decree (or other requirement having the force of law) of any governmental authority, court or other tribunal (including the Federal and state laws of the United States of America or of any other jurisdiction whose laws may be mandatorily applicable) (collectively, "Applicable Law") with respect to any Lender, then, in that event, notwithstanding anything to the contrary in this Agreement or any Note, it is agreed as follows: (a) the following provisions of this Section 4.6 shall govern and ----------- control; (b) the aggregate of all consideration that constitutes interest under Applicable Law that is contracted for, charged or received under this Agreement or under any Note by any Lender shall under no circumstances exceed the maximum amount of interest allowed by Applicable Law (such maximum, nonusurious interest rate that may, under Applicable Law, be contracted for, charged or -24- received, the "Highest Lawful Rate"), and any excess shall be credited to the Company by such Lender (or, if such consideration shall have been finally paid in full, such excess refunded to the Company by such Lender); (c) all sums paid, or agreed to be paid, to any Lender for the use, forbearance and detention of the indebtedness of the Company to such Lender hereunder or under any Note shall, to the extent permitted by Applicable Law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full of such indebtedness so that the actual rate of interest is uniform throughout the full term thereof; (d) if at any time the interest provided pursuant to Section 4.1, ----------- together with any fees payable to any Lender pursuant to this Agreement or any Note that are deemed to be interest under Applicable Law, exceeds that amount which would have accrued to such Lender at the Highest Lawful Rate, the amount of interest and any such fees to accrue pursuant to this Agreement or any Note shall be limited, notwithstanding anything to the contrary in this Agreement or any Note, to the amount which would have accrued at the Highest Lawful Rate, but any subsequent reductions in the amount of such interest and/or fees, as applicable, which would otherwise occur shall not reduce the interest to accrue to such Lender pursuant to this Agreement and the applicable Note below the Highest Lawful Rate until the total amount of interest accrued pursuant to this Agreement and such Note and such fees that are deemed to be interest equals the amount of interest which would have accrued to such Lender if a varying rate per annum equal to the rate provided pursuant to Section 4.1 had at all times ----------- been in effect, plus the amount of fees which would have been received but ---- for the effect of this Section 4.6; and ----------- (e) if the total amount of interest paid or accrued, together with any fees payable pursuant to this Agreement and any Note that are deemed to -25- be interest under Applicable Law, pursuant to this Agreement and any Note under the foregoing provisions of this Section 4.6, is less than the total ----------- amount of interest which would have accrued if a varying rate per annum equal to the rate provided pursuant to Section 4.1 had at all times been in ----------- effect and all fees provided for in this Agreement and such Note had been paid, then the Company agrees to pay to the applicable Lender, upon demand, an amount equal to the difference between (i) the lesser of (A) the amount of interest and fees which would have accrued if the Highest Lawful Rate had at all times been in effect, and (B) the amount of interest and fees which would have accrued if a varying rate per annum equal to the rate provided pursuant to Section 4.1 had at all times been in effect and all ----------- fees provided for in this Agreement and the applicable Note had been paid and (ii) the amount of interest and fees paid in accordance with the other provisions of this Agreement and the applicable Note. For purposes of Article 5069-1.04, Vernon's Texas Civil Statutes, to the extent, if any, applicable to any lender, the Company agrees that the Highest Lawful Rate shall be the "indicated (weekly) rate ceiling" as defined in said Article; provided that any Lender may also rely, to the extent permitted by Applicable - -------- Law, on alternative maximum rates of interest, if greater, under other Applicable Laws; provided, further, that to the extent permitted by such -------- ------- Article, any Lender by notice to the Company may revise the aforesaid election of such interest rate ceiling as such ceiling affect the then current or future balances outstanding under this Agreement and any Note. Chapter 15, Subtitle 3, Title 79, of the Revised Civil Statutes of Texas, 1925 (relating to revolving loans and triparty accounts), shall not apply to this Agreement or any Note. SECTION 5 FEES. 5.1. Non-Use Fee. The Company agrees to pay to the Agent for the ----------- account of each Lender a non-use fee for the period from and including the Effective Date to but excluding the Termination Date in an amount equal to the Specified Percentage (as defined below) per annum of the daily average of the unused amount of such Lender's -26- Commitment. Such non-use fee shall be payable in arrears on the last day of each calendar quarter and on the Termination Date for any period then ending for which such non-use fee shall not have been theretofore paid. The non-use fee shall be computed for the actual number of days elapsed on the basis of a year of 360 days. For purposes of the foregoing, "Specified Percentage" means (a) if the Interest Coverage Ratio is equal to or greater than 3.75 to 1, 0.10%, (b) if the Interest Coverage Ratio is equal to or greater than 2.5 to 1 but less than .375 to 1, 0.125%, and (c) if the Interest Coverage Ratio is less than 2.5 to 1, 0.175%. The Specified Percentage initially shall be 0.10% and shall be adjusted, to the extent applicable, 50 days (or, in the case of the last fiscal quarter of any fiscal year, 90 days) after the end of each fiscal quarter based on the Interest Coverage Ratio as of the last day of such fiscal quarter; it being understood that if the Company fails to deliver the financial statements required By Section 10.1.1 or 10.1.2, as applicable, by the 50th day (or, if -------------- ------ applicable, the 90th day) after any fiscal quarter, the Specified Percentage shall be 0.175% until such financial statements are delivered. 5.2 Agent's Fee. The Company agrees to pay to the Agent for its own ----------- account such fees are agreed to from time to time by the Company and the Agent. SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS; PREPAYMENTS. 6.1 Reduction or Termination of the Commitments. The Company may from ------------------------------------------- time to time on at least five Business Days' prior written notice received by the Agent (which shall promptly advise each Lender thereof) permanently reduce the amount of the Commitments to an amount not less than the aggregate unpaid principal amount of the Loans. Any such reduction shall be in an amount that is an integral multiple of $5,000,000 and shall be pro rata among the Lenders according to their respective Percentages. The Company may at any time on like notice terminate the commitments upon payment in full of all Loans and all other obligations of the Company hereunder. 6.2 Prepayments. The Company may from time to time prepay the Loans ----------- in whole or in part, provided that -27- (a) the Company shall give the Agent (which shall promptly advise each Lender) written notice thereof not later than 11:00 a.m., Chicago time, on the date of such prepayment, in the case of Floating Rate Loans, and not less than two Business Days' prior to the date of such prepayment, in the case of Eurodollar Loans, in each case specifying the Loans to be prepaid and the date (which shall be a Business Day) and amount of prepayment (b) each partial prepayment of Loans shall be in an aggregate principal amount of at least $1,000,000 and an integral multiple of $500,000 and (c) any prepayment of Eurodollar Loans on a day other than the last day of an Interest Period therefor shall be subject to Section ------- 8.4. After giving effect to any prepayment of Eurodollar Loans, each Group of Eurodollar Loans shall be at least $2,000,000 and an integral multiple of $500,000. SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES 7.1 Making of Payments. All payments of principal of or interest on ------------------ the Notes, and of all fees, shall be made by the Company to the Agent in immediately available funds at its office in Chicago not later than noon, Chicago time, on the date due; and funds received after that hour shall be deemed to have been received by the Agent on the immediately following Business Day. The Agent shall promptly remit to each Lender its share of all such payments received in collected funds by the Agent for the account of such Lender. All payments under Section 8.1 and 8.4 shall be made by the Company ----------- --- directly to the Lender entitled thereto. 7.2 Application of Certain Payments. Each payment of principal shall ------------------------------- be applied to such Loans as the Company shall direct by notice to be received by the Agent on or before the date of such payment, or in the absence of such notice, as the Agent shall determine in its discretion. Concurrently with each remittance to any Lender of its share of any such payment, the Agent shall advise such Lender as to the application of such payment. 7.3 Due Date Extension. If any payment of principal or interest with ------------------ respect to any of the Notes, or of any fee, falls due on a day which is not a Business Day, then such due date shall be extended to the immediately following Business Day and, in the case of principal, -28- additional interest shall accrue and be payable for the period of any such extension. 7.4 Setoff. The Company agrees that the Agent and each Lender have ------ all rights of set-off and bankers' lien provided by applicable law, and in addition thereto, the Company agrees that at any time any Unmatured Event of Default described in Section 12.1.4 or any Event of Default exists, the Agent -------------- and each Lender may apply to the payment of any obligations of the Company hereunder any and all balances, credits, deposits, accounts or moneys of the Company then or thereafter with the Agent or such Lender. 7.5 Proration of Payments. If any Lender shall obtain any payment or --------------------- other recovery (whether voluntary, involuntary, by application of offset or otherwise) on account of principal of or interest on any Note in excess of its pro rata share of payments and other recoveries obtained by all Lenders on account of principal of and interest on all Notes (other than any non-pro rata interest payment resulting from a Loan being an Affected Loan or as a result of replacement of a Lender pursuant to Section 8.7), such Lender shall purchase ----------- from the other Lenders such participation in the Notes held by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided, however, that if all or any --------- ------- portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery. 7.6 Taxes. ----- (a) All payments by the Company of principal, interest, fees, indemnities and other amounts payable hereunder and under the Notes shall be made to the recipient thereof without setoff or counterclaim and free and clear of, and without withholding or deduction for or on account of, any present or future Taxes (other than Excluded Taxes (as defined below)) now or hereafter imposed on such recipient or its income, property, assets or franchises (such recipient's "Recipient Taxes"), except to the extent that such withholding or deduction (i) is required by applicable law, (ii) results from the breach by such recipient of its Exemption Agreement (as -29- defined below) or (iii) would not be required if such recipient's Exemption Representation (as defined below) were true. If any such withholding or deduction is required by applicable law, the Company will: (A) pay to the relevant authorities the full amount so required to be withheld or deducted; (B) promptly forward to the Agent an official receipt or other documentation satisfactory to the Agent evidencing such payment to such authorities; and (C) except to the extent that such withholding or deduction results from the breach, by the recipient of a payment, of its Exemption Agreement or would not be required if such recipient's Exemption Representation were true, pay to the Agent for the account of the relevant recipient such additional amount as is necessary to ensure that the net amount actually received by such recipient will equal the full amount such recipient would have received had no such withholding or deduction been required. For the purposes of this Section 7.6, "Excluded Taxes" means, in the case of ----------- payments made to any Lender or the Agent, all of the following: taxes imposed upon the overall net income of such Lender or the Agent, franchise taxes imposed upon such Lender or the Agent with respect to its net income by the jurisdiction under the laws of which such Lender or the Agent, as the case may be, is organized or any political subdivision thereof, and franchise taxes imposed upon such Lender or the Agent with respect to its net income by the jurisdiction in which such Lender's or the Agent's Eurodollar Office is located or any political subdivision thereof. (b) In consideration of the Company's agreements in clause (a) ---------- of this Section 7.6, each Lender which is not organized under the ----------- laws of the United States or a State thereof hereby agrees (such Lender's "Exemption Agreement"), to the extent permitted by applicable law (including any -30- applicable double taxation treaty of the jurisdiction of its incorporation and the jurisdiction in which its Eurodollar Office is located), to execute and deliver to the Company (i) on or before the first date on which any payment is to be made to such Lender hereunder, a United States Internal Revenue Service Form 1001 or 4224 (or successor form), as appropriate, properly completed and claiming a complete exemption, from withholding or deduction for or on account of Recipient Taxes of such Lender, and (ii) a new Form 1001 or 4224 (or successor form), as appropriate, upon the expiration or obsolescence of any previously delivered Form. (c) Each Lender hereby represents and warrants (such Lender's "Exemption Representation") to the Company that on the Effective Date (or, if later, the date such Lender becomes a party to this Agreement) it is entitled to receive payments of principal of, and interest on, Loans made by such Lender without withholding or deduction for or on account of such Lender's Recipient Taxes imposed by the United States of America or any political subdivision thereof. SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS. 8.1 Increased Costs. (a) If, after the date hereof, the adoption of --------------- any applicable law, rule or regulation, or any change in any applicable law, rule or regulation (including, without limitation, Regulation D of the Federal Reserve Board), or any change in the interpre tation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or any Eurodollar Office of such Lender) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency (A) shall subject any Lender (or any Eurodollar Office of such Lender) to any tax, duty or other charge with respect to its Eurodollar Loans, its Note or its obligation to make Eurodollar Loans, or shall change the -31- basis of taxation of payments to any Lender of the principal of or interest on its Eurodollar Loans or any other amounts due under this Agreement in respect of its Eurodollar Loans or its obligation to make Eurodollar Loans (except for taxes imposed on or measured by the overall net income of such Lender or its Eurodollar Office imposed by the jurisdiction, or any political subdivision thereof or taxing authority therein, in which such Lender's principal executive office or Eurodollar Office is located or in which such Lender is incorporated); or (B) shall impose, modify or deem applicable any reserve (including, without limitation, any reserve imposed by the Federal Reserve Board, but excluding any reserve included in the determination of interest rates pursuant to Section 4), special --------- deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by any Lender (or any Eurodollar Office of such Lender); or (C) shall impose on any Lender (or its Eurodollar Office) any other condition affecting its Eurodollar Loans, its Note or its obligation to make Eurodollar Loans; and the result of any of the foregoing is to increase the cost to (or in the case of Regulation D referred to above, to impose a cost on) such Lender (or any Eurodollar Office of such Lender) of making or maintaining any Eurodollar Loan, or to reduce the amount of any sum received or receivable by such Lender (or its Eurodollar Office) under this Agreement or under its Note with respect thereto, then within 10 days after demand by such Lender (which demand shall be accompanied by a statement setting forth the basis of such demand, a copy of which shall be furnished to the Agent), the Company shall pay directly to such Lender such additional amount or amounts as will compensate such Lender for such increased cost or such reduction. (b) If any Lender shall reasonably determine that the adoption or phase-in of any applicable law, rule or -32- regulation regarding capital adequacy, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its Eurodollar Office) or any Person controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender's or such controlling Person's capital as a consequence of such Lender's obligations hereunder (including, without limitation, such Lender's Commitment) to a level below that which such Lender or such controlling Person could have achieved but for such adoption, change or compliance (taking into consideration such Lender's or such controlling Person's policies with respect to capital adequacy) by an amount deemed by such Lender or such controlling Person to be material, then from time to time, within 10 days after demand by such Lender (which demand shall be accompanied by a statement setting forth the basis of such demand, a copy of which shall be furnished to the Agent), the Company shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling Person for such reduction. 8.2 Basis for Determining Interest Rate Inadequate or Unfair. If -------------------------------------------------------- with respect to any Interest Period: (a) Lenders having an aggregate Percentage of 50% or more advise the Agent that deposits in Dollars (in the applicable amounts) are not being offered to such Lenders in the relevant market for such Interest Period, or the Agent otherwise reasonably determines (which determination shall be binding and conclusive on the Company) that by reason of circumstances affecting the interbank eurodollar market adequate and reasonable means do not exist for ascertaining the applicable Eurodollar Rate; or (b) Lenders having an aggregate Percentage of 50% or more advise the Agent that the Eurodollar Rate (Reserve Adjusted) as determined by the Agent will not adequately and fairly reflect the cost to such Lenders of maintaining or funding such Loans for such Interest Period, or that the making or funding of Eurodollar Loans has become -33- impracticable as a result of an event occurring after the date of this Agreement which in the reasonable opinion of such Lenders materially affects such Loans, then the Agent shall promptly notify the other parties thereof and, so long as - ---- such circumstances shall continue, (i) no Lender shall be under any obligation to make or convert into Eurodollar Loans and (ii) on the last day of the current Interest Period for each Eurodollar Loan, such Loan shall, unless then repaid in full, automatically convert to a Floating Rate Loan. 8.3 Changes in Law Rendering Eurodollar Loans Unlawful. In the event -------------------------------------------------- that any change in (including the adoption of any new) applicable laws or regulations, or any change in the interpretation of applicable laws or regulations by any governmental or other regulatory body charged with the administration thereof, should make it (or in the good faith judgment of any Lender cause a substantial question as to whether it is) unlawful for any Lender to make, maintain or fund Eurodollar Loans, then such Lender shall promptly notify each of the other parties hereto and, so long as such circumstances shall continue, (a) such Lender shall have no obligation to make or convert into Eurodollar Loans (but shall make Floating Rate Loans concurrently with the making of or conversion into Eurodollar Loans by the Lenders which are not so affected, in each case in an amount equal to such Lender's Percentage of all Eurodollar Loans which would be made or converted into at such time in the absence of such circumstances) and (b) on the last day of the current Interest Period for each Eurodollar Loan of such Lender (or, in any event, if such Lender so requests, on such earlier date as may be required by the relevant law, regulation or interpretation), such Eurodollar Loan shall, unless then repaid in full, automat ically convert to a Floating Rate Loan. Each Floating Rate Loan made by a Lender which, but for the circumstances described in the foregoing sentence, would be a Eurodollar Loan (an "Affected Loan") shall, notwithstanding any other provision of this Agreement, remain outstanding for the same period as the Group of Eurodollar Loans of which such Affected Loan would be a part absent such circumstances. 8.4 Funding Losses. The Company agrees that, upon demand by any -------------- Lender (which demand shall be accompanied by a statement setting forth the basis for the calculations of the amount being claimed, a copy of which shall be -34- furnished to the Agent), the Company will indemnify such Lender against any net loss or expense which such Lender may sustain or incur (including, without limitation, any net loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain any Eurodollar Loan), as reasonably determined by such Lender, as a result of (a) any payment or prepayment or conversion of any Eurodollar Loan of such Lender on a date other than the last day of an Interest Period for such Loan (including, without limita tion, any conversion pursuant to Section 8.3) ----------- or (b) any failure of the Company to borrow or convert any Loans on a date specified therefor in a notice of borrowing or conversion pursuant to this Agreement (other than as a result of a default by such Lender or the Agent). For this purpose, all notices to the Agent pursuant to this Agreement shall be deemed to be irrevocable. 8.5 Right of Lenders to Fund through Other Offices. Subject to ---------------------------------------------- clause (a) of Section 8.7, each Lender may, if it so elects, fulfill its ----------- commitment as to any Eurodollar Loan by causing a foreign branch or affiliate of such Lender to make such Loan, provided that in such event for the purposes of -------- this Agreement such Loan shall be deemed to have been made by such Lender and the obligation of the Company to repay such Loan shall nevertheless be to such Lender and shall be deemed held by it, to the extent of such Loan, for the account of such branch or affiliate. 8.6 Discretion of Lenders as to Manner of Funding. Notwithstanding --------------------------------------------- any provision of this Agreement to the contrary, each Lender shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if such Lender had actually funded and maintained each Eurodollar Loan during each Interest Period for such Loan through the purchase of deposits having a maturity corresponding to such Interest Period and bearing an interest rate equal to the Eurodollar Rate for such Interest Period. 8.7 Mitigation of Circumstances; Replacement of Affected Lender. (a) ----------------------------------------------------------- Each Lender shall promptly notify the Company and the Agent of any event of which it has knowledge which will result in, and will use reasonable commercial efforts available to it (and not, in such Lender's sole -35- judgment, otherwise disadvantageous to such Lender) to mitigate or avoid, (i) any obligation by the Company to pay any amount pursuant to Section 7.6 or 8.1 ----------- --- (ii) the occur rence of any circumstance of the nature described in Section 8.2 ----------- or 8.3 (and, if any Lender has given notice of any such event described in --- clause (i) or (ii) above and thereafter such event ceases to exist, such Lender - ---------- ---- shall promptly so notify the Company and the Agent). Without limiting the foregoing, each Lender will designate a different funding office if such designation will avoid (or reduce the cost to the Company of) any event described in clause (i) or (ii) of the preceding sentence and such designation ---------- ---- will not, in such Lender's sole judgment, be otherwise disadvantageous to such Lender. (b) At any time any Lender is an Affected Lender, the Company may replace such Affected Lender as a party to this Agreement with one or more other bank(s) or financial institution(s) reasonably satisfactory to the Agent, such bank(s) or financial institution(s) to have a Commitment or Commitments, as the case may be, in such amounts as shall be reasonably satisfactory to the Agent (and upon notice from the Company such Affected Lender shall assign, without recourse or warranty, its Commitment, its Loans, its Note and all of its other rights and obligations hereunder to such replacement bank(s) or other financial institution(s) for a purchase price equal to the sum of the principal amount of the Loans so assigned, all accrued and unpaid interest thereon, its ratable share of all accrued and unpaid non-use fees, any amounts payable under Section ------- 8.4 as a result of such Lender receiving payment of any Eurodollar Loan prior to - --- the end of an Interest Period therefor and all other obligations owed to such Affected Lender hereunder). 8.8 Conclusiveness of Statements; Survival of Provisions. ---------------------------------------------------- Determinations and statements of any Lender pursuant to Section 8.1, 8.2, 8.3 or ----------- --- --- 8.4 shall be conclusive absent demonstrable error. Lenders may use reasonable - --- averaging and attribution methods in determining compensa tion under Sections -------- 8.1 and 8.4, and the provisions of such Sections shall survive repayment of the - --- --- Loans, cancellation of the Notes and any termination of this Agreement. -36- SECTION 9 WARRANTIES. To induce the Agent and the Lenders to enter into this Agreement and to induce the Lenders to make Loans hereunder, the Company warrants to the Agent and the Lenders that: 9.1 Organization, Power, etc. Each of the Company and each of its ------------------------ Subsidiaries (a) is a corporation or a partnership, as the case may be, validly organized and existing and in good standing under the laws of the state of its organization, and (b) is duly qualified to do business and is in good standing as a foreign corporation or partnership, as the case may be, in each jurisdiction where the nature of its activities or properties makes such qualification necessary and where any failure so to qualify, individually or in the aggregate for all such failures, would have a Materially Adverse Effect. Each of the Company and each of its Subsidiaries has full power and authority to own and hold under lease its property and to conduct its business as currently conducted by it, other than governmental licenses, consents and approvals the failure to hold which, individually or in the aggregate for all such failures, would not have a Materially Adverse Effect. The Company has full power and authority to execute, deliver, and perform its obligations under this Agreement and each Note and to borrow Loans hereunder. 9.2 Authorization; No Conflict. The execution and delivery of this -------------------------- Agreement and each Note, the borrowings hereunder, and the performance by the Company of its obligations under this Agreement and each Note are within the Company's corporate powers, have all been duly authorized by all necessary corporate action or other organizational action, have received all necessary governmental approvals (if any shall be required), and do not and will not conflict with, result in any violation of, or constitute any default under any provision of any Organic Document or material Contractual Obligation of the Company or any of its Subsidiaries or any law or regulation of any governmental authority or agency or any judicial decision, decree or order of any court or other governmental authority, and will not result in or require the creation or imposition of any Lien on any properties, assets, or revenues of the Company or any of its Subsidiaries pursuant to the provisions of any Contractual Obligation of the Company or any of its Subsidiaries. -37- 9.3 Validity and Binding Nature. This Agreement is, and each Note --------------------------- when duly executed and delivered will be, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws at the time in effect affecting the enforceability of the rights of creditors generally and by the application of general principles of equity. 9.4 No Default. Each of the Company and each of its Subsidiaries is ---------- in compliance with all provisions of its Organic Documents and all Instruments to which it may be subject or by which it or any of its properties may be bound, the failure to comply with which, individually or in the aggregate for all such failures, would have a Materially Adverse Effect. No Event of Default or Unmatured Event of Default has occurred and is continuing. 9.5 Financial Statements. The audited consolidated financial -------------------- statements of the Company and its Subsidiaries as at October 31, 1993 and the unaudited consolidated financial statements of the Company and its Subsidiaries as at July 31, 1994, copies of which have been furnished to each Lender, have been prepared in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding fiscal year and period and present fairly the financial condition of the Company and its Subsidiaries as at such dates and the results of their operations for the periods then ended, subject (in the case of the interim financial statement) to year-end audit adjustments. 9.6 No Material Adverse Change; Solvency. Since the date of the ------------------------------------ audited financial statements described in Section 9.5, there have been no ----------- occurrences which, individually or in the aggregate, have had a Materially Adverse Effect. On the Effective Date, and on the date of the making of each Loan, after giving effect to the making of such Loan, the Company and its domestic Subsidiaries shall be Solvent. 9.7 Litigation; Labor Controversies; Contingent Liabilities. Except ------------------------------------------------------- as set forth in Section 9.7, ----------- (a) there are no claims, litigation (including, without limitation, derivative -38- actions), arbitration proceedings, administrative proceedings or investigations that are pending or threatened against or affecting the Company or any of its Subsidiaries (i) which, if adversely determined would have a Materially Adverse Effect, or (ii) which purport to affect the legality, validity, or enforceability of this Agreement or any Note or any action taken or to be taken pursuant hereto, and there are no inquiries, whether formal or informal, from any governmental agency or authority or otherwise, which would give rise to any such action, proceeding or investigation; (b) there are no labor controversies pending or threatened against the Company or any of its Subsidiaries which, based on reasonable assumptions of the Company as to the probable outcome of any and all such labor controversies, would have a Materially Adverse Effect; and (c) other than any liability incident to any litigation, proceedings or investigations described in this Section 9.7, neither the ----------- Company nor any of its Subsidiaries has any material contingent liabilities not provided for or disclosed in the financial statements referred to in Section 9.5. ----------- 9.8 Ownership of Properties. Except (a) as set forth in Schedule 9.8 ----------------------- ------------ and (b) for any failure to have a valid leasehold interest or a valid ownership interest which would not, individually or in the aggregate for all such failures, have a Materially Adverse Effect, each of the Company and each of its Subsidiaries has a valid leasehold interest in all property leased by it, and has good and marketable title to all of the properties and assets, real, personal or mixed, tangible and intangible, of any nature whatsoever, owned by it (which, with respect to licenses, means that the Company or such Subsidiary (as applicable) is the lawful owner of its rights under such licenses), free and clear of all Liens, charges, options or claims (including infringement claims with respect to patents, trademarks, copyrights and all other intellectual property) except for Liens permitted by Section 10.18. The Company and its ------------- Subsidiaries own, or have a valid equitable interest sufficient to obtain an assignment of, all franchises, -39- patents, copyrights, trademarks, trade names, licenses and permits, and rights in respect of the foregoing, adequate for the conduct of their respective businesses substantially as now conducted without known conflict with any rights of any other Person. 9.9 Subsidiaries. Neither the Company nor any of its Subsidiaries ------------ has any Subsidiaries other than those listed on Schedule 9.9. The percentage ------------ ownership of such subsidiaries by the Company and its Subsidiaries is set forth on Schedule 9.9. ------------ 9.10 Purpose. The proceeds of the Loans will be used by the Company ------- and its Subsidiaries for working capital needs and general corporate purposes (including acquisitions). 9.11 Regulation U. Neither the Company nor any Subsidiary is engaged ------------ in the business of purchasing or selling Margin Stock, or extending credit to others for the purpose of purchasing or carrying Margin Stock, and less than 25% of the assets of the Company and its Subsidiaries, individually and on a consolidated basis with its respective Subsidiaries, consists of Margin Stock. No part of the proceeds of any Loan will be used to purchase or carry any Margin Stock or for any other purpose which would violate, or be inconsistent with, any of the margin regulations of the Federal Reserve Board. 9.12 Compliance with Laws, etc. Neither the Company nor any of its ------------------------- Subsidiaries is in violation of any applicable law, rule, regulation, judgment, decree or order of any governmental authority (federal, state, local or foreign), which violation, individually or in the aggregate for all such violations, would be reasonably likely to have a Materially Adverse Effect. The Company and its Subsidiaries have obtained all governmental authorizations, permits, licenses and other approvals required for the ownership and operation of their respective businesses, the failure to obtain which (individually or in the aggregate for all such failures) would be reasonably likely to have a Materially Adverse Effect, and all such governmental authorizations, permits, licenses and other approvals have been, and are currently, in effect, and the Company and its Subsidiaries are in compliance with all such governmental authorizations, permits, licenses and other approvals, the failure to comply with which, individually or in the -40- aggregate for all such failures, would be reasonably likely to have a Materially Adverse Effect. 9.13 Investment Company Act. Neither the Company nor any Subsidiary ---------------------- is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 9.14 Public Utility Holding Company Act. Neither the Company nor any ---------------------------------- Subsidiary is a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 9.15 Environmental Warranties. To the Company's knowledge, except as ------------------------ set forth in Schedule 9.15, ------------- (a) all facilities and property (including underlying groundwater) owned or leased by the Company or any of its Subsidiaries have been, and continue to be, in compliance with all Environmental Laws, the noncompliance by the Company and its Subsidiaries with which, individually or in the aggregate for all such noncompliance, would have a Materially Adverse Effect; (b) there are no pending, unresolved or threatened Environmental Actions which (i) (individually or in the aggregate for all such Environmental Actions) would be reasonably likely to have a Materially Adverse Effect; (c) there have been no Releases of Hazardous Materials at, on or under any property now or previously owned or leased by the Company or any of its Subsidiaries that, singly or in the aggregate, have had, have, or may reasonably be expected to have, a Materially Adverse Effect; (d) the Company and its Subsidiaries have been issued and are in compliance with all permits, certificates, approvals, licenses and other authorizations relating to environmental -41- matters that are necessary or desirable for their businesses, which failure or failures so to comply (individually or in the aggregate) would be likely to have a Materially Adverse Effect; (e) no property now or previously owned or leased by the Company or any of its Subsidiaries is listed or proposed for listing (with respect to owned property only) on the National Priorities List pursuant to CERCLA, on the CERCLIS (as defined in CERCLA) or on any similar state list of sites requiring investigation or clean-up; and (f) no conditions exist at, on or under any property now or previously owned, leased or operated by the Company or any of its Subsidiaries which, with the passage of time, or the giving of notice or both, would give rise to liability under any Environmental Law, which liability or liabilities (individually or in the aggregate) would be likely to have a Materially Adverse Effect. 9.16 Pension and Welfare Plans. Each Pension Plan and each Welfare ------------------------- Plan complies in all material respects with all applicable statutes and governmental rules and regulations, and (a) no Reportable Event has occurred for which the 30-day notice has not been waived, (b) neither the Company, any of its Subsidiaries nor any ERISA Affiliate has withdrawn from any Pension Plan or instituted steps to do so, other than withdrawals which, individually or in the aggregate for all such withdrawals, would not be reasonably likely to have a Materially Adverse Effect, (c) no steps have been instituted to terminate any Pension Plan other than a standard termination under Section 4041(b) of ERISA which does not require an expenditure that, individually or in the aggregate for all such expenditures, would have a Materially Adverse Effect, and (d) no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA. No condition exists or event or transaction has occurred with respect to any Pension Plan which would result in the incurrence by the Company, any of its Subsidiaries or any ERISA Affiliate of any liability, fine or penalty in an amount that, individually or in the aggregate for all such liabilities, fines and penalties, would have a Materially Adverse Effect. Neither the Company, any of its -42- Subsidiaries nor any ERISA Affiliate is a member of, or contributes to, any Multiemployer Plan. 9.17 Taxes. Each of the Company and, to the extent material, its ----- Subsidiaries has filed all tax returns, reports and declarations which are required to have been filed by it and has paid, or made adequate provisions for the timely payment of, all of its Taxes which are due and payable, except such Taxes, if any, as are being contested in good faith and by appropriate proceedings and as to which reserves or other appropriate provisions as may be required by GAAP have been, and are being, maintained. 9.18 Accuracy of Information. To the best of the Company's ----------------------- knowledge, all factual information heretofore or contemporaneously herewith furnished by or on behalf of the Company to any Lender for purposes of or in connection with this Agreement and the transactions contemplated hereby is, and all factual information hereafter furnished by or on behalf of the Company to any Lender will be, true and accurate in every material respect on the date as of which such information is dated or certified and as of the Effective Date, and none of such information is or will be incomplete by omitting to state any material fact necessary to make such information not misleading. SECTION 10 COVENANTS. Until the expiration or termination of the Commitments and thereafter until all obligations hereunder and under the Notes are paid in full, the Company agrees that, unless at any time the Required Lenders shall otherwise expressly consent in writing, the Company will perform and comply with, and will cause its Subsidiaries to perform and comply with, the obligations set forth in this Section 10. ---------- 10.1 Reports, Certificates and Other Information. The Company will ------------------------------------------- furnish to each Lender: 10.1.1 Annual Financial Statements. Within 90 days after the close --------------------------- of each fiscal year of the Company, a copy of a consolidated balance sheet, as at the close of such fiscal year, and the related consolidated statements of operations, shareholders' equity, and cash flow for such fiscal year, together with supporting notes thereto, of the Company and its consolidated Subsidiaries (with comparable -43- information as at the close of and for the prior fiscal year), in each case prepared in accordance with GAAP consistently applied and certified without Impermissible Qualification by Price Waterhouse or another firm of independent certified public accountants recognized to be of similar standing. 10.1.2 Quarterly Financial Statements. Within 50 days after the end ------------------------------ of each quarter (except the last quarter) of each fiscal year of the Company, a copy of a consolidated balance sheet, as at the close of such quarter, and the related consolidated statements of operations, shareholders' equity, and cash flow for such quarter and for the period commencing at the close of the previous fiscal year and ending with the close of such quarter, of the Company and its consolidated Subsidiaries (with comparable information at the close of and for the corresponding quarter of the prior fiscal year and for the corresponding period of such prior fiscal year), each in reasonable detail and prepared in accordance with GAAP consistently applied and certified by the chief accounting officer, the chief financial officer or the Treasurer of the Company. 10.1.3 Compliance Certificate. Contemporaneously with the furnishing ---------------------- of a copy of each of the financial statements provided for in Section 10.1.1 and -------------- 10.1.2, a Compliance Certificate dated the date of such annual or such quarterly - ------ financial statements, certified by the chief accounting officer, the chief financial officer or the Treasurer of the Company and (a) to the effect that no Event of Default or Unmatured Event of Default has occurred and is continuing, or, if any such event has occurred and is continuing, describing it and the steps, if any, being taken to cure it, and (b) containing a computation of, and showing compliance with, each of the financial ratios and restrictions contained in this Section 10. ---------- 10.1.4 SEC and Other Reports. Copies of each filing and report made --------------------- by the Company or any Subsidiary with or to any and of each communication from the Company or any Subsidiary to shareholders generally, promptly upon the filing or making thereof. 10.1.5 Other Information. Promptly, from time to time, such other ----------------- reports or information concerning the Company and its Significant Affiliates as any Lender may reasonably request; provided, however, that with respect to -------- ------- -44- Significant Affiliates not controlled by the Company, such reports and information so requested shall relate to either (i) the data necessary to demonstrate compliance with the financial covenants set forth herein or (ii) information accessible to the Company and which the Company is authorized to disclose to the Lenders. Each of the financial statements referred to in Sections 10.1.1 and --------------- 10.1.2 above will be true and correct in all material respects as of the dates - ------ and for the periods stated therein, subject, in the case of unaudited financial statements, to changes resulting from normal recurring year-end audit adjustments consistent with past practice (none of which, alone or in the aggregate, would be reasonably likely to have a Materially Adverse Effect). 10.2 Notice of Default, Litigation, etc. The Company will, and will ---------------------------------- cause each of its Subsidiaries to, notify the Lenders in writing of any of the following within three Business Days after learning thereof: (a) Default. The occurrence of any Event of Default or ------- Unmatured Event of Default; (b) Litigation. The occurrence of any adverse development with ---------- respect to any litigation, action, proceeding, investigation or labor controversy of the type described in Section 9.7 that is likely to have a ----------- Materially Adverse Effect, or the commencement of any litigation, action, proceeding, investigation or labor controversy of the type described in Section 9.7, and, if requested by any Lender, provide such Lender copies of ----------- all documentation relating to any of the foregoing; (c) Environmental Action. The existence of any Environmental -------------------- Action relating to the Company or any Subsidiary or any material development relating to any such Environmental Action, if, based upon information then reasonably available, the Company expects that such Environmental Action is reasonably likely to result in the payment of fines, compliance costs or clean-up costs by the Company or such Subsidiary in excess of an aggregate of $5,000,000 for such Environmental Action; -45- (c) Pension and Welfare Plans. The occurrence of any of the ------------------------- following: a Reportable Event with respect to any Pension Plan for which the 30-day notice has not been waived; the institution of any steps by the Company, any of its Subsidiaries, any ERISA Affiliate, the PBGC or any other Person to terminate any Pension Plan if such termination would be reasonably likely to result in a liability of $5,000,000 or more in excess of any remaining contributions to such Pension Plan due from the Company, any of its Subsidiaries or any ERISA Affiliate for the year in which such termination occurs; the institution of any steps by the Company, any of its Subsidiaries, or any ERISA Affiliate to withdraw from any Pension Plan if such withdrawal would be reasonably likely to result in a liability of $5,000,000 or more in excess of any remaining contributions to such Pension Plan due from the Company, any of its Subsidiaries or any ERISA Affiliate for the year in which such withdrawal occurs; the failure to make a required contribution to any Pension Plan if such failure is sufficient to give rise to a Lien under section 302(f) of ERISA; the taking of any action with respect to a Pension Plan which would reasonably be expected to result in the requirement that the Company, any of its Subsidiaries or any ERISA Affiliate furnish a bond or other security to the PBGC or to such Pension Plan; the occurrence of any event with respect to any Pension Plan which would be reasonably likely to result in the incurrence by the Company, any of its Subsidiaries or any ERISA Affiliate of any liability, fine or penalty in an aggregate amount that, individually or in the aggregate for all such liabilities, fines and penalties, would have a Materially Adverse Effect; the occurrence of any event that would constitute a complete or partial withdrawal from a Multiemployer Plan by the Company, any of its Subsidiaries or any ERISA Affiliate if such withdrawal would be reasonably likely to result in a liability of $5,000,000 or more in excess of any remaining contribution to such Multiemployer Plan due from the Company, any of its Subsidiaries or any ERISA Affiliate for the year in which such withdrawal occurs; or any -46- amendment to a welfare plan that would have a Materially Adverse Effect; (d) Material Adverse Change. The occurrence of any circumstance ----------------------- that is reasonably likely to have a Materially Adverse Effect; (e) Default on other Indebtedness. The receipt of any notice of ----------------------------- any default or event of default (however denominated) with respect to any Indebted ness of the Company or any of its Subsidiaries of $10,000,000 or more (in the aggregate for all such notices which are currently effective) from the trustee therefor or any holder thereof; and Each notice delivered pursuant to this Section 10.2 shall contain a description ------------ in reasonable detail of the nature and period of existence of the matter in question and of the actions which the Company or the applicable Subsidiary (as applicable) has taken and proposes to take with respect thereto. 10.3 Maintenance of Existence, etc. The Company will maintain and ----------------------------- preserve, and, except as otherwise permitted pursuant to Section 10.12, will ------------- cause each of its Subsidiaries to maintain and preserve, in full force and effect (a) its existence and good standing in the jurisdiction of its incorporation and (b) its qualification and good standing as a foreign corporation in each jurisdiction where the nature of its business makes such qualification necessary (except in those instances in which the failure to be qualified or in good standing would not have a Materially Adverse Effect). 10.4 Foreign Qualification. The Company will, and will cause each of --------------------- its Subsidiaries to, cause to be done all things necessary at all times so that the Company and each of its Subsidiaries will be duly qualified to do business and be in good standing as a foreign corporation or partnership (as applicable) in each jurisdiction where the ownership or lease of their respective properties or the nature of their respective businesses makes such qualification necessary and where the failure so to qualify, individually or in the aggregate for all such failures, would have a Materially Adverse Effect. -47- 10.5 Books, Records and Access. The Company will: maintain, and ------------------------- will cause each of its Subsidiaries to maintain, complete and accurate books and records reflecting all of their respective business affairs and transactions in accordance with GAAP; permit, and will cause each of its Subsidiaries to permit, any Lender and its agents and representatives to have access to the books and records of the Company and such Subsidiary during normal business hours; permit, and will cause each of its Subsidiaries to permit, any Lender and its agents and representatives to make copies of such books and records; and permit, and will cause each of its Subsidiaries to permit, any Lender and its agents and representatives, at reasonable times and intervals during normal business hours, to visit all of their respective offices and other locations, to discuss their financial matters with their respective officers and independent public accountants (and hereby authorizes such independent public accountants to discuss such financial matters with any Lender or its representatives, whether or not any representative of the Company or such Subsidiary is present, upon the request of such Lender and the consent of the Company thereto, such consent not to be unreasonably withheld or delayed). 10.6 Insurance. The Company will maintain, and will cause each of --------- its Subsidiaries to maintain, insurance (which may include self-insurance) with respect to their respective properties, assets, revenues, businesses and business operations against such casualties and contingencies and of such types and in such amounts as is customary in accordance with prudent business practice in the case of similar businesses and such other insurance as is required by law. 10.7 Maintenance of Property. The Company will maintain, preserve ----------------------- and keep, and will cause each of its Subsidiaries to maintain, preserve and keep, the properties which are useful and necessary in their respective businesses in good repair, working order and condition, ordinary wear and tear excepted. 10.8 Taxes. The Company will pay, and will cause each of its ----- Subsidiaries to pay, when due, all of their respective Taxes; provided, however, -------- ------- that the foregoing shall not require the Company or any of its Subsidiaries to pay or discharge any Taxes so long as (a) the Company or such Subsidiary, as the case may be, is contesting such -48- Taxes in good faith and by appropriate proceedings and the Company or such Subsidiary has set aside on its books such reserves or other appropriate provisions therefor as may be required by GAAP and (b) no forfeiture would occur or would be threatened as a result of such contest by the Company or such Subsidiary. 10.9 Compliance with Laws. The Company will: (a) comply, and will -------------------- cause each of its Subsidiaries to comply, with all applicable laws, rules, regulations, judgments, rulings, decrees and orders of any governmental authority, the noncompliance by the Company and its Subsidiaries with which, individually or in the aggregate for all such noncompliance, would have a Materially Adverse Effect; (b) obtain, and will cause each of its Subsidiaries to obtain, all governmental authorizations, permits and licenses necessary or desirable for the operations of the Company and its Subsidiaries, which failure by the Company and its Subsidiaries to obtain any of the foregoing, individually or in the aggregate for all such failures, would have a Materially Adverse Effect; and (c) cause, and will cause each of its Subsidiaries to cause, all governmental authorizations, permits and licenses necessary or desirable for the operations of the Company and its Subsidiaries to remain in effect and to be renewed in a timely manner and conduct, and will cause each of its Subsidiaries to conduct, their respective businesses in compliance therewith, the noncompliance with which by the Company and its Subsidiaries, individually or in the aggregate for all such noncompliance, would have a Materially Adverse Effect. 10.10 Further Assurances. The Company will, and will cause each of ------------------ its Subsidiaries to, cooperate with the Lenders and execute and furnish to any Lender such further agreements, instruments, certificates and other documents as such Lender may reasonably request to carry out to such Lender's reasonable satisfaction the transactions contemplated in this Agreement. 10.11 Pension Plans. The Company will: not permit, and will not ------------- permit any of its Subsidiaries to permit, any condition to exist in connection with any Pension Plan which would constitute grounds for the PBGC to institute proceedings to have such Pension Plan terminated or a trustee appointed to administer such Pension Plan which proceedings, or the outcome thereof, would be reasonably -49- likely to have a Materially Adverse Effect; and not engage in, or permit to exist or occur, or permit any of its Subsidiaries to engage in, or permit to exist or occur, any other condition, event or transaction with respect to any Pension Plan which would result in the incurrence by the Company or any of its Subsidiaries of any liability, fine or penalty that, individually or in the aggregate for all such liabilities, fines, or penalties, would have a Materially Adverse Effect. 10.12 Merger, Purchase and Sale. The Company will not, and (except ------------------------- for any such transaction between wholly-owned Subsidiaries of the Company or between Subsidiaries in which the Company owns equal percentages of voting stock) will not permit any of its Subsidiaries to: (a) be a party to any merger, consolidation or exchange of stock with any other Person, unless immediately before such merger, consolidation or exchange of stock and after giving effect thereto, no Event of Default or Unmatured Event or Default shall have occurred and be continuing; (b) sell, transfer, convey, lease or otherwise dispose of any of, or grant options, warrants, or other rights with respect to, any of their respective assets (including capital stock of, or other equity interests in, any Subsidiary) to any Person, unless, immediately before such sale, transfer, conveyance, lease or other disposition and after giving effect thereto, no Event of Default or Unmatured Event of Default shall have occurred and be continuing; (c) sell or assign, with or without recourse, any accounts receivable or chattel paper, except for (i) sales or assignments of accounts receivable or chattel paper in an amount that at any time does not cause the aggregate outstanding amount of all accounts receivable and chattel paper that are sold and assigned to exceed $50,000,000 and (ii) such other sales or assignments of accounts receivable or chattel paper that the Required Lenders, in their reasonable discretion, approve in writing; or -50- (d) purchase or otherwise acquire all or substantially all the assets of, or the equity interests in, any Person, unless, immediately before such purchase or acquisition and after giving effect thereto, no Event of Default or Unmatured Event of Default shall have occurred and be continuing. 10.13 Indebtedness/Capitalization Ratio. The Company will not permit --------------------------------- the Indebtedness/Capitalization Ratio to be greater than 0.5 to 1.0 at any time. 10.14 Indebtedness/Net Cash Flow Ratio. The Company will not permit -------------------------------- the Indebtedness/Net Cash Flow Ratio to be less than 4.5 to 1, as measured as of the last day of any fiscal quarter of the Company and its Subsidiaries for the 12-month period ending on the last day of such fiscal quarter. 10.15 Interest Coverage Ratio. The Company will not permit the ----------------------- Interest Coverage Ratio as of the last day of any fiscal quarter of the Company to be less than 2.0 to 1. 10.16 Restricted Payments. (a) The Company will not, and will not ------------------- permit any of its Subsidiaries to, purchase or redeem any shares of their respective stock or other equity interests; (b) the Company will not, and will not permit any of its non-wholly-owned Subsidiaries to, declare, pay, or make any dividend or distribution (in cash, property, or obligations) on any shares of any class of its own capital stock (now or hereafter outstanding) or other equity interests (now or hereafter outstanding), or on any warrants, options, or other rights with respect to any shares of any class of its own capital stock (now or hereafter outstanding) or other equity interests (now or hereafter outstanding) (other than dividends or distributions payable solely in its stock, or warrants to purchase its stock, or split-ups or reclassifications of its stock into additional or other shares of its stock, so long as such transactions do not involve the incurrence of Indebtedness) nor will it apply, or permit any of its Subsidiaries to apply, any of their respective funds, properties or assets to the purchase, redemption, sinking fund or other retirement of any shares of any class of its own capital stock (now or hereafter outstanding) or other equity interests (now or hereafter outstanding); (c) the Company will not, and will not permit any of its -51- Subsidiaries to, set aside any funds or make any deposit for any of the foregoing purposes; and (d) the Company will not prepay, purchase or redeem, and will not permit any of its Subsidiaries to purchase, any subordinated Indebtedness of the Company; provided, however, (i) the Company may declare, pay -------- ------- and make cash dividends and distributions and redeem and purchase its stock and equity interests, and set aside funds for such purposes, in each case so long as no Event of Default or Unmatured Event of Default shall have occurred and be continuing immediately prior thereto or will result therefrom and (ii) any Subsidiary may pay dividends the Company. 10.17 Indebtedness. The Company will not, and will not permit any ------------ Subsidiary to, create, incur, assume or permit to exist or otherwise become or be liable in respect of any Indebtedness except: (a) the Loans; (b) Indebtedness of Subsidiaries to the Company; (c) Indebtedness of Subsidiaries to other Subsidiaries; (d) Capitalized Lease Liabilities; (e) other Indebtedness outstanding on the date hereof and listed on Schedule 10.17 or hereafter -------------- incurred in connection with Liens permitted by Section 10.18; (f) Indebtedness ------------- in respect of judgments or awards which have been in force for less than the applicable appeal period so long as execution is not levied thereunder (or in respect of which the Company or its relevant Subsidiary shall at the time in good faith be prosecuting an appeal or proceedings for review and in respect of which a stay of execution shall have been obtained pending such appeal or review) and which does not, in the aggregate for the Company and all of its Subsidiaries, exceed $5,000,000 at any time; (g) the endorsement, in the ordinary course of collection, of instruments payable to the order of the Company or any of its Subsidiaries (as applicable); (h) guaranties by the Company of the obligations of its Subsidiaries; and (i) other Indebtedness of the Company and its Subsidiaries; provided, however, that no Indebtedness -------- ------- otherwise permitted by clause (d), (e), (h}, or (i) shall be permitted to be ---------- --- --- --- incurred if, either immediately before the proposed incurrence or issuance thereof or after giving effect to the incurrence or issuance thereof (as applicable), any Event of Default or Unmatured Event of Default shall have occurred and be continuing. 10.18 Liens. The Company will not, and will not permit any ----- Subsidiary to, create, incur, assume or permit to exist any Lien with respect to any of its properties, assets -52- or revenues, whether now owned or hereafter acquired, except (a) Liens (i) in ------ connection with the acquisition of property after the date hereof by way of purchase money mortgage, conditional sale or other title retention agreement, capitalized lease or other deferred payment contract, and attaching only to the property being acquired, and (ii) existing prior to the time any property is acquired by the Company or any Subsidiary and attaching only to such property (but not incurred in anticipation of such acquisition by the Company or such Subsidiary); in each case if the Indebtedness secured by each Lien described in clause (i) or clause (ii) above is permitted pursuant to Section 10.17; (b) - ---------- ----------- ------------- Liens for current Taxes that are not delinquent or Taxes that are being contested in good faith and by appropriate proceedings and as to which reserves or other appropriate provisions as may be required by GAAP have been and are being maintained; (c) Liens of carriers, warehousemen, mechanics, materialmen, repairmen, and landlords arising in the ordinary course of business and securing obligations which are not overdue or which are being contested in good faith and by appropriate proceedings and as to which reserves or other appropriate provisions as may be required by GAAP have been and are being maintained; (d) Liens incurred in the ordinary course of business in connection with workmen's compensation, unemployment insurance, or other forms of governmental insurance or benefits, or to secure performance of tenders, statutory obligations, leases, and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; (e) Liens in favor of the Agent; (f) Liens disclosed on Schedule 10.18; (g) Liens -------------- disclosed in the financial statements referred to in Section 9.5; (h) judgment ----------- Liens in existence less than 30 days after the entry thereof or with respect to which execution has been stayed; and (i) Liens securing Indebtedness of Subsidiaries not exceeding in the aggregate $25,000,000. 10.19 Other Agreements. The Company will not, and will not permit ---------------- any of its Subsidiaries to, enter into any agreement containing any provision which would be violated or breached by any Loan (or request therefor) or by the Company's performance of its obligations hereunder. 10.20 Use of Proceeds. The Company will not, and will not permit any --------------- of its Subsidiaries to, use any proceeds of the Loans, either directly or indirectly, for the -53- purpose, whether immediate, incidental or ultimate, of "purchasing or carrying any margin stock" within the meaning of Regulation U of the Federal Reserve Board, as amended from time to time; and will furnish, and will cause its Subsidiaries to furnish, to any Lender, upon such Lender's request, a statement in conformity with the requirements of Federal Reserve Form U-1 referred to in Regulation U. The Company may use the proceeds of the Loans to finance acquisitions of other companies or assets provided (a) such acquisition is not -------- prohibited by another provision of this Credit Agreement and (b) the Person being acquired or the Person whose assets are being acquired (or such Person's board of directors) has not (i) announced that it will oppose such acquisition or (ii) commenced any litigation which alleges such acquisition violates, or will violate, applicable law. 10.21 Transactions with Affiliates. The Company will not, and will ---------------------------- not permit any of its Subsidiaries to, enter into or cause, suffer or permit to exist any transaction or arrangement (including, without limitation, the purchase, sale, lease or exchange of property or the rendering of any service) with any of its Affiliates (excluding the Company or any Subsidiary), if such transaction or arrangement is on a non-arm's-length basis and such transaction or arrangement, individually or in the aggregate for all such transactions or arrangements, would be reasonably likely to have a Materially Adverse Effect. 10.22 Environmental Liabilities. The Company will not, and will not ------------------------- permit any of its Subsidiaries to, violate any requirement of any Environmental Law, the violation of which by the Company and its Subsidiaries, individually or in the aggregate for all such violations, would have a Materially Adverse Effect. Without limiting the foregoing, the Company and its Subsidiaries will not, and will not permit any Person to, Release any Hazardous Materials into the environment or onto or (except in accordance with applicable law) from any real property leased, owned or operated by the Company or any of its Subsidiaries or any adjacent property, which Releases (individually or in the aggregate for all such Releases) would be reasonably likely to result in a requirement that the Company or any of its Subsidiaries undertake any removal or other remedial action pursuant to any Environmental Law, nor allow any Lien imposed pursuant to any Environmental Law -54- to be imposed or to remain on such owned or operated real property. SECTION 11 CONDITIONS OF LENDING. The obligation of each Lender to make its Loans is subject to the following conditions precedent: 11.1 Initial Loan. The obligation of each Lender to make its initial ------------ Loan is, in addition to the conditions precedent specified in Section 11.2, ------------ subject to the conditions precedent (and the date on which all such conditions precedent have been satisfied or waived in writing by the Lenders is herein called the "Effective Date") that the Agent shall have received all of the following, each duly executed and dated the Effective Date (or such other date as shall be satisfactory to the Agent), in form and substance satisfactory to the Agent, and each (except for the Notes, of which only the original shall be signed) in sufficient number of signed counterparts to provide one for each Lender: 11.1.1 Notes. The Notes of the Company payable to the order of ----- the Lenders. 11.1.2 Resolutions. Certified copies of resolutions of the ----------- Board of Directors of the Company authorizing the execution, delivery and performance by the Company of this Agreement, the Notes and the other documents to be executed by the Company pursuant hereto. 11.1.3 Consents, etc. Certified copies of all documents ------------- evidencing any consents and governmental approvals (if any) required for the execution, delivery and performance by the Company of this Agreement and the Notes. 11.1.4 Incumbency and Signature Certificates. An incumbency and ------------------------------------- signature certificate of the Company certifying the names of the officer or officers of the Company authorized to sign this Agreement, the Notes and the other documents required to be delivered by the Company in connection with this Agreement, together with a sample of the true signature of each such officer (it being understood that the Agent and each Lender may conclusively rely on such certificate until formally advised by a like certificate of any changes therein). -55- 11.1.5 Opinion of Counsel for the Company. The opinion of Steve ---------------------------------- Barnett, Esq., counsel to the Company, substantially in the form of Exhibit C. --------- 11.1.6 Other. Such other documents as the Agent or any Lender ----- may reasonably request. 11.2 All Loans. The obligation of each Lender to make each Loan is --------- subject to the following further conditions precedent that: 11.2.1 No Default. (a) No Event of Default or Unmatured Event ---------- of Default has occurred and is continuing or will result from the making of such Loan and (b) the warranties of the Company contained in Section 9 (excluding Section 9.9) are true and correct in all material respects as of the date of - ----------- such requested Loan, with the same effect as though made on such date. 11.2.2 No Material Adverse Change. Since the date of the audited -------------------------- financial statements referred to in Section 9.5, there has been no change in the ----------- assets, business, revenues, financial condition, prospects or operations of the Company and its Subsidiaries which has (or has had) a Materially Adverse Effect. 11.2.3 Confirmatory Certificate. If requested by the Agent or ------------------------ any Lender, the Agent shall have received (in sufficient counterparts to provide one to each Lender) a certificate dated the date of such requested Loan and signed by a duly authorized officer of the Company as to the matters set out in Section 11.2.1 and 11.2.2 (it being understood that each request by the Company - -------------- ------ for the making of a Loan shall be deemed to constitute a warranty by the Company that the conditions precedent set forth in Section 11.2.1 and 11.2.2 will be -------------- ------ satisfied at the time of the making of such Loan), together with such other documents as the Agent or any Lender may reasonably request in support thereof. SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT. 12.1 Events of Default. Each of the following shall constitute an ----------------- "Event of Default" under this Agreement: 12.1.1 Non-Payment of Obligation. The Company shall default in the ------------------------- payment when due of any -56- principal of or interest on any Loan; or the Company shall default, and such default shall continue unremedied for three Business Days after notice to the Company from the Agent or any Lender, in the payment when due of any other Obligation (including, without limitation, any fees or expenses not being contested in good faith). 12.1.2 Non-Performance of Other Obligations. The Company shall ------------------------------------ default in the due performance and observance of Section 10.13, 10.14 or 10.15; ------------- ----- ----- or the Company shall default in the due performance and observance of any other agreement contained herein (and not constituting an Event of Default under any other provision of this Agreement), and such default shall continue unremedied for a period of 30 days. 12.1.3 Default on Other Indebtedness. (a) The Company or any ----------------------------- Significant Affiliate shall default, and such default shall continue for three days, in the payment of any Indebtedness in a principal amount of $10,000,000 or more when due, whether by acceleration or otherwise, of any Indebtedness of, or guaranteed by the Company or any Significant Affiliate (other than the Indebtedness hereunder); or (b) any event or condition shall occur which results in, or continues unremedied for a period of time sufficient to permit, the acceleration of the maturity of any Indebtedness of, or guaranteed by, the Company or any Significant Affiliate (other than the Indebtedness hereunder) or any event or condition shall occur which enables the holder or holders of such other Indebtedness or any trustee or agent for such holders to accelerate the maturity of such other Indebtedness or to require the Company or any of its Significant Affiliates to purchase, redeem or cause the defeasance of such other Indebtedness in whole or in part, and, in all cases described in this clause (b), such event or condition shall continue for three days. 12.1.4 Bankruptcy, Insolvency, etc. (a) The Company or any --------------------------- Significant Affiliate becomes insolvent or generally fails to pay, or admits in writing its inability or refusal to pay, debts as they become due; (b) the Company or any Significant Affiliate applies for, consents to, or acquiesces in the appointment of a trustee, receiver, sequestrator or other custodian for the Company or any Significant Affiliate or for a substantial part of the property of any thereof, or makes a general assignment for the benefit of creditors; (c) in the absence of such -57- application, consent or acquiescence, a trustee, receiver, sequestrator or other custodian is appointed for the Company or any of its Significant Affiliates or for a substantial part of the property of any thereof and is not discharged within 60 days; (d) any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding-up or liquidation proceeding, is commenced in respect of the Company or any of its Significant Affiliates, and if such case or proceeding is not commenced by the Company or any of its Significant Affiliates, it is consented to or acquiesced in by the Company or such Significant Affiliate or results in the entry of an order for relief or remains for 60 days undismissed; (e) any warrant of attachment or similar legal process is issued against any substantial part of the property of the Company or any of its Significant Affiliates which is not released within 60 days after service; or (f) the Company or any Significant Affiliate takes any corporate or other action to authorize, or in furtherance of, any of the foregoing. 12.1.5 Default on Other Contractual Obligations. The Company or any ---------------------------------------- Subsidiary shall default in the payment when due, whether by acceleration or otherwise, in the performance or observance of any Contractual Obligation of the Company or any Subsidiary to or with any other Person involving the payment of an amount in excess of $3,000,000 at any time by the Company or any Subsidiary (other than any such Contractual Obligation constituting or related to Indebtedness). 12.1.6 Pension Plans. Any of the following events shall occur ------------- with respect to any Pension Plan: (a) the institution by the Company, any of its Subsidiaries, any ERISA Affiliate or any other Person of steps to terminate any Pension Plan if, in order to effectuate such termination, the Company, any such Subsidiary or any ERISA Affiliate would be required to make a contribution to such Pension Plan or would incur a liability or obligation to such Pension Plan of $8,000,000 or more in excess of any remaining contributions to such Pension Plan due from the Company, any of its Subsidiaries or any ERISA Affiliate for the year in which such termination occurs; -58- (b) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under section 302(f) of ERISA; (c) the institution of any steps or the failure to take any action by the Company, any Subsidiary, any ERISA Affiliate or any other Person if such act or omission would reasonably be expected to result in the assessment of withdrawal liability by a Multiemployer Plan against the Company, any Subsidiary or any ERISA Affiliate in an amount of $8,000,000 or more in excess of any remaining contributions to such Multiemployer Plan due from the Company, any of its Subsidiaries or any ERISA Affiliate for the year in which such withdrawal occurs; or (d) a "default" (as defined in section 4219(c)(5) of ERISA) occurs with respect to payments owed by the Company, any Subsidiary or any ERISA Affiliate to any Multiemployer Plan. 12.1.7 Breach of Warranty. Any material representation and ------------------ warranty of the Company in this Agreement or in any other Loan Document executed by it or any other writing furnished by or on behalf of the Company or any of its Subsidiaries to the Agent or any Lender for purposes of or in connection with this Agreement is or shall be untrue or misleading in any material respect on or as of the date on which such representation and warranty was made or deemed made, and such circumstances shall continue for thirty days or more. 12.1.8 Judgments. There shall be entered against the Company or --------- any Subsidiary one or more judgments or decrees for the payment of money in an aggregate amount in excess of $25,000,000 at any one time outstanding for the Company and all of its Subsidiaries, excluding those judgments or decrees (a) that shall have been outstanding less than 30 calendar days from the entry thereof or (b) that shall have been stayed (for as long as such stay shall continue and for 30 days thereafter) or (c) that shall have been satisfied or (d) for which the Company or the relevant Subsidiary is insured. -59- 12.1.9 Material Adverse Change. Any event or condition occurs or ----------------------- arises which has a Materially Adverse Effect and such event or condition continues for more than 10 days after notice is given to the Company by the Required Lenders. 12.2 Effect of Event of Default. If any Event of Default described -------------------------- in Section 12.1.4 shall occur, the Commitments (if they have not theretofore -------------- terminated) shall immediately terminate and the Notes and all other obligations hereunder shall become immediately due and payable, all without presentment, demand, protest or notice of any kind; and in the case of any other Event of Default, the Agent may, and upon written request of the Required Lenders shall, declare the Commitments (if they have not theretofore terminated) to be terminated and/or declare all Notes and all other obligations hereunder to be due and payable, whereupon the Commitments (if they have not theretofore terminated) shall immediately terminate and/or all Notes and all other obligations hereunder shall become immediately due and payable, all without presentment, demand, protest or notice of any kind. The Agent shall promptly advise the Company of any such declaration, but failure to do so shall not impair the effect of such declaration. Notwithstanding the foregoing, the effect as an Event of Default of any event described in Section 12.1.1 or -------------- Section 12.1.4 may be waived by the written concurrence of all of the Lenders, - -------------- and the effect as an Event of Default of any other event described in this Section 12 may be waived by the written concurrence of the Required Lenders. - ---------- SECTION 13 THE AGENT. 13.1 Authorization. Each Lender authorizes the Agent to act on ------------- behalf of such Lender to the extent provided herein or any other document or instrument delivered hereunder or in connection herewith, and to take such other action as may be reasonably incidental thereto. 13.2 Indemnification. Each Lender agrees to reimburse and indemnify --------------- the Agent for, and hold the Agent harmless against, a share (determined in accordance with such Lender's Percentage) of any loss, damage, penalty, action, judgment, obligation, cost, disbursement, liability or expense (including reasonable attorneys' fees) which may at any time be incurred by the Agent (and for which the Agent is not reimbursed by the Company) arising out of or in -60- connection with the performance of its obligations or the exercise of its powers hereunder or any other document or instrument delivered hereunder or in connection herewith, as well as the costs and expenses of defending against any claim against the Agent arising hereunder or thereunder, provided that no Lender -------- shall be liable for any of the foregoing which are determined by a court of competent jurisdiction in a final proceeding to have resulted solely from the Agent's gross negligence or willful misconduct. 13.3 Exculpation. The Agent shall be entitled to rely upon advice of ----------- counsel concerning legal matters, and upon this Agreement and any schedule, certificate, statement, report, notice or other writing which it believes to be genuine or to have been presented by a proper person. Neither the Agent nor any of its directors, officers, employees or agents shall (i) be responsible for any recitals, representations or warranties contained in, or for the execution, validity, genuineness, effectiveness or enforceability of, this Agreement or any other instrument or document delivered hereunder or in connection herewith, (ii) be responsible for the validity, genuineness, perfection, effectiveness, enforceability, existence, value or enforcement of any collateral security, (iii) be under any duty to inquire into or pass upon any of the foregoing matters, or to make any inquiry concerning the performance by the Company or any other obligor of its obligations, or (iv) in any event, be liable as such for any action taken or omitted by it or them, except for its or their own gross negligence or willful misconduct. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, the Agent in its individual capacity. 13.4 Credit Investigation. Each Lender acknowledges that it has made -------------------- such inquiries and taken such care on its own behalf as would have been the case had such Lender's Commitment been granted and such Lender's Loans been made directly by such Lender to the Company without the intervention of the Agent or any other Lender. Each Lender agrees and acknowledges that the Agent makes no representations or warranties about the creditworthiness of the Company or any other party to this Agreement or with respect to the legality, validity, sufficiency or enforceability of this Agreement or any Note or the value of any security therefor. -61- 13.5 Agent and Affiliates. The Agent in its individual capacity -------------------- shall have the same rights and powers hereunder as any other Lender and may exercise or refrain from exercising the same as though it were not the Agent, and the Agent and its affiliates may accept deposits from and generally engage in any kind of business with the Company or any affiliate thereof as if the Agent were not the Agent hereunder. 13.6 Action on Instructions of the Required Lenders. As to any ---------------------------------------------- matters not expressly provided for by this Agreement (including, without limitation, enforcement of this Agreement and collection of the Loans), the Agent shall not be required to exercise any discretion or take any action, but the Agent shall in all cases be fully protected in acting or refraining from acting upon the written instructions (i) from the Required Lenders, except for instructions which under the express provisions hereof must be received by the Agent from all Lenders, and (ii) in the case of such instructions, from all Lenders. In no event will the Agent be required to take any action which exposes the Agent to personal liability or which is contrary to this Agreement or applicable law. The relationship between the Agent and the Lenders is and shall be that of agent and principal only and nothing herein contained shall be construed to constitute the Agent a trustee for any holder of a Note or of a participation therein nor to impose on the Agent duties and obligations other than those expressly provided for herein. 13.7 Funding Reliance. (a) Unless the Agent receives notice from a ---------------- Lender by 11:00 a.m., Chicago time, on the day of a proposed borrowing that such Lender will not make available to the Agent the amount which would constitute its Percentage of such borrowing in accordance with Section 2.3, the Agent may ----------- assume that such Lender has made such amount available to the Agent and, in reliance upon such assumption, make a corresponding amount available to the Company. If and to the extent such Lender has not made any such amount available to the Agent, such Lender and the Company jointly and severally agree to repay such amount to the Agent forthwith on demand, together with interest thereon (i) in the case of the Company, the interest rate applicable to Loans comprising such borrowing and (ii) in the case of such Lender, the Federal Funds Rate (or, beginning on the third Business Day after demand, the rate set forth in clause (i)). Nothing set forth in this clause ---------- ------ -62- (a) shall relieve any Lender of any obligation it may have to make any Loan - --- hereunder. (b) Unless the Agent receives notice from the Company prior to the due date for any payment hereunder that the Company does not intend to make such payment, the Agent may assume that the Company has made such payment and, in reliance upon such assumption, make available to each Lender its share of such payment. If and to the extent that the Company has not made any such payment to the Agent, each Lender which received a share of such payment shall repay such share (or the relevant portion thereof) to the Agent forthwith on demand, together with interest thereon at the Federal Funds Rate (or, beginning on the third Business Day after demand, at the Alternate Reference Rate). Nothing set forth in this clause (b) shall relieve the Company of any obligation it may have ---------- to make any payment hereunder. 13.8 Resignation. The Agent may resign as such at any time upon at ----------- least 30 days' prior notice to the Company and the Lenders. In the event of any such resignation, the Required Lenders (with, so long as no Event of Default or Unmatured Event of Default exists, the consent of the Company, which consent shall not be unreasonably delayed or withheld) shall as promptly as practicable appoint a successor Agent. If no successor shall have been so appointed, and shall have accepted such appointment, within 30 days after the giving of notice of such resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America having a combined capital, surplus and undivided profits of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from all further duties and obligations under this Agreement. After any resignation pursuant to this Section 13.8, the provisions of this Section 13 shall inure to ------------ ---------- the benefit of the retiring Agent as to any actions taken or omitted to be taken by it while it was Agent hereunder. -63- SECTION 14 GENERAL. 14.1 Waiver; Amendments. No delay on the part of the Agent or any ------------------ Lender in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power or remedy preclude other or further exercise thereof, or the exercise of any other right, power or remedy. No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement or the Notes shall in any event be effective unless the same shall be writing and signed and delivered by the Agent and signed and delivered by Lenders having an aggregate Percentage of not less than the aggregate Percentage expressly designated herein with respect thereto or, in the absence of such designation as to any provision of this Agreement or the Notes, by the Required Lenders, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment, modification, waiver or consent shall (i) extend or increase the amount of the Commitments, (ii) extend the date for payment of any principal of or interest on the Loans or any fees payable hereunder, (iii) reduce the principal amount of any Loan, the rate of interest thereon or any fees payable hereunder, (iv) change the definition of Required Lenders or otherwise reduce the aggregate Percentage required to effect an amendment, modification, waiver or consent or (v) amend this sentence without, in each case, the consent of all Lenders. No provisions of Section 13 shall be amended, modified or waived without the ---------- written consent of the Agent. 14.2 Confirmations. The Company and each holder of a Note agree from ------------- time to time, upon written request received by it from the other, to confirm to the other in writing (with a copy of each such confirmation to the Agent) the aggregate unpaid principal amount of the Loans then outstanding under such Note. 14.3 Notices. Except as otherwise provided in Sections 2.3, 2.4 and ------- ------------ --- 4.3, all notices hereunder shall be in writing (including, without limitation, - --- facsimile transmission) and shall be sent to the applicable party at its address shown below its signature hereto or at such other address as such party may, by written notice received by the other party, have designated as its address for such purpose. Notices sent by facsimile transmission shall be -64- deemed to have been given when sent; notices sent by mail shall be deemed to have been given three Business Days after the date when sent by registered or certified mail, postage prepaid; and notices sent by hand delivery shall be deemed to have given when received. For purposes of Sections 2.3, 2.4 and 4.3, ------------ --- --- the Agent shall be entitled to rely on telephonic instructions from any person that the Agent in good faith believes is an authorized officer or employee of the Company, and the Company shall hold the Agent and each Lender harmless from any loss, cost or expense resulting from any such reliance. 14.4 Subsidiary References. The provisions of this Agreement --------------------- relating to Subsidiaries shall apply only during such times as the Company has one or more Subsidiaries. 14.5 Regulation U. Each Lender represents that it in good faith is ------------ not relying, either directly or indirectly, upon any Margin Stock as collateral security for the extension or maintenance by it of any credit provided for in this Agreement. 14.6 Costs, Expenses and Taxes. The Company agrees to pay on demand ------------------------- all reasonable out-of-pocket costs and expenses of the Agent (including the fees and out-of-pocket of counsel for the Agent and of local counsel, if any, who may be retained by said counsel) in connection with the preparation, execution, delivery and administration of this Agreement and all other documents provided for herein or delivered or to be delivered hereunder or in connection herewith (including, without limitation, any amendment, supplement or waiver to this Agreement or any such other document). The Company further agrees to pay all reasonable out-of-pocket costs and expenses (including reasonable attorneys' fees, court costs and other legal expenses and allocated costs of staff counsel) incurred by the Agent and each Lender in connection with (i) the negotiation of any restructuring or "work-out" (whether or not consummated) of the obligations of the Company hereunder and (ii) the enforcement of this Agreement or any other document provided for herein or delivered or to be delivered hereunder or in connection herewith. In addition, the Company agrees to pay, and to save the Agent and the Lenders harmless from all liability for, any stamp or other similar taxes which may be payable in connection with the execution and delivery of this Agreement, the borrowings hereunder, the issuance of -65- the Notes or the execution and delivery of any other document provided for herein or delivered or to be delivered hereunder or in connection herewith. All obligations provided for in this Section 14.6 shall survive repayment of the ------------ Loans, cancellation of the Notes and any termination of this Agreement. 14.7 Indemnification by the Company. ------------------------------ (a) In consideration of the execution and delivery of this Agreement by the Agent and the Lenders and the agreement to extend the Commitments provided hereunder, the Company hereby agrees to indemnify, exonerate and hold the Agent, each Lender and each of the officers, directors, employees and agents of the Agent and each Lender (collectively the "Lender Parties" and individually each a "Lender Party") free and harmless from and against any and all actions, causes of action, suits, losses, liabilities, damages and expenses, including, without limitation, reasonable attorneys' fees and charges and allocated costs of staff counsel (collectively called the "Indemnified Liabilities"), incurred by the Lender Parties or any of them as a result of, or arising out of, or relating to, (i) any tender offer, merger, purchase of stock, purchase of assets or other similar transaction financed or proposed to be financed in whole or in part, directly or indirectly, with the proceeds of any of the Loans or (ii) the enforcement of this Agreement or any Note by any of the Lender Parties, except for any such Indemnified Liabilities arising on account of any such Lender Party's bad faith, gross negligence or willful misconduct. If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Company hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. (b) Without limiting clause (a) above, the Company agrees to ---------- reimburse each Lender Party for, and indemnify each Lender Party against, any and all losses, claims, damages, penalties, judgments, liabilities and expenses (including reasonable attorneys' and consultant's fees and allocated costs of staff counsel) which any Lender Party may pay, incur or become subject to arising out of or relating to the use, handling release, emission, discharge, transportation, storage, treatment or disposal of any Hazardous Material at any real property owned or leased by -66- the Company or any Subsidiary or used by the Company or any Subsidiary in its business or operations, except to the extent caused by the acts or omissions of such Lender Party. (c) All obligations provided for in this Section 14.7 shall survive ------------ repayment of the Loans, cancellation of the Notes and any termination of this Agreement. 14.8 Successors and Assigns. This Agreement shall be binding upon ---------------------- the Company, the Lenders and the Agent and their respective successors and assigns, and shall inure to the benefit of the Company, the Lenders and the Agent and the successors and assigns of the Lenders and the Agent. The Company may not assign its rights or obligations hereunder without the prior written consent of all Lenders. 14.9 Assignments; Participations. --------------------------- 14.9.1 Assignments. Any Lender may, with the prior written consent ----------- of the Company and the Agent (which consents shall not be unreasonably delayed or withheld), at any time assign and delegate to one or more commercial banks or other Persons (any Person to whom such an assignment and delegation is to be made being herein called an "Assignee"), all or any fraction of such Lender's Loans and Commitment (which assignment and delegation shall be of a constant, and not a varying, percentage of all the assigning Lender's Loans) in a minimum aggregate amount equal to the lesser of (i) the assigning Lender's remaining Commitment and (ii) $5,000,000; provided, however, that (a) no assignment and -------- ------- delegation may be made to any Person if, at the time of such assignment and delegation, the Company would be obligated to pay any greater amount under Section 7.6 or Section 8 to the Assignee than the Company is then obligated to - ----------- --------- pay to the assigning Lender under such Section and (b) the Company and the Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned and delegated to an Assignee until the date when all of the following conditions hall have been met: (x) five Business Days (or such lesser period of time as the Agent and the assigning Lender shall agree) shall have passed after written notice of such assignment and delegation, together with payment instructions, addresses and related information with respect to such Assignee, -67- shall have been given to the Company and the Agent by such assigning Lender and the Assignee, (y) the assigning Lender and the Assignee shall have executed and delivered to the Company and the Agent an assignment agreement substantially in the form of Exhibit D (an "Assignment Agreement"), --------- together with any documents required to be delivered thereunder, which Assignment Agreement shall have been accepted by the Agent and the Company, and (z) the assigning Lender or the Assignee shall have paid the Agent a processing fee of $2,500. From and after the date on which the conditions described above have been met, (x) such Assignee shall be deemed automatically to have become a party hereto and, to the extent that rights and obligations hereunder have been assigned and delegated to such Assignee pursuant to such Assignment Agreement, shall have the rights and obligations of a Lender hereunder, and (y) the assigning Lender, to the extent that rights and obligations hereunder have been assigned and delegated by it pursuant to such Assignment Agreement, shall be released from its obligations hereunder. Within five Business Days after effectiveness of any assignment and delegation, the Company shall execute and deliver to the Agent (for delivery to the Assignee and the Assignor, as applicable) a new Note in the principal amount of the Assignee's Commitment and, if the assigning Lender has retained a Commitment hereunder, a replacement Note in the principal amount of the Commitment retained by the assigning Lender (such Note to be in exchange for, but not in payment of, the predecessor Note held by such assigning Lender). Each such Note shall be dated the effective date of such assignment. The assigning Lender shall mark the predecessor Note "exchanged" and deliver it to the Company. Accrued interest on that part of the predecessor Note being assigned shall be paid as provided in the Assignment Agreement. Accrued interest and fees on that part of the predecessor Note not being assigned shall be paid to the assigning Lender. Accrued interest and accrued fees shall be paid at the same time or times provided in the predecessor Note and in this Agreement. Any attempted assignment and delegation not made in accordance with this Section 14.9.1 shall be null and void. -------------- -68- Notwithstanding the foregoing provisions of this Section 14.9.1 or any -------------- other provision of this Agreement, any Lender may at any time assign all or any portion of its Loans and its Note to a Federal Reserve Bank (but no such assignment shall release any Lender from any of its obligations hereunder). 14.9.2 Participations. Any Lender may at any time sell to one or -------------- more commercial banks or other Persons participating interests in any Loan owing to such Lender, the Note held by such Lender, the Commitment of such Lender or any other interest of such Lender hereunder (any Person purchasing any such participating interest being herein called a "Participant"). In the event of a sale by a Lender of a participating interest to a Participant, (x) such Lender shall remain the holder of its Note for all purposes of this Agreement and (y) the Company and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations hereunder. No Participant shall have any direct or indirect voting rights hereunder (except that a Lender may grant a Participant rights with respect to any of the events described in the penultimate sentence of Section 14.1). The Company agrees that ------------ if amounts outstanding under this Agreement and the Notes are due and payable (as a result of acceleration or otherwise), each Participant shall be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement and any Note to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement or such Note; provided that such right of setoff shall be subject to -------- the obligation of each Participant to share with the Lenders, and the Lenders agree to share with each Participant, as provided in Section 7.5. The Company ----------- also agrees that each Participant shall be entitled to the benefits of Section ------- 7.6 and Section 8 as if it were a Lender (provided that no Participant shall - --- --------- receive any greater compensation pursuant to such Sections than would have been paid to the participating Lender if no participation had been sold). 14.10 Governing Law. This Agreement and each Note shall be a ------------- contract made under and governed by the laws of the State of Illinois applicable to contracts made and to be performed entirely within the State of Illinois. Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid -69- under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. All obligations of the Company and rights of the Agent and the Lenders expressed herein or in the Notes shall be in addition to and not in limitation of those provided by applicable law. 14.11 Counterparts. This Agreement may be executed in any number of ------------ counterparts and by the different parties hereto on separate counterparts and each such counterpart shall together constitute but one and the same Agreement. When counterparts executed by all of the parties hereto shall have been lodged with the Agent (or, in the case of any Lender as to which an executed counterpart shall not have been so lodged, the Agent shall have received confirmation from such Lender of execution of a counterpart hereof by such Lender), this Agreement shall become effective as of the date hereof, and at such time the Agent shall notify the Company and each Lender. 14.12 Forum Selection and Consent to Jurisdiction. ANY LITIGATION ------------------------------------------- BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR NOTE, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 14.13 Waiver of Jury Trial. EACH OF THE COMPANY, THE AGENT AND EACH -------------------- LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE AND AMENDMENT, -70- INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. Delivered at Chicago, Illinois, as of the day and year first above written. INDRESCO INC. By __________________________ Title _______________________ By __________________________ Title _______________________ Address: 2121 San Jacinto Street Suite 2500 LB-31 Dallas, Texas 75201 Attention: Gary G. Garrison Facsimile: 214/953-4598 BANK OF AMERICA ILLINOIS, individually and as Agent By __________________________ Address: 231 South LaSalle Street Chicago, Illinois 60697 Attention: W. Thomas Barnett Facsimile: 312/987-5833 -71- SCHEDULE I COMMITMENTS AND PERCENTAGES Lender Percentage Commitment ----------------- ---------- Bank of America Illinois $60,000,000 100% _______________ Total $60,000,000 100% EX-99.B.2 12 SEVENTH AMENDMENT TO CREDIT AGREEMENT DTD 2/19/98 EXHIBIT 99(b)(2) SEVENTH AMENDMENT TO CREDIT AGREEMENT ------------------------------------- SEVENTH AMENDMENT, dated as of February 19, 1998, among GLOBAL INDUSTRIAL TECHNOLOGIES, INC., a Delaware corporation (the "Parent Company"), GP CORP., a Nevada corporation ("GPX") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent (the "Agent") and as a Lender (the "Lender"). WHEREAS, the Lender has extended credit to the Parent Company and GPX ("Borrowers") pursuant to that certain Credit Agreement dated as of September 23, 1994 as amended from time to time by (1) letter agreement dated November 29, 1994, (2) letter agreement dated January 6, 1995, (3) letter agreement dated January 25, 1995, (4) first Amendment to Credit Agreement dated as of September 15, 1995, (5) Assignment and Assumption Agreement and Second Amendment to Credit Agreement dated as of November 1, 1995, (6) Third Amendment to Credit Agreement dated as of September 25, 1996, (7) Fourth Amendment to Credit Agreement dated as of June 15, 1997, (8) Fifth Amendment to Credit Agreement dated as of July 31, 1997 and (9) Sixth Amendment to Credit Agreement dated as of December 30, 1997 and as at any time further amended, modified or supplemented (the "Credit Agreement"); and WHEREAS, the Borrowers, the Agent and Lender desire to amend the Agreement as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties agree as follows: 1. All capitalized terms used herein which are defined in the Credit Agreement shall have the meanings provided therefor in the Credit Agreement unless otherwise defined herein. 2. The definition "Termination Date" in Section 1.1 of the Credit Agreement is hereby amended by deleting the date "November 1, 1999" and inserting the date "August 31, 1998" in lieu thereof. Accordingly, all Loans shall be due on the Termination Date as amended. 3. Section 2.1 of the Credit Agreement is hereby amended by deleting the Total Commitment Amount of "$150,000,000" and inserting the amount "$260,000,000" in lieu thereof. 4. A new Section 2.1A shall be added to the Credit Agreement following Section 2.1 to read in its entirety as follows: "2.1A Term Loan. Subject to the terms and conditions of this Agreement, on --------- not more than one date up to and including August 27, 1998, each of the Lenders, severally and for itself alone, agrees to lend one term loan (collectively, the "Term Loan" and together with any Loan, the "Loans") to the Company in the aggregate principal amount of Two Hundred Million Dollars ($200,000,000), the proceeds of which shall be applied by the Company only for the acquisition of the stock and assets of A.P. Green Industries (herein called "APK") and related expenses. The outstanding principal balance of the Term Loan shall be repaid on or before August 31, 1998 (the "Term Loan Payment Date"). Principal amounts of the Term Loan that are repaid shall not be reborrowed. Interest on the Term Loan shall accrue and be payable in accordance with this Agreement. The Term Loan of each Lender shall be evidenced by a promissory note (as amended, supplemented, replaced or otherwise modified from time to time, individually each a "Term Note" and collectively for all Lenders, the "Term Notes," and collectively with any Note, the "Notes") substantially in the form set forth in Exhibit F with appropriate insertions, dated the date of disbursement of such - --------- Lender's Term Loan and payable on the Term Loan Payment Date." 5. Section 2.9 of the Credit Agreement is hereby amended by inserting a new subsection (e) to read in its entirety as follows: "(e) Notwithstanding anything contained herein, the commitment of the Lenders to extend the Term Loan (herein called the "Term Commitment") shall not be subject to extension pursuant to this Section 2.9." 6. Section 3.1 of the Credit Agreement is hereby amended by inserting the following sentence at the end thereof: "Pursuant to Section 2.1 A, the Term Loan of each Lender shall be evidenced by the Term Notes." 7. Section 4.1 (b) of the Credit Agreement is hereby amended by inserting the phrase "plus 0. 125% "following the words "in effect" contained therein. 8. A new Section 4. 1 A is hereby added to the Credit Agreement to read in its entirety as follows: "4.1A Term Loan Interest Rates. From and after the date of disbursement of ------------------------ the Term Loan, Borrowers promise to pay interest on the unpaid principal amount of each Loan for the period commencing on and including the date of such Loan to but excluding the date such Loan is paid in full, and for such time as the Term Loan is outstanding, but after repayment of the Term Loan, if any Loans are outstanding, at the rates in Section 4.1, as follows: (a) at all times while such Loan is a Floating Rate Loan, at a rate per annum equal to the Alternate Reference Rate from time to time in effect provided -------- that if the -2- Term Loan is not repaid on or before ninety (90) days after the date of the Term Loan, the Borrowers shall pay interest on the unpaid principal amount of the Floating Rate Loans for the period commencing on and including the ninety-first (91st) day after the date of the Tenn Loan to but excluding the date such Loan is paid in full at a rate per annum equal to the Alternate Reference Rate from time to time in effect plus one-quarter of one percent (1 /4%), subject to the proviso in Section 4. 1; and (b) at all times while such Loan is a Eurodollar Loan and the Company has entered into a binding and enforceable agreement, in form and substance satisfactory to the Lenders, for the sale of its shareholding interest in INTOOL, Inc., a Delaware corporation ("INTOOL"), for not less than $200,000,000 (the "INTOOL Agreement"), at a rate per annum equal to the Eurodollar Rate (Reserve Adjusted) applicable to each Interest Period for such Loan plus seven- eighths of one percent (7/8%), provided that if (i) at any time the INTOOL -------- Agreement is not in full force and effect, the Borrowers shall pay interest on the unpaid principal amount of each Eurodollar Loan for the period commencing on and including the later of (x) the date of such Loan and (y) the date on which the INTOOL Agreement ceased to be effective, to but excluding the date such Loan is paid in full, at a rate per annum equal to the Eurodollar Rate (Reserve Adjusted) applicable to each Interest Period (or portion thereof) for such Loan plus one and three-quarters percent (1.75%), provided further that if the Term ---------------- Loan is not repaid on or before ninety (90) days after the date of the Term Loan, the Borrowers shall pay interest on the unpaid principal amount of the Eurodollar Loans for the period commencing on and including the ninety-first (91st) day after the date of the Term Loan to but excluding the date such Loan is paid in full at a rate per annum equal to the Eurodollar Rate (Reserve Adjusted) applicable to each Interest Period (or portion thereof) for such Loan from time to time in effect plus two percent (2%), subject to the proviso in Section 4.1." 9. Section 5.1 is hereby amended by inserting the word "Revolving" before the word "Commitment" in the first sentence thereof and by adding a new sentence at the end of the first paragraph of Section 5.1 to read in its entirety as follows: "The term "Revolving Commitment" means the commitment of each Lender to make Loans hereunder from time to time pursuant to Section 2.1 hereof and 'Commitments' means the Revolving Commitment and the Term Commitment of the Lenders." 10. A new Section 5. 1 A is hereby added to the Credit Agreement to read in its entirety as follows: "5.1A Term Commitment Non-Use Fee. The Company agrees to pay to the Agent --------------------------- for the account of each Lender a non-use fee for the period from and including February 23, 1998 to but excluding the earlier of the date of disbursement of the Term Loan and August 31, 1998 in an amount equal to three-eighths of one percent (3/8 %) per annum of the daily average of the unused amount of each Lenders's Commitment to make the Term -3- Loan as stated on Schedule I to this Agreement. Such non-use fee shall be payable in arrears on the last day of each calendar quarter and on the Termination Date for any period then ending for which such non-use fee shall not have been theretofore paid. The non-use fee shall be computed for the actual number of days elapsed on the basis of a year of 360 days. 11. A new Section 5.3 is hereby added to the Credit Agreement to read in its entirety as follows: "5.3 Closing Fee. The Company agrees to pay to the Agent a closing fee as ----------- agreed by the Company and the Agent. Such fee shall be payable on the date of the execution by the Company of the Seventh Amendment to Credit Agreement." 12. A new Section 5.4 is hereby added to the Credit Agreement to read in its entirety as follows: "5.4 Funding Fee. On the date of disbursement of the Term Loan, the ----------- Company shall pay to the Agent a funding fee as agreed by the Company and the Agent." 13. Section 6.1 of the Credit Agreement is hereby amended by deleting the words "the Commitments" in the first and second sentences thereof and inserting the words "either the Revolving Commitment or the Term Commitment or both" in lieu thereof 14. Section 6.3(c) of the Credit Agreement is hereby amended by adding the following provision at the end thereof, "provided that there shall be excluded -------- from the definition of "Long Term Indebtedness" up to $50,000,000 of Indebtedness of APK existing at the time of APK's acquisition by the Company that is refinanced on terms that are consistent with this Agreement." 15. A new Section 6.3(e) is hereby added to the Credit Agreement to read in its entirety as follows: "(e) The Company shall reduce the Term Commitment and shall prepay the Term Loan in an amount equal to one hundred percent (100%) of (i) the net proceeds of the sale of the Company's shareholding interest in INTOOL, plus (ii) the net proceeds (including the conversion to cash of any non-cash proceeds (whether principal or interest and including securities, release of escrow arrangements or lease payments) received therefrom) of any asset sale that requires the consent of the Required Lenders pursuant to this Agreement, plus (iii) the net cash proceeds of the issuance of any (x) capital stock, warrants, options or other rights to acquire capital stock of the Company or any of its Subsidiaries, (y) subordinated indebtedness which is not Subordinated Indebtedness and (z) Long Term Indebtedness as provided in subsection 6.3(c) hereof." -4- 16. Section 10. 13 of the Credit Agreement is hereby amended to read in its entirety as follows: "10.13 Indebtedness/Capitalization Ratio. The Company will not permit the --------------------------------- Indebtedness/Capitalization Ratio to be greater than 0.5 to 1.0 at any time, provided that from and after the date of the Term Loan the Company shall not - -------- permit the Indebtedness/Capitalization Ratio to be greater than 0.65 to 1.0 at any time." 17. Section 10.14 of the Credit Agreement is hereby amended to read in its entirety as follows: "10.14 Indebtedness/Net Cash Flow Ratio. The Company will not permit the --------------------------------- Indebtedness/Net Cash Flow Ratio to be greater than 3.0 to 1, as measured as of the last day of any fiscal quarter of the Company and its Subsidiaries for the 12-month period ending on the last day of such fiscal quarter, provided that -------- from and after the date of the Term Loan the Company shall not permit the Indebtedness/Net Cash Flow Ratio to be greater than 4.5 to 1." 18. Schedule I to the Credit Agreement is hereby deleted therefrom, and Schedule I attached hereto is substituted in lieu thereof 19. This Amendment shall be limited precisely as written and shall not be deemed to (i) be a consent to the modification or waiver of any other term or condition of the Agreement or of any of the instruments or agreements referred to therein or (ii) prejudice any right which the Lender may now have under or in connection with the Agreement, as amended by this Amendment. Except as expressly modified hereby, all of the terms and provisions of the Agreement shall continue in full force and effect; and the Borrowers hereby confirm each and every one of their obligations under the Agreement, as amended by this Amendment. Whenever the term "Agreement" is used in the Agreement and whenever the Agreement is referred to in any of the instruments, agreements or other documents or papers executed and delivered in connection therewith, it shall be deemed to mean the Agreement, as amended by this Amendment. 20. This Amendment shall be effective on the date (the "Effective Date") on which the following conditions precedent shall have been satisfied: (a) Execution and delivery by the Borrowers to the Agent of this Amendment and evidence of due authorization and signing by the Borrowers; (b) Receipt by the Agent of executed counterparts of the Company's agreement with BancAmerica Robertson Stephens regarding syndication of all the Company's and certain of its Subsidiaries' Indebtedness on terms satisfactory to the Lender (the "BARS Agreement"); -5- (c) Receipt by the Agent of the fees and expenses provided herein and in the Credit Agreement as amended hereby; (d) Receipt by the Agent of an opinion of counsel reasonably satisfactory to the Agent and the Lender regarding the effectiveness of this Amendment and the BARS Agreement and all documents executed in connection therewith; (e) Receipt by the Agent of copies certified by, respectively, the Secretary of each of Parent Company and GPX of incumbency certificates as to all persons signing on behalf of Parent Company and GPX and such other evidence of all necessary corporate actions of Parent Company and GPX, including without limitation corporate resolutions, for the valid execution, delivery and performance of this Amendment and all other instruments and documents signed by the parties hereto; (f) Any other actions reasonably required by the Agent or the Lender in connection with the transactions contemplated hereby. 21. The Parent Company agrees to pay to or reimburse the Agent and the Lender, upon demand, for all reasonable costs and expenses (including allocated costs of in-house counsel) incurred in connection with the preparation, negotiation, execution and delivery of this Amendment. 22. THIS SEVENTH AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS. 23. The Borrowers hereby represent and warrant to the Lender that on and as of the date hereof after giving effect to this Amendment there shall exist no Event of Default or Default and all representations and warranties contained in the Agreement or otherwise made in writing in connection herewith or therewith (as though made in connection with a request for a Loan under the Agreement) shall be true and correct with the same effect as though such representations and warranties had been made on and as of the date hereof. 24. The Parent Company hereby ratifies the Parent Guaranty dated November 1, 1995 executed by the Parent Company and confirms that said Parent Guaranty remains in full force and effect in accordance with its terms. -6- IN WITNESS WHEREOF. the parties hereto have executed this Seventh Amendment by their duly authorized officers as of the date and year first above written. PARENT COMPANY: GLOBAL INDUSTRIAL TECHNOLOGIES, INC. By:_____________________________ Title: ___________________________ By:_____________________________ Title: GPX: GPX CORP. By:_____________________________ Title: President By:_____________________________ Title: Vice President & Treasurer AGENT BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By:_____________________________ Title:___________________________ -7- LENDER: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By:_____________________________ Title:___________________________ -8- SCHEDULE I COMMITMENTS AND PERCENTAGES Lender Term Revolving Credit Percentage Commitment Commitment - ---------- ---------- ---------- Bank of America NT&SA $200,000,000 $60,000,000 100% ------------ ----------- TOTAL $200,000,000 $60,000,000 100% -9- EXHIBIT F FORM OF TERM NOTE $200,000,000 __________, 1998 FOR VALUE RECEIVED, the undersigned promises to pay to the order of Bank of America National Trust and Savings Association at the principal office of Bank of America National Trust and Savings Association (the "Agent"), in Chicago, Illinois, on the date set forth in the Credit Agreement referred to below, Two Hundred Million Dollars ($200,000,000) or, if less, the aggregate unpaid amount of the Term Loan made by the payee to the undersigned pursuant to the Credit Agreement (as shown in the records of the payee, or at the payee's option, on the schedule attached hereto and any continuation thereof). The undersigned further promises to pay interest on the unpaid principal amount of each Loan evidenced hereby from the date of such Loan until such Loan is paid in full, payable at the rate(s) and at the time(s) set forth in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America. This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, the Credit Agreement, dated as of September 23, 1994 (herein, as amended or otherwise modified from time to time, called the 'Credit Agreement"), among the undersigned, certain financial institutions (including the payee) and the Agent, to which Credit Agreement reference is hereby made for a statement of the terms and provisions under which this Note may or must be paid prior to its due date or may have its due date accelerated. In addition to and not in limitation of the foregoing and the provisions of the Credit Agreement, the undersigned further agrees subject only to any limitation imposed by applicable law, to pay all reasonable expenses, including reasonable attorneys' fees (including the allocated cost of in-house counsel) and out-of-pocket expenses, incurred by the holder of this Note in endeavoring to collect any amounts payable hereunder which are not paid -10- when due, whether by acceleration or otherwise. Each of the Company and each guarantor hereof waives demand, presentment, protest, diligence, notice of dishonor and any other formality in connection with this note. GLOBAL INDUSTRIAL TECHNOLOGIES, INC. By:_____________________________ Title:__________________________ By:_____________________________ Title:__________________________ -11- EX-99.C.1 13 AGREEMENT AND PLAN OF MERGER EXHIBIT 99(c)(1) AGREEMENT AND PLAN OF MERGER ---------------------------- AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), --------- dated as of March 3, 1998, among A.P. Green Industries, Inc., a Delaware corporation (the "Company"), Global Industrial Technologies, Inc., a Delaware ------- corporation ("Purchaser"), and BGN Acquisition Corp., a Delaware corporation and --------- a wholly-owned subsidiary of Purchaser ("Merger Sub"), the Company and Merger ---------- Sub sometimes being hereinafter collectively referred to as the "Constituent ----------- Corporations." - ------------ RECITALS WHEREAS, the Boards of Directors of Purchaser and the Company each have determined that it is in the best interests of their respective shareholders for Purchaser to acquire the Company upon the terms and subject to the conditions set forth herein; and WHEREAS, the Company, Purchaser and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with this Agreement. NOW, THEREFORE, in consideration of the premises, and of the representation, warranties, covenants and agreements contained herein the parties hereto hereby agree as follows: ARTICLE I THE TENDER OFFER 1.1. Tender Offer. (a) Provided that this Agreement shall not have ------------ been terminated in accordance with Article IX hereof and none of the events set forth in Annex A hereto shall have occurred or be existing, within five business days of the date hereof, Purchaser shall cause Merger Sub to commence a tender offer (the "Offer") for all of the outstanding shares of Common Stock, par value ----- $1.00 per share, of the Company, including the associated Rights (as defined in Section 6.1(b)) (together, the "Shares") at a price of $22.00 per Share in cash, ------ net to the seller, subject to the terms and conditions set forth in Annex A hereto (the "Offer Conditions"). The initial expiration date of the Offer shall ---------------- be the date twenty business days from and including the date (the "Commencement ------------ Date") the Offer Documents (as hereinafter defined) are first filed with the - ---- Securities and Exchange Commission (the "SEC"). Purchaser and Merger Sub --- expressly reserve the right, in their sole discretion, to waive any condition (other than the Minimum Condition, as defined in the Offer Conditions) and to set forth or change any other term and condition of the Offer, provided that, -------- unless previously approved by the Company in writing, no provision may be set forth or changed which decreases the price per Share payable in the Offer, changes the form of consideration payable in the Offer (other than by adding consideration), reduces the maximum number of Shares to be purchased in the Offer, or imposes conditions to the Offer in addition to those set forth herein that are materially adverse to holders of the Shares. Merger Sub covenants and agrees that, subject to the terms and conditions of the Offer, including but not limited to the Offer Conditions, it will accept for payment and pay for Shares as soon as it is permitted to do so under applicable law, provided that Merger Sub shall have the right, in its sole -------- discretion, to extend the Offer from time to time notwithstanding the prior satisfaction of the Offer Conditions. It is agreed that the terms and conditions set forth in the Offer, including but not limited to the Offer Conditions, are for the benefit of Purchaser and Merger Sub and may be asserted by Purchaser and Merger Sub regardless of the circumstances giving rise to any such condition. (b) The Company hereby approves of and consents to the Offer and represents and warrants that: (i) its Board of Directors, at a meeting duly called and held on March 2, 1998, has unanimously (A) determined that this Agreement and the transactions contemplated hereby, including each of the Offer and the Merger (as defined in Section 2.1), are fair to and in the best interests of the holders of Shares, (B) approved this Agreement and the transactions contemplated hereby, including each of the Offer and the Merger, and (C) resolved to recommend that the stockholders of the Company accept the Offer, tender their Shares to Merger Sub thereunder and approve this Agreement and the transactions contem plated hereby; and (ii) Credit Suisse First Boston (the "Financial Advisor") has delivered to the Board of Directors of the Company ----------------- its written opinion that the consideration to be received by holders of Shares, other than Purchaser and Merger Sub, pursuant to each of the Offer and the Merger is fair to such holders from a financial point of view. The Company has been authorized by the Financial Advisor to permit, subject to prior review and consent by such Financial Advisor (such consent not to be unreasonably withheld), the inclusion of such fairness opinion (or a reference thereto) in a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") -------------- to be filed with the SEC upon commencement of the Offer and in the Proxy Statement referred to in Section 7.3(a). The Company hereby consents to the inclusion in the Offer Documents (as defined in Section 1.1(c)) of the recommendations of the Board of Directors of the Company described herein. (c) Purchaser agrees, as to the Offer to Purchase and related Letter of Transmittal (which together constitute the "Offer Documents"), and the --------------- Company agrees, as to the Schedule 14D-9, that such documents shall, in all material respects, comply with the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the "Exchange -------- Act") and other applicable laws. The Company and its counsel, as to the Offer Documents, and Purchaser and its counsel, as to the Schedule 14D-9, shall be given an opportunity to review such documents a reasonable time prior to their being filed with the SEC. Purchaser, Merger Sub and the Company each agrees promptly to correct any information provided by it for use in the Offer Documents or the Schedule 14D-9, as applicable, that shall have become false or misleading in any material respect, and Purchaser and Merger Sub, on the one hand, and the Company, on the other hand, further agree to take all steps necessary to cause the Offer Documents and the Schedule -2- 14D-9, as the case may be, as so corrected to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. (d) In connection with the Offer, the Company will cause its transfer agent to furnish promptly to Merger Sub a list, as of a recent date, of the record holders of Shares and their addresses, as well as mailing labels containing the names and addresses of all record holders of Shares and lists of security positions of Shares held in stock depositories. The Company will furnish Merger Sub with such additional information (including, but not limited to, updated lists of holders of Shares and their addresses, mailing labels and lists of security positions) and such other assistance as Purchaser or Merger Sub or their agents may reasonably request in communicating the Offer to the record and beneficial holders of Shares. ARTICLE II THE MERGER; CLOSING; EFFECTIVE TIME 2.1. The Merger. Subject to the terms and conditions of this ---------- Agreement, at the Effective Time (as defined in Section 2.3) Merger Sub shall be merged with and into the Company and the separate corporate existence of Merger Sub shall thereupon cease (the "Merger"). The Company shall be the surviving ------ corporation in the Merger (sometimes hereinafter referred to as the "Surviving --------- Corporation") and shall continue to be governed by the laws of the State of - ----------- Delaware, and the separate corporate existence of the Company with all its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger, except as set forth in Section 3.1. The Merger shall have the effects specified in the Delaware General Corporation Law (the "DGCL"). ---- 2.2. Closing. The closing of the Merger (the "Closing") shall take ------- ------- place (i) at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New York at 9:00 a.m. on the first business day on which the last to be fulfilled or waived of the conditions set forth in Article VIII hereof shall be fulfilled or waived in accordance with this Agreement or (ii) at such other place and time and/or on such other date as the Company and Purchaser may agree. 2.3. Effective Time. As soon as practicable following the Closing, -------------- and provided that this Agreement has not been terminated or abandoned pursuant to Article IX hereof, the Company and Purchaser will cause a Certificate of Merger (the "Delaware Certificate of Merger") to be executed and filed with the ------------------------------ Secretary of State of Delaware as provided in Section 251 of the DGCL. The Merger shall become effective on the date on which the Delaware Certificate of Merger has been duly filed with the Secretary of State of Delaware, and such time is hereinafter referred to as the "Effective Time." -------------- -3- ARTICLE III CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING CORPORATION 3.1. The Certificate of Incorporation. The Restated Certificate of -------------------------------- Incorporation of the Company (the "Company Certificate") in effect at the ------------------- Effective Time shall be the Certificate of Incorporation of the Surviving Corporation, until duly amended in accordance with the terms thereof and the DGCL, except that Article Fourth of the Company Certificate shall be amended to read in its entirety as follows: "The aggregate number of shares which the Corporation shall have the authority to issue is 1,000 shares of Common Stock, par value $1.00 per share." 3.2. The By-Laws. The By-Laws of the Company (the "Company By-Laws") ----------- --------------- in effect at the Effective Time shall be the By-Laws of the Surviving Corporation, until duly amended in accordance with the terms thereof and the DGCL. ARTICLE IV OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION 4.1. Officers and Directors. The directors of Merger Sub and the ---------------------- officers of the Company at the Effective Time shall, from and after the Effective Time, be the directors and officers, respectively, of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Certificate of Incorporation and By-Laws. 4.2. Boards of Directors; Committees. If requested by Purchaser, the ------------------------------- Company will, subject to compliance with applicable law and promptly following the purchase by Merger Sub of Shares pursuant to the Offer, take all actions necessary to cause persons designated by Purchaser to become directors of the Company so that the total number of such persons equals not less than the product of (i) the total number of directors on the Board of Directors of the Company (giving effect to the directors elected pursuant to this sentence) and (ii) a fraction the numerator of which is the aggregate number of Shares beneficially owned by Merger Sub or any affiliate of Merger Sub and the denominator of which is the total number of Shares then outstanding. In furtherance thereof, the Company will increase the size of the Board of Directors of the Company, or use its reasonable efforts -4- to secure the resignation of directors, or both, as is necessary to permit Purchaser's designees to be elected to the Board of Directors of the Company. At such time, the Company, if so requested, will use its reasonable efforts to cause persons designated by Purchaser to constitute the same proportionate representation of each committee of the Board of Directors of the Company, each board of directors of each subsidiary of the Company and each committee of each such board (in each case to the extent of the Company's ability to elect such persons). No directors appointed by Purchaser shall be entitled to receive any compensation or benefits currently in effect for the Company's non-employee directors. The Company's obligations to appoint designees to the Board of Directors of the Company shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions required pursuant to such Section and Rule in order to fulfill its obligations under this Section 4.2 and shall include in the Schedule 14D-9, or in a separate Rule 14f-1 information statement provided to stockholders, such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1 to fulfill its obligations under this Section 4.2. Purchaser and Merger Sub will supply to the Company and will be solely responsible for any information with respect to either of them and their nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1. 4.3 Actions by Directors. For purposes of Article IX and Sections -------------------- 10.3 and 10.4, no action taken by the Board of Directors of the Company after the date of the consummation of the Offer and prior to the Merger shall be effective unless such action is approved by the affirmative vote of at least a majority of the directors of the Company which are not officers of Purchaser or designees, stockholders or affiliates of Purchaser. ARTICLE V CONVERSION OR CANCELLATION OF SHARES IN THE MERGER 5.1. Conversion or Cancellation of Shares. The manner of converting ------------------------------------ or canceling shares of the Company and Merger Sub in the Merger shall be as follows: (a) At the Effective Time, each Share of the Company issued and outstanding immediately prior to the Effective Time (other than Shares owned by Purchaser, Merger Sub or any other subsidiary of Purchaser (collectively, the "Purchaser Companies") or Shares that are held by stockholders ("Dissenting - -------------------- ---------- Stockholders") exercising appraisal rights pursuant to Section 262 of the DGCL) - ------------ shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive, without interest, an amount in cash (the "Merger Consideration") equal to $22.00 or such greater amount which -------------------- may be paid pursuant to the Offer. All Shares (other than those owned by the Purchaser Companies), by virtue of the Merger and without any action on the part of the holders thereof, shall no longer be outstanding and shall be canceled and retired and shall cease to exist, and each -5- holder of a certificate representing any such Shares shall thereafter cease to have any rights with respect to such Shares, except the right to receive the Merger Consideration for such Shares upon the surrender of such certificate in accordance with Section 5.2 or the right, if any, to receive payment from the Surviving Corporation of the "fair value" of such Shares as determined in accordance with Section 262 of the DGCL. (b) At the Effective Time, each Share issued and outstanding at the Effective Time and owned by any of the Purchaser Companies, and each Share issued and held in the Company's treasury at the Effective Time, shall, by virtue of the Merger and without any action on the part of the holder thereof, cease to be outstanding, shall be canceled and retired without payment of any consideration therefor and shall cease to exist. (c) At the Effective Time, each share of Common Stock, par value $0.001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of Merger Sub or the holders of such shares, be converted into one Share. 5.2. Payment for Shares. Purchaser shall make available or cause to ------------------ be made available to the paying agent appointed by Purchaser with the Company's prior approval (the "Paying Agent") amounts sufficient in the aggregate to ------------ provide all funds necessary for the Paying Agent to make payments pursuant to Section 5.1(a) hereof to holders of Shares issued and outstanding immediately prior to the Effective Time (other than Shares owned by the Purchaser Companies). Such funds shall be invested by the Paying Agent as directed by Purchaser, provided that such investments shall be in obligations of or -------- guaranteed by the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard & Poor's Corporation, respectively, or in certificates of deposit, bank repurchase agreements or banker's acceptances of commercial banks with capital exceeding $500 million. Any net profit resulting from, or interest or income produced by, such investments will be payable to the Surviving Corporation or Purchaser, as Purchaser directs. Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed to each person who was, at the Effective Time, a holder of record (other than any of the Purchaser Companies) of Shares a form (mutually agreed to by Purchaser and the Company) of letter of transmittal and instructions for use in effecting the surrender of the certificates which, immediately prior to the Effective Time, represented any of such Shares in exchange for payment therefor. Upon surrender to the Paying Agent of such certificates, together with such letter of transmittal, duly executed and completed in accordance with the instructions thereto, the Surviving Corporation shall promptly cause to be paid to the persons entitled thereto a check in the amount to which such persons are entitled as Merger Consideration, after giving effect to any required tax withholdings. No interest will be paid or will accrue on the amount payable upon the surrender of any such certificate. If payment is to be made to a person other than the registered holder of the certificate surrendered, it shall be a condition of such payment that the certificate so -6- surrendered shall be properly endorsed or otherwise in proper form for transfer and that the person requesting such payment shall pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of the certificate surrendered or establish to the satisfaction of the Surviving Corporation or the Paying Agent that such tax has been paid or is not applicable. One hundred and eighty days following the Effective Time, the Surviving Corporation shall be entitled to cause the Paying Agent to deliver to it any funds (including any interest received with respect thereto) made available to the Paying Agent which have not been disbursed to holders of certificates formerly representing Shares outstanding on the Effective Time, and thereafter such holders shall be entitled to look to the Surviving Corporation only as general creditors thereof with respect to the cash payable upon due surrender of their certificates. Notwithstanding the foregoing, neither the Paying Agent nor any party hereto shall be liable to any holder of certificates formerly representing Shares for any amount paid to a public official pursuant to any applicable abandoned property, escheat or similar law. The Surviving Corporation shall pay all charges and expenses, including those of the Paying Agent, in connection with the exchange of cash for Shares and Purchaser shall reimburse the Surviving Corporation for such charges and expenses. 5.3. Dissenters' Rights. If any Dissenting Stockholder shall be ------------------ entitled to be paid the "fair value" of his or her Shares, as provided in Section 262 of the DGCL, the Company shall give Purchaser notice thereof and Purchaser shall have the right to participate in all negotiations and proceedings with respect to any such demands. Neither the Company nor the Surviving Corporation shall, except with the prior written consent of Purchaser, voluntarily make any payment with respect to, or settle or offer to settle, any such demand for payment. If any Dissenting Stockholder shall fail to perfect or shall have effectively withdrawn or lost the right to dissent, the Shares held by such Dissenting Stockholder shall thereupon be treated as though such Shares had been converted into the Merger Consideration pursuant to Section 5.1. 5.4. Transfer of Shares After the Effective Time. No transfers of ------------------------------------------- Shares shall be made on the stock transfer books of the Surviving Corporation at or after the Effective Time. ARTICLE VI REPRESENTATIONS AND WARRANTIES 6.1. Representations and Warranties of the Company. The Company --------------------------------------------- hereby represents and warrants to Purchaser and Merger Sub that: (a) Corporate Organization and Qualification. Each of the Company ---------------------------------------- and its subsidiaries is a corporation duly organized, validly existing and in good standing under the -7- laws of its respective jurisdiction of incorporation and is in good standing as a foreign corporation in each jurisdiction where the properties owned, leased or operated, or the business conducted, by it require such qualification, except for such failure to so qualify or be in such good standing, which, when taken together with all other such failures, is not reasonably likely to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole. Each of the Company and its subsidiaries has the requisite corporate power and authority to carry on its respective businesses as they are now being conducted. The Company has made available to Purchaser a complete and correct copy of the Company Certificate and Company By-Laws, each as amended to date. The Company Certificate and Company By-Laws so delivered are in full force and effect. The Company has delivered to Purchaser prior to the date hereof (i) a true, correct and complete list of the subsidiaries and associated entities of the Company which evidences, among other things, the amount of capital stock or other equity interests owned by the Company, directly or indirectly, in such subsidiaries or associated entities, (ii) copies of all joint venture agreements and partnership agreements to which the Company or any subsidiary of the Company is a party and (iii) a true, correct and complete list of all entities in which the Company owns, directly or indirectly, less than a 50% equity interest. (b) Authorized Capital. The authorized capital stock of the Company ------------------ consists of 10,000,000 Shares, of which 8,068,665 Shares were outstanding on February 26, 1998, and 2,000,000 shares of Preferred Stock par value $1.00 per share (the "Preferred Shares"), of which no shares were outstanding as of the ---------------- date hereof. All of the outstanding Shares have been duly authorized and are validly issued, fully paid and nonassessable. The Company has no Shares or Preferred Shares reserved for issuance, except that, as of February 26, 1998, there were an aggregate of 919,150 Shares reserved for issuance under then- current outstanding stock options pursuant to the 1987 Long-Term Performance Plan (the "1987 Plan"), the 1989 Long-Term Performance Plan (the "1989 Plan"), --------- --------- the 1993 Performance Plan (the "1993 Plan") and the 1996 Long-Term Performance --------- Plan (the "1996 Plan" and collectively with the Plans listed in this sentence, --------- the "Stock Plans") and 120,000 Preferred Shares reserved for issuance upon ----------- exercise of the rights (the "Rights") issued pursuant to the Rights Agreement, ------ dated as of November 13, 1997, between the Company and Harris Trust and Savings Bank (the "Rights Agreement"). Each of the outstanding shares of capital stock ---------------- of each of the Company's subsidiaries (as defined in Rule 1.02(v) of Regulation S-X promulgated pursuant to the Exchange Act) is duly authorized, validly issued, fully paid and nonassessable and, except as set forth in the Disclosure Letter, owned, either directly or indirectly, by the Company free and clear of all liens, pledges, security interests, claims or other encumbrances. Except as set forth above, there are no shares of capital stock of the Company authorized, issued or outstanding and except as set forth above, there are no pre emptive rights nor any outstanding subscriptions, options, warrants, rights, convertible securities or other agreements or commitments of any character relating to the issued or unissued capital stock or other securities of the Company or any of its subsidiaries. -8- Immediately prior to the consummation of the Offer and the Merger, no Preferred Shares or any other securities of the Company will be subject to issuance pursuant to the Rights Agreement, no Distribution Date (as defined in the Rights Agreement) shall have occurred and, at or after the Effective Time, the Surviving Corporation will have no obligation to issue, transfer or sell any Shares or common stock of the Surviving Corporation pursuant to any Benefit Plan (as defined in Section 7.1(d)). (c) Corporate Authority. Subject only to approval of this Agreement ------------------- by the holders of a majority of the outstanding Shares, the Company has the requisite corporate power and authority and has taken all corporate action necessary in order to execute and deliver this Agreement and to consummate the transactions contemplated hereby. This Agreement is a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, assuming the due authorization, execution and delivery hereof by Purchaser and Merger Sub. (d) Governmental Filings; No Violations. (i) Other than the filings ----------------------------------- provided for in Section 2.3, as required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and as required under the Exchange Act ------- (collectively, the "Regulatory Filings"), no notices, reports or other filings ------------------ are required to be made by the Company with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by the Company from, any governmental or regulatory authority, agency, commission or other entity, domestic or foreign ("Governmental Entity"), in connection with ------------------- the execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby, the failure to make or obtain any or all of which is reasonably likely to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole, or could prevent, delay or materially burden the transactions contemplated by this Agreement. (ii) Except as to matters described in the disclosure letter delivered to Purchaser on or prior to the date hereof (the "Disclosure Letter"), ----------------- the execution and delivery of this Agreement by the Company do not, and the consummation by the Company of the transactions contemplated by this Agreement will not, constitute or result in (i) a breach or violation of, or a default under, the Company Certificate or Company By-Laws or the comparable governing instruments of any of its subsidiaries, (ii) a breach or violation of, a default under or the triggering of any payment or other material obligations pursuant to, any of the Company's existing Benefit Plans (as defined in Section 7.1(d)) or any grant or award made under any of the foregoing, (iii) a breach or violation of, or a default under, the acceleration of or the creation of a lien, pledge, security interest or other encumbrance on assets (with or without the giving of notice or the lapse of time) pursuant to, any provision of any agreement, lease, permit, contract, joint venture agreement, partnership agreement, note, mortgage, indenture, arrangement or other legal obligation ("Contracts") of the Company or - ----------- -9- any of its subsidiaries or any law, rule, ordinance or regulation or judgment, decree, order, award or governmental or non-governmental permit or license to which the Company or any of its subsidiaries is subject or (iv) any change in the rights or obligations of any party under any of the Contracts, except, in the case of clause (iii) or (iv) above, for such breaches, violations, defaults, accelerations or changes that, alone or in the aggregate, are not reasonably likely to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole or that could not prevent, delay or materially burden the transactions contemplated by this Agreement. The Disclosure Letter (i) specifically identifies all Contracts that contain any "change of control" or other similar provisions and (ii) sets forth, to the best knowledge of the officers of the Company, a list of any consents required under any Contracts to be obtained prior to consummation of the transactions contemplated by this Agreement (whether or not subject to the exception set forth with respect to clause (iii) above). The Company will use its best efforts to obtain the consents referred to in the Disclosure Letter. (e) Company Reports; Financial Statements. The Company has delivered ------------------------------------- to Purchaser each registration statement, schedule, report, proxy statement or information statement required to be filed or otherwise filed with the SEC (the "Company Reports") prepared by it since December 31, 1996 (the "Audit Date"), --------------- ---------- including, without limitation, (i) the Company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 1996, (ii) the Company's Quarterly Reports on Form 10-Q/A for the periods ended March 31, 1997, June 30, 1997 and September 30, 1997, (iii) a Definitive Proxy Statement on Schedule 14A dated April 7, 1997, (iv) a Form 8-A dated January 6, 1998, and (v) the Form 8-K dated December 31, 1996 and the Form 8-K dated November 13, 1997, each in the form (including exhibits and any amendments thereto) filed with the SEC. As of their respective dates, the Company Reports complied in all material respects with the applicable requirements under the Exchange Act and did not, and any Company Reports filed with the SEC subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. Each of the consolidated balance sheets and statements of financial position included in or incorporated by reference into the Company Reports (including the related notes and schedules) fairly presents the consolidated financial position of the Company and its subsidiaries as of its date and each of the consolidated statements of earnings, stockholders' equity and cash flows included in or incorporated by reference into the Company Reports (including any related notes and schedules) fairly presents the results of operations, stockholders' equity and changes in cash flows, as the case may be, of the Company and its subsidiaries for the periods set forth therein (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material in amount or effect), in each case in accordance with generally accepted accounting principles consistently applied during the periods involved, except as may be noted therein. Other than the Company Reports specifically recited above, the Company has not filed any other -10- definitive reports or statements with the SEC since the Audit Date. The Company will provide Purchaser with the most current draft version of the Company's Annual Report on Form 10-K, including documents incorporated therein by reference, for the year ended December 31, 1997, (the "1997 10-K") promptly --------- after preparation of such draft. As soon as practicable after receiving its auditor's opinion with respect to the Company's financial statements for the fiscal year ended December 31, 1997 (the "1997 Financial Statements"), the ------------------------- Company will deliver to Purchaser a copy of such 1997 Financial Statements (including such auditor's opinion) and, either simultaneously therewith or as soon thereafter as is practicable, a copy of the 1997 10-K in substantially the form to be filed with the SEC. The 1997 10-K, as filed with the SEC, will comply with the standards set forth in this Section 6.1(e) for the Company Reports. (f) Absence of Certain Changes. Except as disclosed in the Company -------------------------- Reports filed with the SEC prior to the date hereof or otherwise disclosed in the Disclosure Letter, since the Audit Date, the Company and its subsidiaries have conducted their respective businesses only in, and have not engaged in any material transaction other than according to, the ordinary and usual course of such businesses and there has not been (i) any material adverse change in the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole or any development or combination of developments of which management of the Company has knowledge that is reasonably likely to result in any such change; (ii) any material change in the net projected liability relating to asbestos or silica or projected insurance recovery related thereto included in the Company Reports or any development or combination of developments of which management of the Company has knowledge that is reasonably likely to result in any such change; (iii) any declaration, setting aside or payment of any dividend or other distribution with respect to the capital stock of the Company; or (iv) any change by the Company in accounting principles, practices or methods. Since the Audit Date, except as provided for herein or as disclosed in the Company Reports filed with the SEC prior to the date hereof and other than in the ordinary course, there has not been any increase in the compensation payable or which could become payable by the Company and its subsidiaries to their officers or key employees, or any amendment of any Benefit Plans (as defined in Section 7.1). (g) Litigation and Liabilities. Except as disclosed with reasonable -------------------------- specificity in the Company Reports filed with the SEC prior to the date hereof or in the Disclosure Letter, there are no (i) civil, criminal or administrative actions, suits, claims, hearings, investigations or proceedings (collectively, "Actions") pending or, to the knowledge of the management of the Company, - -------- threatened against the Company or any of its subsidiaries or (ii) obligations or liabilities, whether or not accrued, contingent or otherwise, including, without limitation, those relating to matters involving any Environmental Law (as defined in Section 6.1(m)), or any other facts or circumstances of which the management of the Company is aware that could result in any claims against or obligations or liabilities of the Company or any of its subsidiaries, that, alone or in the aggregate, are reasonably likely to -11- have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole. The Company has set forth in the Disclosure Letter a true description of all claims, obligations and liabilities relating to asbestos and silica, including, without limitation, product and general liability. (h) Employee Benefits. ----------------- (i) All bonus, deferred compensation, pension, retirement, profit- sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock and stock option, employment, termination, severance, compensation, medical, health or other plan, contract, policy or arrangement which covers current or former employees of the Company and its subsidiaries (the "Employees") and current or former directors of the Company (the --------- "Compensation and Benefit Plans") including, but not limited to, "employee - ------------------------------- benefit plans" within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") are listed in the Disclosure ----- Letter and any "change of control" or similar provisions therein are specifically identified in the Disclosure Letter. True and complete copies of all Compensation and Benefit Plans and such other benefit plans, contracts or arrangements, including, but not limited to, any trust instruments and insurance contracts, if any, forming a part of any such plans and agreements, and all amendments thereto have been made available to Purchaser. (ii) All Compensation and Benefit Plans are in substantial compliance with applicable law and all Compensation and Benefit Plans which are employee benefit plans, other than "multiemployer plans" within the meaning of Sections 3(37) of ERISA, covering employees (the "Plans") to the extent subject to ERISA, are in substantial compliance with ERISA. Each Plan which is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA ("Pension ------- Plan") and which is intended to be qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), has received a favorable ---- determination letter from the Internal Revenue Service with respect to "TRA" (as defined in Section 1 of Internal Revenue Service Revenue Procedure 93-39), and the Company is not aware of any circumstances likely to result in revocation of any such favorable determination letter. There is no material pending or, to the knowledge of the Company, threatened litigation relating to the Compensation and Benefit Plans. Neither the Company nor any subsidiary has engaged in a transaction with respect to any Plan that, assuming the taxable period of such transaction expired as of the date hereof, could subject the Company or any of its subsidiaries to a material tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA. (iii) No liability under Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by the Company or any subsidiary with respect to any ongoing, frozen or terminated "single-employer plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the single-employer plan of any -12- entity which is considered one employer with the Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate"). The Company and its --------------- subsidiaries have not incurred and do not expect to incur any withdrawal liability with respect to a multiemployer plan under Subtitle E of Title IV of ERISA. No notice of a "reportable event", within the meaning of Section 4043 of ERISA for which the 30-day reporting requirement has not been waived, has been required to be filed for any Pension Plan or by any ERISA Affiliate within the 12-month period ending on the date hereof. (iv) All contributions required to be made under the terms of any Plan have been timely made. Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has an "accumulated funding deficiency" (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA. Neither the Company nor its subsidiaries has provided, or is required to provide, security to any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code. (v) Except as set forth in the Disclosure Letter, under each Pension Plan which is a single-employer plan, as of the last day of the most recent plan year ended prior to the date hereof, the actuarially determined present value of all "benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial assumptions contained in the Plan's most recent actuarial valuation), did not exceed the then current value of the assets of such Plan, and there has been no material change in the financial condition of such Plan since the last day of the most recent Plan Year. The withdrawal liability of the Company and its subsidiaries under each Benefit Plan which is a multiemployer plan to which the Company, its subsidiaries or an ERISA Affiliate has contributed during the preceding 12 months, determined as if a "complete withdrawal", within the meaning of Section 4203 of ERISA, had occurred as of the date hereof, does not exceed $100,000. (vi) Neither the Company nor the subsidiaries have any obligations for retiree health and life benefits under any Plan, except as set forth in the Disclosure Letter. The Company or its subsidiaries may amend or terminate any such Plan pursuant to the terms thereof. (vii) Except as set forth in the Disclosure Letter, the consummation of the transactions contemplated by this Agreement will not (x) entitle any employees of the Company or any of its subsidiaries to severance pay, (y) accelerate the time of payment or vesting or trigger any payment of compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any of the Compensation and Benefit Plans or (z) result in any breach or violation of, or a default under any of the Compensation and Benefit Plans. -13- (viii) All Compensation and Benefit Plans covering non-U.S. Employees comply in all material respects with applicable local law. Except as set forth in the Disclosure Letter, the Company and its subsidiaries have no material unfunded liabilities with respect to any Pension Plan which covers non-U.S. Employees. (ix) The method of allocating the portion of the proceeds of the Offer from the suspense account which is part of the A.P. Green Industries, Inc. Employee Stock Ownership Trust, which implements and forms part of the A.P. Green Investment Plan (collectively, the "ESOP") to participants' accounts in accordance with Section 7.8(d) hereof will not violate the terms of the ESOP. (i) Compliance. Neither the Company nor any of its subsidiaries is ---------- in conflict with, or in default or violation of, (i) any law, rule, regulation, order, judgment or decree applicable to the Company or any of its subsidiaries or by which its or any of their respective properties are bound or affected, or (ii) any Contract to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or its or any of their respective properties are bound or affected, except for any such conflicts, defaults or violations that, individually or in the aggregate, are not reasonably likely to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole, or could prevent, delay or materially burden the transactions contemplated by this Agreement. (j) Brokers and Finders. Neither the Company nor any of its ------------------- officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders, fees in connection with the transactions contemplated herein, except that the Company has employed Credit Suisse First Boston as its financial advisor, the arrangements with which have been disclosed in writing to Purchaser prior to the date hereof. (k) Other Actions. ------------- (i) The transactions contemplated hereby have been approved by the Board of Directors of the Company in accordance with Article Sixth of the Company Certificate and, as a result thereof, Article Sixth is inapplicable to the Offer and the Merger. (ii) The Company has taken all necessary action under the Rights Agreement to provide that the execution of this Agreement and the consummation of the transactions contemplated hereby will not cause (i) Merger Sub and/or Purchaser to become an Acquiring Person (as defined in the Rights Agreement) or (ii) a Distribution Date or a Stock Acquisition Date (as such terms are defined in the Rights Agreement) to occur, irrespective of the number of Shares acquired pursuant to the Offer. -14- (l) Takeover Statutes. No "fair price", "moratorium", "control share ----------------- acquisition" or other similar antitakeover statute or regulation (including, without limitation, Section 203 of the DGCL) (each a "Takeover Statute") is ---------------- applicable to the Company, the Shares, the Offer, the Merger or the transactions contemplated hereby. (m) Environmental Matters. Except as disclosed in the Disclosure --------------------- Letter and except to the extent that the Company's noncompliance with the following would not reasonably be likely to have a material adverse effect on the on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole: (i) the Company and its subsidiaries have complied at all times with all applicable Environmental Laws; (ii) all properties currently owned or operated by the Company or any subsidiary (including soils, groundwater, surface water, buildings or other structures) have not been contaminated with any Hazardous Substances; (iii) any properties formerly owned or operated by the Company or any of its subsidiaries were not contaminated with Hazardous Substances on or prior to such period of ownership or operation; (iv) neither the Company nor any subsidiary is subject to liability for any Hazardous Substance disposal or contamination on any third party property; (v) neither the Company nor any subsidiary is subject to liability for any release or threat of release of any Hazardous Substance; (vi) neither the Company nor any subsidiary has received any notice, demand, letter, claim or request for information indicating that it may be in violation of or liable under any Environmental Law; (vii) neither the Company nor any subsidiary is subject to any order, decree, injunction or other arrangement with any governmental entity or any indemnity or other agreement with any third party relating to liability under any Environmental Law; (viii) none of the properties of the Company or any subsidiary contain any underground storage tanks, asbestos-containing material, silica, lead products, or polychlorinated biphenyls; (ix) there are no other circumstances or conditions involving the Company or any subsidiary that could reasonably be expected to result in any claims, liability, investigations, costs or restrictions on the ownership, use, or transfer of any property pursuant to any Environmental Law; and (x) the Company has delivered or made available to Purchaser copies of all environmental reports, studies, assessments, sampling data and all other information in its possession relating to asbestos and silica liability and claims including without limitation product and sales information, filing rates, settlements, projected claims, legal advice, reserves, insurance and the use and disposal of asbestos containing material and silica. As used herein, the term "Environmental Law" means any federal, state ----------------- or local law, regulation, order, decree, permit, authorization, opinion, common law or agency requirement relating to: (A) the protection, investigation or restoration of the environment, health, safety, or natural resources, (B) the handling, use, presence, disposal, release or threatened release of any Hazardous Substance, (C) noise, odor, wetlands, pollution, contamination or any injury or threat of injury to persons or property or (D) standards of conduct concerning protection of human health (including, without limitation, employee health and safety), in each case as amended and as now or hereafter in effect, and the term -15- "Hazardous Substance" means any substance that is: (A) listed, classified or ------------------- regulated pursuant to any Environmental Law; (B) any petroleum product or by- product, asbestos-containing material, silica, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive materials or radon; or (C) any other substance which may be the subject of regulatory action by any governmental authority pursuant to any Environmental Law. (n) Tax Matters. The Company and each of its subsidiaries, and any ----------- consolidated, combined, unitary or aggregate group for tax purposes of which the Company or any of its subsidiaries is or has been a member, has timely filed all Tax Returns required to be filed by it in the manner provided by law. All such Tax Returns are true, correct and complete in all material respects. The Company and each of its subsidiaries have paid all Taxes (including interest and penalties) due or required to be withheld from amounts owing to any employee, creditor or third party or have provided adequate reserves in their financial statements for any Taxes that have not been paid, whether or not shown as being due on any returns. Except as has been disclosed to Purchaser in the Disclosure Letter: (i) no material claim for unpaid Taxes has become a lien or encumbrance of any kind against the property of the Company or any of its subsidiaries or is being asserted against the Company or any of its subsidiaries; (ii) no audit, examination, investigation or other proceeding in respect of Taxes is pending, threatened or being conducted by a Tax Authority; (iii) no extension or waiver of the statute of limitations on the assessment of any Taxes has been granted by the Company or any of its subsidiaries and is currently in effect; (iv) neither the Company nor any of its subsidiaries is a party to, is bound by, or has any obligation under, or potential liability with regards to, any Tax sharing agreement, Tax indemnification agreement or similar contract or arrangement; (v) no power of attorney has been granted by or with respect to the Company or any of its subsidiaries with respect to any matter relating to Taxes; (vi) neither the Company nor any of its subsidiaries is a party to any agreement, plan, contract or arrangement (whether oral or in writing) that would result, separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code; (vii) neither the Company nor any of its subsidiaries has any deferred intercompany gain or loss arising as a result of a deferred intercompany transaction within the meaning of Treasury Regulation Section 1.1502-13 (or similar provision under state, local or foreign law) or any excess loss accounts within the meaning of Treasury Regulation Section 1.1502-19; (viii) the Company is not and has not been a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(ii) of the Code. As used herein, "Taxes" shall mean any taxes of any kind, including ----- but not limited to those on or measured by or referred to as income, gross receipts, capital, sales, use, ad valorem, franchise, profits, license, withholding, premium, value added, property or windfall profits taxes, customs, duties or similar fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any governmental authority, domestic or -16- foreign. As used herein, "Tax Return" shall mean any return, report or statement ---------- required to be filed with any governmental authority with respect to Taxes. (o) Intangible Property. Except as set forth in the Disclosure ------------------- Letter, the Company and its subsidiaries own or have adequate rights to use all patents, trademarks, trade names, service marks, brands, logos, copyrights, licenses, trade secrets, customer lists and other proprietary intellectual property rights (collectively, "Intellectual Property") required for, used in or --------------------- incident to the business of the Company and its subsidiaries as now conducted or proposed to be conducted. To the knowledge of the Company, all Intellectual Property owned by the Company is valid and enforceable. Except as set forth in the Disclosure Letter, the Company has not received notice, and has no reason to know of any claim or threatened infringement of the rights of others with respect to any Intellectual Property used or owned by the Company, the loss of which could have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole. Except as disclosed in the Disclosure Letter, the Company and its subsidiaries have not been sued within the past two years (or with respect to a subsidiary of the Company, since such subsidiary was acquired by the Company if acquired less than two years prior to the date hereof) for infringing on the Intellectual Property of another entity or person. To the knowledge of the Company, the Company is not now using, and has not in the past used without appropriate authorization, any confidential information or trade secrets of any third party. The Company has not received any notice alleging such conduct within the past two years and, with respect to notices received prior to such time, there is no Action pending or, to the knowledge of the Company, threatened with respect thereto. 6.2. Representations and Warranties of Purchaser and Merger Sub. ---------------------------------------------------------- Purchaser and Merger Sub represent and warrant to the Company that: (a) Corporate Organization and Qualification. Each of Purchaser and ---------------------------------------- Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation and is in good standing as a foreign corporation in each jurisdiction where the properties owned, leased or operated, or the business conducted, by it require such qualification except for such failure to so qualify or to be in such good standing, which, when taken together with all other such failures, is not reasonably likely to have a material adverse effect on the financial condition, properties, business or results of operations of Purchaser and its subsidiaries, taken as a whole. Each of Purchaser and its subsidiaries has the requisite corporate power and authority to carry on its respective businesses as they are now being conducted. (b) Corporate Authority. Purchaser and Merger Sub each has the ------------------- requisite corporate power and authority and has taken all corporate action necessary in order to execute and deliver this Agreement and to consummate the transactions contemplated -17- hereby. This Agreement is a valid and binding agreement of Purchaser and Merger Sub enforceable against Purchaser and Merger Sub in accordance with its terms, assuming the due authorization, execution and delivery hereof by the Company. (c) Governmental Filings; No Violations. (i) Other than the ----------------------------------- Regulatory Filings, no notices, reports or other filings are required to be made by Purchaser and Merger Sub with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by Purchaser and Merger Sub from, any Governmental Entity in connection with the execution and delivery of this Agreement by Purchaser and Merger Sub and the consummation by Purchaser and Merger Sub of the transactions contemplated hereby, the failure to make or obtain any or all of which could prevent, delay or materially burden the transactions contemplated by this Agreement. (ii) The execution and delivery of this Agreement by Purchaser and Merger Sub do not, and the consummation by Purchaser and Merger Sub of the transactions contemplated by this Agreement will not, constitute or result in (i) a breach or violation of, or a default under, the Certificate of Incorporation or By-Laws of Purchaser or Merger Sub or the comparable governing instruments of any of their subsidiaries or (ii) a breach or violation of, a default under, the acceleration of or the creation of a lien, pledge, security interest or other encumbrance on assets (with or without the giving of notice or the lapse of time) pursuant to, any provision of any Contract of Purchaser or Merger Sub or any of their subsidiaries or any law, ordinance, rule or regulation or judgment, decree, order, award or governmental or non-governmental permit or license to which Purchaser or Merger Sub or any of their subsidiaries are subject, except, in the case of clause (ii) above, for such breaches, violations, defaults or accelerations or changes that, alone or in the aggregate, could not prevent or delay or materially burden the transactions contemplated by this Agreement. (d) Funds. Purchaser has or will have the funds necessary to ----- consummate the transactions contemplated by this Agreement. ARTICLE VII COVENANTS 7.1. Interim Operations of the Company. The Company covenants and --------------------------------- agrees, as to itself and its subsidiaries, that, except as set forth in the Disclosure Letter, after the date hereof and prior to the Effective Time (unless Purchaser shall otherwise agree in writing and except as otherwise permitted or required by this Agreement): -18- (a) the business of the Company and its subsidiaries shall be conducted only in the ordinary and usual course and, to the extent consistent therewith, each of the Company and its subsidiaries shall use its best efforts to preserve its business organization intact and maintain its existing relations with customers, suppliers, employees and business associates; (b) the Company shall not (i) sell or pledge or agree to sell or pledge any stock owned by it in any of its subsidiaries; (ii) amend the Company Certificate or Company By-Laws or amend, modify or terminate the Rights Agreement, or redeem the Rights issued pursuant thereto; (iii) split, combine or reclassify the outstanding Shares; or (iv) declare, set aside or pay any dividend payable in cash, stock or property with respect to the Shares; (c) neither the Company nor any of its subsidiaries shall (i) issue, sell, pledge, dispose of or encumber any additional shares of, or securities convertible or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of its capital stock of any class of the Company or its subsidiaries or any other property or assets other than, in the case of the Company, Shares issuable pursuant to options outstanding on the date hereof under the Stock Plans; (ii) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any assets or incur or modify any indebtedness or other liability other than in the ordinary and usual course of business; (iii) acquire directly or indirectly by redemption or otherwise any shares of the capital stock of the Company; (iv) authorize capital expenditures for items other than those relating to the Company's Palmetto, South Carolina facility in excess of $250,000 individually or $1,500,000 in the aggregate; (v) authorize capital expenditures for items relating to the Company's Palmetto, South Carolina facility in excess of $8,500,000 in the aggregate or (vi) make any acquisition of another person or entity (by merger, consolidation or acquisition of stock or assets) or any investment in, assets or stock of any other person or entity; (d) neither the Company nor any of its subsidiaries shall grant any severance or termination pay to, or enter into any employment or severance agreement with any director, officer or other employee of the Company or such subsidiaries; and neither the Company nor any of its subsidiaries shall establish, adopt, enter into, make any new grants or awards under or amend, any collective bargaining, bonus, profit shar ing, thrift, compensation, stock option, restricted stock, pension, retirement, employee stock ownership, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directors, officers or employees (the "Benefit Plans"); ------------- -19- (e) except in the ordinary and usual course of business and with the consent of Purchaser, neither the Company nor any of its subsidiaries shall settle or compromise any material claims or litigation or, modify, amend or terminate any of its joint venture agreements, partnership agreements or material Contracts or waive, release or assign any material rights or claims; (f) neither the Company nor any of its subsidiaries shall make any tax election or permit any insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated without notice to Purchaser, except in the ordinary and usual course of business; (g) except as may be required as a result of a change in law or in generally accepted accounting principles, neither the Company nor any of its subsidiaries shall change any of the accounting practices or principles used by it; (h) neither the Company nor any of its subsidiaries shall adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization, or other reorganization of the Company or any of its subsidiaries not constituting an inactive subsidiary (other than the Merger); and (i) neither the Company nor any of its subsidiaries will authorize or enter into an agreement to do any of the foregoing or take any action that would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect as of the date when made if such action had then been taken, or would result in any of the Offer Conditions set forth in Annex A not being satisfied. 7.2. Acquisition Proposals. The Company, its affiliates and its and --------------------- their respective officers, directors, employees, representatives and agents (including, without limitation, any investment banker, attorney or accountant retained by the Company or any of its subsidiaries) shall immediately cease all existing discussions or negotiations, if any, with any parties conducted heretofore with respect to any acquisition or exchange of all or any material portion of the assets of, or more than 15% of the equity interest in, the Company or any of its subsidiaries (by direct purchase from the Company, tender or exchange offer or otherwise) or any business combination, merger, consolidation or similar transaction (including an exchange of stock or assets) with or involving the Company or any subsidiary or division of the Company (an "Acquisition Transaction"). Neither the Company nor any of its affiliates, nor - ------------------------ any of its or their respective officers, directors, employees, representatives or agents (including, without limitation, any investment banker, attorney or accountant retained by the Company or any of its subsidiaries) shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Purchaser and Merger Sub, any affiliate or associate of Purchaser and Merger Sub or any -20- designees of Purchaser and Merger Sub) with respect to any inquiries or the making of any offer or proposal (including, without limitation, any offer or proposal to the stockholders of the Company) concerning an Acquisition Transaction (an "Acquisition Proposal"), unless (i) the Board of Directors of -------------------- the Company determines in good faith after consultation with outside legal counsel that such action is necessary in order for its directors to comply with their respective fiduciary duties under applicable law and (ii) the Board of Directors of the Company determines in good faith (after consultation with its financial advisor) that such Acquisition Proposal, if accepted, is reasonably likely to be consummated (taking into account all legal, financial and regulatory aspects of the proposal, the person making the proposal and all other relevant factors) and would, if consummated, result in a transaction more favorable to the Company's stockholders from a financial point of view than the transaction contemplated by this Agreement (any such more favorable Acquisition Proposal being referred to in this Agreement as a "Superior Proposal"). The ----------------- Company will take the necessary steps to inform the individuals or entities referred to in the first sentence hereof of the obligations undertaken in this Section 7.2. The Company will notify Purchaser immediately if any such inquiries or proposals are received by, any such information is requested from, or any such negotiations or discussions are sought to be initiated or continued with the Company, the name of the person making such proposals (unless identifying such person is prohibited by a binding confidentiality agreement in effect as of February 25, 1998), the material terms and conditions of such proposals and thereafter shall keep Purchaser informed, on a current basis, of the status and terms of such proposals and the status of such negotiations or discussions. The Company agrees not to release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which the Company is a party, unless the Board of Directors of the Company shall have determined in good faith, based upon the advice of outside counsel to the Company, that failing to release such third party or waive such provisions would constitute a breach of the fiduciary duties of the Board of Directors of the Company under applicable law. 7.3. Meetings of the Company's Stockholders. (a) If required -------------------------------------- following termination of the Offer, the Company will take, consistent with applicable law, the Company Certificate and the Company By-Laws, all action necessary to convene a meeting of holders of Shares as promptly as practicable following the purchase of Shares pursuant to the Offer to consider and vote upon the approval of this Agreement and the Merger. Subject to fiduciary requirements of applicable law, the Board of Directors of the Company shall recommend such approval and the Company shall take all lawful action to solicit such approval. At any such meeting of the Company all of the Shares then owned by the Purchaser Companies will be voted in favor of this Agreement. The Company's proxy or information statement with respect to such meeting of shareholders (the "Proxy Statement"), at the date thereof and at the date of --------------- such meeting, will comply in all material respects with the applicable requirements under the Exchange Act and will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not -21- misleading; provided, however, that the foregoing shall not apply to the extent -------- ------- that any such untrue statement of a material fact or omission to state a material fact was made by the Company in reliance upon and in conformity with written information concerning the Purchaser Companies furnished to the Company by Purchaser specifically for use in the Proxy Statement. The Proxy Statement shall not be filed, and no amendment or supplement to the Proxy Statement will be made by the Company, without consultation with Purchaser and its counsel. (b) Notwithstanding the foregoing, in the event that Merger Sub shall acquire at least 90% of the outstanding Shares, the Company agrees, at the request of Merger Sub, subject to Article VIII, to take all necessary and appropriate action to cause the Merger to become effective as soon as reasonably practicable after such acquisition, without a meeting of the Company's stockholders, in accordance with Section 253 of the DGCL. 7.4. Filings; Other Action. (a) Subject to the terms and conditions --------------------- herein provided, the Company and Purchaser shall: (i) promptly make their respective filings and thereafter make any other required submissions under the HSR Act and other Regulatory Filings with respect to the Offer and the Merger; and (ii) use all reasonable efforts to promptly take, or cause to be taken, all other action and do, or cause to be done, all other things necessary, proper or appropriate under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including but not limited to cooperating in the preparation and filing of the Offer Documents, the Schedule 14D-9, the Proxy Statement, any required filings under the HSR Act or other foreign filings and any amendments to any thereof. The Company shall use all reasonable efforts to obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to Contracts with the Company and its subsidiaries as are necessary for the consummation of the transactions contemplated by this Agreement and to fulfill the conditions to the Offer and the Merger. The Company will cooperate with Purchaser and Merger Sub with respect to consummating the financing for the Offer and the Merger and any refinancing of the Company's indebtedness. Notwithstanding anything contained herein to the contrary, Purchaser shall be under no obligation whatsoever to make or accept or engage in negotiations for any settlement with any governmental entity or any other arrangement involving the sale, disposition, or separate holding, through the establishment of a trust, or otherwise, of the business or any of the assets of the Company or any of its subsidiaries acquired pursuant to this Agreement, or any portion thereof, or particular assets of Purchaser or its subsidiaries or any of the Purchaser Companies in order to complete the transactions contemplated herein. (b) The Company and Purchaser each shall keep the other apprised of the status of matters relating to completion of the transactions contemplated hereby, including promptly furnishing the other with copies of notices or other communications received by Purchaser or the Company, as the case may be, or any of their subsidiaries, from any -22- Governmental Entity with respect to the Offer or the Merger or any of the other transactions contemplated by this Agreement. The parties hereto will consult and cooperate with one another, and consider in good faith the views of one another in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party hereto in connection with proceedings under or relating to the HSR Act or any other antitrust law. 7.5. Access. The Company shall (and shall cause each of its ------ subsidiaries to) afford Purchaser's officers, employees, counsel, lenders, accountants and other authorized representatives ("Representatives") access, --------------- during normal business hours throughout the period prior to the Effective Time, to the Representatives of the Company (and each of its subsidiaries) and its properties, books, Contracts and records and, during such period, the Company shall (and shall cause each of its subsidiaries to) furnish promptly to Purchaser all information concerning its business, properties and personnel as Purchaser or its Representatives may reasonably request, provided that no -------- investigation pursuant to this Section 7.5 shall affect or be deemed to modify any representation or warranty made by the Company and provided, further, that -------- ------- the foregoing shall not require the Company to permit any inspection, or to disclose any information, which in the reasonable judgment of the Company would result in the disclosure of any trade secrets of third parties or violate any obligation of the Company with respect to confidentiality if the Company shall have used reasonable efforts to obtain the consent of such third party to such inspection or disclosure. All requests for information made pursuant to this Section shall be directed to an executive officer of the Company or such person as may be designated by any such officer. Upon any termination of this Agreement, Purchaser will collect and deliver to the Company all documents obtained by it or any of its Representatives then in their possession and any copies thereof. 7.6. Notification of Certain Matters. The Company shall give prompt ------------------------------- notice to Purchaser of: (a) any notice of, or other communication relating to, any environmental matter, a default or event that, with notice or lapse of time or both, would become a default, received by the Company or any of its subsidiaries subsequent to the date of this Agreement and prior to the Effective Time, under any Contract to which the Company or any of its subsidiaries is a party or is subject; (b) any changes or developments relating to any Action pending or, to the knowledge of management of the Company, threatened against the Company or any of its subsidiaries existing as of the date hereof; (c) any new Actions pending or, to the knowledge of management of the Company, threatened against the Company or any of its subsidiaries since the date hereof; (d) any material adverse change in the financial condition or results of operations of the Company and its subsidiaries taken as a whole as compared to the financial condition and results of operations of the Company and its subsidiaries disclosed in the consolidated financial statements of the Company as of and for the year ended December 31, 1997 which are set forth in the Disclosure Letter or the occurrence of any event which, so far as reasonably can be foreseen at the time of its -23- occurrence, is reasonably likely to result in any such change; and (e) any material adverse change in the properties or business of the Company and its subsidiaries taken as a whole or the occurrence of any event which, so far as reasonably can be foreseen at the time of its occurrence, is reasonably likely to result in any such change. Each of the Company and Purchaser shall give prompt notice to the other party of any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement. 7.7. Publicity. The initial press release relating to the execution --------- of this Agreement shall be a joint press release and thereafter the Company and Purchaser, unless they have previously agreed in writing to the contrary, will not issue any press release or otherwise make a public statement with respect to the transactions contemplated hereby or make any filings with any Governmental Entity or with any national securities exchange with respect thereto, unless in the written opinion of counsel to the party desiring to make such disclosure, a copy of which opinion shall be delivered to the other party as promptly as practicable under the circumstances, such disclosure is required by law or stock exchange rule or regulation. 7.8. Stock Options and Employee Benefits. ----------------------------------- (a) Stock Options - Cash Exchange. Subject to Section 7.8(b), ----------------------------- immediately prior to the Effective Time, the Company shall take such actions as may be necessary such that immediately prior to the Effective Time each stock option outstanding and unexercised pursuant to the Stock Plans (the "Option"), ------ whether or not then exercisable, shall be canceled and shall cease to be exercisable. In consideration for such cancellation, the holder thereof, as soon as practicable after the Effective Time, will receive an amount in cash from Purchaser equal to the result of multiplying the number of shares of Company Common Stock previously subject to such Option by the difference between the Merger Consideration and the per share exercise price of such Option. (b) Stock Options - Option Exchange. (i) The executives of the ------------------------------- Company that are listed in Exhibit 7.8(b) may, by written notice to Purchaser received by Purchaser not less than ten (10) business days prior to the Effective Time, elect to convert the Options held by them, up to the number of Options so designated in Exhibit 7.8(b), into options ("Purchaser Options") to ----------------- purchase Purchaser common stock ("Purchaser Common Stock"). Any such election ---------------------- shall identify the Options to be converted into Purchaser Options and shall become irrevocable upon receipt by Purchaser of the notice of election. If such election is made, at the Effective Time, each Option to be converted shall be deemed to constitute an option to acquire Purchaser Common Stock on the same terms of the applicable Stock Plan and the stock option agreement by which it is evidenced. From and after the Effective Time, (A) each such Option may be exercised solely for shares of Purchaser Common Stock, (B) the number of shares of Purchaser Common Stock subject to such Option shall be equal -24- to the result (rounded down to the nearest whole share) of multiplying the number of shares of Company Common Stock subject to such Option immediately prior to the Effective Time by a fraction (the "Conversion Fraction"), where (x) ------------------- the numerator is equal to the Merger Consideration and (y) the denominator is equal to the average of the last reported sales prices of the Purchaser Common Stock on the five business days immediately prior to the date hereof and (C) the per share exercise price under each such Option shall be equal to the result (rounded up to the nearest cent) of dividing the per share exercise price under each such Option by the Conversion Fraction; provided, however, that with -------- ------- respect to any Option which is an "incentive stock option", within the meaning of Section 422 of the Code, the adjustments provided by this Section 7.8(b)(i) shall be effected in a manner consistent with the requirements of Section 424(a) of the Code. No payment shall be made pursuant to Section 7.8(a) with respect to any portion of an Option that is converted into a Purchaser Option as aforesaid. (ii) (A) At or prior to the Effective Time, Purchaser shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Purchaser Common Stock for delivery upon exercise of Options assumed by it in accordance with Section 7.8(b)(i) and (B) as soon as administratively feasible following the Effective Time, file a registration statement on Form S-8 (or any successor or other appropriate form) with respect to the Purchaser Common Stock subject to such Options (or shall cause such Option to be deemed an option issued pursuant to a Purchaser stock option plan for which Purchaser Common Stock have previously been registered pursuant to an appropriate registration form). Purchaser shall use its best efforts to maintain the effectiveness of such registration statement (and maintain the current status of the prospectus or prospectuses contained therein) for so long as the Options remain outstanding. (c) Employee Benefits. Purchaser agrees that during the period ----------------- commencing at the Effective Time and ending on the first anniversary thereof, the employees of the Company will continue to be provided with benefits under employee benefit plans (other than stock options or other plans involving the potential issuance of securities of the Company or Purchaser) which in the aggregate are substantially comparable to those currently provided by the Company to such employees; provided, however, that employees covered by -------- ------- collective bargaining agreements need not be provided with such benefits. Purchaser will cause each employee benefit plan of Purchaser in which employees of the Company are eligible to participate to take into account for purposes of eligibility and vesting thereunder the service of such employees with the Company as if such service were with Purchaser. Purchaser will, and will cause the Surviving Corporation to, honor without modification all employee benefit obligations to current and former employees of the Company accrued as of the Effective Time and, to the extent set forth in the Disclosure Letter, all employee severance plans in existence on the date hereof and all employment or severance agreements adopted by the Board of Directors of the Company and entered into prior to the date hereof. -25- (d) ESOP Distributions and Termination. As soon as practicable following ---------------------------------- the Effective Time, Purchaser and the Company shall take all actions necessary or appropriate to cause the A.P. Green Industries, Inc. Employee Stock Ownership Trust, which implements and forms part of the A.P. Green Investment Plan (collectively, the "ESOP"), to provide for the use of all proceeds received pursuant to the Offer from the tender of Shares allocated to the suspense account of the ESOP, as follows: first, such proceeds shall be applied to repay any outstanding loan incurred by the ESOP; and secondly, the balance of such proceeds shall be allocated to participants' Employer Match ESOP account in proportion to the total aggregate value of such accounts of the participants as of the accounting date immediately preceding the Effective Time, except to the extent such allocations could exceed the limits on annual contributions pursuant to Section 415 of the Code. In addition, as soon as is reasonably practicable following the Effective Time (or, if deemed appropriate by Purchaser and the Company, after receipt of a favorable determination letter from the Internal Revenue Service on the effect of termination of the ESOP) Purchaser and the Company shall terminate the ESOP and distribute all proceeds to the participants in accordance therewith. Notwithstanding the foregoing, Purchaser shall have no obligation to implement this Section 7.8(d) if such implementation would violate the terms of the ESOP or jeopardize the tax-qualified status of the ESOP. 7.9. Indemnification; Directors' and Officers' Insurance. (a) From --------------------------------------------------- and after the Effective Time, Purchaser agrees that it will cause the Surviving Corporation to indemnify and hold harmless each present and former director and officer of the Company, determined as of the Effective Time (the "Indemnified ----------- Parties"), against any costs or expenses (including reasonable attorneys' fees), - ------- judgments, fines, losses, claims, damages or liabilities (collectively, "Costs") ----- incurred in connection with any Action, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent that the Company is permitted to do so under Delaware law and the Company Certificate or Company By-Laws in effect on the date hereof (and Purchaser shall also advance expenses as incurred to the fullest extent permitted under applicable law provided the person to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification); provided that any determination required to be made with respect to whether an - -------- officer's or director's conduct complies with the standards set forth under Delaware law and the Company Certificate and Company By-Laws shall be made by independent counsel selected by the Surviving Corporation. (b) Any Indemnified Party wishing to claim indemnification under paragraph (a) of this Section 7.9, upon learning of any such Action, shall promptly notify Purchaser thereof. In the event of any such Action (whether arising before or after the Effective Time), (i) Purchaser or the Surviving Corporation shall have the right to assume the defense thereof and Purchaser shall not be liable to such Indemnified Parties for any legal expenses of other -26- counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, except that if Purchaser or the Surviving Corporation elects not to assume such defense or counsel for the Indemnified Parties advises that, in such counsel's reasonable judgment, there are material issues that constitute conflicts of interest between Purchaser or the Surviving Corporation and the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to them, and Purchaser or the Surviving Corporation shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as statements therefor are received; provided, -------- however, that Purchaser shall be obligated pursuant to this paragraph (b) to pay - ------- for only one firm of counsel for all Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of any such matter and (iii) Purchaser shall not be liable for any settlement effected without its prior written consent; and provided, further, however, that Purchaser shall not -------- ------- ------- have any obligation hereunder to any Indemnified Party when and if a court of competent jurisdiction shall ultimately determine, and such determination shall have become final, that the indemnification of such Indemnified Party in the manner contemplated hereby is pro hibited by applicable law. (c) The Surviving Corporation shall be permitted to maintain the Company's existing officers' and directors' liability insurance ("D&O --- Insurance") for a period of two years after the Effective Time so long as the annual premium therefor is not in excess of 150% of the last annual premium paid prior to the date hereof (the "D&O Premium"); provided, however, if the existing ----------- -------- ------- D&O Insurance expires, is terminated or canceled during such two year period, the Surviving Corporation will use its best efforts to obtain as much D&O Insurance as can be obtained for the remainder of such period for a premium not in excess (on an annualized basis) of the D&O Premium. 7.10. Environmental Filings. The Company shall promptly make all --------------------- filings, notifications, applications, permit transfers and other submissions relating to the Offer and Merger that may be required pursuant to any Environmental Laws including without limitation those relating to the ownership, operation or transfer of real property, underground storage tanks, waste disposal locations or landfills and closure and post closure financial assurances ("Environmental Submissions"). The Company shall provide Purchaser ------------------------- with copies of all Environmental Submissions at the time of filing and Purchaser shall cooperate with the Company in the preparation and execution of all Environmental Submissions. 7.11. Other Actions by the Company. ---------------------------- (a) Takeover Statutes. If any Takeover Statute shall become ----------------- applicable to the transactions contemplated hereby, the Company and the members of the Board of Directors of the Company shall grant such approvals and take such actions as are necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of such -27- statute or regulation on the transactions contemplated hereby. (b) Rights. Prior to the commencement of the Offer, the Board of ------ Directors of the Company shall amend the Rights Agreement so that the consummation of the transactions contemplated hereby will not cause (x) Merger Sub and/or Purchaser to become an Acquiring Person (as defined in the Rights Agreement) or (y) a Distribution Date or a Stock Acquisition Date (as such terms are defined in the Rights Agreement) to occur, irrespective of the number of Shares acquired pursuant to the Offer. In addition, the Board of Directors of the Company shall either (i) amend the Rights Agreement prior to the commencement of the Offer so that all outstanding Rights will expire upon the acceptance of Shares for payment pursuant to the Offer, whether or not tendered and purchased pursuant to the Offer, and neither the Company, Merger Sub nor Purchaser shall have any obligations under the Rights or the Rights Agreement to any holder (or former holder) of Rights following consummation of the Offer or (ii) redeem all of the outstanding Rights immediately prior to the consummation of the Offer so that the Company, Merger Sub and Purchaser shall have no obligations under the Rights or the Rights Agreement following such time and the holders shall have no rights under the Rights or the Rights Agreement following such time, other than the redemption payment of $0.001 per Right as provided in the Rights Agreement. ARTICLE VIII CONDITIONS 8.1. Conditions to Obligations of Purchaser and Merger Sub. The ----------------------------------------------------- respective obligations of Purchaser and Merger Sub to consummate the Merger are subject to the fulfillment of each of the following conditions, any or all of which may be waived in whole or in part by Purchaser or Merger Sub, as the case may be, to the extent permitted by applicable law: (a) Stockholder Approval. If required, this Agreement shall have -------------------- been duly approved by the holders of a majority of the Shares, in accordance with applicable law and the Company Certificate and the Company By-Laws; (b) Purchase of Shares. Merger Sub (or one of the Purchaser ------------------ Companies) shall have purchased Shares pursuant to the Offer; (c) Governmental Consents and Regulatory Approvals. The waiting ---------------------------------------------- period applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated and, other than the filings provided for in Section 2.3, all filings required to be made prior to the Effective Time with, and all consents, approvals and authorizations -28- required to be obtained prior to the Effective Time from, any Governmental Entity in connection with the execution and delivery of this Agreement and the consummation of the Merger by the Company, Purchaser and Merger Sub (the "Regulatory Approvals") shall have been made or obtained (as the case may be); - --------------------- (d) Injunction. No United States or state court or other ---------- Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and prohibits consummation of the transactions contemplated by this Agreement or imposes material restrictions on Purchaser or the Company in connection with consummation of the Merger or with respect to their business operations, either prior to or subsequent to the Merger (collectively, an "Order"); and ----- (e) Other Obligations. The Company shall have fulfilled its ----------------- obligations under Section 7.8(a) and the representations set forth in Section 6.1(k) shall be true and correct as of the Closing Date as if made on such date. 8.2. Conditions to Obligations of the Company. The obligations of ---------------------------------------- the Company to consummate the Merger are subject to the fulfillment of each of the following conditions, any or all of which may be waived in whole or in part by the Company to the extent permitted by applicable law: (a) Stockholder Approval. If required, this Agreement shall have -------------------- been duly approved by the holders of a majority of the Shares, in accordance with applicable law and the Company Certificate and the Company By-Laws; (b) Purchase of Shares. Merger Sub (or one of the Purchaser ------------------ Companies) shall have purchased Shares pursuant to the Offer; (c) Governmental Consents. The waiting period applicable to the --------------------- consummation of the Merger under the HSR Act shall have expired or been terminated; and (d) Order. There shall be in effect no Order. ----- ARTICLE IX TERMINATION 9.1. Termination by Mutual Consent. This Agreement may be terminated ----------------------------- and the transactions contemplated hereby may be abandoned at any time prior to the Effective -29- Time, before or after the approval by holders of Shares, by the mutual consent of Purchaser and the Company, by action of their respective Boards of Directors. 9.2. Termination by either Purchaser or the Company. This Agreement ---------------------------------------------- may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Effective Time, before or after the approval by holders of Shares, by action of the Board of Directors of either Purchaser or the Company if (i) Merger Sub, or any Purchaser Company, shall have terminated the Offer without purchasing any Shares pursuant thereto; or (ii) the Merger shall not have been consummated by August 31, 1998 whether or not such date is before or after the approval by holders of Shares; or (iii) if required, the approval of shareholders required by Section 8.1(a) shall not have been obtained at a meeting duly convened therefor; or (iv) any court of competent jurisdiction or other Governmental Entity located or having jurisdiction within the United States or any country in which either the Company or Purchaser, directly or indirectly, has material assets or operations, shall have issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the Offer or the Merger and such order, decree, ruling or other action is or shall have become final and nonappealable. 9.3. Termination by Purchaser. This Agreement may be terminated and ------------------------ the transactions contemplated hereby may be abandoned at any time prior to the Effective Time, before or after the approval by holders of Shares, by action of the Board of Directors of Purchaser, if (i) the Company shall have breached or failed to perform in any material respect any of the covenants or agreements contained in this Agreement to be complied with or performed by the Company prior to such date of termination which breach or failure shall not have been cured prior to the earlier of (A) five business days following the giving of written notice to the Company of such breach or failure and (B) two business days prior to the date on which the Offer is then scheduled to expire, or any representation or warranty of the Company set forth in this Agreement shall have been inaccurate or incomplete when made except for such failures to be complete or accurate that, individually or in the aggregate, could not reasonably be expected to have a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole or could prevent or materially delay the transactions contemplated by this Agreement or impair the ability of Purchaser, Merger Sub, the Company or any of their respective affiliates, following consummation of the Offer or the Merger, to conduct any material business or operations in any jurisdiction where they are now being conducted, (ii) the Board of Directors of the Company (or a special committee thereof) shall have amended, modified or withdrawn in a manner adverse to Purchaser or Merger Sub its approval or recommendation of the Offer, this Agreement or the Merger or the Board of Directors of the Company (or a special committee thereof), upon request by Purchaser, shall fail to reaffirm such approval or recommendation, or shall have endorsed, approved or recommended any other Acquisition Proposal, or shall have resolved to do any of the foregoing, or (iii) if the Company or any of the other persons or entities described in Section 7.2 shall take any -30- actions that would be proscribed by Section 7.2 but for the exception therein allowing certain actions to be taken if required by fiduciary obligations under applicable law as advised in writing by counsel. 9.4. Termination by the Company. This Agreement may be terminated -------------------------- and the transactions contemplated hereby may be abandoned at any time prior to the Effective Time, before or after the approval by holders of Shares by action of the Board of Directors of the Company, (i) if Purchaser or Merger Sub (or another Purchaser Company) (x) shall have breached or failed to perform in any material respect any of the covenants or agreements contained in this Agreement to be complied with or performed by Purchaser or Merger Sub prior to such date of termination which shall not have been cured prior to the earlier of (A) five business days following the giving of written notice to Purchaser of such breach or failure and (B) two business days prior to the date on which the Offer is then scheduled to expire, or (y) shall have failed to commence the Offer within the time required in Section 1.1, or (ii) if (w) the Company is not in material breach of any of the terms of this Agreement, (x) the Board of Directors of the Company authorizes the Company, subject to complying with the terms of this Agreement, to enter into a binding written agreement concerning a transaction that constitutes a Superior Proposal and the Company notifies Purchaser in writing that it intends to enter into such an agreement, attaching the most current version of such agreement (which shall include all of the material terms, including the price proposed to be paid for Shares pursuant thereto) to such notice, (y) Purchaser does not make, within two business days of receipt of the Company's written notification of its intention to enter into a binding agreement for a Superior Proposal, an offer that the Board of Directors of the Company determines, in good faith after consultation with its financial advisors, is at least as favorable, from a financial point of view, to the stockholders of the Company as the Superior Proposal and (z) the Company, prior to such termination, pays to Purchaser in immediately available funds the fees required to be paid pursuant to Section 9.5(b). 9.5. Effect of Termination and Abandonment. (a) In the event of the ------------------------------------- termination of this Agreement pursuant to this Article IX, no party hereto (or any of its directors or officers) shall have any liability or further obligation to any other party to this Agreement, except as provided in Section 9.5(b) below and Section 10.2 and except that nothing herein will relieve any party from liability for any willful breach of this Agreement; provided, however, that if -------- ------- this Agreement is terminated by Purchaser pursuant to Section 9.3(i) or the Company pursuant to Section 9.4(i), the terminating party's rights to pursue all legal remedies will survive such termination unimpaired. (b) If (i) (x) the Offer shall have remained open for a minimum of at least 20 business days, (y) after the date hereof any corporation, partnership, person, other entity or group (as defined in Section 13(d)(3) of the Exchange Act) other than Purchaser or Merger Sub or any of their respective subsidiaries or affiliates (collectively, a "Person") shall have become the beneficial owner ------ of 20% or more of the outstanding Shares or shall have publicly -31- announced a proposal or intention to make an Acquisition Proposal or any Person shall have commenced, or shall have publicly announced an intention to commence, a tender offer or exchange offer for 20% or more of the outstanding Shares, and (z) the Minimum Condition (as defined in Annex A) shall not have been satisfied and the Offer is terminated without the purchase of any Shares thereunder, or (ii) Purchaser shall have terminated this Agreement pursuant to Section 9.3(ii) or Section 9.3(iii) or (iii) the Company shall have terminated this Agreement pursuant to Section 9.4(ii), then the Company shall promptly, but in no event later than two days after the date of such termination, pay Purchaser a fee of $8,000,000 and shall reimburse Purchaser and Merger Sub (not later than one business day after request by Purchaser or Merger Sub) for all of the out-of- pocket charges and expenses, including financing fees, incurred by Purchaser or Merger Sub in connection with this Agreement and the transactions contemplated by this Agreement up to a maximum amount of $1,500,000, in each case payable by wire transfer in same day funds. The Company acknowledges that the agreements contained in this Section 9.5(b) are an integral part of the transactions contemplated in this Agreement, and that, without these agreements, Purchaser and Merger Sub would not enter into this Agreement; accordingly, if the Company fails to promptly pay the amount due pursuant to this Section 9.5(b), and, in order to obtain such payment, Purchaser or Merger Sub commences a suit which results in a judgment against the Company for the fee set forth in this paragraph (b), the Company shall pay to Purchaser or Merger Sub its costs and expenses (including attorneys' fees) in connection with such suit, together with interest on the amount of the fee at the prime rate of Bank of America National Trust and Savings Association on the date such payment was required to be made. The payments made by the Company pursuant to this Section 9.5(b) are the sole and exclusive remedy of Purchaser and Merger Sub for any claim that Purchaser or Merger Sub may have arising from or relating to the events set forth in Section 9.5(b)(i), (ii) or (iii). ARTICLE X Miscellaneous and General 10.1. Payment of Expenses. Whether or not the Merger shall be ------------------- consummated, each party hereto shall, subject to Section 9.5(b), pay its own expenses incident to preparing for, entering into and carrying out this Agreement and the consummation of the Merger. 10.2. Survival. The agreements of the Company, Purchaser and Merger -------- Sub contained in Sections 5.2 (Payment for Shares) (but only to the extent that such Section expressly relates to actions to be taken after the Effective Time), 5.3 (Dissenters' Rights), 5.4 (Transfer of Shares After the Effective Time), 7.8 (Stock Options and Employee Benefits), 7.9 (Indemnification; Directors' and Officers' Insurance), 7.11 (Other Actions by the Company) and 10.1 (Payment of Expenses) shall survive the consummation of the Merger. -32- The agreements of the Company, Purchaser and Merger Sub contained in Confidentiality Agreement, dated as of December 12, 1997 between the Company and Purchaser and Sections 7.5 (Access), 9.5 (Effect of Termination and Abandonment), 10.1 (Payment of Expenses), 10.6 (Governing Law), 10.7 (Notices), 10.8 (Severability), 10.9 (Entire Agreement, etc.), 10.10 (Parties in Interest), 10.11 (Definition of "Subsidiary"), 10.12 (Obligation of Purchaser) and 10.13 (Captions) shall survive the termination of this Agreement. All other representations, warranties, agreements and covenants in this Agreement shall not survive the consummation of the Merger or the termination of this Agreement. 10.3. Modification or Amendment. Subject to the applicable ------------------------- provisions of the DGCL, at any time prior to the Effective Time, the parties hereto may modify or amend this Agreement, by written agreement executed and delivered by duly authorized officers of the respective parties. 10.4. Waiver of Conditions. The conditions to each of the parties' -------------------- obligations to consummate the Merger are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable law. 10.5. Counterparts. For the convenience of the parties hereto, this ------------ Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. 10.6. Governing Law. This Agreement shall be governed by and ------------- construed in accordance with the laws of the State of Delaware. 10.7. Notices. Any notice, request, instruction or other document to ------- be given hereunder by any party to the others shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, if to ----- Purchaser or Merger Sub, addressed to Purchaser or Merger Sub, as the case may - ----------------------- be, at Global Industrial Technologies, Inc., 2121 San Jacinto Street, Suite 2500, Dallas, Texas 75201, Attention: Graham L. Adelman, Esq. Senior Vice President, General Counsel and Secretary (with a copy to James C. Morphy, Esq., Sullivan & Cromwell, 125 Broad Street, New York, New York 10004); and if to the ------------- Company, addressed to the Company at A.P. Green Industries, Inc., Green - ------- Boulevard, Mexico, Missouri 65265, Attention: Michael B. Cooney, Esq., Senior Vice President -Law/Administration and Secretary (with a copy to Robert LaRose, Esq., Thompson Coburn, One Mercantile Center, St. Louis, Missouri, 63101), or to such other persons or addresses as may be designated in writing by the party to receive such notice. 10.8. Severability. If any term or other provision of this Agreement ------------ is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other -33- conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible. 10.9. Entire Agreement, etc. This Agreement (including the --------------------- Disclosure Letter and any exhibits or Annexes hereto) (a) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties both written and oral, among the parties, with respect to the subject matter hereof, and (b) shall not be assignable by operation of law or otherwise and is not intended to create any obligations to, or rights in respect of, any persons other than the parties hereto; provided, -------- however, that Purchaser may designate, by written notice to the Company, another - ------- wholly-owned direct or indirect subsidiary to be a Constituent Corporation in lieu of Merger Sub, in the event of which, all references herein to Merger Sub shall be deemed references to such other subsidiary except that all representations and warranties made herein with respect to Merger Sub as of the date of this Agreement shall be deemed representations and warranties made with respect to such other subsidiary as of the date of such designation. 10.10. Parties in Interest. This Agreement shall be binding upon and ------------------- inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. 10.11. Definition of "Subsidiary". When a reference is made in this -------------------------- Agreement to a subsidiary of a party, the word "subsidiary" means any corporation or other organization whether incorporated or unincorporated of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its subsidiaries, or by such party and one or more of its subsidiaries, and, with respect to the Company, shall also include Empresa de Refractarios Colombianos S.A. and Materiales Industriales S.A. (the "Colombian Companies"); provided, however, that any representations ------------------- -------- ------- and warranties relating to the Colombian Companies shall be deemed qualified by reference to the knowledge of the officers of the Company. 10.12. Obligation of Purchaser. Whenever this Agreement requires ----------------------- Merger Sub to take any action, such requirement shall be deemed to include an undertaking on the part of Purchaser to cause Merger Sub to take such action. -34- 10.13. Captions. The Article, Section and paragraph captions herein -------- are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. -35- IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto on the date first hereinabove written. A.P. GREEN INDUSTRIES, INC. By ----------------------------------- Name: Title: GLOBAL INDUSTRIAL TECHNOLOGIES, INC. By ----------------------------------- Name: Title: BGN ACQUISITION CORP. By ----------------------------------- Name: Title: -36- ANNEX A CERTAIN CONDITIONS OF THE OFFER. The capitalized terms used in this ------------------------------- Annex A have the meanings set forth in the attached Agreement. Notwithstanding any other provision of the Offer, Merger Sub shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating to Merger Sub's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, or may delay the acceptance for payment of or payment for, any tendered Shares, or may, in its sole discretion, terminate or amend the Offer as to any Shares not then paid for if, (i) prior to the expiration of the Offer, (x) a number of Shares which, together with any Shares owned by Purchaser or Merger Sub, constitutes more than 50% of the voting power (determined on a fully-diluted basis) of all the securities of the Company entitled to vote generally in the election of directors or in connection with a merger shall not have been validly tendered and not withdrawn prior to the expiration of the Offer (the "Minimum Condition") or (y) any waiting periods ----------------- under the HSR Act applicable to the purchase of Shares pursuant to the Offer, and any applicable waiting periods under any foreign statutes or regulations that are applicable to the Offer or the Merger shall not have expired or been terminated, or any Regulatory Approvals applicable to the Offer and the Merger shall not have been obtained on terms satisfactory to Purchaser in its reasonable judgment, or (ii) on or after March 3, 1998, and at or before the time of payment for any of such Shares (whether or not any Shares have theretofore been accepted for payment), any of the following events shall occur: (a) there shall have occurred (i) any general suspension of, or limitation on prices for, trading in securities on the NYSE, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) a commencement or escalation of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States, (iv) any limitation (whether or not mandatory) by any Governmental Entity on, or any other event which might affect, the extension of credit by banks or other lending institutions, (v) a material change in United States or any other currency exchange rates or a suspension of, or limitation on, the markets therefor, (vi) or in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof, (vii) any extraordinary or material adverse change in the market price of the Shares or in the United States securities or financial markets generally, including, without limitation, a decline of at least 20% in either the Dow Jones Average of Industrial Stocks or the Standard & Poor's 500 index from the date of the Agreement or (viii) any material adverse change in the relevant financial markets that could reasonably be expected to materially and adversely affect the debt facilities related to the financing of the Offer; (b) the Company shall have breached or failed to perform in any material respect any of its obligations, covenants or agreements contained in the Agreement or any representation or warranty of the Company set forth in A-1 the Agreement shall have been inaccurate or incomplete in any material respect when made or thereafter shall become inaccurate or incomplete in any material respect; (c) there shall be threatened, instituted or pending any Action before any court or other Governmental Entity by any Governmental Entity or instituted or pending any Action by any other person, domestic or foreign: (i) challenging the acquisition by Purchaser or Merger Sub of Shares, seeking to restrain or prohibit the consummation of the transactions contemplated by the Offer or the Merger or other subsequent business combination, seeking to obtain any material damages or otherwise directly or indirectly relating to the transactions contemplated by the Offer or the Merger or other subsequent business combination; (ii) seeking to prohibit, or impose any material limitations on, Purchaser's or Merger Sub's ownership or operation of all or any portion of their or the Company's business or assets (including the business or assets of their respective affiliates and subsidiaries), or to compel Purchaser or Merger Sub to dispose of or hold separate all or any portion of Purchaser's or Merger Sub's or the Company's business or assets (including the business or assets of their respective affiliates and subsidiaries) as a result of the transactions contemplated by the Offer or the Merger or other subsequent business combination; (iii) seeking to make the acceptance for payment, purchase of, or payment for, some or all of the Shares illegal or render Merger Sub unable to, or result in a delay in, or restrict, the ability of Merger Sub to, accept for payment, purchase or pay for some or all of the Shares; (iv) seeking to impose material limitations on the ability of Purchaser or Merger Sub effectively to acquire or hold or to exercise full rights of ownership of the Shares including, without limitation, the right to vote the Shares purchased by them on an equal basis with all other Shares on all matters properly presented to the stockholders; or (v) that, in any event, in the judgment of Purchaser, is reasonably likely to have a material adverse effect on the financial condition, properties, business or operations of the Company or Purchaser or Merger Sub (or any of their respective affiliates or subsi diaries) or the value of the Shares to Purchaser or Merger Sub or the benefits expected to be derived by Purchaser or Merger Sub as a result of consummation of the transactions contemplated by the Offer and the Merger; (d) any statute, rule, regulation, order or injunction shall be sought, proposed, enacted, promulgated, entered, enforced or deemed or become applicable to the Offer, the Merger, the Agreement or other subsequent business combination, or any other action shall have been taken, proposed or threatened, by any court or other Governmental Entity other than the application to the Offer, the Merger, the Agreement or other subsequent busi- A-2 ness combination of waiting periods under the HSR Act, that, in the judgment of Purchaser, could be expected to, directly or indirectly, result in any of the effects of, or have any of the consequences sought to be obtained or achieved in, any Action referred to in clauses (i) through (v) of paragraph (c) above; (e) a tender or exchange offer for some portion or all of the Shares shall have been commenced or publicly proposed to be made by another person (including the Company or its subsidiaries), or it shall have been publicly disclosed or Purchaser shall have learned that (i) any person (including the Company or its subsidiaries), entity or "group" (as defined in Section 13(d) of the Exchange Act and the rules promulgated thereunder) shall have become the beneficial owner (as defined in Section 13(d) of the Exchange Act and the rules promulgated thereunder) of more than 20% of any class or series of capital stock of the Company (including the Shares) other than for bona fide arbitrage purposes or (ii) any person, entity or group shall have entered into a definitive agreement or an agreement in principle or made a proposal with respect to a tender offer or exchange offer for some portion or all of the Shares or a merger, consolidation or other business combination with or involving the Company; (f) any change shall have occurred (or any development shall have occurred involving a prospective change) or Purchaser or Merger Sub shall have become aware of any fact (including, but not limited to, any such change) that has had, or is reasonably likely to have, a material adverse effect on the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole; (g) the Board of Directors of the Company (or a special committee thereof) shall have amended, modified or withdrawn its approval or recommendation of the Offer, the Agreement or the Merger, or shall have failed to publicly reconfirm such approval or recommendation upon request by Purchaser or Merger Sub, or shall have endorsed, approved or recommended any other Acquisition Proposal, or shall have resolved to do any of the foregoing; or (h) the Agreement shall have been terminated by the Company or Purchaser or Merger Sub in accordance with its terms or Purchaser or Merger Sub shall have reached an agreement or understanding in writing with the Company providing for termination or amendment of the Offer or delay in payment for the Shares; A-3 which, in the sole judgment of Purchaser and Merger Sub, in any such case, and regardless of the circumstances (including any action or inaction by Purchaser or Merger Sub) giving rise to any such conditions, makes it inadvisable to proceed with the Offer and/or with such acceptance for payment of or payment for Shares. The foregoing conditions are for the sole benefit of Purchaser and Merger Sub and may be asserted by Purchaser or Merger Sub regardless of the circumstances (including any action or inaction by Purchaser or Merger Sub) giving rise to such condition or may be waived by Purchaser or Merger Sub, by express and specific action to that effect, in whole or in part at any time and from time to time in its sole discretion. Any determination by Purchaser and Merger Sub concerning any event described in this Annex A shall be final and binding upon all parties. The failure by Merger Sub at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. A-4 EXHIBIT 7.8(b) -------------- 1. Paul F. Hummer, President and Chief Executive Officer of the Company may, by written notice to Purchaser received by Purchaser not less than ten (10) business days prior to the Effective Time, elect to convert up to 75,000 Options into Purchaser Options, pursuant to Section 7.8(b) of the Agreement. EX-99.C.2 14 CONFIDENTIALITY AGREEMENT DTD 12/12/1997 EXHIBIT 99(c)(2) [GLOBAL INDUSTRIAL TECHNOLOGIES, INC. LETTERHEAD} December 12, 1997 A.P. Green Industries, Inc. Green Boulevard Mexico, Missouri 65265 Attention: Mr. Paul F. Hummer, Chairman, President and Chief Executive Officer Gentlemen: In connection with the consideration by A.P. Green Industries, Inc. ("Green") and Global Industrial Technologies, Inc. ("Global") of a possible business combination transaction (a "Transaction") between Green and Global involving Green and the refractories business of Global conducted by Harbison-Walker Refractories Company ("H-W"), a wholly owned subsidiary of Global, Global is prepared to make available to Green, and it is our understanding that Green is prepared to make available to Global, certain information concerning the business, financial condition, operations, assets and liabilities of H-W and Green, respectively (herein collectively referred to, and further defined below, as the "Evaluation Material"). The purpose of this letter agreement is to set forth the understanding of Global and Green (the "Parties") with respect to the conditions upon which Evaluation Material will be furnished by each to the other, including their agreement to treat any Evaluation Material (whether prepared by the Parties, their advisors or otherwise and irrespective of the form of communication) which has been or will be furnished by or on behalf of the Parties after the date hereof in accordance with the provisions of this letter agreement, and to take or abstain from taking certain other actions hereinafter set forth. The term "Evaluation Material" shall be deemed to include all data, reports, interpretations, forecasts and records, financial or otherwise, reflecting information and concerning Green and H-W which is not available to the general public and which the Parties, their affiliates or any of their respective directors, partners, officers, employees, agents or advisors (including without limitation, attorneys, accountants, consultants, bankers and financial advisors) (collectively, "Representatives") provide to each other as well as all notes, analyses, compilations, studies, interpretations or other documents prepared by the Parties or their Representatives which contain, reflect or are based upon, in whole or in part, the information furnished to the Parties or their Representatives pursuant hereto. The term "Evaluation Material" does not include information which (1) is or becomes generally available to the public other than as a result of a disclosure by a Party or its Representatives in violation hereof, (2) was within the possession of a Party or its Representatives prior to its being furnished to such Party by the other Party or any Representative of the other Party pursuant hereto, provided that the source of such information was not known by the Party claiming such information is not Evaluation Material to be bound by a confidentiality agreement with or other direct or indirect contractual, legal or fiduciary obligation of confidentiality to the other Party or its Representatives with respect to such information, or (3) becomes available to the Party to which such information was furnished under this letter agreement on a non-confidential basis from a sourse other than the other Party or any Representative of the other Party, provided that such source is not known by the Party claiming such information is not Evaluation Material to be bound to the other Party or its Representatives by a confidentiality agreement or other direct or indirect contractual, legal or fiduciary obligation with respect to such information, or (4) is demonstrated, to the reasonable satisfaction of the Party that furnished such information, to have been developed by the other Party or its Representatives independently from the Evaluation Material. The Parties hereby agree that, for a period of three years after the date hereof, they and their Representatives shall use the Evaluation Material solely for the purpose of evaluating a possible Transaction, the Evaluation Material will be kept confidential, and they and their Representatives will not disclose any of the Evaluation Material to any person in any manner whatsoever; provided, however, that (1) either Party may make any disclosure of such information to which the other Party gives its prior written consent and (2) any of such information may be disclosed to those Representatives of a Party who need to know such information for the sole purpose of evaluating a possible Transaction, who agree to keep such information confidential, and who agree to be bound by the terms hereof to the same extent as if they were parties hereto. Notwithstanding the foregoing, unless and until the Parties reach an agreement in principle regarding a Transaction, and subject to the following paragraph and the first full paragraph on page 3, the Parties agree that (1) the Evaluation Material, (2) the fact that Evaluation Material has been furnished hereunder, and (3) the fact that discussions are taking place and may take place in the future between the Parties and their Representatives regarding a Transaction, will only be disclosed by the Parties or their Representatives to those corporate officers and other corporate employees of the Parties, and, in the case of Global, also to those corporate officers and other corporate employees of H-W, to whom such disclosure is necessary in order for the Parties to initially evaluate a Transaction and discuss terms for an agreement in principle. The Parties shall instruct such officers and employees to make no further disclosure thereof and shall inform them of restrictions imposed by applicable laws upon the disclosure and use of Evaluation Material. In any event, each Party shall be responsible for the breach of this letter agreement by any of its Representatives and agrees, at its sole expense, to take all reasonable measures (including but not limited to court proceedings) to restrain its Representatives from prohibited or unauthorized disclosure or use of the Evaluation Material. In addition, unless they have previously agreed in writing to the contrary, the Parties and their Representatives will not disclose to any other person (1) that they have furnished Evaluation Material to each other, (2) that discussions or negotiations have taken place or will take place concerning a possible Transaction, or (3) any of the terms, conditions or other facts with respect thereto (including the status thereof), unless in the written opinion of counsel to the Party desiring to make such disclosure, a copy of which opinion shall be delivered to the other Party, such disclosure is required by law or stock exchange rule or regulation and then only with as much prior written notice to the other Party as is practicable under the circumstances. The term "person" as used in this letter agreement shall be broadly interpreted to include the media and any individual, corporation, partnership, group, or other entity. Until the discussions contemplated by this letter agreement have been terminated, Green, on the one hand, and Global, on the other, shall not make any contract with any directors, officers, employees, advisors, customers, suppliers, lenders or subcontractors of the other Party (other than in the ordinary course of business) without the express written consent of such other Party. Each Party shall, as soon as possible after the date hereof, designate one or more persons to whom contact may be made. All communications regarding the proposed Transaction, requests for additional information, and discussions or questions regarding procedures, will be submitted or directed only to those the person so designated for such purpose. In the event that a Party or its Representatives are requested or required (by deposition, interrogatories, requests for information or documents in legal proceedings, subpoena, civil investigative demand or other similar process) to disclose any of the Evaluation Material, that Party shall provide the other Party with prompt written notice of any such request or requirement. In such event the other Party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this letter agreement. If, in the absence of a protective order or other remedy or the receipt of a waiver by the other Party, the Party which has received such request or is subject to such requirement and its Representatives are nonetheless, in the written opinion of counsel to such Party, a copy of which opinion shall be delivered to the other Party, legally compelled to disclose Evaluation Material to any tribunal or else stand liable for contempt or suffer other censure or penalty, it or its Representative may, without liability hereunder, disclose to such tribunal only that portion of the Evaluation Material which it has been advised by such counsel that it is legally required to disclose, provided that such Party, at the expense of the other Party, exercises commercially reasonable efforts to preserve the confidentiality of the Evaluation Material, including, without limitation, by cooperating with the other Party to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Evaluation Material by such tribunal. Such efforts shall be at the expense of the other Party if disclosure to such tribunal was not caused by or resulted from a previous disclosure by the Party (or its Representatives) that received such request or became subject to such requirement which was not permitted by this letter agreement. If either Party decides that it does not wish to participate in a Transaction, it will promptly inform the other Party of that decision. In that case, or at any time upon the request of either Party for any reason or for no reason, each Party will promptly deliver to the other Party all documents (and all copies thereof) furnished to it or its Representatives by or on behalf of the other Party pursuant hereto. In the event of such a decision or request, all other Evaluation Material prepared by the Parties or their Representatives shall be immediately destroyed and no copy thereof shall be retained (except as may be required by regulatory authorities to which you are subject). Notwithstanding the return or the destruction of the Evaluation Material, the Parties and their Representatives will continue to be bound by their obligations of confidentiality and other obligations hereunder for a period of three years after the date hereof. In consideration of the Evaluation Material being furnished, the Parties hereby agree that, for a period of two years from the date hereof, neither of them will, nor will any of their affiliates (including H-W), solicit to employ officers or other employees of the other, or any of the other's affiliates (including H-W), with whom it, its affiliates or its Representatives have had contact, or who were specifically identified to it or its Representatives during the period of its investigation of the Company, so long as they are employed by the other Party or any of the other Party's affiliates (including H-W), without obtaining the prior written consent of the other Party, provided that either Party or its affiliates may make general solicitations of employment not directed to the other Party, its affiliates or its employees. The parties understand and acknowledge that the stock of Green and Global is publicly-held. Green warrants to Global that it does not own, directly or indirectly, any of the capital stock of Global nor does it own any option, warrant or right to acquire any such stock. Global warrants to Green that it does not own, directly or indirectly, any of the capital stock of Green nor does it own any option, warrant or right to acquire any such stock. For a period of eighteen (18) months from the date hereof, Green agrees that it will not, directly or indirectly, by purchase or otherwise, through subsidiaries or associates, acquire, offer to acquire, or agree to acquire ownership of or warrants or options covering any common shares of Global without the prior written approval of Global. For a period of eighteen (18) months from the date hereof, Global agrees that it will not, directly or indirectly, by purchase or otherwise, through subsidiaries or associates, acquire, offer to acquire, or agree to acquire ownership of or warrants or options covering any common shares of Green without the prior written approval of Green. The Parties understand and acknowledge that no representation or warranty, express or implied, is made or shall be deemed to have been made as to the accuracy or completeness of any Evaluation Material furnished to them. The Parties agree that neither of them shall have any liability to the other or to any Representatives of the other relating to or resulting from the use of Evaluation Material except as may be set forth in a final definitive agreement. Only those representations or warranties which are made in a final definitive agreement regarding a Transaction, when, as and if executed and delivered by the parties, and subject to such limitations and restrictions as may be specified therein (the "definitive agreement"), will have any legal effect. In particular, but without prejudice to the generality of the foregoing, no representation or warranty is given or shall be deemed to have been given as to the achievement or reasonableness of any projections, management estimates, prospects or returns contained in the Evaluation Material. The Parties also understand and acknowledge that the Evaluation Material does not purport to contain all the information that may be required to evaluate a Transaction and that they should conduct their own independent analysis of the Green and H-W, as the case may be, and of the data contained in the Evaluation Material. Furthermore, the Parties understand and acknowledge that the definitive agreement will provide that neither of them have not relied on or been induced to enter into such definitive agreement by any representation, warranty, promise or assurance save as may be expressly set out in such definitive agreement and subject to such limitations and restrictions as may be specified therein, and, unless and to the extent provided to the contrary in a definitive agreement, that any information provided to either of them that is subject to this letter agreement which is inconsistent with any representation or warranty shall be deemed an exception thereto. The Parties agree that unless and until they have both executed and exchanged a final definitive agreement providing for a Transaction, neither of them will be under any legal obligation of any kind whatsoever with respect to a Transaction or otherwise by virtue of this letter agreement, except the matters specifically agreed to herein. The Parties further acknowledge and agree that each of them reserves the right, in its sole discretion, to reject any and all proposals made by the other, or the other's affiliates or Representatives with regard to a Transaction, and to terminate discussions and negotiations with the other at any time for any reason or no reason. It is understood and agreed that no failure or delay by either Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. It is understood and agreed that money damages would not be a sufficient remedy for any breach of this letter agreement by either Party or any of its Representatives and that each Party shall be entitled to equitable relief; including injunction and specific performance, as a remedy for any such breach and each Party hereby waives any requirement for the securing or posting of any bond in connection with such remedy. Such remedies shall not be deemed to be the exclusive remedies for a breach of this letter agreement but shall be in addition to all other remedies available at law or equity to the Parties and H- W. This letter agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflicts of law provisions thereof. Please confirm the agreement of Green with the foregoing by signing and returning one copy of this letter agreement to the undersigned, whereupon this letter agreement shall become a binding agreement between you and the Company as to the matters specifically agreed to herein. Very truly yours, Global Industrial Technologies, Inc. J.L. Jackson, Chairman of the Board, President and Chief Executive Officer Accepted and agreed as of the date first above written A.P. Green Industries, Inc. Paul F. Hummer, Chairman of the Board, President and Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----