EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
AMONG
RHI AG
HEAT ACQUISITION CORP.
AND
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
Dated: July 12, 1999
TABLE OF CONTENTS
ARTICLE I
THE OFFER
SECTION 1.01. The Offer................................................. 2
SECTION 1.02. Company Action............................................ 4
SECTION 1.03. Directors................................................. 5
ARTICLE II
THE MERGER
SECTION 2.01. The Merger................................................ 6
SECTION 2.02. Effective Time............................................ 7
SECTION 2.03. Effect of the Merger...................................... 7
SECTION 2.04. Certificate of Incorporation; By-Laws..................... 7
SECTION 2.05. Closing................................................... 7
SECTION 2.06. Directors and Officers.................................... 7
SECTION 2.07. Stockholders' Meeting..................................... 8
SECTION 2.08. Merger Without Meeting of Stockholders.................... 8
ARTICLE III
CONVERSION OF SECURITIES
SECTION 3.01. Effect on Capital Stock................................... 8
SECTION 3.02. Exchange of Certificates.................................. 10
SECTION 3.03. Dissenting Shares......................................... 11
SECTION 3.04. Lost, Stolen or Destroyed Certificates.................... 12
SECTION 3.05. Further Action............................................ 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Organization and Qualification; Subsidiaries.............. 12
SECTION 4.02. Certificate of Incorporation and By-Laws.................. 13
SECTION 4.03. Capitalization............................................ 13
SECTION 4.04. Authority Relative to This Agreement...................... 14
SECTION 4.05. Material Contracts; No Conflict, Required Filings
and Consents.............................................. 14
SECTION 4.06. Compliance, Permits....................................... 15
SECTION 4.07. Rights Agreement.......................................... 16
SECTION 4.08. SEC Filings, Financial Statements......................... 16
SECTION 4.09. Absence of Certain Changes or Events...................... 17
SECTION 4.10. No Undisclosed Liabilities................................ 18
SECTION 4.11. Absence of Litigation..................................... 18
SECTION 4.12. Employee Benefit Plans; Employment Agreements............. ▇▇
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▇▇▇▇▇▇▇ 4.13. Labor Matters............................................. 20
SECTION 4.14. Title to Property......................................... 21
SECTION 4.15. Taxes..................................................... 21
SECTION 4.16. Environmental Matters..................................... 23
SECTION 4.17. Brokers................................................... 24
SECTION 4.18. Intellectual Property..................................... 24
SECTION 4.19. Vote Required............................................. 25
SECTION 4.20. Takeover Statutes, Etc.................................... 25
SECTION 4.21. Opinion of Financial Advisor.............................. 25
SECTION 4.22. Year 2000 Compliance...................................... 25
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 5.01. Organization and Qualification............................ 25
SECTION 5.02. Authority Relative to this Agreement...................... 26
SECTION 5.03. No Conflict, Required Filings and Consents................ 26
SECTION 5.04. Financial Structure....................................... 27
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01. Conduct of Business by the Company Pending the Merger..... 27
SECTION 6.02. No Solicitation........................................... 30
SECTION 6.03. Information Supplied...................................... 32
SECTION 6.04. The Company Rights Agreement.............................. 32
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Filings, Other Actions; Notification...................... 32
SECTION 7.02. Access to Information; Confidentiality.................... 35
SECTION 7.03. Stock Options and Stock Units............................. 35
SECTION 7.04. Employee Benefits......................................... 36
SECTION 7.05. Indemnification........................................... 37
SECTION 7.06. Further Action............................................ 38
SECTION 7.07. Public Announcements...................................... 38
SECTION 7.08. De-listing................................................ 39
SECTION 7.09. Expenses.................................................. 39
SECTION 7.10. Financing................................................. 39
SECTION 7.11. Payment to the Company.................................... 39
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to Obligation of Each Party to Effect
the Merger................................................ 40
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination............................................... 40
SECTION 9.02. Effect of Termination..................................... 43
SECTION 9.03. Fees and Expenses......................................... 43
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Effectiveness of Representations, Warranties
and Agreements............................................ 45
SECTION 10.02. Notices................................................... 45
SECTION 10.03. Amendment................................................. 46
SECTION 10.04. Waiver.................................................... 46
SECTION 10.05. Headings.................................................. 46
SECTION 10.06. Severability.............................................. 46
SECTION 10.07. Entire Agreement.......................................... 47
SECTION 10.08. Assignment, Purchaser..................................... 47
SECTION 10.09. Parties in Interest....................................... 47
SECTION 10.10. Failure or Indulgence Not Waiver; Remedies Cumulative..... 47
SECTION 10.11. Governing Law............................................. 48
SECTION 10.12. Counterparts.............................................. 48
SECTION 10.13. Waiver of Jury Trial; Consent of Jurisdiction............. 48
SECTION 10.14. Certain Definitions....................................... 49
SECTION 10.15. Additional Definitions/Interpretative Matters............. 49
SECTION 10.16. Enforcement of Agreement.................................. 53
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 12, 1999 (the
"Agreement"), by and among RHI AG, a corporation organized under the laws of
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Austria ("Parent"), Heat Acquisition Corp., a Delaware corporation and a wholly-
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owned indirect subsidiary of Parent ("Purchaser"), and Global Industrial
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Technologies, Inc., a Delaware corporation (the "Company"). Certain capitalized
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terms used in this Agreement have the meanings ascribed to them in Section 10.14
hereof.
WHEREAS, the Boards of Directors of each of Parent, Purchaser and the
Company have approved and deem it advisable and in the best interests of their
respective companies and stockholders for Parent to enter into a business
combination with the Company upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance of such combination, it is proposed that Purchaser
make a cash tender offer (the "Offer") to acquire all of the outstanding Common
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Stock, par value $0.25 per share, of the Company (the "Company Common Stock") at
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a price of $13.00 per share, net to the seller in cash, upon the terms and
subject to the conditions set forth herein;
WHEREAS, prior to the approval of the business combination, the Company
Board approved the amendment to the Rights Agreement (as defined herein) to
permit the Offer, the Merger and the other transactions contemplated by this
Agreement (the "Transactions") to proceed without resulting in a distribution of
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Rights (as defined herein) under the Rights Agreement;
WHEREAS, the Boards of Directors of each of Parent and the Company have
approved this Agreement and the merger (the "Merger"), following the
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consummation of the Offer, of Purchaser with and into the Company in accordance
with the DGCL and upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company Board, by the affirmative vote of a majority of the
members of the Company Board, has (i) determined that this Agreement and the
Transactions are fair to and in the best interests of the Company and the
holders of the Shares (as defined herein), (ii) authorized, approved, adopted
and declared advisable this Agreement and the Transactions and (iii) resolved to
recommend that the stockholders of the Company accept the Offer and tender their
Shares to Purchaser pursuant to the Offer and approve and adopt this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer. (a) Provided that this Agreement shall not have
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been terminated in accordance with Article IX and none of the events set forth
in Annex A shall have occurred and be existing, as promptly as reasonably
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practicable (but in no event later than five business days from the public
announcement of the execution of this Agreement), Purchaser shall commence
(within the meaning of Rule 14d-2 promulgated under the Exchange Act) the Offer
to acquire all the outstanding Shares at a price of $13.00 per Share, net to the
seller in cash, subject to applicable withholding of taxes, without interest
(such price, or such higher price per Share as may be paid in the Offer, being
referred to herein as the "Offer Price"). Subject to (i) the satisfaction of
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the Minimum Condition and (ii) the satisfaction or waiver of the other
conditions set forth in Annex A, Purchaser shall consummate the Offer in
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accordance with its terms and promptly accept for payment and pay for Shares
validly tendered pursuant to the Offer and not withdrawn as soon as Purchaser is
legally permitted to do so under applicable law. The Offer shall be made by
means of an offer to purchase (the "Offer to Purchase") and shall be subject to
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the Minimum Condition and the other conditions set forth in Annex A hereto, and
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shall reflect, as appropriate, the other terms set forth in this Agreement.
Parent and Purchaser expressly reserve the right, in their sole discretion,
subject to compliance with the Exchange Act and the terms of this Agreement, to
waive any such condition and to make any other changes in the terms and
conditions of the Offer; provided, however, that Parent and Purchaser shall not
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(i) amend or waive the Minimum Condition, (ii) decrease the Offer Price, (iii)
decrease the maximum number of Shares to be purchased in the Offer, (iv) waive
or satisfy the Financing Condition (as defined herein) unless the representation
set forth in Section 5.04 shall be true and correct, or (v) amend any other term
or condition of the Offer in any manner or impose any term or condition that is
adverse to the holders of the Shares without the written consent of the Company
executed by the Chief Executive Officer of the Company stating that it was
authorized by the Company Board or a duly authorized committee thereof.
Notwithstanding any other provision hereof, Parent and Purchaser expressly
reserve the right (but will have no obligation to), in their sole discretion,
subject to compliance with the Exchange Act and the terms of this Agreement, to
waive the Financing Condition. Unless otherwise stated, all references in this
Agreement to Company Common Stock and Shares shall be deemed to include the
associated preferred stock purchase rights (the "Rights") issued pursuant to the
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Rights Agreement.
(b) Notwithstanding the foregoing, in the event that any condition to the
Offer set forth in Annex A shall not have been satisfied or waived at the
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scheduled or any extended expiration date of the Offer, Purchaser shall (unless
otherwise notified by the Company in writing), and Purchaser shall otherwise be
entitled to, extend the expiration date of the Offer in increments of up to 5
business days each (unless otherwise agreed by Parent and the Company) until the
earliest to occur of (x) the satisfaction or waiver of each such condition and
(y) the termination of this Agreement in accordance with its terms; provided,
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however, that Purchaser shall not be required to extend the Offer as provided in
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this sentence if any such condition (other than the
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Financing Condition) is incapable of being satisfied. In addition, without
limiting the foregoing, Purchaser may, without the consent of the Company,
extend the expiration date of the Offer (i) as required by applicable law, (ii)
pursuant to Section 7.10, and (iii) for up to 5 business days if, on the
scheduled or any extended expiration date of the Offer, the Shares validly
tendered pursuant to the Offer and not withdrawn represent more than 80% but
less than 90% of the outstanding Shares, notwithstanding that all the conditions
to the Offer set forth in Annex A have been satisfied, so long as Purchaser
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waives the further satisfaction of any of the conditions to the Offer (other
than the condition set forth in paragraph (a) of Annex A).
(c) As soon as practicable on the date the Offer is commenced (the "Offer
Commencement Date"), Parent and Purchaser shall file with the SEC a Tender Offer
Statement on Schedule 14D-1 (together with all amendments and supplements
thereto, the "Schedule 14D-1") with respect to the Offer. The Schedule 14D-1
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shall contain or shall incorporate by reference the Offer to Purchase and forms
of the related letter of transmittal and any related summary advertisement (the
Schedule 14D-1, the Offer to Purchase and such other documents, together with
all supplements and amendments thereto, being referred to herein collectively as
the "Offer Documents"). Parent and Purchaser shall mail the applicable Offer
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Documents to the stockholders of the Company as soon as practicable after filing
with the SEC. The Offer Documents shall comply in all material respects with the
provisions of applicable federal securities laws. Each of Parent and Purchaser,
on the one hand, and the Company, on the other hand, shall correct promptly any
information provided by it for use in the Offer Documents which shall have
become false or misleading in any material respect, and Parent and Purchaser
further agree to take all steps necessary to cause the Schedule 14D-1, as so
corrected, to be filed with the SEC and the other Offer Documents, as so
corrected, to be disseminated to holders of the Shares, in each case as and to
the extent required by applicable federal securities laws. Parent and Purchaser
shall give the Company and its counsel reasonable opportunity to review and
comment upon the Offer Documents prior to their being filed with, or sent to,
the SEC. Parent and Purchaser agree to provide the Company and its counsel any
comments Parent, Purchaser or their counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after the receipt of such
comments.
(d) Parent shall provide or cause to be provided to Purchaser on a timely
basis the funds necessary to purchase all the Shares that Purchaser becomes
obligated to purchase pursuant to the Offer.
(e) Purchaser shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to the Offer such amounts as be
required to be deducted and withheld with respect to the making of such payment
under the Code or under any provision of state, local or foreign tax law;
provided, however, that Purchaser shall promptly pay any amounts deducted and
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withheld hereunder to the applicable Governmental Entity, shall promptly file
all Tax Returns and reports required to be filed in respect of such deductions
and withholdings, and shall promptly provide to the Company proof of such
payment and a copy of all such Tax Returns and reports.
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SECTION 1.02 Company Action. (a) The Company hereby approves of and
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consents to the Offer and represents that the Company Board, at a meeting duly
called and held on July 12, 1999 by the affirmative vote of a majority of the
members of the Company Board, has duly (i) determined that the Transactions are
fair to and in the best interests of the Company and the holders of the Shares,
(ii) authorized, approved, adopted and declared advisable this Agreement and the
Transactions, (iii) resolved to recommend that the stockholders of the Company
accept the Offer and tender their Shares to Purchaser pursuant to the Offer and
approve and adopt this Agreement, (iv) took all other action necessary to render
the limitations on business combinations contained in Section 203 of the DGCL
(or any similar provision) and Article VI of the Company's Certificate of
Incorporation inapplicable to the Transactions and (v) amended the Rights
Agreement as described in Section 4.07. ▇.▇. ▇▇▇▇▇▇ & Co., Inc. and ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co., Inc., the Company's financial advisors, have each delivered to
the Company Board the opinion described in Section 4.21. The Company will use
its best efforts to obtain the consent of each of ▇.▇. ▇▇▇▇▇▇ & Co., Inc. and
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. to permit the inclusion of the opinions referred
to in Section 4.21 in the Schedule 14D-9 and the Information Statement. The
Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Company Board described in the immediately preceding
sentence, subject to Section 6.02(b).
(b) On the date that Parent and Purchaser file the Schedule 14D-1 with the
SEC, the Company shall file with the SEC a Solicitation/Recommendation Statement
on Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9") containing the recommendation of the Company Board described
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in Section 1.02(a) and shall disseminate the Schedule 14D-9 to the holders of
the Shares to the extent required by Rule 14d-9 promulgated under the Exchange
Act and any other applicable federal securities laws. The Schedule 14D-9 shall
comply in all material respects with the provisions of applicable federal
securities laws. Each of the Company, on the one hand, and Parent and Purchaser,
on the other hand, shall correct promptly any information provided by it for use
in the Schedule 14D-9 which shall have become false or misleading in any
material respect, and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9, as so corrected, to be filed with the SEC and
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. The Company shall give Parent,
Purchaser and their counsel reasonable opportunity to review and comment upon
the Schedule 14D-9 prior to it being filed with, or sent to, the SEC. The
Company agrees to provide Parent, Purchaser and their counsel any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) The Company shall cause its transfer agent to promptly furnish
Purchaser with mailing labels containing the names and addresses of all record
holders of the Shares and with security position listings of Shares held in
stock depositories, each as of a recent date, together with all other available
listings and computer files containing names, addresses and security position
listings of record holders and beneficial owners of Shares. The Company shall
furnish Purchaser with such additional information, including, without
limitation, updated listings and
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computer files of stockholders, mailing labels and security position listings,
and such other assistance as Parent, Purchaser or their agents may reasonably
request. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent and Purchaser
shall (i) hold in confidence the information contained in such labels, listings
and files, (ii) use such information only in connection with the Offer and the
Merger and (iii) if this Agreement is terminated in accordance with Article IX,
upon request of the Company, promptly deliver or cause to be delivered to the
Company (or destroy and certify to the Company the destruction of) all copies of
such information then in their possession or the possession of their affiliates,
agents or representatives.
SECTION 1.03 Directors. (a) Promptly upon the acceptance for payment by
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Parent or any of its subsidiaries of Shares pursuant to the Offer, the Company
will, subject to compliance with Section 14(f) of the Exchange Act, take all
actions necessary to cause persons designated by Purchaser to become directors
of the Company so that the total number of such persons equals the product of
the total number of directors on the Company Board (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Parent, Purchaser or any of
their affiliates (including for purposes of this Section 1.03, such Shares as
are accepted for payment pursuant to the Offer, but excluding Shares held by the
Company or any of its affiliates, which would not include Parent, Purchaser or
any of their respective affiliates) bears to the number of Shares then
outstanding; provided, however, that if the number of Shares purchased pursuant
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to the Offer equals or exceeds a majority of the outstanding Shares, the Board
percentage described above will in all events be a majority of the members of
the Company Board. Notwithstanding any other provision hereof, in the event
that Parent's designees are appointed or elected to the Company Board, until the
Effective Time (as defined in Section 2.02), the Company Board shall have at
least two directors who are directors on the date of this Agreement and who are
not executive officers of the Company or, if no such persons are willing or able
so to serve, who qualify as "independent directors" within the meaning of the
New York Stock Exchange ("NYSE") Listed Company Manual (the "Independent
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Directors"). At such times, the Company will use its best efforts to cause (i)
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each committee of the Company Board, (ii) if requested by Parent, the board of
directors of each of the Company's subsidiaries and (iii) if requested by
Parent, each committee of such subsidiaries' boards to include persons
designated by Parent constituting the same percentage of each such committee or
board as Parent's designees are of the Company Board. The Company shall, upon
request by Parent, promptly increase the size of the Company Board or secure the
resignations of such number of directors, or both, as is necessary to enable
Parent's designees to be elected or appointed to the Company Board pursuant to
this Section 1.03(a) and shall cause Parent's designees to be so elected or
appointed. The Company Board shall approve, and by approving the execution and
delivery of this Agreement by the Company, hereby does approve the taking of
action by stockholders of the Company, by written consent, to amend the By-Laws
of the Company as may be necessary or desirable to effect the provisions of this
Section 1.03.
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(b) Following the election or appointment of Parent's designees pursuant to
this Section 1.03, and prior to the Effective Time, the approval of a majority
of the Independent Directors shall be required to authorize (i) any amendment of
this Agreement or the Certificate of Incorporation or By-Laws of the Company,
(ii) any termination of this Agreement by the Company, (iii) any consent by the
Company to any extension of the time for performance of any of the obligations
or other acts of Parent or Purchaser or (iv) any waiver by the Company of
compliance with any of the covenants or conditions contained in this Agreement
for the benefit of the Company or any other rights of the Company under this
Agreement. Any person who is a director on the date of this Agreement, but who,
in order to carry out the provisions of this Section 1.03, is not a director at
the Effective Time, shall be entitled to receive all payments (other than
attendance fees) at the time such director resigns as he or she otherwise would
have been entitled to receive under policies or programs in effect on the date
hereof if he or she had been a director as of the Effective Time.
(c) Subject to applicable law, the Company shall promptly take all action
necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.03 and shall include in the Schedule 14D-9 mailed to stockholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if Parent has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.03. Parent and Purchaser shall furnish to
the Company in a timely manner so as to permit the Company to fulfill its
obligations under this Section 1.03 and be solely responsible for any
information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1. Subject to clause (b) of
this Section 1.03, the provisions of this Section 1.03 are in addition to and
shall not limit any rights that Parent, Purchaser or any of their respective
affiliates may have as a holder or beneficial owner of Shares as a matter of law
with respect to the election of directors or otherwise.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the conditions
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set forth in this Agreement, and in accordance with the DGCL, at the Effective
Time Purchaser shall be merged with and into the Company. As a result of the
Merger, (i) the separate corporate existence of Purchaser shall cease and the
Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation"), (ii) the Company shall succeed to and assume all the
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rights and obligations of Purchaser in accordance with the DGCL and (iii) 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 2.04.
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SECTION 2.02 Effective Time. As promptly as practicable after the
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satisfaction or waiver of the conditions set forth in Article VIII, the parties
hereto shall cause the Merger to be consummated by filing this Agreement or a
certificate of merger (in either case, the "Certificate of Merger") with the
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Secretary of State of the State of Delaware in such form as required by, and
executed in accordance with, the relevant provisions of the DGCL. The parties
hereto shall make all other filings, recordings or publications required by the
DGCL in connection with the Merger. The Merger shall become effective at such
time as the Certificate of Merger is duly filed with such Secretary of State, or
at such later time as Parent and the Independent Directors of the Company shall
agree and specify in the Certificate of Merger (the time the Merger becomes
effective being the "Effective Time").
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SECTION 2.03 Effect of the Merger. At the Effective Time, the effect of
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the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, immunities, powers and franchises of the Company and Purchaser shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Purchaser shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 2.04 Certificate of Incorporation; By-Laws. At the Effective
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Time and without any further action on the part of the Company and Purchaser,
the Certificate of Incorporation of the Company in effect at the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation, until
thereafter amended as provided by the DGCL and such Certificate of
Incorporation, except that Article IV of the Company's Certificate of
Incorporation shall be amended to read in its entirety as follows: "The
aggregate number of shares which the Corporation shall have the authority to
issue is 1,000 shares of Common Stock, par value $0.01 per share.". The By-Laws
of the Company shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by the DGCL, the Certificate of Incorporation of
the Surviving Corporation and such By-Laws.
SECTION 2.05 Closing. Unless this Agreement has been terminated and the
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Transactions have been abandoned pursuant to Article IX, and subject to the
satisfaction or waiver of the conditions set forth in Article VIII, the closing
of the Merger (the "Closing") will take place at 10:00 AM (EST) as promptly as
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practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article VIII, at the offices of ▇▇▇▇▇,
Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless
another date, time or place is agreed to in writing by the parties hereto.
SECTION 2.06 Directors and Officers. The directors of Purchaser
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immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be
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the initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
SECTION 2.07 Stockholders' Meeting.
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(a) If required by applicable law in order to consummate the Merger,
the Company, acting through the Company Board, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Special Meeting") as promptly as practicable
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following the acceptance for payment and purchase of Shares by Purchaser
pursuant to the Offer for the purpose of considering and taking action upon the
approval of the Merger and the approval and adoption of this Agreement; and
(ii) prepare and file with the SEC a preliminary Information
Statement relating to the Merger and this Agreement, use its best efforts to
obtain and furnish the information required to be included by the SEC in the
Information Statement and, after consultation with Parent, respond promptly to
any comments made by the SEC with respect to the preliminary Information
Statement and cause a definitive Information Statement to be mailed to its
stockholders, provided that the Information Statement shall not be filed, and no
amendment or supplement to the Information Statement shall be made, by the
Company without consultation with Parent and its counsel.
(b) Parent shall provide the Company with the information concerning
Parent and Purchaser required to be included in the Information Statement.
Parent shall vote, or cause to be voted, all of the Shares then beneficially
owned by it, Purchaser or any of its other subsidiaries or affiliates in favor
of the approval of the Merger and the approval and adoption of this Agreement.
SECTION 2.08 Merger Without Meeting of Stockholders. Notwithstanding
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Section 2.07 hereof, in the event that Parent, Purchaser or any other subsidiary
of Parent shall acquire at least 90 percent of the outstanding Shares pursuant
to the Offer or otherwise, the parties hereto shall, subject to Article VIII,
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
ARTICLE III
CONVERSION OF SECURITIES
SECTION 3.01 Effect on Capital Stock. At the Effective Time, by virtue
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of the Merger and without any action on the part of Parent, Purchaser, the
Company or the holders of any of the following securities:
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(a) Cancellation. Each Share held in the treasury of the Company and each
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Share owned by Parent, Purchaser or any direct or indirect wholly-owned
subsidiary of the Company or Parent immediately prior to the Effective Time
(other than Shares in trust accounts, managed accounts and the like that are
beneficially owned by third parties) ("Ineligible Shares") shall, by virtue of
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the Merger and without any action on the part of the holder thereof, cease to be
outstanding, be canceled and retired without payment of any consideration
therefor and cease to exist.
(b) Conversion of Securities. Each Share issued and outstanding
------------------------
immediately prior to the Effective Time, other than Dissenting Shares and
Ineligible Shares, shall be converted into the right to receive the Offer Price
(the "Merger Consideration"), upon surrender of the certificate formerly
--------------------
representing such Share in the manner provided in Section 3.02. All such
Shares, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of such certificate in accordance with Section 3.02.
Notwithstanding the foregoing, if between the date of this Agreement and the
Effective Time the outstanding Shares shall have been changed into a different
number of shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, the Merger Consideration will be correspondingly adjusted on a per-
share basis to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
(c) Stock Options and Stock Units. All options to purchase Company Common
-----------------------------
Stock granted under the Stock Option Plans to directors, officers or employees
of the Company (in any such case, an "Option") and all stock units ("Stock
------ -----
Units") issued under the Global Industrial Technologies, Inc. Deferred
-----
Compensation Plan (the "Deferred Compensation Plan") then outstanding shall be
--------------------------
subject to the provisions of Section 7.03.
(d) Capital Stock of Purchaser. Each share of Purchaser Common Stock
--------------------------
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and non-
assessable share of common stock, par value $.01 per share, of the Surviving
Corporation. Each stock certificate of Purchaser evidencing ownership of any
such shares shall continue to evidence ownership of such shares of capital stock
of the Surviving Corporation.
(e) All Other Capital Stock of the Company. All other capital stock of the
--------------------------------------
Company and any options, warrants or other rights to purchase capital stock of
the Company (other than Options and Stock Units) shall be canceled and retired
and shall cease to exist, and no Merger Consideration or other consideration
shall be issued or delivered in exchange therefor.
-9-
SECTION 3.02 Exchange of Certificates.
------------------------
(a) Paying Agent. Prior to the Effective Time, Parent shall designate
------------
a bank or trust company to act as agent for holders of the Shares in connection
with the Merger (the "Paying Agent") to receive in trust the funds to which
------------
holders of the Shares shall become entitled pursuant to Section 3.01(b). At the
Effective Time, Parent shall take all steps necessary to deposit or cause to be
deposited with the Paying Agent such funds for timely payment thereunder. Such
funds shall be invested by the Paying Agent as directed by Parent pending
payment thereof by the Paying Agent to holders of the Shares. Any net profit
resulting from, or interest or income produced by, such investments shall be the
sole and exclusive property of Parent and shall be payable at the direction of
Parent, and no part of such earnings shall accrue to the benefit of holders of
the Shares. No interest will accrue or be paid on any cash payable upon the
surrender of a Certificate or Certificates which immediately before the
Effective Time represented outstanding Shares.
(b) Exchange Procedures. Promptly after the Effective Time, Parent
-------------------
shall cause the Paying Agent to mail to each holder of record of a certificate
or certificates, which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates"), whose Shares were converted pursuant to
------------
Section 3.01(b) into the right to receive the Merger Consideration, (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall, subject to the immediately following sentence
and Section 3.02(e), be entitled to receive in exchange therefor the Merger
Consideration for each Share formerly represented by such Certificate and the
Certificate so surrendered shall forthwith be canceled. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition to
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
Parent that such tax either has been paid or is not applicable. Until
surrendered as contemplated by this Section 3.02(b), each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 3.02.
(c) Transfer Books; No Further Ownership Rights in Company Common
-------------------------------------------------------------
Stock. At the Effective Time, the stock transfer books of the Company shall be
-----
closed and thereafter there shall be no further registration of transfers of
Shares on the records of the Company. From and after the Effective Time, the
holders of Certificates evidencing ownership of the Shares outstanding
immediately prior to the Effective Time shall cease to have any rights
-10-
with respect to such Shares, except as otherwise provided for herein or by
applicable law. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article III.
(d) Termination of Fund; No Liability. At any time following six
---------------------------------
months after the Effective Time, Parent shall be entitled to require the Paying
Agent to deliver to it any funds (including any interest received with respect
thereto) which had been made available to the Paying Agent and which have not
been disbursed to holders of Certificates, and thereafter such holders shall be
entitled to look to Parent (subject to abandoned property, escheat or other
similar laws) only as general creditors thereof with respect to the payment of
any Merger Consideration that may be payable upon surrender of any Certificates
such stockholder holds, as determined pursuant to this Agreement, without any
interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving
Corporation or the Paying Agent shall be liable to any holder of a Certificate
for Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(e) Withholding Rights. Parent, the Surviving Corporation and the
------------------
Paying Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as Parent, the Surviving Corporation or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under
the Code or any provision of state, local, provincial or foreign tax law. To
the extent that amounts are so withheld, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
Shares in respect of which such deduction and withholding was made.
SECTION 3.03. Dissenting Shares. Notwithstanding any provision of this
-----------------
Agreement to the contrary, if and to the extent required by the DGCL, Dissenting
Shares shall not be converted into the right to receive the Merger
Consideration, and holders of such Dissenting Shares shall be entitled to
receive payment of the appraised value of such Dissenting Shares in accordance
with the provisions of Section 262 of the DGCL unless and until such holders
fail to perfect or effectively withdraw or otherwise lose their rights to
appraisal and payment under the DGCL. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or otherwise loses such right,
such Dissenting Shares shall thereupon be treated as if they had been converted
into and become exchangeable for, at the Effective Time, the right to receive
the Merger Consideration, without any interest thereon. Notwithstanding
anything to the contrary contained in this Section 3.03, if (i) the Merger is
rescinded or abandoned or (ii) the stockholders of the Company revoke the
authority to effect the Merger, then the right of any stockholder to be paid the
fair value of such stockholder's Dissenting Shares pursuant to Section 262 of
the DGCL shall cease. The Company shall give Parent prompt notice of any
demands received by the Company for appraisals of Dissenting Shares and the
opportunity to direct all negotiations and proceedings with respect to appraisal
rights under the DGCL. The Company shall not, except with the prior written
consent of Parent, make any payment with respect to any demands for appraisals
or offer to settle or settle any such demands.
-11-
SECTION 3.04. Lost, Stolen or Destroyed Certificates. If any Certificates
--------------------------------------
shall have been lost, stolen or destroyed, the Paying Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such Merger Consideration as may
be required pursuant to Section 3.01(b); provided, however, that Parent may, in
-------- -------
its discretion and as a condition precedent to the issuance and delivery
thereof, require the owner of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Parent or the Paying Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
SECTION 3.05. Further Action. If, at any time after the Effective Time,
--------------
any such further action is necessary or desirable to carry out the purposes of
this Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
the Company and Purchaser, the officers and directors of the Company and
Purchaser are fully authorized in the name of their respective corporations or
otherwise to take, and will take, all such lawful and necessary action.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule, the Company hereby
represents and warrants to Parent and Purchaser that:
SECTION 4.01. Organization and Qualification; Subsidiaries. Each of the
--------------------------------------------
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the requisite corporate power and authority and is in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders ("Approvals") necessary to own, lease and
---------
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority and
Approvals is not reasonably likely to have a Company Material Adverse Effect.
Each of the Company and its subsidiaries is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that is not reasonably likely to have a Company Material Adverse
Effect. A true and complete list of all of the Company's subsidiaries, together
with the jurisdiction of incorporation of each subsidiary and the percentage of
each subsidiary's outstanding capital stock owned by the Company or another
subsidiary, is set forth in Section 4.01 of the Company Disclosure Schedule.
The Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for, any
equity or similar interest in, any corporation, partnership, joint venture or
other business association or entity.
-12-
SECTION 4.02. Certificate of Incorporation and By-Laws. The Company has
----------------------------------------
heretofore furnished or made available to Parent a complete and correct copy of
its Certificate of Incorporation and By-Laws, as amended to date, and a complete
and correct copy of the equivalent organizational documents of each of A.P.
Green Industries, Inc., Corrosion Technology International, Inc., ▇▇▇▇▇▇▇▇-
▇▇▇▇▇▇ Refractories Company, Inc. and Shred-Tech Capital Corp. The Certificate
of Incorporation, By-Laws and equivalent organizational documents of each of the
Company's subsidiaries are in full force and effect. The Company is not in
violation of any of the provisions of its Certificate of Incorporation or By-
Laws. None of the Company's subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or By-Laws or equivalent
organizational documents.
SECTION 4.03. Capitalization. (a) The authorized capital stock of the
--------------
Company consists of 100,000,000 shares of Company Common Stock and 10,000,000
shares of preferred stock, par value $0.25 per share. As of July 1, 1999 (the
"Measurement Date"), (i) 22,412,961 shares of Company Common Stock were issued
and outstanding (including 651,297 Shares held under the Company's 401(k) Plan),
all of which have been duly authorized and validly issued and are fully paid and
non-assessable, (ii) no shares of preferred stock were issued or outstanding or
had been designated, (iii) 4,950,736 Shares were held in the treasury of the
Company, (iv) 2,276,535 Shares were reserved for future issuance pursuant to
outstanding Options granted under the 1992 Stock Compensation Plan and the Stock
Option Plan for Non-Employee Directors and 120,760 Stock Units were outstanding
under the Deferred Compensation Plan, and (v) 222,956 shares of preferred stock
were reserved for issuance pursuant to the Rights Agreement. Except as
expressly contemplated hereunder, no change in such capitalization, including
without limitation, any issuance of Shares or grants of Options or Stock Units,
has occurred between January 1, 1998 and the date hereof other than any change
associated with the exercise of vested Options. Except as set forth in this
Section 4.03 or Section 4.12 hereof and except for the Rights, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of the Company or
any of its subsidiaries or obligating the Company or any of its subsidiaries to
issue or sell any shares of capital stock of, or other equity interests in, the
Company or any of its subsidiaries. All shares subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non-assessable. There are no obligations,
contingent or otherwise, of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or the capital stock of any subsidiary or to provide funds to or make
any investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity other than guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock of each of the Company's subsidiaries are
duly authorized, validly issued, fully paid and non-assessable and are owned by
the Company or another subsidiary free and clear of all security interests,
liens, claims, pledges, agreements, limitations in the Company's voting rights,
charges or other encumbrances of any nature whatsoever. The Company has
delivered or made available to Parent a complete, true and correct copy of the
Rights Agreement and the forms of option agreements for Options. Section
-13-
4.03 of the Company Disclosure Schedule contains a list of existing Options,
including the number of option shares, exercise price, vesting terms and grant
date thereof.
(b) There are no voting trusts or other agreements or understandings to
which the Company or any of its subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the subsidiaries. None of
the Company or its subsidiaries is required to redeem, repurchase or otherwise
acquire shares of capital stock of the Company or any of its subsidiaries,
respectively, as a result of the Transactions.
SECTION 4.04. Authority Relative to This Agreement. (a) The Company has
------------------------------------
all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action on the part of the Company, and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the Transactions (other than the
approval and adoption of this Agreement by stockholders as contemplated by
Section 2.07). This Agreement has been duly and validly executed and delivered
by the Company and, assuming the due authorization, execution and delivery of
this Agreement by Parent and Purchaser, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(b) The Company Board, at a meeting duly called and held on July 12, 1999
by the affirmative vote of a majority of the members of the Company Board, has
duly (i) determined that this Agreement and the Transactions are fair to and in
the best interests of the Company and the holders of the Shares, (ii)
authorized, approved, adopted and declared advisable this Agreement and the
Transactions and (iii) recommended that the stockholders of the Company accept
the Offer and tender their Shares to Purchaser pursuant to the Offer and approve
and adopt this Agreement, and as of the date hereof none of the aforesaid
actions by the Company Board has been amended, rescinded or modified.
SECTION 4.05. Material Contracts; No Conflict, Required Filings and
-----------------------------------------------------
Consents. (a) Subject to such exceptions that are not reasonably likely to have
--------
a Company Material Adverse Effect or otherwise prevent or materially delay the
Company from performing its obligations under this Agreement or the consummation
of the Transactions, all of the Material Contracts are valid, binding and in
full force and effect, and neither the Company nor any of its subsidiaries is in
default of any of its obligations under any of the Material Contracts. As of
the date hereof, no contracting party to any Material Contract has notified
(whether orally or in writing) the Company or any of its subsidiaries of its
intention to terminate, cancel or modify such Material Contract or otherwise to
reduce or change its activity thereunder so as to materially adversely
-14-
affect the benefits derived, or currently expected to be derived, by the Company
or any of its subsidiaries.
(b) Except as set forth in Section 4.05(c) hereof, the execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement and the consummation of the Transactions by the Company will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws or
equivalent organizational documents of the Company or any of its subsidiaries,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective assets or properties is bound or affected or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or impair the Company's or
any of its subsidiaries' rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any Material Contract, or result in the
creation of a lien or encumbrance on any of the assets or properties of the
Company or any of its subsidiaries pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its or any of their
respective assets or properties is bound or affected except, in the case of
clauses (ii) and (iii), for such conflicts, breaches, violations, defaults or
other occurrences that are not reasonably likely to have a Company Material
Adverse Effect or otherwise prevent or materially delay the Company from
performing its obligations under this Agreement or the consummation of the
Transactions.
(c) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement and the consummation of the Transactions by
the Company will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Entity, except (i) for
applicable requirements, if any, of the Exchange Act, state securities laws
("Blue Sky Laws"), state anti-takeover laws, the pre-merger notification
---------------
requirements of the HSR Act, the laws regulating competition, antitrust,
investment or exchange controls in Germany and Mexico, and the filing of the
Certificate of Merger or other documents as required by the DGCL and (ii) where
the failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or materially delay
consummation of the Transactions, or otherwise prevent or materially delay the
Company from performing its obligations under this Agreement, or is not
otherwise reasonably likely to have a Company Material Adverse Effect.
SECTION 4.06. Compliance, Permits. (a) Except for such conflicts,
-------------------
defaults and violations as are not reasonably likely to have a Company Material
Adverse Effect or otherwise prevent or materially delay the Company from
performing its obligations under this Agreement or the consummation of the
Transactions, since December 31, 1998, neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective assets or properties
is bound or affected or (ii) any note, bond, mortgage,
-15-
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its or any of their
respective assets or properties is bound or affected.
(b) The Company and its subsidiaries hold all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
Governmental Entities necessary for the operation of the business of the Company
and its subsidiaries taken as a whole (collectively, the "Company Permits"),
---------------
except to the extent that the failure to have any such Company Permit is not
reasonably likely to have a Company Material Adverse Effect or otherwise prevent
or materially delay the Company from performing its obligations under this
Agreement or the consummation of the Transactions. The Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply is not reasonably likely to have a Company
Material Adverse Effect or otherwise prevent or materially delay the Company
from performing its obligations under this Agreement or the consummation of the
Transactions.
SECTION 4.07. Rights Agreement. The Company has taken all necessary action
----------------
so that neither the execution, delivery and performance of this Agreement nor
the consummation of the Transactions shall (i) cause Parent, Purchaser or any of
their respective affiliates to become an Acquiring Person or (ii) result in the
occurrence of a Stock Acquisition Date (as such terms are defined in the Rights
Agreement). The Company Board has approved, and the Company and The Bank of New
York, as Rights Agent, have entered into, an amendment to the Rights Agreement a
copy of which has been delivered to Parent (the "Rights Amendment"). Pursuant
----------------
to the Rights Amendment, among other things, neither the execution, delivery and
performance of this Agreement nor the consummation of the Transactions will (x)
result in the distribution of separate certificates representing Rights, (y)
cause the Rights to become exercisable or (z) result in the occurrence of a
Distribution Date (as defined in the Rights Agreement).
SECTION 4.08. SEC Filings, Financial Statements. (a) The Company has
---------------------------------
filed all forms, reports and documents required to be filed by it with the SEC
since January 1, 1998. The Company has delivered or made available to Parent, in
the form filed with the SEC, the Company SEC Reports. The Company SEC Reports
(including any financial statements or schedules included therein) filed prior
to the Measurement Date ("Company Filed SEC Documents") and all reports or other
filings permitted or required to be filed with the SEC thereafter (i) were
prepared or will be prepared, as the case may be, in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) did not or will not, as the case may be, at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the Company's subsidiaries is required to file any
forms, reports or other documents with the SEC.
-16-
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each of the
consolidated balance sheets (including the related notes and schedules) included
or incorporated in such financial statements fairly presents in all material
respects the consolidated financial position of the Company and its subsidiaries
as at the respective dates thereof and each of the consolidated statements of
income and of cash flows (including the related notes and schedules) included or
incorporated in such financial statements fairly presents in all material
respects the consolidated results of their operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments and such statements
do not contain notes thereto.
(c) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any amendments or modifications, which have not yet
been filed with the SEC but which are required to be filed, to agreements,
documents or other instruments which previously had been filed by the Company
with the SEC pursuant to the Securities Act or the Exchange Act.
SECTION 4.09. Absence of Certain Changes or Events. Except as set forth in
------------------------------------
the Company Filed SEC Documents or as expressly contemplated by this Agreement,
since December 31, 1998 and prior to the date hereof, the Company and its
subsidiaries have conducted their business in the ordinary course and there has
not occurred: (i) any amendments or changes to the Certificate of
Incorporation, By-Laws or equivalent organizational documents of the Company or
any of its subsidiaries; (ii) any change, condition or event that is reasonably
likely to have a Company Material Adverse Effect or otherwise prevent or
materially delay the Company from performing its obligations under this
Agreement or the consummation of the Transactions; (iii) any declaration,
setting aside or payment of any dividend or other distribution with respect to
the capital stock of the Company; (iv) any change by the Company in its
accounting methods, principles or practices; (v) any revaluation by the Company
or any of its subsidiaries of any of its assets, including, without limitation,
writing down the value of capitalized software or inventory or writing off notes
or accounts receivable other than in the ordinary course of business; (vi) any
sale of a material amount of assets of the Company or any of its subsidiaries,
except for the sale of inventory in the ordinary course of business; (vii) any
split, combination or reclassification of any of the Company's capital stock or
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for any shares of the Company's
capital stock; (viii) any granting by the Company or any of its subsidiaries to
any director, executive officer or other employee of the Company of any material
increase in compensation (except for increases to employees who are not
directors or officers in the ordinary course of business); (ix) any granting by
the Company or any of its subsidiaries to any such director, executive officer
or employee of any severance or termination pay, except as was required under
any employment, severance or termination agreements in effect as of the date of
the most recent financial statements included in the Company Filed SEC
Documents; or (x)
-17-
any entry by the Company or any of its subsidiaries into any employment,
severance or termination agreement with any such director, executive officer or
employee.
SECTION 4.10. No Undisclosed Liabilities. (a) Except as is disclosed in
--------------------------
the Company Filed SEC Documents, neither the Company nor any of its subsidiaries
has any liabilities (absolute, accrued, contingent or otherwise) of the type
that are required to be disclosed in financial statements, including the notes
thereto, prepared in accordance with GAAP, that are, in the aggregate, material
to the business, operations or financial condition of the Company and its
subsidiaries taken as a whole, except liabilities (i) adequately provided for or
referred to in the Company's balance sheet and the related notes thereto as of
December 31, 1998 included in the Company's Form 10-K for the year ended
December 31, 1998 (which is part of the Company SEC Reports) or (ii) incurred
since December 31, 1998 (A) in the ordinary course of business and consistent
with past practice, or (B) that are not reasonably likely to have a Company
Material Adverse Effect.
(b) Set forth in Section 4.10(b) of the Company Disclosure Schedule is a
true and complete listing of all of the Company's and its subsidiaries'
indebtedness for borrowed money outstanding and other obligations required to be
reflected as indebtedness on a consolidated balance sheet of the Company
("Indebtedness"), and capitalized leases required to be reflected on a
--------------
consolidated balance sheet of the Company, in each case as of the date
immediately preceding the date hereof and in each case setting forth the
principal amount thereof. No payment defaults have occurred and are continuing
under the agreements and instruments governing the terms of such obligations or
any agreements and instruments governing the terms of any Indebtedness arising
after the date hereof and no other events have occurred which, with the giving
of notice, the passage of time, or both could constitute an event of default
thereunder.
SECTION 4.11. Absence of Litigation. Except as set forth in the Company
---------------------
Filed SEC Documents, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries, or any properties or rights of the
Company or any of its subsidiaries, before any arbitrator or Governmental Entity
that is reasonably likely to have a Company Material Adverse Effect.
SECTION 4.12. Employee Benefit Plans; Employment Agreements. (a) All
---------------------------------------------
benefit and compensation plans, contracts, policies or arrangements covering
current or former employees of the Company and its subsidiaries (the
"Employees") and current or former directors of the Company, including, but not
---------
limited to, "employee benefit plans" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
deferred compensation, stock option, stock purchase, stock appreciation rights,
stock based, incentive and bonus plans (the "Employee Plans"), other than
--------------
Employee Plans maintained outside of the United States primarily for the benefit
of Employees working outside of the United States, are listed on Section 4.12(a)
of the Company Disclosure Schedule. True and complete copies of all Employee
Plans listed on Section 4.12(a) of the Company Disclosure Schedule, including,
but not limited to, any trust instruments and insurance contracts forming a
-18-
part of any Employee Plans, and all amendments thereto, together with (if
applicable) the most recent favorable determination letter from the Internal
Revenue Service, the three most recent Form 5500 Annual Return/Reports and the
most recent summary plan description and subsequent summaries of material
modifications, have been provided or made available to Parent.
(b) All Employee Plans, other than "multiemployer plans" within the
meaning of Section 3(37) of ERISA, covering Employees and maintained in the
United States (the "Plans") are in substantial compliance with their terms and
-----
all applicable laws. Each Plan which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA ("Pension Plan") and which is
------------
intended to be qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code"), has received a favorable determination letter
----
from the Internal Revenue Service with respect to "TRA" (as defined in Section 1
of Rev. Proc. 93-39), and the Company is not aware of any circumstances likely
to result in revocation of any such favorable determination letter. There is no
material pending or, to the knowledge of the Company threatened, litigation or
governmental investigation relating to the Plans. Neither the Company nor any
of its subsidiaries has engaged in a transaction with respect to any Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
could subject the Company or any subsidiary to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA in an amount which
would be material.
(c) No Plan (i) is a "plan maintained by more than one employer", within
the meaning of Section 413(c) of the Code, (ii) provides benefits to any
individual who is not a current or former Employee or director of the Company,
or the dependent or beneficiary of such current or former Employee or director,
(iii) is, or during the preceding 36 months was, funded through a "welfare
benefit fund", within the meaning of Section 419(e) of the Code, (iv) provides,
or during the preceding 36 months provided, benefits through (A) a "voluntary
employees' beneficiary association", within the meaning of Section 501(c)(9) of
the Code or (B) except as set forth on Section 4.12(a) of the Company Disclosure
Schedule, a trust forming part of a plan providing for the payment of
"supplemental unemployment compensation benefits", within the meaning of Section
501(c)(17) of the Code.
(d) No liability under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by the Company or any of its subsidiaries with respect
to any ongoing, frozen or terminated "single-employer plan", within the meaning
of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of
them, or the single-employer plan of any entity which is considered one employer
with the Company under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA Affiliate"). The Company and the subsidiaries have not incurred and do
----------------
not expect to incur any withdrawal liability with respect to a multiemployer
plan under Subtitle E of Title IV of ERISA (regardless of whether based on
contributions of an ERISA Affiliate). No notice of a "reportable event", within
the meaning of Section 4043 of ERISA for which the 30-day reporting requirement
has not been waived or extended, other than pursuant to PBGC Reg.
-19-
Section 4043.66, has been required to be filed for any Pension Plan or by any
ERISA Affiliate since January 1, 1998.
(e) All contributions required to be made under the terms of any Plan have
been timely made or have been reflected on the audited financial statements
included in the Company Filed SEC Documents. Neither any Pension Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA and neither the Company nor any ERISA Affiliate has
an outstanding funding waiver. Neither the Company nor any of its subsidiaries
has provided, or is required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Code nor has any lien in favor of any such Pension Plan arisen under Section
412(n) of the Code or Section 302(f) of ERISA.
(f) Under each Pension Plan which is a single-employer plan, as of the
last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Plan's most recent actuarial valuation),
did not exceed the then current fair market value of the assets of such Plan,
and there has been no material change in the financial condition of such Plan
since the last day of the most recent plan year. The withdrawal liability of the
Company and its subsidiaries under each Plan which is a multiemployer plan to
which the Company, any of its subsidiaries or an ERISA Affiliate has contributed
during the preceding 36 months, determined as if a "complete withdrawal", within
the meaning of Section 4203 of ERISA, had occurred as of the date hereof, does
not exceed $100,000.
(g) Neither the Company nor any of its subsidiaries has any obligations
for retiree health and life benefits under any Plan, except as set forth on
Section 4.12(g) of the Company Disclosure Schedule. The Company or the
subsidiaries may amend or terminate any such Plan at any time without incurring
any liability thereunder.
(h) The consummation of the transactions contemplated by this Agreement
will not (x) entitle any employees of the Company or any of the subsidiaries to
severance pay, or (y) accelerate the time of payment or vesting or trigger any
payment or funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any of the Employee Plans.
(i) All Employee Plans maintained outside of the United States (which are
listed in Section 4.12(i) of the Company Disclosure Schedule) comply in all
material respects with applicable local law and there is no material litigation
or governmental investigation pending, or to the knowledge of the Company,
threatened against or relating to any such Plan. The Company and its
subsidiaries have no material unfunded liabilities with respect to any such
Employee Plan.
-20-
SECTION 4.13. Labor Matters. There are no labor disputes pending or, to
-------------
the best knowledge of the Company, threatened, between the Company or any of its
subsidiaries and any of their respective employees, which disputes are
reasonably likely to have a Company Material Adverse Effect. Neither the
Company nor any of its subsidiaries is involved in or, to the best knowledge of
the Company, threatened with any labor dispute, grievance or litigation relating
to labor, safety or discrimination matters involving any persons employed by the
Company or any of its subsidiaries, including, without limitation, charges of
unfair labor practices or discrimination complaints which is reasonably likely
to have a Company Material Adverse Effect. Neither the Company nor any of its
subsidiaries is presently or has been in the past a party to, or bound by, any
collective bargaining agreement or union contract with respect to any persons
employed by the Company or any of its subsidiaries and no collective bargaining
agreement is being negotiated by the Company or any of its subsidiaries. Neither
the Company nor any of its subsidiaries has any knowledge of any strikes,
slowdowns, work stoppages or lockouts, or threats thereof, by or with respect to
any employees of the Company or any of its subsidiaries, and there have been no
such strikes, slowdowns, work stoppages or lockouts within the past three years.
SECTION 4.14. Title to Property. The Company and each of its subsidiaries
-----------------
have good, marketable and defensible title to all of their properties and
assets, free and clear of all liens, charges and encumbrances, except liens for
Taxes not yet due and payable and such liens or other imperfections of title, if
any, as do not detract from the value of or interfere with the present use of
the property affected thereby or which is not reasonably likely to have a
Company Material Adverse Effect.
SECTION 4.15. Taxes.
-----
(a) Except as is not reasonably likely to have a Company Material Adverse
Effect: The Company and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which the Company or
any of its subsidiaries is or has been a member, have timely filed all United
States federal income Tax Returns and all other material Tax Returns required to
be filed by them or any of them (taking into account applicable extensions), and
have timely paid and discharged all Taxes shown to be due, and all other
material Taxes due except with respect to Taxes which the Company is maintaining
reserves in accordance with GAAP in its financial statements included in the
Company Filed SEC Documents that are adequate for their payment. All federal
income Tax Returns and all other Tax Returns filed by the Company and each of
its subsidiaries with respect to Taxes were true, complete and correct as of the
date on which they were filed or as subsequently amended to the date hereof.
Neither the IRS nor any other taxing authority or agency is now asserting or, to
the best knowledge of the Company, threatening to assert against the Company or
any of its subsidiaries any deficiency or claim for additional Taxes. There are
no requests for information from the IRS or any other taxing authority or agency
currently outstanding. No Tax Return of either the Company or any of its
subsidiaries is currently being audited by any taxing authority nor are any
proceedings (whether administrative or judicial) currently being conducted with
respect to any issues relating to Taxes.
-21-
No Tax claim has become a lien on any assets of the Company or any subsidiary
thereof (ignoring for this purpose liens for Taxes not yet due and payable).
Neither the Company nor any of its subsidiaries is required to include in income
(i) any items in respect of any change in accounting principles or any material
deferred intercompany transactions or (ii) any installment sale gain, where the
inclusion in income would result in a Tax liability in excess of the reserves
therefor.
(b) (i) Neither the Company nor any of its subsidiaries is a party to any
agreement, contract or arrangement, or maintains or sponsors any Employee Plans,
that will result, separately or in the aggregate, in the payment of (A) any
"excess parachute payment" within the meaning of Section 280G(b)(1) of the Code,
determined without regard to Section 280G(b)(4) of the Code, and no Employee
Plan provides for the reimbursement of excise taxes under Section 4999 of the
Code or any income taxes under the Code or (B) amounts that will be disallowed
as a deduction under Section 162(m) of the Code; (ii) neither the Company nor
any of its subsidiaries has been subject to any accumulated earnings tax or
personal holding company tax; (iii) none of the Company's foreign subsidiaries
has any investments in United States property within the meaning of Section 956
of the Code or, for taxable years beginning after September 30, 1994 and before
January 1, 1998, has "excess passive assets" as defined in former Section
956A(c) of the Code; (iv) neither the Company nor any of its subsidiaries is
obligated under any agreement with respect to industrial development bonds or
other obligations with respect to which the excludability from gross income of
the holder for United States federal or state income tax purposes could be
affected by the Transactions; (v) neither the Company nor any of its
subsidiaries has entered into any deferred intercompany transaction within the
meaning of section 1.1502-13 of the United States Treasury Regulations as to
which items of deferred gain or loss have not been restored; (vi) no excess loss
account within the meaning of section 1.1502-19 of the United States Treasury
Regulations exists with respect to the stock of any of the Company's
subsidiaries; (vii) no extension of time within which to file any material Tax
Return that relates to the Company or any of its subsidiaries has been requested
which Tax Return has not since been filed; (viii) there are no waivers or
extensions of any applicable statute of limitations for the assessment or
collection of Taxes with respect to any material Tax Return that relates to the
Company or any of its subsidiaries which remain in effect; (ix) there are no tax
rulings, closing agreements or changes of accounting method relating to the
Company or any of its subsidiaries which would affect their liability for Taxes
for any period after the Effective Time; (x) all of the Tax Returns referred to
in Section 4.16(a) have been examined by the IRS or the appropriate state, local
or foreign taxing authorities, which examinations have been concluded with a
final determination and payment of adjustments, if any, or the period for
assessment of the Taxes in respect of which such Tax Returns were required to be
filed has expired (unless the period for assessment is still open pursuant to
the normal statute of limitations), and no extensions or waivers of the statute
of limitations with respect to any Tax Returns have been executed by the Company
or any of its subsidiaries and are currently in effect; (xi) neither the Company
nor any of its subsidiaries has filed a consent under Section 341(f) of the Code
or any comparable provision of state revenue statutes; (xii) no property of the
Company or any of its subsidiaries is "tax-exempt use property" within the
meaning of Section 168(h) of
-22-
the Code; (xiii) neither the Company nor any of its subsidiaries is a party to
any lease made pursuant to Section 168(f) of the Code; (xiv) to the extent
applicable, the Company and its subsidiaries have properly and in a timely
manner documented their material transfer pricing methodology in compliance with
Section 482 and related provisions of the Code; and (xv) neither the Company nor
any of its subsidiaries was a member of a consolidated, combined, unitary or
similar group of corporations other than such a group of which the Company is
the common parent corporation.
(c) Neither the Company nor any of its subsidiaries is a party to any
agreement or arrangement (written or oral) providing for the allocation or
sharing of Taxes.
SECTION 4.16. Environmental Matters. Except as is not reasonably likely to
---------------------
have a Company Material Adverse Effect:
(a) All of the operations of the Company and each of its subsidiaries and
their respective assets, businesses and real property, including any of its
operations at or from any real property presently or formerly owned, leased or
operated by the Company or any of its subsidiaries (collectively, the "Real
----
Property"), comply with all applicable Environmental Laws.
--------
(b) None of the assets of the Company or any of its subsidiaries, or any of
the Real Property, are contaminated with any Hazardous Substances in, on, over,
under or at it, in concentrations which would violate any applicable
Environmental Laws or would result in the imposition of Environmental
Liabilities or obligations on the Company or any of its subsidiaries under any
applicable Environmental Laws, including any obligations for the investigation,
corrective action, remediation or monitoring of Hazardous Substances in, on,
over, under or at the Real Property.
(c) None of the Real Property is listed or proposed for listing on the
National Priorities List pursuant to CERCLA or any similar inventory of sites
requiring investigation or remediation maintained by any state or locality.
Neither the Company nor any of its subsidiaries has received any written notice
or oral claim from any Governmental Entity or third party alleging any
Environmental Liabilities.
(d) Each of the Company and its subsidiaries has all the permits, licenses,
authorizations and approvals necessary for the present conduct of their
businesses and for the present operations on, in or at the Real Property which
are required under applicable Environmental Laws (the "Environmental Permits")
---------------------
and they are in compliance with the terms and conditions of all such
Environmental Permits.
(e) Neither the Company nor any of its subsidiaries, nor any other person
or entity, has engaged in, authorized or consented to any operations or
activities upon any of the Real Property for the purpose of or in any way
involving the handling, manufacture, treatment, processing, storage, use,
generation, release, discharge, spilling, emission, dumping or disposal of any
-23-
Hazardous Substances at, on, under or from the Real Property, except in
compliance with all applicable Environmental Laws.
(f) There are no conditions existing at any Real Property or with respect
to any of the assets of the Company or its subsidiaries that require, or which
with the giving of notice or the passage of time or both would require, remedial
or corrective action pursuant to the Environmental Laws or have resulted in the
imposition of Environmental Liabilities on the Company or any of its
subsidiaries.
(g) The Company and its subsidiaries have provided or made available to
Parent all environmental reports, assessments, audits, studies, investigations,
data and Environmental Permits in their custody, possession or control
concerning the Real Property or the assets of the Company or any of its
subsidiaries.
(h) Neither the Company nor any of its subsidiaries has received any claims
for Environmental Liabilities arising out of any indemnity agreement or sale
agreement.
SECTION 4.17. Brokers. No broker, finder or investment banker (other than
-------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. and ▇.▇. ▇▇▇▇▇▇ & Co., Inc.) is entitled to any
brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company. The
Company has delivered to Parent a true, correct and complete copy of the
engagement letters and any other agreements or arrangements between the Company
and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. and ▇.▇. ▇▇▇▇▇▇ & Co., Inc. with respect to
the Transactions. The Company or, if the Effective Time occurs, the Surviving
Corporation, will pay all amounts owed pursuant to the foregoing arrangements.
SECTION 4.18. Intellectual Property. (a) Schedule 4.18 of the Company
---------------------
Disclosure Schedule sets forth a list of (i) all material patents, patent
applications, registered trademarks, trademark applications, registered
copyrights and copyright applications that are owned by the Company or its
subsidiaries (collectively, "Company Intellectual Property") and (ii) all
-----------------------------
agreements under which the Company or its subsidiaries are licensed or otherwise
permitted, or license or otherwise permit a third party, to use patents,
trademarks and copyrights that are material to the business of the Company and
its subsidiaries.
(b) (i) The Company and its subsidiaries directly or indirectly own, or
are licensed or otherwise possess valid rights to use, all Company Intellectual
Property, with such exceptions as have not had and is not reasonably likely to
have a Company Material Adverse Effect, (ii) no person is challenging or, to the
knowledge of the Company, infringing or otherwise violating the Company
Intellectual Property, except in each case for challenges, infringements or
violations which are not reasonably likely to have a Company Material Adverse
Effect, and (iii) neither the Company nor any of its subsidiaries is, or will be
as a result of the execution and delivery of this Agreement or the performance
of its obligations hereunder, infringing or otherwise violating any patents,
registered trademarks or registered copyrights that are owned by any third party
-24-
(collectively, "Third Party Intellectual Property Rights"), except in each case
----------------------------------------
for infringements or violations which are not reasonably likely to have a
Company Material Adverse Effect.
SECTION 4.19. Vote Required. The affirmative vote of the holders of at
-------------
least a majority of the outstanding shares of Company Common Stock is the only
vote of the holders of any class or series of the Company's capital stock
necessary to approve the Merger.
SECTION 4.20. Takeover Statutes, Etc. (a) No "fair price," "moratorium,"
----------------------
"control share acquisition" or other similar anti-takeover statute or regulation
(including, without limitation, Section 203 of the DGCL) (each, a "Takeover
--------
Statute") is applicable to the Company, the Shares, this Agreement or the
-------
Transactions.
(b) The Company has taken such actions as are required to render Article
VI of the Company's Certificate of Incorporation inapplicable to the
Transactions.
SECTION 4.21. Opinion of Financial Advisor. The Company Board has been
----------------------------
advised by its financial advisors that in their opinion, as of the date hereof,
the consideration to be received by holders of the Shares in the Offer and the
Merger, taken together, is fair from a financial point of view to such holders.
SECTION 4.22. Year 2000 Compliance. The Company has conducted a review of
--------------------
each item of software, hardware and firmware ("System") used in the conduct of
------
its business and operations to determine whether such System is Year 2000
Compliant, and is currently implementing a compliance plan that is intended to
result in each System being Year 2000 Compliant no later than January 1, 2000.
Each action to have been taken prior to the date hereof under such plan has been
substantially completed and as of the date hereof the Company has no knowledge
indicating that any action to be taken under such plan after the date hereof
will be materially delayed (and in any event not beyond January 1, 2000) or will
fail to accomplish its purpose under the plan. Achieving Year 2000 Compliance
is not reasonably likely to have a Company Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Except as set forth in the Parent Disclosure Schedule, Parent and Purchaser
each hereby represent and warrant to the Company that:
SECTION 5.01. Organization and Qualification. Each of Parent and Purchaser
------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority and is in possession of all Approvals necessary to own,
lease and operate the properties it purports to own, operate or lease and to
carry on its business as it is now being conducted, except where the
-25-
failure to be so organized, existing and in good standing or to have such power,
authority and Approvals is not reasonably likely to have a Parent Material
Adverse Effect. Each of Parent and Purchaser is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that is not reasonably likely to have a Parent Material Adverse
Effect.
SECTION 5.02. Authority Relative to this Agreement. Each of Parent and
------------------------------------
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Parent and
Purchaser and the consummation by Parent and Purchaser of the Transactions have
been duly and validly authorized by all necessary corporate action on the part
of Parent and Purchaser, and no other corporate proceedings on the part of
Parent or Purchaser are necessary to authorize this Agreement or to consummate
the Transactions. This Agreement has been duly and validly executed and
delivered by Parent and Purchaser and, assuming the due authorization, execution
and delivery of this Agreement by the Company, constitutes a legal, valid and
binding obligation of Parent and Purchaser, enforceable against Parent and
Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
SECTION 5.03. No Conflict, Required Filings and Consents. (a) Except as
------------------------------------------
set forth in Section 5.03(b) hereof, the execution and delivery of this
Agreement by Parent and Purchaser do not, and the performance of this Agreement
and the consummation of the Transactions by Parent and Purchaser will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws or
comparable constituent documents of Parent or Purchaser, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Parent or Purchaser or by which their respective assets or properties are bound
or affected or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or impair Parent's or Purchaser's rights or alter the rights or obligations of
any third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any contracts material to the business of
Parent and Purchaser taken as a whole, or result in the creation of a lien or
encumbrance on any of the assets or properties of Parent or Purchaser pursuant
to any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or Purchaser
is a party or by which Parent or Purchaser or any of their respective assets or
properties are bound or affected except, in the case of clauses (ii) and (iii),
for such conflicts, breaches, violations, defaults or other occurrences that is
not reasonably likely to have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and Purchaser do
not, and the performance of this Agreement and the consummation of the
Transactions by Parent and Purchaser will not, require any consent, approval,
authorization or permit of, or filing with or
-26-
notification to, any Governmental Entity, except (i) for applicable
requirements, if any, of the Securities Act, the Exchange Act, Blue Sky Laws,
state anti-takeover laws, the pre-merger notification requirements of the HSR
Act, the laws regulating competition, antitrust, investment or exchange controls
in Germany and Mexico, and the filing of the Certificate of Merger or other
documents as required by the DGCL and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, is not reasonably likely to have a Parent Material Adverse
Effect.
SECTION 5.04. Financial Structure. Parent and Purchaser hereby represent
-------------------
that all outstanding Indebtedness of the Company existing at the Effective Time
shall be repaid immediately after the Effective Time to the extent required by
the terms thereof and that no less than $300 million of the total financing
currently expected to be approximately $635 million (based on the assumption
that total Indebtedness less cash ("Net Debt") at the time Shares are to be
--------
purchased in the Offer is not greater than $240 million) to be incurred in
connection with the Transactions (the "Financing") will consist of equity
contributed to North American Refractories Company or loans from Parent,
provided that such loans from Parent are subordinate to the claims of all
creditors of the Surviving Corporation and no such loans will be payable or
guaranteed by the Company and its subsidiaries.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01. Conduct of Business by the Company Pending the Merger.
-----------------------------------------------------
During the period from the date of this Agreement and continuing until the
earliest to occur of (i) the termination of this Agreement, (ii) the time the
designees of Parent constitute a majority of the Company Board or (iii) the
Effective Time, the Company covenants and agrees that, unless Parent shall
otherwise approve in writing (which approval shall not be unreasonably withheld)
and unless otherwise expressly contemplated hereunder, the Company shall conduct
its business and shall cause the businesses of its subsidiaries to be conducted,
and the Company and its subsidiaries shall not take any action except, in the
ordinary course of business and in a manner consistent with past practice and in
compliance with applicable laws; and the Company shall use reasonable commercial
efforts to preserve substantially intact the business organization of the
Company and its subsidiaries, to keep available the services of the present
officers, employees and consultants of the Company and its subsidiaries, and to
preserve the present relationships of the Company and its subsidiaries with
customers, suppliers and other persons with which the Company or any of its
subsidiaries has significant business relations; and the Company shall take such
actions prior to the Effective Time as are reasonably requested by Parent to
inform employees of the Company of the existence of certain caps on health
benefits currently in effect. By way of amplification and not limitation,
neither the Company nor any of its subsidiaries shall, during the period from
the date of this Agreement and continuing until the earliest to occur of (i) the
termination of this Agreement, (ii) the time the designees of Parent constitute
a majority of the Company Board or (iii) the Effective Time, directly or
indirectly do, or propose to do, any of
-27-
the following without the prior written approval of Parent, unless expressly
contemplated hereunder or disclosed in the Company Disclosure Schedule:
(a) amend or otherwise change the Company's or any of its subsidiaries'
Certificates of Incorporation, By-Laws or other equivalent organizational
documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize the issuance,
sale, pledge, disposition or encumbrance of, any shares of capital stock of any
class, or any options, warrants, convertible securities or other rights of any
kind to acquire any shares of capital stock, or any other ownership interest
(including, without limitation, any phantom interest) of the Company or any of
its subsidiaries (except for (i) the issuance of Shares pursuant to the exercise
of Options that are outstanding on the date hereof, (ii) the issuance of Stock
Units representing no more than 200,000 Shares in the aggregate pursuant to the
Deferred Compensation Plan, and (iii) the sale of existing ownership interests
in any of its subsidiaries (A) having a book value as of the date of the
Company's most recent financial statements included in the Company Filed SEC
Documents of less than $2.0 million individually and $6.0 million in the
aggregate and (B) the consideration received therefor is less than $2.0 million
individually and, together with the proceeds of sales of assets permitted under
Section 6.01(c), $6.0 million in the aggregate);
(c) sell, pledge, dispose of or encumber any assets of the Company or any
of its subsidiaries (except for (i) sales of assets in the ordinary course of
business and in a manner consistent with past practice and not exceeding $2.0
million individually and, together with the amount of consideration (or book
value, whichever is greater) received in sales of ownership interests permitted
under Section 6.01(b), $6.0 million in the aggregate, (ii) sales of inventory in
the ordinary course of business consistent with past practice, and (iii)
dispositions of obsolete or worthless assets);
(d) amend or change the period (or permit any acceleration, amendment or
change) of exercisability of Options granted under the Stock Option Plans or
authorize cash payments in exchange for any such Options;
(e) (i) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, except that a wholly-owned subsidiary of the Company
may declare and pay a dividend to its parent, (ii) split, combine or reclassify
any of its outstanding capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (iii) amend the terms of, repurchase, redeem
or otherwise acquire, or permit any subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of its subsidiaries,
or propose to do any of the foregoing, except in connection with the repurchase
of Options and Stock Units as contemplated by Section 7.03;
(f) sell, transfer, license, sublicense or otherwise dispose of any
material Company Intellectual Property or amend or modify any existing
agreements with respect to any material
-28-
Company Intellectual Property or Third Party Intellectual Property Rights (other
than in the ordinary course of business consistent with past practice);
(g) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) incur any indebtedness for borrowed money, issue any debt
securities, assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any person, or make any loans or advances
except in the ordinary course of business consistent with past practice; (iii)
enter into any Material Contract other than in the ordinary course of business;
(iv) authorize or make any capital expenditures or purchases of fixed assets
that are not currently budgeted or, if not budgeted, that in the aggregate
exceed $2,000,000; (v) terminate any Material Contract or amend any of its
material terms (other than amendments to existing credit arrangements designed
to remedy or prevent defaults thereunder and within the parameters described in
Schedule 6.01 of the Company Disclosure Schedule); or (vi) enter into or amend
any contract, agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 6.01(g);
(h) except for contracts or amendments that serve to reduce the cost to the
Company of severance arrangements, increase the compensation payable or to
become payable to its employees, officers or directors (except for increases to
employees who are not directors or officers of the Company in the ordinary
course of business in connection with normal periodic performance reviews) or
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any employee, director or officer of the Company or
any of its subsidiaries (other than employees hired by the Company or any of its
subsidiaries after the date hereof in the ordinary course of business and on
terms consistent with those provided to employees of the Company or any such
subsidiary generally) or establish, adopt, enter into, terminate or amend any
Employee Plan (except as may otherwise be required by applicable law);
(i) (i) take any action, other than as required by GAAP, to change
accounting methods, principles or practices (including, without limitation,
procedures with respect to revenue recognition, capitalization of development
costs, payments of accounts payable and collection of accounts receivable) or
(ii) revalue any assets of the Company or any of its subsidiaries, including
without limitation, any write down of the value of capitalized software or
inventory or writing off of notes or accounts receivable other than in the
ordinary course of business;
(j) make any Tax election inconsistent with past practice or settle or
compromise any Tax liability, except to the extent the amount of any such
settlement or compromise has been reserved for on the consolidated financial
statements contained in the Company SEC Reports or is not reasonably likely to
have a Company Material Adverse Effect;
(k) pay, discharge, settle or satisfy any material lawsuits, claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business and consistent with past
-29-
practice of liabilities reflected or reserved against in the financial
statements of the Company included in the Company Filed SEC Documents or
incurred in the ordinary course of business and consistent with past practice;
(l) permit any material increase in the number of employees employed by the
Company or any of its subsidiaries on the date hereof or hire any executive
officer or employee whose total annual compensation is more than $100,000;
(m) authorize, recommend, propose, adopt or announce an intention to adopt
a plan of complete or partial liquidation, dissolution, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its subsidiaries; or
(n) take or fail to take, or agree in writing or otherwise to take, or fail
to take any of the actions described in Section 6.01(a) through (l) above.
SECTION 6.02. No Solicitation. (a) The Company will not, and will not
---------------
permit or cause any of its subsidiaries or any of the officers and directors of
it or its subsidiaries to, and shall direct and use its best efforts to cause
its and its subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
subsidiaries) not to, directly or indirectly, initiate, solicit or encourage
(including without limitation by way of furnishing information), or take any
other action designed or reasonably likely to facilitate or otherwise facilitate
any inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, tender offer, consolidation, liquidation or
dissolution or similar transaction involving, or any purchase of 15% or more of
the consolidated assets (based on the Company's December 31, 1998 audited
consolidated balance sheet) or outstanding shares of capital stock of, the
Company or any of its subsidiaries or any other transaction that is intended or
reasonably could be expected to prevent or materially interfere with the
completion of the Transactions (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal"). The Company will not, and will not
--------------------
permit or cause any of its subsidiaries or any of the officers and directors of
it or its subsidiaries to, and shall direct and use its best efforts to cause
its and its subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
subsidiaries) not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, whether made
before or after the date of this Agreement, or otherwise facilitate any effort
or attempt to make or implement an Acquisition Proposal; provided, however, that
-------- -------
nothing contained in this Agreement shall prevent the Company or the Company
Board (acting directly or through its employees, agents or representatives) from
(i) complying with Rules 14d-9 and 14e-2 promulgated under the Exchange Act with
regard to an Acquisition Proposal or disclosure obligations under state law or
(ii) at any time prior to the earlier to occur of (x) payment for shares of
Company Common Stock pursuant to the Offer or (y) the approval of the Merger by
the requisite vote of the stockholders of the Company, (A) providing information
in response to a request therefor by a person who has made an unsolicited bona
fide written Acquisition Proposal
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(so long as such proposal did not result from a breach of this Section 6.02) if
the Company Board receives from the person so requesting such information an
executed confidentiality agreement with customary terms (which shall not
preclude the making of an Acquisition Proposal); or (B) engaging in any
negotiations or discussions with any person who has made an unsolicited bona
fide written Acquisition Proposal, if and only to the extent that, (x) in each
such case referred to in clause (A) or (B) above, the Company Board determines
in good faith, after consultation with outside legal counsel, that such action
is necessary in order for its directors to comply with their fiduciary duties
under applicable law and (y) in the case referred to in clause (B) above, the
Company Board determines in good faith (based on the advice of its financial
advisor) that such Acquisition Proposal would, if consummated, result in a more
favorable transaction than the Transactions; provided, however, that the Company
-------- -------
may not, except as permitted by Section 6.02(b) below, withdraw or modify, or
propose to withdraw or modify, its position with respect to the Offer or the
Merger or approve or recommend, or propose to approve or recommend, any
Acquisition Proposal, or enter into any agreement with respect to any
Acquisition Proposal (other than a confidentiality agreement); it being
understood and agreed that making the determination in clause (y) above (the
"Section 6.02 Determination") and disclosing such determination shall not
--------------------------
constitute a withdrawal or modification, proposed or otherwise, or an approval
or recommendation, proposed or otherwise, in breach of this proviso or result in
a breach of paragraph (e) to Annex A. The Company will immediately cease and
cause to be terminated any existing activities, discussions or negotiations
(whether by it or an agent or representative of the Company) with any parties
conducted heretofore with respect to any of the foregoing. The Company agrees
that it will take the necessary steps to inform promptly the individuals or
entities referred to in the first sentence hereof of the obligations undertaken
in this Section 6.02. The Company will notify Parent immediately (but in any
event within 24 hours) if any such inquiries, proposals or offers are received
by, any such information requested from, or any such discussions or negotiations
are sought to be initiated or continued with any of its representatives. The
Company also will promptly request each person that has heretofore executed a
confidentiality agreement in connection with its consideration of an Acquisition
Proposal to return or destroy (and certify the destruction of) all confidential
information heretofore furnished to such person by or on behalf of it or any of
its subsidiaries and the Company will use its reasonable efforts consistent with
its fiduciary obligations to enforce the provisions of such confidentiality
agreements, including without limitation, any standstill provisions.
Notwithstanding anything to the contrary in this Section 6.02(a), no breach of
this Section 6.02(a) will result from actions taken by the director elected at
the 1999 Annual Meeting of Stockholders of the Company provided such actions
were not caused, authorized, directed, solicited or encouraged by the Company or
any of its subsidiaries or any of their respective officers and other directors.
(b) So long as the Agreement is in effect, neither the Company Board nor
any committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation of the Offer, this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal by a
third party or (iii) terminate this Agreement pursuant to Section 9.01(f) in
order to
-31-
enter into a definitive agreement with respect to any third-party Acquisition
Proposal unless the Company Board shall have (A) determined in good faith, after
consultation with outside counsel, that such action is necessary in order for
its directors to comply with their fiduciary duties under applicable law and (B)
determined in good faith, after receiving the advice of its financial advisor
that an Acquisition Proposal is a Superior Proposal; provided, however, that
-------- -------
nothing herein shall prevent the Company or the Company Board from complying
with its disclosure obligations under any federal or state law.
SECTION 6.03 Information Supplied. Each of the Company and Parent
--------------------
agrees, as to itself and its subsidiaries, that (i) none of the information
supplied or to be supplied by it or its subsidiaries for inclusion or
incorporation by reference in the Offer Documents and the Schedule 14D-9 will,
at the time of distribution thereof, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (ii) the Information Statement,
if any, will, at the date of mailing to stockholders of the Company, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
6.04. The Company Rights Agreement. The Company Board will take all
----------------------------
further action (in addition to that referred to in Section 4.07) reasonably
requested in writing by Parent (including redeeming the Rights immediately prior
to the Effective Time or amending the Rights Agreement) in order to render the
Rights inapplicable to any of the Transactions. Except as provided above with
respect to the Transactions, the Company Board will not (a) amend the Rights
Agreement or (b) take any action with respect to, or make any determination
under, the Rights Agreement, including a redemption of the Rights or any action
to facilitate an Acquisition Proposal, provided, however, that this Section 6.04
-------- -------
will not prevent the Company Board from taking such actions as it determines are
necessary to prevent the occurrence of a Distribution Date following the
commencement of a tender or exchange offer unless doing so is intended or could
reasonably be expected to facilitate an Acquisition Proposal.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Filings, Other Actions; Notification.
------------------------------------
(a) Parent and the Company shall promptly prepare and file as soon as
practicable after the date hereof all documents required to be filed (i) with
the United States Federal Trade Commission and the Department of Justice in
order to comply with the HSR Act and (ii) any other documents which are required
under any non-United States laws regulating competition, antitrust, investment
or exchange controls. Parent and the Company shall promptly furnish all
materials thereafter required in connection therewith.
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(b) Upon the terms and subject to the provisions hereof, each of the
Company and Parent shall cooperate with each other and use (and shall cause its
subsidiaries to use) all reasonable efforts (i) to cause to be done all things
necessary, proper or advisable on its part under this Agreement and applicable
laws to consummate and make effective the Transactions as soon as practicable,
including preparing and filing as promptly as practicable all documentation to
effect all necessary notices, reports and other filings and (ii) to obtain as
promptly as practicable all consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in connection with, as a result of or in order to
consummate any of the Transactions. Subject to applicable laws relating to the
exchange of information, Parent and the Company shall have the right to review
in advance, and to the extent reasonably practicable each will consult the other
on, all the information relating to the other and its subsidiaries, that appear
in any filing made with, or written materials submitted to, any third party or
any Governmental Entity in connection with the Transactions; provided, however,
-------- -------
that with respect to documents that one party reasonably believes should not be
disclosed to the other party, such party shall instead furnish those documents
to counsel for the other party pursuant to a mutually satisfactory
confidentiality agreement. In exercising the foregoing right, each of the
Company and Parent shall act reasonably and as promptly as reasonably
practicable.
(c) Parent and the Company shall promptly respond to any request for
additional information pursuant to the HSR Act. Upon the terms and subject to
the provisions hereof, Parent and the Company shall each use all reasonable
efforts to resolve objections, if any, as may be asserted by any Governmental
Entity with respect to the Transactions under any antitrust or trade or
regulatory laws or regulations of any Governmental Entity, which, in the case of
Parent, will include if necessary to resolve such objections, offering, and
agreeing to enter into necessary agreements, to sell, license or otherwise
dispose of, or hold separate or otherwise divest itself of, all or any portion
of Parent's businesses or assets or any portion of the businesses or assets of
any of its subsidiaries or any portion of the businesses or assets of the
Company or the Company's subsidiaries. Notwithstanding anything to the contrary
in this Agreement, (i) Parent shall not be required to sell or otherwise dispose
of, or hold separate or otherwise divest itself of, businesses or assets located
outside of the United States, Canada and Germany and (ii) with respect to
businesses or assets located in the United States or Canada, Parent shall not be
required to sell or otherwise dispose of, or hold separate or otherwise divest
itself of, businesses or assets that accounted for, individually or in the
aggregate, more than $86.0 million (the "Revenue Amount") of revenues of the
--------------
Company or Parent, as the case may be, for the year ended December 31, 1998, as
set forth in the respective audited financial statements for the period then
ending for Parent or the Company. Parent shall reasonably consult with the
Company and, subject to being permitted by the Governmental Entity to do so, the
Company shall have the right to attend and participate in any telephone calls or
meetings that Parent or Purchaser have with any person with respect to the
foregoing. The Parent shall use (and cause its subsidiaries to use) all
reasonable efforts to obtain all necessary approvals from the German Federal
Cartel Office (the "FCO") in order to consummate the Transactions, including
---
without limitation, if necessary to resolve any objections raised by the FCO,
offering, and agreeing to enter into necessary agreements, to sell,
-33-
license, divest or otherwise dispose of, or hold separate or otherwise divest
itself of, all or any portion of the businesses or assets of the Company or the
Company's subsidiaries located in Germany (the "German Assets"). Any such
-------------
divestitures required by the FCO shall not be included in the calculation of the
Revenue Amount. The provisions of Section 7.01(a) - (d) constitute the sole
covenants of the parties with respect to the subject matter hereof and no other
provision of this Agreement will be interpreted as obligating any party to take
or fail to take any action in respect of any matter referred to in Section
7.01(a) - (d) that is not required by Section 7.01(a) - (d).
(d) Upon the terms and subject to the provisions hereof, Parent and the
Company each shall use all reasonable efforts (and cause their respective
subsidiaries) to lift or rescind or appeal any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
Transactions and use their best efforts to defend any action, suit or proceeding
seeking to enjoin, prevent or delay the consummation of the transactions
contemplated hereby or seeking material damages.
(e) Each of the Company and Parent shall keep the other apprised of the
status of matters relating to completion of the Transactions, including promptly
furnishing the other with copies of notices or other communications received by
Parent or the Company, as the case may be, or any of their respective
subsidiaries, from any third party or any Governmental Entity with respect to
the Transactions.
(f) In connection with and without limiting the foregoing, the Company and
Parent will, and Parent will cause Purchaser to, (i) take all action necessary
to ensure that no state anti-takeover statute or similar statute or regulation
is or becomes applicable to the Transactions, and (ii) if any state anti-
takeover statute or similar statute or regulation becomes applicable thereto,
take all action necessary to ensure that the Transactions may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise to
minimize the effect of such statute or regulation thereon.
(g) The Company will use all reasonable efforts to give prompt notice to
Purchaser of (i) any notice of, or other communication relating to, any
environmental matter, a default or event that, with notice or lapse of time or
both, would become a default, received by an executive officer of the Company
concerning the Company or any of its subsidiaries subsequent to the date of this
Agreement and prior to the Effective Time, under any Material Contract to which
the Company or any of its subsidiaries is a party or is subject; (ii) any
changes or developments relating to any material legal action pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries existing as of the date hereof; (iii) any new material legal
actions pending or, to the knowledge of the General Counsel of the Company,
threatened against the Company or any of its subsidiaries since the date hereof;
and (iv) any general denial of insurance coverage or contractual indemnity for
asbestos claims. Each of the Company and Purchaser shall give prompt notice to
the other party of any notice or other
-34-
communication from any third party alleging that the consent of such third party
is or may be required in connection with the Transactions.
(h) The Parent and Purchaser will each use all reasonable efforts to give
prompt notice to the Company of any general denial of insurance coverage or
contractual indemnity for asbestos claims.
SECTION 7.02 Access to Information; Confidentiality. The Company shall
--------------------------------------
(and shall cause each of its subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of Parent reasonable access,
consistent with applicable law, at all reasonable times during the period prior
to the Appointment Date, to all its properties, books, contracts, commitments
and records, and, during such period, the Company shall (and shall cause each of
its subsidiaries to) furnish, consistent with applicable law, promptly to Parent
all information concerning the Company's business, properties and personnel as
Parent may reasonably request and shall make available, consistent with
applicable law, to Parent the appropriate individuals (including attorneys,
accountants and other professionals) for discussion of the Company's business,
properties and personnel as Parent may reasonably request. After the
Appointment Date, the Company shall provide Parent and such persons as Parent
shall designate with all such information, at any time as Parent shall request.
Any such information obtained by Parent or Purchaser shall be governed by the
terms of the Confidentiality Agreement. Notwithstanding the foregoing, (i) no
review, inquiry or investigation by Parent shall affect any representations or
warranties of the Company contained herein or the conditions to the obligations
of Parent or Purchaser and (ii) nothing contained in this Agreement shall
require the Company to permit any inspection, or to disclose any information,
that in the reasonable judgment of the Company would result in the disclosure of
any trade secrets of it or third parties or violate any of its obligations with
respect to confidentiality if the Company shall have used reasonable efforts to
obtain the consent of such third party to such inspection or disclosure. All
requests for information made pursuant to this Section shall be directed to an
executive officer of the Company or such person as may be designated by any of
its officers, as the case may be.
SECTION 7.03 Stock Options and Stock Units. (a) Immediately prior to the
-----------------------------
Effective Time, each outstanding Option under the Stock Option Plans shall be
canceled and only entitle the holder thereof to receive for each Share with
respect to such Option an amount in cash equal to the difference between (i) the
Merger Consideration and (ii) the price per share exercise price under such
Option. Prior to the Effective Time, the Company shall take all necessary
action with respect to such cancellation, including obtaining any necessary
consents from the holders of such Options.
(b) Immediately prior to the Effective Time, the Company will amend the
Deferred Compensation Plan to provide (i) that each Stock Unit credited to
accounts of participants will be canceled and the accounts of each such
participant will be credited for each Stock Unit an amount in cash equal to the
Merger Consideration and (ii) that thereafter such accounts will be credited
with a fixed rate of interests. Prior to the Effective Time, the Company shall
take all
-35-
necessary action with respect to such cancellation, including obtaining any
necessary consents from the holders of such Stock Units.
SECTION 7.04 Employee Benefits. (a) Parent shall maintain for a period
-----------------
of nine months immediately following the Effective Time, employee benefit plans,
programs, policies and arrangements for employees of the Company and its
subsidiaries (other than employees covered by collective bargaining agreements)
as of the Effective Time which provide benefits that in the aggregate are
substantially comparable to the employee benefit plans, programs, policies and
arrangements other than stock option plans, stock purchase plans, stock
appreciation rights and any other stock based incentive and bonus plans provided
by the Company or any subsidiary for such employees immediately prior to the
Effective Time; provided, however, that (i) in no event will Parent be obligated
-------- -------
hereunder to award options or equity rights to any Employee, (ii) Parent may
cause the Company to adopt, or extend to employees of the Company, benefit
plans, programs, policies and arrangements that are in effect for the Parent's
other North American businesses, and to substitute the same for the Company's
benefit plans, programs, policies and arrangements, and (iii) nothing herein
will prevent the amendment or termination of any specific plan, program or
arrangement, require that the Surviving Corporation provide or permit investment
in the securities of Parent, the Company or the Surviving Corporation or
interfere with the Surviving Corporation's right or obligation to make such
changes as are necessary to comply with applicable law. Parent shall cause each
employee benefit plan, program, policy or arrangement of Parent in which
employees of the Company and its subsidiaries are eligible to participate to
take into account for purposes of vesting and eligibility thereunder the service
of such employees with the Company and its subsidiaries to the same extent as
such service was credited for such purpose by the Company and its subsidiaries,
unless such credit would result in a duplication of benefits.
(b) Parent shall honor, in accordance with their terms, all benefit
obligations and contractual rights to current and former employees of the
Company and its subsidiaries existing as of the Effective Time the existence of
which is expressly disclosed in the Company Disclosure Schedule, including
employment or severance agreements, plans or policies of the Company and its
subsidiaries which are previously specifically disclosed in the Company
Disclosure Schedule; provided, however, that nothing contained in this Section
-------- -------
7.04(b) shall or shall be deemed to limit the Surviving Corporation's obligation
with respect to all benefit obligations and contractual rights to current and
former employees of the Company and its subsidiaries existing as of the
Effective Time.
(c) If employees of the Company and its subsidiaries become eligible to
participate in a medical, dental or health plan of Parent, Parent shall cause
such plan to (i) waive any preexisting condition limitations for conditions
covered under the applicable medical, health or dental plans of the Company and
its subsidiaries to the same extent waived under such plans of the Company and
its subsidiaries and (ii) honor any deductible and out of pocket expenses
incurred by the employees and their beneficiaries under such plans during the
portion of the calendar year prior to such participation.
-36-
(d) Nothing in this Section 7.04 will require the continued employment of
any person.
SECTION 7.05 Indemnification. (a) From and after the Effective
---------------
Time, Parent shall, or may cause the Surviving Corporation to the extent
provided in the Company's Certificate of Incorporation as in effect on the date
hereof, to the fullest extent each corporation is permitted under applicable
law, indemnify and hold harmless each present and former director and officer of
the Company (collectively, the "Indemnified Parties") against any costs or
-------------------
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to any facts or
events existing or occurring at or prior to the Effective Time (including,
without limitation, the Transactions) for a period of six years after the
Effective Time. Parent or the Surviving Corporation shall advance expenses to an
Indemnified Party, as incurred, to the fullest extent permitted under applicable
law; provided that the Indemnified Party to whom expenses are advanced provides
--------
an undertaking to repay such advances if it is ultimately determined that such
Indemnified Party is not entitled to indemnification. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) the Indemnified Parties shall promptly notify
Parent or the Surviving Corporation thereof, (ii) any counsel retained by the
Indemnified Parties for any period after the Effective Time must be reasonably
satisfactory to Parent and the Surviving Corporation, (iii) neither Parent nor
the Surviving Corporation shall be obligated to pay for more than one firm of
counsel for all Indemnified Parties, except to the extent that (A) an
Indemnified Party has been advised by counsel that there are conflicting
interests between it and any other Indemnified Party or (B) local counsel, in
addition to such other counsel, is required to effectively defend against such
action or proceeding, and (iv) neither Parent nor the Surviving Corporation
shall be liable for any settlement effected without its written consent (which
consent shall not be unreasonably withheld). Neither Parent nor the Surviving
Corporation shall have any obligation hereunder to any Indemnified Party when
and if a court of competent jurisdiction shall ultimately determine (and such
determination shall have become final) that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
(b) For a period of six years after the Effective Time (or the time the
designees of Parent constitute a majority of the Company Board, if earlier),
Parent shall cause to be maintained in effect the current policies of directors'
and officers' liability insurance maintained by the Company (provided that
Parent may substitute therefor policies with reputable and financially sound
carriers of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims arising from
or related to facts or events that occurred at or before the Effective Time;
provided, however, that Parent shall not be obligated to make annual premium
-------- -------
payments for such insurance to the extent such premiums exceed 200% of the
annual premiums paid as of the date hereof by the Company for such insurance
(such 200% amount, the "Maximum Premium"). If such insurance coverage cannot be
---------------
obtained at all, or can only be obtained at an annual premium in excess of the
Maximum Premium, Parent shall maintain the most advantageous policies of
directors' and officers'
-37-
insurance obtainable for an annual premium equal to the Maximum Premium;
provided, further, if such insurance coverage cannot be obtained at all, Parent
-------- -------
shall purchase all available extended reporting periods with respect to pre-
existing insurance in an amount that, together with all other insurance
purchased pursuant to this Section 7.05(b), does not exceed the Maximum Premium.
The Company represents to Parent that the annual premiums paid as of the date
hereof are $525,000. Parent agrees, and will cause the Surviving Corporation,
not to take any action that would have the effect of limiting the aggregate
amount of insurance coverage required to be maintained for the individuals
referred to in this Section 7.05(b). Notwithstanding the foregoing, during the
period from the date of this Agreement and continuing until the time the
designees of Parent constitute a majority of the Company Board, the Company
shall be permitted to purchase a "tail" insurance policy with respect to the
foregoing and a similar policy covering ERISA obligations, as long as the cost
of both policies (on an annualized basis) does not exceed the Maximum Premium.
(c) If the Surviving Corporation or any of its successors or assigns (i)
shall consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then, and in each such
case, proper provision shall be made so that the successors and assigns of the
Surviving Corporation shall assume all of the obligations set forth in this
Section.
(d) The provisions of this Section are intended to be for the benefit of,
and shall be enforceable by, each of the Indemnified Parties, their heirs, their
representatives and assigns.
SECTION 7.06 Further Action. Upon the terms and subject to the
--------------
conditions hereof, each of the parties hereto in good faith shall use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the Transactions, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and to otherwise satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement.
SECTION 7.07 Public Announcements. The initial press release with
--------------------
respect to the execution of this Agreement shall be a joint press release
acceptable to Parent and the Company. Thereafter, so long as this Agreement is
in effect, Parent and the Company shall consult with each other before issuing
any press release or otherwise making any public statements with respect to the
Offer, the Merger or this Agreement and shall not issue any such press release
or make any such public statement without the prior consent of the other party,
which shall not be unreasonably withheld; provided, however, that a party may,
-------- -------
without the prior consent of the other party, issue such press release or make
such public statement as may upon the advice of counsel be required by law or
the NYSE if it has used all reasonable efforts to consult with the other party.
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SECTION 7.08 De-listing. The Surviving Corporation shall use its best
----------
efforts to cause the Shares to be de-listed from the NYSE and de-registered
under the Exchange Act as soon as practicable following the Effective Time.
SECTION 7.09 Expenses. The Surviving Corporation shall pay all charges
--------
and expenses, including those of the Paying Agent, in connection with the
transactions contemplated in Article III. Except as otherwise provided in
Section 9.03, whether or not the Merger is consummated, all other costs and
expenses incurred in connection with this Agreement and the Transactions shall
be paid by the party incurring such expense, except that expenses incurred in
connection with the filing fee for the Information Statement and printing and
mailing the Information Statement shall be shared equally by Parent and the
Company.
SECTION 7.10 Financing. Parent shall use all reasonable efforts to
---------
satisfy the Financing Condition; provided, however, that notwithstanding the
-------- -------
fact that all of the conditions to the Offer set forth in Annex A have been
-------
satisfied, Parent may extend the expiration date of the Offer if Net Debt
exceeds $240 million until such time as Net Debt is $240 million or less. The
provisions of this Section 7.10 constitute the sole covenant of Parent with
respect to the subject matter hereof and no other provision of this Agreement
will be interpreted as obligating Parent to take or fail to take any action in
respect of any matter referred to in this Section 7.10 that is not required by
this Section 7.10.
SECTION 7.11 Payment to the Company. Unless this Agreement has
----------------------
heretofore been terminated in accordance with Section 9.01 and unless the
Financing Condition has been irrevocably waived in writing by Parent prior to
(a) 5:00 p.m. (New York City time) on July 30, 1999, Parent shall pay the
Company $5.0 million, and (b) 5:00 p.m. (New York City time) on October 31,
1999, Parent shall pay the Company an additional $10.0 million; provided,
--------
however, that Parent will have no obligation to pay such $10.0 million pursuant
-------
to this Section 7.11(b) (i) unless it has elected to extend the Financing
Termination Time to the Extended Financing Termination Time pursuant to Section
9.01(i) and (ii) if Net Debt as of the Extended Financing Termination Time is
greater than $250 million. The payments to be made to the Company pursuant to
clauses (a) and (b) of this Section 7.11 shall be made by wire transfer of same
day funds and shall be paid by Parent within two business days of the date set
forth in clause (i) or (ii), as the case may be. The letter agreement, dated
June 6, 1999, addressed to Parent from the Company and amending the
Confidentiality Agreement, is of no further force and effect and the parties
agree that no Termination Fee (as defined in such letter agreement) is payable
thereunder. Parent acknowledges that the agreements contained in this Section
7.11 are an integral part of the Transactions and that, without these
agreements, the Company would not enter into this Agreement. Accordingly, if
Parent fails to pay any amounts when due pursuant to this Section 7.11 and, in
order to obtain such payment, the Company commences a suit that results in a
judgment against Parent for such amounts, Parent shall pay the Company's costs
and expenses (including reasonable attorneys' fees) in connection with such
suit, together with interest on such amounts at the prime rate of Bankers Trust
Company on the date such amounts were required to be paid.
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ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to Obligation of Each Party to Effect the Merger.
-----------------------------------------------------------
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of each of the following
conditions:
(a) Stockholder Approvals. This Agreement and the Merger shall have been
---------------------
approved and adopted by the requisite vote of the stockholders of the Company to
the extent required by the DGCL and the Certificate of Incorporation of the
Company;
(b) No Injunctions or Restraints; Illegality. No temporary restraining
----------------------------------------
order, preliminary or permanent injunction or other order issued by any
Governmental Entity preventing the consummation of the Merger shall be in
effect, and there shall not be any statute, rule, regulation or order enacted,
entered or enforced by any Governmental Entity which makes the consummation of
the Merger illegal; and
(c) Offer. Parent, Purchaser or their affiliates shall have purchased, or
-----
caused to be purchased, Shares pursuant to the Offer.
(d) Solvency Opinion. The Company Board shall have received an opinion,
----------------
in form and substance and from an independent evaluation firm reasonably
satisfactory to the Company Board, as to solvency matters relating to the
Company and to North American Refractories Company and its subsidiaries before
and after giving effect to the Transactions, including the incurrence of
indebtedness related thereto; provided, however, that this condition will in all
-------- -------
events be deemed satisfied if the Company Board receives an opinion as to such
matters from the same firm as provides such opinion to the lenders in respect of
the Financing; provided such firm agrees with the Company within 20 business
days hereof to provide the services required in order to render the opinion
required by this Section 8.01(d). Parent and the Company will, and will cause
their respective subsidiaries and employees to, cooperate with the evaluation
firm in performing the services required hereby, by, among other things,
providing relevant information and access to employees and data.
ARTICLE IX
TERMINATION
SECTION 9.01 Termination. Upon notice given by the appropriate parties in
-----------
accordance with this Agreement, this Agreement may be terminated and the Merger
contemplated hereby may be abandoned on or following the occurrence of one of
the events set forth below prior to the Effective Time, notwithstanding approval
thereof by the stockholders of the Company; provided, however, that any
-------- -------
termination by the Company pursuant to Section 9.01(c) or Section 9.01(f) shall
not be effective unless and until the Company shall have paid to Purchaser any
fees and expenses payable pursuant to Section 9.03:
-40-
(a) by mutual written consent duly authorized by the respective boards of
directors of Parent and, subject to Section 1.03(b), the Company; or
(b) by either Parent or the Company if (i) a Governmental Entity shall
have issued a non-appealable final order, decree or ruling, in each case having
the effect of permanently restraining, enjoining or otherwise prohibiting the
acceptance for payment of, or payment for, Shares pursuant to the Offer or the
Merger or (ii) any statute, rule or regulation is enacted or enforced by any
Governmental Entity for which there is no administrative or judicial right of
appeal, which in any such case makes the consummation of the Offer or the Merger
illegal; or
(c) by either Parent or the Company, if the Company Common Stock has not
been purchased pursuant to the Offer prior to December 31, 1999 (the
"Termination Date") (provided that the right to terminate this Agreement under
----------------
this Section 9.01(c) shall not be available to any party whose failure to
fulfill any obligations under this Agreement has been the cause of or resulted
in the failure to consummate the Offer prior to such date); or
(d) as long as Company Common Stock has not been purchased pursuant to the
Offer, by Parent, if any actions described in paragraph (e) to Annex A has
-------
occurred; or
(e) as long as Company Common Stock has not been purchased pursuant to the
Offer, by Parent, (i) if there has been a breach of any covenant or agreement on
the part of the Company set forth in this Agreement or (ii) if any
representation or warranty of the Company (A) shall have been inaccurate or
incomplete when made or (B) shall have become untrue, and in either case under
clause (i) or (ii) the applicable event would give rise to the failure of a
condition set forth in paragraph (f) or (g) of Annex A, as the case may be (a
-------
"Company Terminating Event"); provided that, in the event of a Company
------------------------- --------
Terminating Event arising with respect to clause (i) or (ii)(A) above (other
than a breach of Section 6.02), if such Company Terminating Event is curable
prior to the expiration of 20 days from notice by Parent to the Company of its
intention to terminate due to its occurrence (but in no event later than the
Termination Date) by the Company through the exercise of its reasonable best
efforts and for so long as the Company continues to exercise such reasonable
best efforts, Parent may not terminate this Agreement under this Section 9.01(e)
until the expiration of such period without such Company Terminating Event
having been cured; provided, further, that, in the event of a Company
-------- -------
Terminating Event arising with respect to clause (ii)(B) above, if such Company
Terminating Event may be curable prior to the Termination Date by the Company
through the exercise of its reasonable best efforts and for so long as the
Company continues to exercise such reasonable best efforts, Parent may not
terminate this Agreement under this Section 9.01(e); or
(f) as long as Company Common Stock has not been purchased pursuant to
the Offer, by the Company to allow the Company to enter into a definitive
agreement in accordance with Section 6.02(b) with respect to a Superior
Proposal; provided, however, that the Company shall have complied with the
-------- -------
provisions of Section 6.02; and provided, further, however, that not less than
-------- ------- -------
five business days prior to such termination, the Company shall have notified
Purchaser of
-41-
its intention to terminate the Agreement pursuant to this Section 9.01(f) and
shall have caused its financial and legal advisers to be reasonably available to
negotiate in good faith with Purchaser and Purchaser's financial and legal
advisers during such five-day period if Purchaser offers to make such
adjustments in the terms and conditions of this Agreement as would cause such
Acquisition Proposal not to be a Superior Proposal; or
(g) as long as Company Common Stock has not been purchased pursuant to the
Offer, by the Company, (i) upon a breach of any covenant or agreement on the
part of Parent or Purchaser set forth in this Agreement or (ii) if any
representation or warranty of Parent or Purchaser (A) shall have been inaccurate
or incomplete when made or (B) shall have become untrue, and in either case, the
applicable event would materially adversely affect Parent's or Purchaser's
ability to consummate (or materially delays commencement or consummation of) the
Offer (a "Parent Terminating Event"); provided that, in the event of a Parent
------------------------ --------
Terminating Event arising with respect to clause (i) or (ii)(A) above, if such
Parent Terminating Event is curable prior to the expiration of 20 days from
notice by the Company to Parent of its intention to terminate due to its
occurrence (but in no event later than the Termination Date) by Parent or
Purchaser through the exercise of its reasonable best efforts and for so long as
Parent or Purchaser continues to exercise such reasonable best efforts, the
Company may not terminate this Agreement under this Section 9.01(g) until the
expiration of such period without such Parent Terminating Event having been
cured; provided, further, that, in the event of a Parent Terminating Event under
-------- -------
clause (ii)(B) above, if such Parent Terminating Event is curable prior to the
Termination Date by Parent or Purchaser through the exercise of its reasonable
best efforts and for so long as Parent or Purchaser continues to exercise such
reasonable best efforts, the Company may not terminate this Agreement under this
Section 9.01(g); or
(h) as long as Company Common Stock has not been purchased pursuant to the
Offer, by Parent, if any person or group (as defined in Section 13(d)(3) of the
Exchange Act) other than Parent, Purchaser or any of their respective
subsidiaries or affiliates shall have become the beneficial owner of more than
50% of the outstanding Shares (either on a primary or fully diluted basis); or
(i) by the Company at any time after 5:00 p.m. (New York City time) on
July 30, 1999 (the "Financing Termination Time"), if Parent has not irrevocably
--------- ----------- ----
waived in writing the Financing Condition prior to the Financing Termination
Time; provided, however, that not less than two business days prior to such
-------- -------
termination, the Company shall have notified Purchaser of its intention to
terminate the Agreement pursuant to this Section 9.01(i); provided, further,
-------- -------
however, that the Company shall not be entitled to terminate this Agreement
-------
pursuant to this Section 9.01(i) if Parent shall (i) have paid any amount
payable under Section 7.11(a) and (ii) have notified the Company in writing
prior to the Financing Termination Time of its determination to extend the
Financing Termination Time to 5:00 p.m. (New York City time) on October 31, 1999
(the "Extended Financing Termination Time");
-----------------------------------
-42-
(j) by the Company at any time after the Extended Financing Termination
Time, if Parent has extended the Financing Termination Time to the Extended
Financing Termination Time pursuant to Section 9.01(i) and Parent has not
irrevocably waived in writing the Financing Condition prior to the Extended
Financing Termination Time; provided, however, that not less than two business
-------- -------
days prior to such termination, the Company shall have notified Purchaser of its
intention to terminate the Agreement pursuant to this Section 9.01(j); provided,
--------
further, however, that the Company shall not be entitled to terminate this
------- -------
Agreement pursuant to this Section 9.01(j) if (A) Parent shall (i) have paid any
amount payable pursuant to Section 7.11(b) and (ii) have irrevocably waived the
Financing Condition prior to such termination by the Company pursuant to this
Section 9.01(j) or (B) Net Debt as of the Extended Financing Termination Time is
greater than $250 million.
SECTION 9.02. Effect of Termination. In the event of the termination of
---------------------
this Agreement and the abandonment of the Merger pursuant to Section 9.01, this
Agreement shall forthwith become void and there shall be no liability on the
part of any party hereto (or any of its affiliates, directors, officers,
employees, agents, legal and financial advisors or other representatives),
except (i) as set forth in Sections 7.09, 7.11(but only to the extent any fee
thereunder has become payable but has not been paid), 9.03 and 10.01, (ii)
nothing shall relieve Parent, Purchaser or any of their affiliates from
liability or damages resulting from any breach of this Agreement and (iii)
nothing herein shall relieve the Company from liability or damages resulting
from any willful breach of this Agreement.
SECTION 9.03. Fees and Expenses. (a) Except as set forth in Section 7.09
-----------------
and this Section 9.03, all fees and expenses incurred in connection with this
Agreement and the Transactions shall be paid by the party incurring such
expenses, whether or not the Merger is consummated.
(b) The Company shall pay the Parent Fee (as defined herein), plus (x)
actual, documented and reasonable out-of-pocket expenses of Parent not in excess
of $1,500,000 relating to the Transactions (including, but not limited to, fees
and expenses of counsel) plus (y) after Parent has entered into one or more
definitive agreements with respect to the Financing, actual, documented and
reasonable out-of-pocket expenses of Parent not in excess of $1,500,000 relating
to or incurred in connection with the Financing (the expenses referred to in
clauses (x) and (y) collectively, the "Expense Amount"), upon the earliest to
--------------
occur of the following events:
(i) the termination of this Agreement by Parent pursuant to Section
9.01(d), 9.01(e)(i), 9.01(e)(ii)(A) or 9.01(h); or
(ii) the termination of this Agreement by Parent or the Company
pursuant to Section 9.01(c) if at the time of termination there has been
publicly announced and not withdrawn an Acquisition Proposal and the
Company Board has withdrawn, modified or changed in a manner adverse to
Parent or Purchaser (including by amendment of the
-43-
Schedule 14D-9) its approval or recommendation of this Agreement, the Offer
or the Merger or shall have resolved to do so;
(iii) the termination of this Agreement by Parent or the Company
pursuant to Section 9.01(c) if at the time of termination there has been
publicly announced and not withdrawn an Acquisition Proposal at a price per
Share at or higher than the Offer Price and the Company thereafter
consummates a transaction that would constitute an Acquisition Proposal
with the person making such Acquisition Proposal within fifteen months
after the termination of this Agreement at a price per Share at or higher
than the Offer Price; or
(iv) the termination of this Agreement by the Company pursuant to
Section 9.01(f).
(c) The Parent Fee payable pursuant to Section 9.03(b) shall be paid by the
Company within two business days after being notified of such by Parent or if
earlier, the time herein specified.
(d) The Company acknowledges that the agreements contained in this Section
9.03 are an integral part of the Transactions and that, without these
agreements, Parent and Purchaser would not enter into this Agreement.
Accordingly, if the Company fails to pay any amounts when due pursuant to this
Section 9.03 and, in order to obtain such payment, Parent commences a suit that
results in a judgment against the Company for such amounts, the Company shall
pay Parent's costs and expenses (including reasonable attorneys' fees) in
connection with such suit, together with interest on such amounts at the prime
rate of Bankers Trust Company on the date such amounts were required to be paid.
(e) The payment of the Parent Fee and the reimbursement of any expenses
pursuant to this Section 9.03 shall be made by wire transfer of same day funds.
Except as otherwise provided in Section 9.02, such payment and reimbursement by
the Company shall be the sole and exclusive remedy of Parent and Purchaser
against the Company and any of its subsidiaries and their respective directors,
officers, employees, agents, advisors or other representatives with respect to a
breach of any representation, warranty, covenant or agreement of the Company.
The payment by Parent to the Company of an aggregate amount of $15 million
pursuant to Section 7.11 shall be the sole and exclusive remedy of the Company
against Parent and any of its subsidiaries and their respective directors,
officers, employees, agents, advisors or other representatives with respect to a
breach (other than a willful breach) of Section 5.04 or Section 7.10; provided,
--------
however, that nothing herein shall relieve such persons from liability or
-------
damages resulting from any breach of Section 5.04 or Section 7.10 unless the
entire $15 million is paid to the Company pursuant to Section 7.11.
-44-
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Effectiveness of Representations, Warranties and
------------------------------------------------
Agreements. Except as otherwise provided in this Section 10.01, the
----------
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time (or the time the designees of Parent
constitute a majority of the Board, if earlier) or upon the termination of this
Agreement pursuant to Section 9.01, as the case may be, except that the
agreements set forth in Article III and in Sections 7.03 (Stock Options and
Stock Units), 7.04 (Employee Benefits), 7.05 (Indemnification), 7.06 (Further
Action), 7.08 (De-listing) and 7.09 (Expenses) shall survive the consummation of
the Merger and those set forth in Section 9.02 (Effect of Termination) and
Section 9.03 (Fees and Expenses) shall survive termination of this Agreement.
SECTION 10.02. Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or mailed if delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by such party by notice given pursuant to this provision) or
sent by electronic transmission, with confirmation received, to the telecopy
number specified below:
(a) If to Parent or Purchaser:
RHI AG
c/o North American Refractories Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
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(b) If to the Company:
Global Industrial Technologies, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 10.03. Amendment. Subject to Section 1.03(b) and applicable law,
---------
this Agreement may be amended by the parties hereto by action taken by or on
behalf of their respective boards of directors at any time prior to the
Effective Time; provided, however, that, after approval and adoption of this
-------- -------
Agreement by the stockholders of the Company, no amendment may be made which by
law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 10.04. Waiver. Subject to Section 1.03(b), at any time prior to
------
the Effective Time, any party hereto may with respect to any other party hereto
(a) extend the time for the performance of any of the obligations or other acts,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (c) waive compliance with
any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
SECTION 10.05. Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.06. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this
-46-
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the Transactions are fulfilled
to the fullest extent possible.
SECTION 10.07. Entire Agreement. (a) This Agreement (including any
----------------
exhibits hereto) and the Company Disclosure Schedule, together with the
Confidentiality Agreement, constitute the entire agreement and supersede all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof.
(b) The Confidentiality Agreement is hereby amended so as to permit
Parent, Purchaser or any of its respective affiliates or Representatives (as
defined therein) to (i) effect the Transactions, (ii) take any action otherwise
prohibited by the fourth paragraph of the Confidentiality Agreement (A)
involving a transaction pursuant to which Parent offers to acquire all of the
shares of Company Common Stock at not less than $13.00 per share or (B) at any
time following (1) a tender offer or exchange offer (other than a tender offer
that has been commenced but has not expired prior to the date hereof) for some
portion or all of the Shares shall have been commenced or publicly proposed to
be made by a person other than Parent or any of its subsidiaries, including by
the Company or its subsidiaries, or it shall have been publicly disclosed or
Parent shall have otherwise learned that any person or "group" (as defined in
Section 13(d)(3) of the Exchange Act), other than Parent or its affiliates or
any group of which any of them is a member or any affiliates controlled by it,
shall have acquired beneficial ownership (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of more than 15% of the outstanding Shares
and (2) the purchase of Shares pursuant to the Offer, and (iii) take any action
otherwise prohibited by the sixth paragraph of the Confidentiality Agreement at
any time following the purchase of Shares pursuant to the Offer.
SECTION 10.08. Assignment, Purchaser. This Agreement shall not be assigned
---------------------
by operation of law or otherwise without the prior written consent of the other
parties hereto; provided, however, that Parent may designate, by written notice
-------- -------
to the Company, another wholly owned direct or indirect subsidiary to be a
constituent corporation in the Merger in lieu of Purchaser, in the event of
which all references herein to Purchaser shall be deemed references to such
other subsidiary, except that all representations and warranties made herein
with respect to Purchaser as of the date of this Agreement shall be deemed
representations and warranties made with respect to such other subsidiary as of
the date of such designation.
SECTION 10.09. Parties in Interest. This Agreement shall be binding upon
-------------------
and inure solely to the benefit of each party hereto and their successors and
assigns, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, other than Article III and
Sections 7.03 (Stock Options and Stock Units) and 7.05 (Indemnification).
SECTION 10.10. Failure or Indulgence Not Waiver; Remedies Cumulative. No
-----------------------------------------------------
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation,
-47-
warranty or agreement herein, nor shall any single or partial exercise of any
such right preclude other or further exercise thereof or of any other right. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 10.11 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 10.12 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 10.13. Waiver of Jury Trial; Consent of Jurisdiction. (a) EACH OF
---------------------------------------------
PARENT, PURCHASER AND THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS.
(b) THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION
OF THE COURTS OF THE STATE OF DELAWARE AND THE FEDERAL COURTS OF THE UNITED
STATES OF AMERICA LOCATED IN THE STATE OF DELAWARE SOLELY IN RESPECT OF THE
INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND OF THE
DOCUMENTS REFERRED TO IN THIS AGREEMENT, AND IN RESPECT OF THE TRANSACTIONS
CONTEMPLATED HEREIN, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN
ANY ACTION FOR THE INTERPRETATION OR ENFORCEMENT HEREOF OR OF ANY SUCH DOCUMENT,
THAT IT IS NOT SUBJECT THERETO OR THAT SUCH ACTION MAY NOT BE BROUGHT OR IS NOT
MAINTAINABLE IN SAID COURTS OR THAT THE VENUE THEREOF MAY NOT BE APPROPRIATE OR
THAT THIS AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO
SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH A DELAWARE STATE
OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT
JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH
DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY
SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 10.02 HEREOF OR IN
SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT
SERVICE THEREOF.
-48-
SECTION 10.14. Certain Definitions. For purposes of this Agreement, the
-------------------
term:
(a) "affiliate" shall mean, with respect to any specified person, any
person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the person
specified, including, without limitation, any partnership or joint venture in
which the person specified (either alone, or through or together with any other
subsidiary) has, directly or indirectly, an interest of 10 percent or more.
(b) "Appointment Date" shall mean the time the persons designated by Parent
have been elected to, and shall constitute a majority of, the Company Board
pursuant to Section 1.03.
(c) "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. (S)9601 et seq.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Company Board" shall mean the Board of Directors of the Company.
(f) "Company Disclosure Schedule" shall mean the written disclosure
schedule prepared and signed by the Company and previously delivered to Parent.
(g) "Company Material Adverse Effect" shall mean any change or effect that,
individually or when taken together with all other such changes or effects, is
reasonably likely to be materially adverse to the business, results of
operations or financial condition of the Company and its subsidiaries, taken as
a whole; provided, however, that in determining whether there has been a Company
-------- -------
Material Adverse Effect, to the extent that any adverse effect is attributable
to the following it shall be disregarded: (i) general economic, business or
financial market conditions; (ii) general industry conditions; (iii) the taking
of any action expressly permitted or required by this Agreement; (iv) the breach
by Parent or Purchaser of this Agreement; or (v) any change in any law, rule or
regulation or GAAP or interpretations thereof that directly apply to the
Company.
(h) "Company SEC Reports" shall mean each form, report, schedule, statement
and other document filed by the Company since January 1, 1998 under the Exchange
Act or the Securities Act, including any amendment to such document.
(i) "Confidentiality Agreement" shall mean the confidentiality agreement,
dated April 1, 1999, between Parent and the Company.
(j) "control" (including the terms "controlled by" and "under common
control with") shall mean the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
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(k) "DGCL" shall mean the Delaware General Corporation Law.
(l) "Dissenting Shares" shall mean any Shares issued and outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has demanded
properly in writing appraisal for such Shares in accordance with Section 262 of
the DGCL, if such Section 262 provides for appraisal rights for such Shares in
the Merger.
(m) "Environment" shall mean any surface or subsurface physical medium or
natural resources, including air, land, soil, surface waters, ground waters,
stream and river sediments, biota and any indoor area, surface or physical
medium.
(n) "Environmental Laws" shall mean federal, foreign, state and local laws
(including the common law), rules, regulations, ordinances, codes, orders and
judgments (including any judicial or administrative interpretations, guidances,
directives, policy statements or opinions) relating to the injury to, or the
pollution or protection of, human health and safety or the Environment.
(o) "Environmental Liabilities" shall mean any claims, judgments, damages
(including punitive damages), losses, penalties, fines, liabilities,
encumbrances, liens, violations, costs and expenses (including attorneys' and
consultants' fees) of any required investigation, remediation, monitoring or
defense of any matter relating to human health, safety as it relates to
Hazardous Substances or the Environment of whatever kind or nature by any party,
entity or authority (A) which are incurred as a result of (i) the existence of
Hazardous Substances in, on, under, at or emanating from any Real Property, (ii)
the Company's or any of its subsidiaries' offsite transportation, treatment,
storage or disposal of Hazardous Substances or (iii) the violation of or non-
compliance with any Environmental Laws or (B) which arise under any
Environmental Laws.
(p) "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
(q) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(r) "fully diluted basis" shall mean the aggregate number of issued and
outstanding shares of Company Common Stock, shares of Company Common Stock
subject to issuance under vested Options and shares of Company Common Stock
subject to issuance upon exercise of outstanding warrants, calls, subscriptions
or other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of the Company or securities
convertible or exchangeable for such capital stock, but shall not include
unvested Options.
(s) "GAAP" shall mean United States Generally Accepted Accounting
Principles.
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(t) "Governmental Entity" shall mean any United States, state or foreign
governmental, administrative or regulatory authority, commission, body, agency
or other authority, or any court of competent jurisdiction.
(u) "Hazardous Substances" shall mean any regulated quantities of
petroleum, petroleum products, petroleum-derived substances, radioactive
materials, hazardous wastes, polychlorinated biphenyls, lead-based paint, radon,
urea formaldehyde, asbestos or any materials containing asbestos, and any
chemicals, contaminants, materials or substances regulated or defined as, or
included in the definition of, "hazardous substances," "extremely hazardous
substances," "hazardous wastes," "hazardous materials," "hazardous
constituents," "toxic substances," "pollutants" or "contaminants" or regulated
by reason of toxicity, carcinogenicity, ignitability, corrosivity or reactivity
or other characteristics under any Environmental Law.
(v) "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
(w) "Information Statement" shall mean the information statement to be
filed by the Company with the SEC pursuant to Section 2.07 hereof, together with
all amendments and supplements thereto and including the exhibits thereto.
(x) "IRS" shall mean the United States Internal Revenue Service.
(y) "Material Contracts" shall mean any agreement, arrangement, bond,
commitment, contract, franchise, indemnity, indenture, instrument, lease,
license, understanding or undertaking, and any amendment or supplement thereto,
in each case, not otherwise terminable on 90 days' or less notice by the
terminating party, that (i) obligates the Company or any of its subsidiaries to
pay, or entitles the Company or any of its subsidiaries to receive, an amount of
$2,500,000 or more annually (including any amounts payable as a result of the
termination thereof), (ii) involves an extension of credit other than relating
to customer accounts receivable having normal credit terms, (iii) contains non-
competition, no solicitation, no hire or change-in-control provisions or (iv) is
otherwise required to be described in or filed as an exhibit to the Company SEC
Reports.
(z) "Minimum Condition" shall mean at least a majority of the outstanding
shares of Company Common Stock (together with the shares of Company Common
Stock, if any, then owned by Parent, Purchaser or their subsidiaries) on a fully
diluted basis shall have been validly tendered and not withdrawn prior to the
expiration of the Offer.
(aa) "Parent Fee" shall mean a termination fee of $10.0 million; provided,
--------
however, that such fee shall be $5.0 million unless (i) Parent has irrevocably
-------
waived the Financing Condition prior to the earlier of giving any notice by the
Company of an intention to terminate or actual termination under Section 9.01 by
the Company or prior to any occurrence, action or event
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giving rise to Parent's right to terminate under Section 9.01 or (ii) Parent has
paid the $5.0 million fee in accordance with Section 7.11(a).
(bb) "Parent Material Adverse Effect" shall mean any change or effect that,
individually or when taken together with all other such changes or effects, is
reasonably likely to prevent or delay Parent or Purchaser from performing their
obligations under this Agreement or the consummation of the Transactions.
(cc) "person" shall mean an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act);
(dd) "Purchaser Common Stock" shall mean the common stock, par value $.01
per share, of Purchaser.
(ee) "Rights Agreement" shall mean that certain Rights Agreement dated as
of October 31, 1995 between the Company and The Bank of New York, as Rights
Agent, as amended.
(ff) "SEC" shall mean the United States Securities and Exchange Commission.
(gg) "Securities Act" shall mean the Securities Act of 1933, as amended.
(hh) "Shares" shall mean shares of Company Common Stock.
(ii) "Stock Option Plans" shall mean the 1992 Stock Compensation Plan, as
amended, and the Stock Option Plan for Non-Employee Directors, as amended and
restated.
(jj) "subsidiary" or "subsidiaries" of any person shall mean any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary) owns,
directly or indirectly, more than 50% of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity;
(kk) "Superior Proposal" shall mean an Acquisition Proposal that the
Company Board determines in good faith (A) is reasonably likely to be
consummated, taking into account all legal, financial and regulatory aspects of
the proposal, the person making the proposal and all other relevant factors, (B)
for which financing, to the extent required, is then committed or which, in the
good faith judgment of the Company Board, is reasonably capable of being
obtained by the party making the Acquisition Proposal, and (C) would, if
consummated, result in a more favorable transaction, from a financial point of
view, than the Transactions.
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(ll) "Tax" shall mean taxes, fees, levies, duties, tariffs, imposts and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, provincial, local or foreign taxing
authority, including, without limitation, (i) income, franchise, profits, gross
receipts, ad valorem, net worth, value added, sales, use, service, real or
personal property, special assessments, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes and (ii) interest,
penalties, additional taxes and additions to tax imposed with respect thereto.
(mm) "Tax Returns" shall mean returns, reports and information statements
with respect to Taxes required to be filed with the IRS or any other taxing
authority, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns.
(nn) "Year 2000 Compliant" shall mean that the computer systems (i) are
capable of recognizing, processing, managing, representing, interpreting and
manipulating correctly date-related data for dates earlier and later than
January 1, 2000; (ii) have the ability to function automatically into and beyond
the year 2000 without human intervention and without any change in operations
associated with the advent of the year 2000; and (iii) have the ability to
recognize all "leap years," including February 29, 2000.
SECTION 10.15. Additional Definitions/Interpretive Matters. Whenever
-------------------------------------------
the words "include," "includes" or "including" are used in this Agreement, they
will be deemed to be followed by the words "without limitation." The words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement will refer to this Agreement as a whole, including the Company
Disclosure Schedule, and not to any particular provision of this Agreement. All
terms used herein with initial capital letters have the meanings ascribed to
them herein and all terms defined in this Agreement will have such defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein. The definitions contained in
this Agreement are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders of
such term.
SECTION 10.16. Enforcement of Agreement. The parties hereto agree that
------------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties will be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
RHI AG
By: /s/ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
HEAT ACQUISITION CORP.
By: /s/ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman of the Board and Chief
Executive Officer
-54-
Annex A
Certain Conditions to the Offer
-------------------------------
Notwithstanding any other provisions of the Offer and subject to (and not
in limitation of) Purchaser's rights or obligations with respect to extending
and amending the Offer pursuant to the terms of this Agreement, Purchaser shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, payment for,
any tendered Shares, and may terminate the Offer or amend the Offer, but only to
the extent permitted by this Agreement, if (i) any applicable waiting period
under the HSR Act or any applicable laws regulating competition, antitrust,
investment or exchange controls in Germany and Mexico shall not have expired or
not have been terminated prior to the expiration of the Offer, (ii) the Minimum
Condition shall not have been satisfied or waived (pursuant to this Agreement)
prior to the expiration of the Offer or (iii) at any time on or after the date
of this Agreement and before the time of acceptance of Shares for payment
pursuant to the Offer, any of the following events shall have occurred and be
continuing:
a. there shall have been entered any judgment, order or injunction
applicable to Parent, Purchaser, the Company or any subsidiary or affiliate of
Parent or the Company, or to the Offer or the Merger, by any Governmental Entity
that (i) makes illegal or otherwise directly or indirectly restrains or
prohibits the acceptance for payment of, or payment for, some of or all the
Shares by Purchaser or any of its affiliates or the consummation of the Merger,
(ii) renders Purchaser unable to accept for payment, pay for or purchase some
or all of the Shares pursuant to the Offer, (iii) imposes limitations on the
ability of Parent, Purchaser or any other affiliate of Parent effectively to
exercise full rights of ownership of any Shares, including, without limitation,
the right to vote any Shares acquired by it pursuant to the Offer or otherwise
on all matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of this Agreement and the Merger,
(iv) prohibits, limits or otherwise materially adversely affects the ownership
or operation by Parent or any of its subsidiaries of all or any portion of the
business or assets of the Company, Parent or any of their respective
subsidiaries located in the United States or Canada or in the alternative
compels the Company, Parent or any of their respective subsidiaries to sell or
otherwise dispose of, or hold separate or otherwise divest itself of, all or any
portion of the business or assets of the Company, Parent or any of their
respective subsidiaries located in the United States or Canada, but only if in
each case such businesses or assets accounted for, individually or in the
aggregate, revenues of the Company or Parent, as the case may be, for the year
ended December 31, 1998 as set forth in the respective audited financial
statements for the period then ending for Parent or the Company in excess of the
Revenue Amount; or (v) which otherwise would materially adversely affect the
ability of the Company or Parent to consummate the Offer or the Merger or to
perform any of their respective obligations under this Agreement; or
A-1
b. there shall have been (i) any statute, rule, regulation, executive
order, decree, legislation, interpretation, enacted, entered, enforced,
promulgated, amended, issued or deemed applicable by any Governmental Entity to
(x) Parent, the Company or any subsidiary or affiliate of Parent or the Company
or (y) the Offer or the Merger, or (ii) any action, suit or proceeding initiated
by any Governmental Entity, other than the application to the Offer or the
Merger of the applicable waiting periods under the HSR Act or any applicable
non-United States laws regulating competition, antitrust, investment or exchange
controls, that would result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above; or
c. there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the NYSE for a period in excess of 24
hours (excluding suspensions or limitations resulting solely from physical
damage or interference with the NYSE not related to market conditions or
suspensions or limitations triggered on the NYSE by price fluctuations on a
single trading day), (ii) a declaration of a banking moratorium or any
suspension of or material limitation on payments in respect of banks or other
lending institutions by United States, Austrian, European Community or New York
authorities or any suspension or material limitation on the extension of credit
(whether or not mandatory), (iii) a commencement of a war, insurrection, armed
conflict or other international or national crisis other than the current
hostilities in Iraq or Eastern Europe or (iv) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof not contemplated as of the date hereof; or
d. there shall have occurred any change or effect that, individually or
when taken together with all other such changes or effects, is or is reasonably
likely to be materially adverse to the business, results of operations or
financial condition of the Company and its subsidiaries, taken as a whole;
e. the Company Board or any committee thereof shall have (i) withdrawn or
modified in a manner adverse to Parent or Purchaser (including by amendment of
the Schedule 14D-9) its approval or recommendation of this Agreement, the Offer
or the Merger, (ii) recommended or taken a "neutral" position (except in
connection with a Section 6.02 Determination) with respect to the approval or
acceptance of an Acquisition Proposal from, or similar business combination
with, a person or entity other than Parent, Purchaser or their affiliates, (iii)
taken any action referred to in Section 6.02 of this Agreement that is
prohibited thereby, or (iv) publicly disclosed any intention, or resolved, to do
any of the foregoing; or
f. any of the representations and warranties of the Company set forth in
this Agreement that are qualified as to Company Material Adverse Effect shall
not be true and correct and any such representations and warranties that are not
so qualified shall (i) not be true and correct and (ii) be reasonably likely to
result in a Company Material Adverse Effect, in each case as if such
representations and warranties were made at the time of such determination; or
A-2
g. the Company shall have breached any material agreement or covenant or
failed to perform any material obligation to be complied with or performed by it
under this Agreement; or
h. all consents necessary to the consummation of the Offer or the Merger,
including, without limitation, consents from parties to loans, contracts, leases
or other agreements to which the Company or any of its subsidiaries is subject,
and consents from Governmental Entities, shall not have been obtained, other
than consents the failure to obtain which is not reasonably likely to have a
Company Material Adverse Effect; or
i. this Agreement shall have been terminated in accordance with its
terms; or
j. the Financing shall not be available to Parent and Purchaser on terms
reasonably satisfactory to Parent given the structure of the Financing
contemplated for the Transactions, including, without limitation, the financing
contemplated to be arranged by Parent (the "Financing Condition").
-------------------
The foregoing conditions are for the sole benefit of Parent and Purchaser,
and may (subject to the terms of the Merger Agreement) be asserted or waived by
Parent or Purchaser, in whole or in part, regardless of the circumstances
(including any action or inaction by Parent or Purchaser) at any time and from
time to time in the good faith discretion of Parent or Purchaser; provided,
--------
however, that nothing contained herein shall relieve Parent or Purchaser of its
-------
obligations under the Agreement. The failure by Parent or Purchaser at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
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