Exhibit 2.1
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STOCK PURCHASE AGREEMENT
among
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
A.P. GREEN INDUSTRIES, INC.
and
CHEMICAL LIME COMPANY
Dated as of March 8, 1999
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TABLE OF CONTENTS
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ARTICLE I
Section 1.1 Specific Definitions........................................ 1
Section 1.2 Other Terms................................................. 7
Section 1.3 Other Definition Provisions................................. 7
ARTICLE II
Purchase and Sale of Shares
Section 2.1 Purchase and Sale of Shares................................. 7
Section 2.2 Closing; Delivery and Payment............................... 7
Section 2.3 Post-Closing Adjustments.................................... 8
ARTICLE III
Representations and Warranties of Seller
Section 3.1 Organization and Authority of Seller........................ 10
Section 3.2 Organization, Authority and Qualification of the Company.... 11
Section 3.3 Capitalization of the Company............................... 11
Section 3.4 Subsidiary of the Company................................... 12
Section 3.5 Financial Statements; Liabilities........................... 13
Section 3.6 Absence of Certain Changes or Events........................ 13
Section 3.7 Title to Properties; Absence of Liens and Encumbrances, Etc. 14
Section 3.8 Litigation.................................................. 15
Section 3.9 Compliance with Law......................................... 15
Section 3.10 Contracts................................................... 15
Section 3.11 Consents and Approvals...................................... 17
Section 3.12 Tax Matters................................................. 17
Section 3.13 Intellectual Property....................................... 18
Section 3.14 Labor Matters............................................... 18
Section 3.15 Employee Benefits........................................... 18
Section 3.16 Environmental Matters....................................... 21
Section 3.17 Insurance................................................... 21
Section 3.18 Brokers and Finders......................................... 21
Section 3.19 Lime Reserves............................................... 21
Section 3.20 Assets...................................................... 21
Section 3.21 Capital Expenditures........................................ 22
Section 3.22 No Other Representations or Warranties...................... 22
ARTICLE IV
Representations and Warranties of Purchaser
Section 4.1 Organization and Authority of Purchaser..................... 22
Section 4.2 Brokers and Finders......................................... 23
Section 4.3 Financial Capability........................................ 00
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Xxxxxxx 4.4 Securities Act.............................................. 23
Section 4.5 Consents and Approvals...................................... 23
Section 4.6 No Other Representations or Warranties...................... 24
ARTICLE V
Tax Matters
Section 5.1 Section 338(h)(10).......................................... 24
Section 5.2 Liability for Taxes and Related Matters..................... 25
Section 5.3 Transfer Taxes.............................................. 27
Section 5.4 Information to be Provided by Purchaser..................... 27
Section 5.5 Assistance and Cooperation.................................. 27
Section 5.6 Section 1445................................................ 28
ARTICLE VI
Certain Covenants and Agreements of Seller and Purchaser
Section 6.1 Access and Information...................................... 28
Section 6.2 Registrations, Filings and Consents......................... 29
Section 6.3 Conduct of Business......................................... 29
Section 6.4 Employee Benefit Plans...................................... 30
Section 6.5 Retention of Books and Records.............................. 32
Section 6.6 Provision of Financial Statements........................... 33
Section 6.7 Delivery of Corporate Minutes and Bank Signature Cards...... 33
Section 6.8 Use of "AP Green, APG and APG Lime" Names................... 33
Section 6.9 Acquisition Proposals....................................... 34
Section 6.10 Labor Matters, WARN......................................... 35
Section 6.11 INFORMATION................................................. 36
Section 6.12 Non-Competition............................................. 36
Section 6.13 Release of Indemnity Obligations............................ 37
Section 6.14 Capital Expenditures of the Plant........................... 37
ARTICLE VII
Conditions to Closing
Section 7.1 Conditions to Obligations of Purchaser...................... 37
Section 7.2 Conditions to Obligations of Seller......................... 38
Section 7.3 Conditions to Obligations of Purchaser and Seller........... 39
ARTICLE VIII
Termination
Section 8.1 Termination................................................. 39
Section 8.2 Effect of Termination....................................... 40
ARTICLE IX
Due Diligence Termination Right
Section 9.1 Due Diligence Termination Right............................. 41
ARTICLE X
Indemnification
Section 10.1 Indemnification by Global................................... 41
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Section 10.2 Calculation of Losses; No Consequential Damages, Etc........ 43
Section 10.3 Termination of Indemnification.............................. 43
Section 10.4 Procedures Relating to Indemnification...................... 43
Section 10.5 Tax Adjustment.............................................. 45
ARTICLE XI
Miscellaneous
Section 11.1 Survival.................................................... 45
Section 11.2 Amendment and Waiver........................................ 45
Section 11.3 Expenses.................................................... 46
Section 11.4 Public Disclosure........................................... 46
Section 11.5 Assignment.................................................. 46
Section 11.6 Entire Agreement............................................ 46
Section 11.7 Fulfillment of Obligations.................................. 46
Section 11.8 Parties in Interest; No Third Party Beneficiaries........... 47
Section 11.9 Schedules................................................... 47
Section 11.10 Counterparts................................................ 47
Section 11.11 Section Headings............................................ 47
Section 11.12 Notices..................................................... 47
SECTION 11.13 GOVERNING LAW; ARBITRATION.................................. 48
Section 11.14 Severability................................................ 49
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This STOCK PURCHASE AGREEMENT (the "Agreement"), is made and entered
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into as of March 8, 1999, among GLOBAL INDUSTRIAL TECHNOLOGIES, INC., a Delaware
corporation ("Global"), A.P. GREEN INDUSTRIES, INC., a Delaware corporation and
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wholly-owned subsidiary of Global (the "Seller"), and CHEMICAL LIME COMPANY, a
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Nevada corporation ("Purchaser").
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W I T N E S S E T H:
WHEREAS, Seller owns all of the issued and outstanding shares of
capital stock of APG LIME, CORP., a Delaware corporation (the "Company");
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WHEREAS, the Company and its Subsidiary (as defined herein) are
engaged in the business of mining limestone, processing limestone and selling
lime (the "Business"); and
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WHEREAS, Seller desires to sell and transfer to Purchaser, and
Purchaser desires to purchase from Seller, all of the issued and outstanding
shares of capital stock of the Company, as more specifically provided herein.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
set forth herein, the parties hereto agree as follows:
ARTICLE I
Section I.1 Specific Definitions . As used in this Agreement, the
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following terms shall have the meanings set forth or referenced below:
"Acquisition Proposal" shall have the meaning set forth in Section
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6.9.
"Adjusted Closing Balance Sheet" shall have the meaning set forth in
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Section 2.3(b).
"Affiliate", as applied to any Person, means any other Person directly
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or indirectly controlling, controlled by or under common control with such
Person.
"Agreement" shall mean this Agreement and the Disclosure Schedule.
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"Allocation" shall have the meaning set forth in Section 5.1(b).
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"Antitrust Division" shall mean the Antitrust Division of the United
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States Department of Justice.
"Assets" shall have the meaning set forth in Section 3.20(a).
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"Balance Sheet" shall mean the unaudited Balance Sheet (which shall
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include the Net Asset Value) as of December 31, 1998 attached hereto as Schedule
3.5.
"Business" shall have the meaning set forth in the second recital of
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this Agreement.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
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day on which banks in Texas are authorized or obligated by law or executive
order to close.
"Closing" shall have the meaning set forth in Section 2.2(a).
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"Closing Balance Sheet" shall have the meaning set forth in Section
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2.3(a).
"Closing Date" shall have the meaning set forth in Section 2.2(a).
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"Closing Net Asset Value" shall mean the Net Asset Value as shown on
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the Adjusted Closing Balance Sheet minus the amount referred to in Section
6.14(a) incurred between January 1, 1999 and the Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Company" shall have the meaning set forth in the first recital of
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this Agreement.
"Company Plans" shall have the meaning set forth in Section 3.15(a).
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"Company Welfare Plans" shall have the meaning set forth in Section
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6.4(b).
"Confidentiality Agreement" shall have the meaning set forth, in
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Section 6.1(b).
"Contracts" shall have the meaning set forth in Section 3.1.
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"CPA Firm" shall have the meaning set forth in Section 2.3(b).
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"Disclosure Schedule" shall have the meaning set forth in Article III.
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"Due Diligence Termination Notice" shall have the meaning set forth in
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Section 9.1.
"Employee Pension Benefit Plan" shall have the meaning set forth in
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Section 6.4(c).
"Employee Pension Benefit Plan Participants" shall have the meaning
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set forth in Section 6.4(c).
"Encumbrances" shall have the meaning set forth in Section 3.1.
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"Environmental Law" means any federal, state, local or foreign law,
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statute, regulation, code, license, permit, order, judgment, decree or
injunction of the United States, any State or political subdivision thereof
(including any court thereof and any Governmental Entity) relating to the
protection of the environment (including air, water, soil and natural
resources), health safety as it relates to Hazardous Substances or the use,
storage, handling, release or disposal of any Hazardous Substance as in effect
on the Closing Date.
"ERISA" shall have the meaning set forth in Section 3.15(b).
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"ERISA Affiliate" shall have the meaning set forth in Section 3.15(c).
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"Exclusivity Agreement" shall have the meaning set forth in Section
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11.6.
"Financial Statements" shall have the meaning set forth in Section
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3.5.
"First Phase" shall have the meaning set forth in Section 3.21(a).
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"FTC" shall mean the Federal Trade Commission.
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"GAAP" shall mean United States generally accepted accounting
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principles.
"Global" shall have the meaning set forth in the first paragraph of
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this Agreement.
"Governmental Entity" shall mean any governmental or regulatory
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authority, agency, commission, body or other governmental entity of the United
States of America or any State or political subdivision thereof.
"Hazardous Substance" means any substance material or waste listed,
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defined, designated or classified as hazardous, toxic or radioactive under, or
otherwise regulated by,
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any applicable Environmental Law, including petroleum and any derivative or by-
products thereof.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
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of 1976, as amended.
"Indemnified Parties" shall have the meaning set forth in Section
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10.1(a).
"Intellectual Property" shall mean trademarks, service marks, brand
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names, certification marks, trade dress, assumed names, trade names and other
indications of origin, the goodwill associated with the foregoing and
registrations in the United States of, and applications in the United States to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas, whether
patentable or not in the United States; patents, applications for patents
(including, without limitation, divisions, continuations, continuations in-part
and renewal applications), and any renewals, extensions or reissues thereof, in
the United States; non-public information, trade secrets and confidential
information and rights in the United States to limit the use or disclosure
thereof by any Person; writings and other works, whether copyrightable or not in
the United States; registrations or applications for registration of copyrights
in the United States, and any renewals or extensions thereof; and any similar
intellectual property or proprietary rights.
"IRS" shall mean the Internal Revenue Service.
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"Knowledge", with respect to Global or Seller, shall mean the actual
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knowledge after reasonable inquiry of Xxxxxx Xxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx
X. Xxxxxxxx, Xxxxxxxx X. Xxxx and Xxxxx X. Xxxxxx, and in the case of the
Company or its Subsidiary, shall mean the actual knowledge after reasonable
inquiry of Xxx X. Xxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xxx Xxxxx and
Xxx X. Xxxxxx, in each case, arising without the conduct by such Person of any
independent investigation other than such reasonable inquiry with respect to the
facts or matters specified.
"Law" shall have the meaning set forth in Section 3.1.
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"Leased Real Property" shall have the meaning set forth in Section
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3.7(a).
"Liabilities" shall mean any and all debts, liabilities and
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obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including, without limitation, those
arising under any Law, Order or any Contract.
"Losses" shall have the meaning set forth in Section 10.1(a).
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"Matching Right" shall have the meaning set forth in Section 6.9(c).
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"Material Adverse Effect" shall mean a material adverse effect on the
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business, financial condition, properties, operations or results of operations
of the Company and its Subsidiary, taken as a whole; provided, however, that an
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effect resulting from (i) any change in Law or GAAP or interpretations thereof
that apply to the Company or its Subsidiary, (ii) any change in economic,
business or financial market conditions generally or generally affecting the
limestone mining and processing and/or lime markets or (iii) the announcement
and performance of this Agreement and compliance with the covenants set forth in
this Agreement shall not be considered when determining if a Material Adverse
Effect has occurred.
"Net Asset Value" shall mean (x) the assets of the Company excluding
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intercompany receivables from Global minus (y) the liabilities of the Company
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excluding intercompany payables to Global.
"Order" shall have the meaning set forth in Section 3.1.
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"Owned Real Property" shall have the meaning set forth in Section
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3.7(a).
"Overage" shall have the meaning set forth in Section 6.14(b).
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"PBGC" shall have the meaning set forth in Section 3.15(a).
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"Pension Arbitrator" shall have the meaning set forth in Section
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6.4(d).
"Pension Plan" shall have the meaning set forth in Section 3.15(b).
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"Pension Review" shall have the meaning set forth in Section 6.4(d).
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"Permitted Encumbrances" shall have the meaning set forth in Section
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3.7(a).
"Person" means any individual, corporation, partnership, firm, joint
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venture, association, joint-stock company, trust, unincorporated organization,
governmental or regulatory body or other entity.
"Plant" shall have the meaning set forth in Section 3.21.
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"Purchase Price" shall have the meaning set forth in Section 2.1.
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"Purchaser" shall have the meaning set forth in the first paragraph of
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this Agreement.
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"Purchaser's Actuary" shall have the meaning set forth in Section
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6.4(d).
"Report" shall have the meaning set forth in Section 6.2.
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"Restricted Period" shall have the meaning set forth in Section
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6.12(a).
"Securities Act" shall mean the Securities Act of 1933, as amended.
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"Section 338 Elections" shall have the meaning set forth in Section
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5.1(a).
"Seller" shall have the meaning set forth in the first paragraph of
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this Agreement.
"Seller's Actuary" shall have the meaning set forth in Section 6.4(d).
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"Seller's Group" shall mean any "affiliated group" (as defined in
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Section 1504(a) of the Code without regard to the limitations contained in
Section 1504(b) of the Code) that includes Seller and the Company.
"Seller's Objection" shall have the meaning set forth in Section
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2.3(b).
"Shares" shall have the meaning set forth in Section 2.1.
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"Subsidiary" shall have the meaning set forth in Section 3.4.
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"Tax Returns" shall mean all federal, state, local or foreign Tax
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returns, and Tax reports, including without limitation consolidated federal
income Tax returns of Seller's Group.
"Taxes" shall mean all taxes, fees, levies, duties, tariffs, imposts
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and other charges of any kind imposed by any governmental or other taxing
authority (together with any and all interest, penalties, and additions to tax
imposed with respect thereto), including without limitation, taxes imposed on or
with respect to income, gross receipts, windfall or excess profits, severance,
social security, capital stock, workers' compensation, property, production,
sales, use, license, excise, franchise, employment and net worth, taxes or other
charges in the nature of withholding, ad valorem, stamp, transfer, value added
or gains taxes, license, registration and documentation fees and customs duties,
tariffs and similar charges.
"Third Party Claim" shall have the meaning set forth in Section
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10.4(a).
"Transferee Plan" shall have the meaning set forth in Section 6.4(c).
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"WARN Act" shall have the meaning set forth in Section 6.10(a).
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Section I.2 Other Terms. Other terms may be defined elsewhere in
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the text of this Agreement and, unless otherwise indicated, shall have such
meaning indicated throughout this Agreement.
Section I.3 Other Definition Provisions. (a) The words "hereof",
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"herein", and "hereunder" and words of similar import, when used in this
Agreement, shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States Dollars.
ARTICLE II
Purchase and Sale of Shares
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Section II.1 Purchase and Sale of Shares. Purchaser agrees to
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purchase from Seller, and Seller agrees to sell to Purchaser, all of the issued
and outstanding shares of Common Stock, par value $4.00 per share (the
"Shares"), of the Company for an aggregate purchase price of one hundred thirty
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million three hundred thousand dollars ($130,300,000) (the "Purchase Price").
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Section II.2 Closing; Delivery and Payment.
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(a) The delivery of the Shares and payment therefor (the "Closing")
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shall take place at the offices of Global Industrial Technologies, Inc., 0000
Xxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx at 10:00 a.m. local time, on the
latest of (i) the third Business Day after which the last to be fulfilled or
waived of the conditions set forth in Article VII (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions) shall be satisfied or waived in
accordance with this Agreement; (ii) 25 days after the date of this Agreement,
or (iii) at such other time and place as the parties hereto may mutually agree.
The date on which the Closing occurs is called the "Closing Date".
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(b) At the Closing:
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(i) Seller shall deliver to Purchaser certificates representing
the Shares, duly endorsed and in form for transfer (and with any required
stock transfer stamps affixed thereto) to Purchaser; and
(ii) Purchaser shall pay to Seller, by wire transfer to an
account designated by Seller not less than two (2) Business Days prior to
the Closing, immediately available funds equivalent to the Purchase Price.
Section II.3 Post-Closing Adjustments.
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(a) Within 60 days following the Closing, Purchaser shall cause to be
prepared, and deliver to Seller (i) an audited consolidated balance sheet of the
Company as of the Closing Date (the "Closing Balance Sheet") together with a
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report thereon of the Purchaser's accountants stating that the Closing Balance
Sheet was prepared in accordance with GAAP and, if not inconsistent with GAAP,
in a manner consistent with the preparation of the Balance Sheet and using the
same accounting policies, principles and practices that were used by the Company
to prepare the Balance Sheet without any changes or modifications, which shall
set forth the consolidated assets and liabilities of the Company as of such
date; and (ii) Purchaser's determination of the Closing Net Asset Value, which
shall be derived from the Closing Balance Sheet. The Closing Balance Sheet
shall be prepared by a nationally recognized firm of independent public
accountants other than PricewaterhouseCoopers LLP and all of the costs and
expenses relating to the preparation of the Closing Balance Sheet shall be borne
solely by Purchaser.
(b) Seller and Seller's accountants shall, within 30 days after the
delivery by Purchaser of the Closing Balance Sheet, complete their review of the
Closing Balance Sheet and the Closing Net Asset Value. In the event that Seller
determines that the Closing Balance Sheet or the Closing Net Asset Value has not
been determined on the basis set forth in Section 2.3(a) hereof, Seller shall so
inform Purchaser in writing (the "Seller's Objection"), setting forth a specific
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description of the basis of Seller's Objection and the adjustments to the
Closing Balance Sheet and/or the Closing Net Asset Value which Seller believes
should be made, on or before the last day of such 30-day period. Purchaser
shall then have 30 days from receipt of the Seller's Objection to review and
respond to the Seller's Objection. If Seller and Purchaser are unable to
resolve all of their disagreements with respect to the determination of the
foregoing items within 10 days following the completion of Purchaser's review of
Seller's Objection, they shall refer their remaining differences to a nationally
recognized firm of independent public accountants other than
PricewaterhouseCoopers LLP or, if such firm or its successor has had any
significant business relationships with Seller, Purchaser or their respective
Affiliates within the last two years, another nationally recognized firm of
independent public accountants as to which Seller and Purchaser mutually agree
(the "CPA Firm"), who shall, determine on the basis of the standard set forth in
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Section 2.3(a) hereof, and only with respect to the remaining differences so
submitted, whether and to what
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extent, if any, the Closing Balance Sheet and/or Closing Net Asset Value
requires adjustment. The CPA Firm shall not make any determination as to whether
the Balance Sheet or the Closing Balance Sheet was prepared in accordance with
GAAP. The parties shall instruct the CPA Firm to deliver its written
determination to Purchaser and Seller no later than the twentieth day after any
remaining differences underlying the Seller's Objection are referred to the CPA
Firm. The CPA Firm's determination shall include a certification that it reached
such determination in accordance with this Section 2.3(b) and shall be
conclusive and binding upon Purchaser and Seller. Purchaser and Seller agree
that judgment may be entered upon the CPA Firm's determination in any court
having jurisdiction over Purchaser or Seller, as the case may be. The fees and
disbursements of the CPA Firm shall be paid by Purchaser and Seller in inverse
proportion to those matters submitted to the CPA Firm which are resolved in
favor of Purchaser or Seller, as the case may be, as so allocated between
Purchaser and Seller by the CPA Firm in accordance with this Section 2.3 at the
time of the CPA Firm's determination. Purchaser and Seller shall (and Purchaser
shall cause the Company to) make readily available to the CPA Firm and to each
other all relevant books and records and any work papers (including, to the
extent they are legally able to do so, those of the parties' respective
accountants, subject to the compliance by the recipient of any reasonable
requirements of such accountants as a condition to such access) relating to the
Closing Balance Sheet and all other items reasonably requested by the CPA Firm,
Purchaser or Seller, as the case may be. The "Adjusted Closing Balance Sheet"
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shall be (i) the Closing Balance Sheet in the event that (x) no Seller's
Objection is delivered to Purchaser during the 30-day period specified above or
(y) Seller and Purchaser so agree during such 30-day period; (ii) the Closing
Balance Sheet as adjusted in accordance with the Seller's Objection, in the
event that a Seller's Objection is timely delivered to Purchaser and (x)
Purchaser does not respond to Seller's Objection within the 30-day period
following receipt by Purchaser of Seller's Objection or (y) Seller and Purchaser
so agree during such 30-day period; or (iii) the Closing Balance Sheet as
adjusted by either (x) the agreement of Seller and Purchaser or (y) the CPA
Firm.
(c) Purchaser shall, and shall cause the Company to, provide Seller
and its accountants (i) all data and financial statements reasonably requested
by Seller and (ii) full access to the Company's books and records, any other
information, including work papers of its accountants, and to any employees.
(d) (i) Within 2 Business Days following determination of the
Adjusted Closing Balance Sheet and Closing Net Asset Value pursuant to Section
2.3(b), the adjustment payments, if any, payable pursuant to this Section 2.3(d)
shall be paid by wire transfer of immediately available funds to a bank account
designated by Purchaser or Seller, as the case may be, at least two Business
Days prior to the expiration of such 2 Business Day period. All adjustment
payments made pursuant to this Section 2.3(d) shall be treated for all tax
purposes as adjustments to the Purchase Price.
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(ii) Seller shall make an adjustment payment to Purchaser in respect
of Net Asset Value in an amount equal to the amount, if any, by which the (x)
Closing Net Asset Value is less than (y) the Net Asset Value set forth on
Schedule 3.5.
(iii) Purchaser shall make an adjustment payment to Seller in respect
of Net Asset Value in an amount equal to the amount, if any, by which the (x)
Closing Net Asset Value is greater than (y) the Net Asset Value set forth on
Schedule 3.5.
ARTICLE III
Representations and Warranties of Seller
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Seller represents and warrants to Purchaser that, except as set forth
in the disclosure schedule delivered to Purchaser by Seller (the "Disclosure
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Schedule"), as of the date hereof and as of the Closing Date (except that
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representations and warranties that are made as of a specific date need be true
only as of such date) as follows:
Section III.1 Organization and Authority of Seller. Seller is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has all requisite corporate or similar power and
authority, and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement. This Agreement is a
legal, valid and binding obligation of Seller, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles. The execution,
delivery and performance of this Agreement by Seller do not, and the
consummation by the Seller of the transactions contemplated hereby will not,
constitute or result in (i) a breach or violation of, or a default under, the
certificate of incorporation or bylaws of the Seller; (ii) a breach or violation
of, or a default under, the acceleration of any obligations or the creation of a
lien, pledge, security interest or other encumbrance (collectively,
"Encumbrances") on the assets of Seller (with or without notice, lapse of time
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or both) pursuant to, any agreement, lease, contract, note, mortgage, indenture,
arrangement or other obligation, excluding purchase orders or other similar
arrangements ("Contracts") binding upon the Seller; (iii) assuming compliance
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with the matters referred to in Sections 3.11 and 4.5, violate any governmental
or non-governmental permit or license or, to the Knowledge of Seller, any law,
statute, rule or regulation of a Governmental Entity ("Law") or any judgment,
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injunction, order, decree or other restriction of any court or Governmental
Entity having competent jurisdiction ("Order") to which Seller is subject; or
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(iv) any change in the rights or obligations of any party under any of the
Contracts, except, in the case of clause (ii), (iii) or (iv) above, for any
breach, violation, default, acceleration, creation or change that, individually
or in the aggregate, is not reasonably likely to have a
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Material Adverse Effect or to prevent, materially delay or materially impair the
ability of the Seller to consummate the transactions contemplated by this
Agreement.
Section III.2 Organization, Authority and Qualification of the
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Company. The Company is a corporation duly organized, validly existing and in
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good standing under the laws of the State of Delaware. The execution, delivery
and performance of this Agreement by the Company do not, and the consummation by
the Company of the transactions contemplated hereby will not, constitute or
result in (i) a breach or violation of, or a default under, the articles of
incorporation or bylaws of the Company or its Subsidiary; (ii) a breach or
violation of, or a default under, the acceleration of any obligations or the
creation of any Encumbrances on the assets of the Company or its Subsidiary
(with or without notice, lapse of time or both) pursuant to, any Contracts
binding upon the Company or its Subsidiary; (iii) assuming compliance with the
matters referred to in Sections 3.11 and 4.5, violate any governmental or non-
governmental permit or license or, to the Knowledge of the Company, any Law or
Order to which the Company or its Subsidiary is subject; or (iv) any change in
the rights or obligations of any party under any of the Contracts, except, in
the case of clause (ii), (iii) or (iv) above, for any breach, violation,
default, acceleration, creation or change that, individually or in the
aggregate, is not reasonably likely to cause a Material Adverse Effect or to
prevent, materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement.
Section III.3 Capitalization of the Company. The authorized
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capital stock of the Company consists of 250 shares of Common Stock, par value
$4.00 per share, of which 250 shares are validly issued and outstanding. The
Shares constitute all the issued and outstanding capital stock of the Company,
have been duly authorized and validly issued, are fully paid and nonassessable
and are owned by Seller, and when transferred at the Closing will be, free and
clear of any Encumbrances, other than such Encumbrances which were incurred by
Purchaser or caused to be incurred by the Company or its Subsidiary by Purchaser
as a result of the transactions contemplated by this Agreement. There are no
preemptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, agreements, arrangements or
commitments to issue or sell any shares of capital stock or other securities of
the Company or any securities or obligations convertible or exchangeable into or
exercisable for, or giving any Person a right to subscribe for or acquire, any
securities of the Company, and no securities or obligations evidencing such
rights are authorized, issued or outstanding. The Company does not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or convertible into or exercisable for securities
having the right to vote) with the stockholders of the Company on any matter.
The Company has the power and authority to own or lease its assets and to carry
on its business substantially as it is now being conducted, and is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the ownership or operation of its properties and assets
or the conduct of its business
-11-
requires such qualification, except where the failure to be so qualified would
not be reasonably likely to have a Material Adverse Effect.
Section III.4 Subsidiary of the Company. The Company owns directly
-------------------------
securities representing fifty-one percent (51%) of the aggregate voting power of
Palmetto Lime, LLC, a limited liability company organized and existing under the
laws of the state of South Carolina (hereinafter referred to as the
"Subsidiary"). All membership interests of the Subsidiary owned by the Company
----------
are free and clear of all Encumbrances, other than such Encumbrances which were
incurred by Purchaser or caused to be incurred by the Company or any Subsidiary
by Purchaser as a result of the transactions contemplated by this Agreement, and
all such membership interests are duly authorized, validly issued, fully paid
and nonassessable. The Company does not own an equity or other ownership
interest in any Person other than the Subsidiary. There are no preemptive or
other outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, agreements, arrangements or commitments
to issue or sell any shares of capital stock or other securities of the
Subsidiary or any securities or obligations convertible or exchangeable into or
exercisable for, or giving any Person a right to subscribe for or acquire, any
securities of the Subsidiary, and no securities or obligations evidencing such
rights are authorized, issued or outstanding. There is no obligation of the
Company or Seller to purchase any equity of the Subsidiary. The Subsidiary does
not have outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or convertible into or exercisable for
securities having the right to vote) with the unitholder of the Subsidiary on
any matter. The Subsidiary is a limited liability company duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, has the power and authority to own or lease its assets and to
carry on its business substantially as it is now being conducted, and is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the ownership or operation of its properties and assets
or the conduct of its business requires such qualification, except where the
failure to be so qualified would not be reasonably likely to have a Material
Adverse Effect.
Section III.5 Financial Statements; Liabilities. (a) Attached
---------------------------------
hereto as Schedule 3.5 is a copy of the unaudited consolidated balance sheets of
the Business as of December 31, 1998 and the unaudited consolidated statements
of operations for the year ended December 31, 1998 and cash flows for the
Business for the six months ended December 31, 1998 (collectively, with any
notes thereto, the "Financial Statements"). The Financial Statements have been
--------------------
prepared in accordance with GAAP applied on a consistent basis (except as may be
noted therein, including no accrual for federal income taxes), and present
fairly, in all material respects, the consolidated financial position and the
consolidated results of operations of the Business as of December 31, 1998,
except that the Financial Statements (i) are not a complete set of the financial
statements required by GAAP, (ii) do not have full footnote disclosure required
by GAAP and (iii) do not follow the presentation requirements of GAAP.
-12-
(b) There are no Liabilities of the Company or its Subsidiary, other
than Liabilities (i) reflected or reserved against on the Financial Statements
or otherwise set forth in this Agreement; (ii) incurred since the date of the
Financial Statements (A) in the ordinary course of business, consistent with
past practice, of the Company and its Subsidiary or (B) except as do not or
would not reasonably be expected to have a Material Adverse Effect; or (iii)
that are specifically exempt from disclosure in the Disclosure Schedule pursuant
to the express terms of the provisions of this Agreement (other than this
Section 3.5(b)) requiring such disclosure.
Section III.6 Absence of Certain Changes or Events. Since
------------------------------------
September 30, 1998, and with respect to clause (iii) below, since December 31,
1998, the Company and its Subsidiary have conducted the Business only in, and
have not engaged in any material transaction other than according to, the
ordinary and usual course of such Business consistent with past practice and
there has not been (i) any adverse change in the Business, except those changes
that, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect; (ii) any material damage, destruction or other casualty
loss with respect to any material asset or property owned, leased or otherwise
used by the Company or its Subsidiary not covered by insurance; (iii) any
material change by the Company in Tax or accounting principles, practices or
methods; (iv) any labor dispute, other than routine matters, which has had or is
reasonably likely to have a Material Adverse Effect; (v) except for increases or
amendments in the ordinary and usual course of business consistent with past
practice or as required by Law, any material increase in the compensation
payable or to become payable by the Company or its Subsidiary to any of their
directors, officers or employees or any increase in the benefits under, or
adoption of, any bonus, insurance, pension or other employee benefit plan,
payment or arrangement, for or with any such directors, officers or employees;
(vi) made any material changes in the customary methods of operations of the
Company or the Subsidiary, including, without limitation, practices and policies
relating to manufacturing, purchasing, inventories, marketing, selling and
pricing; (vii) merged with, entered into a consolidation with or acquired an
interest of 5% or more in any Person or acquired a substantial portion of the
assets or business of any Person or any division or line of business thereof, or
otherwise acquired any material assets other than in the ordinary course of
business consistent with past practice; (viii) other than in connection with the
Subsidiary, made any capital expenditure or commitment for any capital
expenditure in excess of $50,000 individually or $250,000 in the aggregate; (ix)
entered into any Contracts calling for an exchange value of more than $250,000;
(x) except as set forth on Schedule 3.10 of the Disclosure Schedule, entered
into any material agreement, arrangement or transaction with any of its
directors, officers, employees or shareholders (or with any relative,
beneficiary, spouse or affiliate of such Person); (xi) written down or written
up (or failed to write down or write up in accordance with GAAP consistent with
past practice) the value of any inventories or receivables or revalued any
assets of the Company or the Subsidiary other than in the ordinary course of
business consistent with past practice and in accordance with GAAP; (xii) other
than in the ordinary course of business, amended, modified or consented to the
-13-
termination of any Contract or the Company's or the Subsidiary's rights
thereunder; (xiii) amended or restated the Certificate of Incorporation or the
By-laws (or other organizational documents) of the Company or the Subsidiary;
(xiv) any indebtedness incurred or loan or guarantee of indebtedness made or
(xv) permitted or allowed any of the Assets to be subjected to any Encumbrance,
other than Permitted Encumbrances.
Section III.7 Title to Properties; Absence of Liens and Encumbrances,
-------------------------------------------------------
Etc. (a) Schedule 3.7(a)(i) hereto lists all leases and subleases of real
----
property entered into by the Company or its Subsidiary at the locations
described thereon as of the date hereof. Schedule 3.7(a)(ii) hereto lists all
properties owned by the Company or its Subsidiary as of the date hereof (the
"Owned Real Property"). Except as set forth on Schedule 3.7(a)(iii) hereto,
--------------------
each of the Company and the Subsidiary has good and marketable title to the
Owned Real Property and a valid and binding leasehold interest in, the leases
and subleases of real property under which the Company or the Subsidiary, as the
case may be, is the lessee or sublessee (the "Leased Real Property") free and
--------------------
clear of any Encumbrances, except for: (i) any Encumbrances reflected in the
Financial Statements; (ii) any Encumbrances which, alone or in the aggregate,
would not be reasonably likely to have a Material Adverse Effect; (iii) any
Encumbrances for Taxes, assessments and other governmental charges not yet due
and payable or due but not delinquent or being contested in good faith by
appropriate proceedings; (iv) except as would not reasonably be expected to have
a Material Adverse Effect, any mechanics', workmen's, repairmen's,
warehousemen's, carriers' or other like liens and encumbrances arising in the
ordinary and usual course of business consistent with past practice or being
contested in good faith by appropriate proceedings; (v) easements, rights of way
or other similar matters or restrictions or exclusions which would be shown by a
current title report or other similar report which do not or would not
reasonably be expected to materially adversely affect the operation of the
Business at such location as the Business is currently being conducted at such
location; and (vi) any condition or other matter, if any, that may be shown or
disclosed by a current and accurate survey or physical inspection which do not
or would not reasonably be expected to materially adversely affect the operation
of the Business at such location as the Business is currently being conducted at
such location (clauses (i) through (vi) are collectively referred to herein as
"Permitted Encumbrances").
-----------------------
(b) Neither the Company nor its Subsidiary is in default under any
lease or sublease with respect to any Leased Real Property, except defaults
which, individually or in the aggregate, would not be reasonably likely to have
a Material Adverse Effect.
Section III.8 Litigation. There are, as of the date hereof, no
----------
claims, actions, suits, proceedings or investigations pending, or to the
Knowledge of Seller and the Company, threatened, against the Company or its
Subsidiary at law, in equity or otherwise, in, before, or by, any court or
Governmental Entity or authority which, individually or in the aggregate, would
be reasonably likely to have a Material Adverse Effect.
-14-
Section III.9 Compliance with Law. The Business is not being
-------------------
conducted in violation of any applicable Law, and all governmental approvals,
permits and licenses required to conduct the Business have been obtained, except
for any noncompliance which, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect; it being understood that
nothing in this representation is intended to address any compliance issue that
is (i) related to any Environmental Law or (ii) the subject of any other
representation or warranty set forth herein.
Section III.10 Contracts. (a) Within 7 days after the date hereof,
---------
Seller shall deliver to Purchaser, Schedule 3.10(a) which shall set forth the
following Contracts to which the Company or its Subsidiary is a party on the
date hereof:
(i) (A) any Contract of the Company (other than a lease or sublease to
which the Company is a party) the performance of which involved aggregate
consideration in excess of $250,000.00 and which agreement is not cancellable,
without penalty, by the Company on not more than ninety (90) days' notice;
(B) any Contract of the Subsidiary (other than a lease or sublease to
which the Subsidiary is a party) the performance of which involved aggregate
consideration in excess of $1,000,000.00 and which agreement is not cancellable,
without penalty, by the Subsidiary on not more than ninety (90) days' notice;
(ii) any collective bargaining agreement;
(iii) any employment agreement;
(iv) any agreement which relates to indebtedness owed by the
Company or its Subsidiary, or the guarantee thereof;
(v) all broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market research, marketing
consulting and advertising Contracts and agreements to which the Company or its
Subsidiary is a party;
(vi) (A) all Contracts with independent contractors or
consultants to which the Company is a party and which are not cancellable
without penalty or further payment and without more than 30 days' notice;
(B) all Contracts with independent contractors or
consultants, the performance of which involved aggregate consideration in excess
of $1,000,000.00 to which the Subsidiary is a party and which are not
cancellable without penalty or further payment and without more than 30 days'
notice;
-15-
(vii) all Contracts with any Governmental Entity to which the
Company or its Subsidiary is a party;
(viii) all Contracts that limit or purport to limit the ability
of the Company or its Subsidiary to compete in any line of business or with any
Person or in any geographic area or during any period of time;
(ix) all Contracts between or among the Company or its
Subsidiary on the one hand and Seller or any affiliate of Seller on the other
hand; and
(x) any other Contracts which are material to the Company and
its Subsidiary, taken as a whole, the absence of which would have a Material
Adverse Effect.
(b) Seller shall, within 7 days of the date of this Agreement, make
available to Purchaser a correct and complete copy of each Contract listed in
Schedule 3.10(a), together with any and all amendments or modifications thereto.
Subject to such exceptions that, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect, each such Contract is
valid, binding, enforceable, and in full force and effect, the Company is not in
breach or default under any such Contract and no event has occurred which, with
or without notice or lapse of time or both, would constitute a breach or
default, or permit termination, modification, or acceleration, under such
Contract.
Section III.11 Consents and Approvals. Other than the filings
----------------------
and/or notices (i) set forth in Schedule 3.11; (ii) under the HSR Act; or (iii)
in connection with any Leased Real Property, no notices, reports or other
filings are required to be made by Seller, the Company or its Subsidiary with,
nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by Seller, the Company or its Subsidiary from, any
Governmental Entity, in connection with the execution and delivery of this
Agreement by Seller and the consummation by Seller of the transactions
contemplated hereby, except those that the failure to make or obtain are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect or prevent, materially delay or materially impair the ability of Seller
to consummate the transactions contemplated by this Agreement.
Section III.12 Tax Matters. Except as set forth in Schedule 3.12,
-----------
(i) all material Tax Returns that are required to be filed by or with respect to
the Seller's Group, including the Company and its Subsidiary, have been timely
and duly filed, and such Tax Returns are true, correct and complete in all
material respects; (ii) all material Taxes shown to be due on the Tax Returns
referred to in clause (i) or otherwise due have been paid in full; (iii) the Tax
Returns referred to in clause (i) have been examined by the IRS or the
appropriate state, local or foreign taxing authority or the period for
assessment of the Taxes in respect of which such Tax Returns were required to be
filed has expired, and no notice has been received by Seller's Group regarding
an actual or threatened examination for a taxable period for which the period of
assessment of Taxes has not expired and for which the
-16-
Company or its Subsidiary may be liable; (iv) all material deficiencies asserted
or assessments made as a result of such examinations have been paid in full; (v)
no material issues that have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns referred to in clause
(i) are currently pending; (vi) no waivers of statutes of limitation have been
given by or requested with respect to any Taxes of the Seller's Group; (vii) no
tax is required to be withheld pursuant to Section 1445 of the Code as a result
of the transfer contemplated by this Agreement; (viii) no consent under Section
341(f) of the Code has been or will be filed with respect to the Company or the
Subsidiary; (ix) there are no Tax liens on any assets of the Company or its
Subsidiary except for Tax liens in respect of Taxes not yet due and payable or
due but not delinquent or being contested in good faith by appropriate
proceedings; (x) neither Seller nor the Subsidiary is a party to any agreement
or arrangement that would result, separately or in the aggregate, in the payment
of any "excess parachute payments" within the meaning of Section 280G of the
Code; and (xi) neither the Company nor its Subsidiary has or is projected to
have any amount includible in income under Sections 951 or 1293 of the Code.
Section III.13 Intellectual Property.
---------------------
(a) Schedule 3.13(a) sets forth a list and brief description of (i)
all material patents, patent applications, registered trademarks, trademark
applications, registered copyrights and copyright applications that are owned by
the Company or its Subsidiary and used in the Business; and (ii) all agreements
under which the Company or its Subsidiary are licensed or otherwise permitted,
or license or otherwise permit a third party, to use patents, trademarks and
copyrights which are material to the Business.
(b) (i) The Company and its Subsidiary directly or indirectly own, or
are licensed or otherwise possess valid rights to use, all Intellectual Property
used in the Business as currently conducted, with such exceptions, individually
or in the aggregate, as have not had and would not be reasonably likely to have
a Material Adverse Effect and (ii) no Person is challenging or, to the Knowledge
of the Company, infringing or otherwise violating the Intellectual Property of
the Company and its Subsidiary, except in each case for challenges,
infringements or violations, which individually or in the aggregate, would not
be reasonably likely to have a Material Adverse Effect.
Section III.14 Labor Matters. Except as set forth on Schedule
-------------
3.10(a), neither the Company nor its Subsidiary is a party to any collective
bargaining agreement respecting its employees, nor is there pending, or to the
Knowledge of the Seller threatened, any strike, walkout or other work stoppage
or any union organizing effort by or respecting the employees.
Section III.15 Employee Benefits.
-----------------
-17-
(a) Set forth on Schedule 3.15(a) of the Disclosure Schedule is a
complete and correct list of all "employee benefit plans" as defined by Section
3(3) of ERISA, and all other bonus, incentive compensation, deferred
compensation, profit sharing, stock option, stock appreciation right, stock
bonus, stock purchase, employee stock ownership, savings, severance,
supplemental unemployment, layoff, salary continuation, retirement, pension,
health, life insurance, disability, accident, group insurance, vacation,
holiday, sick leave, fringe benefit or welfare plan, and any other employee
compensation or benefit plan, agreement, policy, practice, commitment, contract,
or understanding (whether qualified or nonqualified, currently effective or
terminated, written or unwritten), and any trust, escrow or other agreement
related thereto, which provides benefits, or describes policies or procedures
applicable to any current or former director, officer, employee, or service
provider of the Company or its Subsidiary, or the dependents of any thereof,
regardless of whether funded (the "Company Plans"). Schedule 3.15(a) of the
-------------
Disclosure Schedule identifies as such any Company Plan that is (i) a "defined
benefit plan" (as defined in Section 414(l) of the Code); (ii) any other plan
intended to meet the requirements of Section 401(a) of the Code; (iii) a
"multiemployer plan" (as defined in Section 3(37) of ERISA); and (iv) any other
plan which is subject to Title IV of ERISA, other than a multiemployer plan.
The Company has delivered or made available to Purchaser true,
accurate and complete copies of (i) the documents comprising each Company Plan
(or, with respect to any Company Plan which is unwritten, a detailed written
description of eligibility, participation, benefits, funding arrangements,
assets and any other matters which relate to the obligations of the Company or
its Subsidiary); (ii) all trust agreements, insurance contracts or any other
funding instruments related to the Company Plans; (iii) all rulings,
determination letters, no-action letters or advisory opinions from the IRS, U.S.
Department of Labor, the Pension Benefit Guaranty Corporation ("PBGC"), or any
----
other federal or state authority that pertain to each Company Plan and any open
requests therefor; (iv) the most recent actuarial and financial reports (audited
and/or unaudited) and the annual reports filed with any government agency with
respect to the Company Plans during the current year; and (v) all summary plan
descriptions and any memoranda, employee handbooks and other written
communications regarding the Company Plans.
(b) All Company Plans are in substantial compliance with all
applicable laws, including the Code and the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). The Company has received a favorable
-----
determination letter from the IRS with respect to each Company Plan which is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA (a
"Pension Plan") and which is intended to be qualified under Section 401(a) of
-------------
the Code and the Company is not aware of any circumstances likely to cause the
revocation of any such letter. As of the date hereof, there is no material
pending or, to the Knowledge of the Company, threatened litigation relating to
the Company Plans. Neither the Company nor the Subsidiary has engaged in any
transactions with respect to any Company Plan that, assuming the "taxable
period" (as defined
-18-
in Section 4975 of the Code) with respect to such transaction expired as of the
date hereof, would subject the Company or its Subsidiary to a material tax or
penalty imposed by Section 4975 of the Code or Section 502 of ERISA.
(c) As of the date hereof, no liability under Subtitle C or D of Title
IV of ERISA has been or is expected to be incurred by the Company or its
Subsidiary with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which is
considered one employer with the Company under Section 4001 of ERISA or Section
414 of the Code (an "ERISA Affiliate"). Neither the Company nor, to the
---------------
Company's Knowledge, any ERISA Affiliate has any Liability or has Knowledge of
any facts or circumstances that might give rise to any Liability of the Company
or its Subsidiary and the transactions contemplated under this Agreement will
not result in any Liability (i) for any lien imposed under Section 302(f) of
ERISA or Section 412(n) of the Code; (ii) for any interest payments required
under Section 302(e) of ERISA or Section 412(m) of the Code; (iii) for any
excise tax imposed by Section 4971 of the Code; or (iv) for any minimum funding
contributions under Section 302(c)(11) of ERISA or Section 412(c)(11) of the
Code. Neither the Company nor its Subsidiary has contributed to or maintained
any defined benefit plan during the past six years other than the plan(s) set
forth on Schedule 3.15(a)(i) of the Disclosure Schedule. Neither the Company
nor its Subsidiary has contributed, or been obligated to contribute, to a
"multiemployer plan" (within the meaning of Section 3(37) of ERISA) at any time
during the six-year period prior to the date hereof. Neither the Company, nor
its Subsidiary, nor any ERISA Affiliate has withdrawn from any multiemployer
plan with respect to which there is any outstanding Liability to the Company or
its Subsidiary as of the date of this Agreement. 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, had been required to be filed for any
Pension Plan or by any ERISA Affiliate within the 12-month period ending on the
date hereof or will be required to be filed in connection with the transactions
contemplated by this Agreement.
(d) All contributions required to be made by the Company or its
Subsidiary under the terms of any Company Plan as of the date hereof have been
timely made or have been reflected in the Financial Statements. The Company and
its Subsidiary have made required entries in their financial statements and
statements for all obligations and liabilities under the Company Plans that have
accrued but are not yet payable. Neither any Pension Plan nor any single
employer plan of an ERISA Affiliate has an "accumulated funding deficiency"
(within the meaning of Section 412 of the Code or Section 302 of ERISA) whether
or not waived. Neither the Company nor its Subsidiary 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. Since the
last valuation date for such Pension Plan, no event has occurred or circumstance
exists that would substantially increase the amount of benefits under such plan.
-19-
(e) The consummation of the transactions contemplated by this
Agreement will not (x) entitle any of the employees of the Company or its
Subsidiary to severance pay (other than severance pay described in Section
6.4(a)), (y) accelerate the time of payment or trigger any payment of
compensation or benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Company Plans or (z) result in any
breach or violation of, or a default under, any of the Company Plans.
(f) There is no bonus payable by Seller, the Company or its Subsidiary
to any director, officer or other employee of Seller, the Company or its
Subsidiary in connection with the transactions contemplated by this Agreement.
Section III.16 Environmental Matters . (a) Except as would not be
---------------------
reasonably likely to have a Material Adverse Effect, the Company and its
Subsidiary (i) are in compliance with applicable Environmental Laws; (ii) have
not received any written notices from any Governmental Entity alleging the
violation of or Liabilities or potential Liability under, any applicable
Environmental Law; (iii) are not the subject of any court order, administrative
order or decree arising under any Environmental Law; (iv) have not generated,
stored, used, emitted, discharged or disposed of any Hazardous Substance except
as permitted under applicable Environmental Laws; and (v) do not have any
contamination on any Leased Real Property or Owned Real Property which requires
remediation or other action under any applicable Environmental Law.
(b) Notwithstanding any other representation in this Article III, this
Section 3.16 constitutes the sole representation of the Company and its
Subsidiary with respect to any Environmental Law or any Hazardous Substance.
Section III.17 Insurance. Schedule 3.17 hereto lists all material
---------
insurance policies maintained by or on behalf of the Company or its Subsidiary.
Section III.18 Brokers and Finders. Other than Xxxxxxxxxxx Xxxxxxx
-------------------
& Co., Inc. and X.X. Xxxxxx & Co., Inc., Global, Seller, the Company and its
Subsidiary have not employed any broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement who would be
entitled to a broker's, finder's or similar fee or commission in connection
therewith or upon the consummation thereof, or if the Closing does not occur.
Global and Seller agree to bear all costs they incur, including fees and
expenses of Xxxxxxxxxxx Xxxxxxx & Co., Inc. and X.X. Xxxxxx & Co., Inc., in
connection with the transactions contemplated by this Agreement unless otherwise
expressly provided herein.
Section III.19 Lime Reserves . The amount of reserves at each of
-------------
the Texas and Virginia sites owned by the Company or its Subsidiary, in the
aggregate, are no less than 50 years at current production levels.
-20-
Section III.20 Assets. (a) Either the Company or its Subsidiary,
------
as the case may be, owns, leases or has the legal right to use all the
properties and assets necessary to be used in the conduct of the Business in
substantially the same manner as conducted prior to the date hereof (all such
properties and assets being the "Assets"). Either the Company or its
------
Subsidiary, as the case may be, has good and marketable title to, or, in the
case of leased or subleased Assets, valid and subsisting leasehold interests in,
all the Assets, free and clear of all Encumbrances other than Permitted
Encumbrances.
(b) Since December 31, 1998, the Company has caused the Assets to be
adequately maintained and all the Assets are in good operating condition and
repair, except as would not have, or reasonably be expected to have, a Material
Adverse Effect.
(c) Following the Closing, neither the Company nor its Subsidiary
shall incur any material penalty or other material adverse consequence,
including, without limitation, any material increase in rentals, royalties or
licenses or other fees imposed solely as a result of, or arising solely from,
the consummation of the transactions contemplated by this Agreement.
Section III.21 Capital Expenditures. (a) To the knowledge of
--------------------
Seller, the cost for the first phase (the "First Phase") of construction of the
-----------
Subsidiary's plant in Charleston, South Carolina (the "Plant") shall not exceed
-----
$29.7 million.
(b) At the end of the First Phase, such Plant will be in an operable
condition that is consistent with the specifications set forth in the 800 TPB
Vertical Kiln Lime Plant Contract between the Subsidiary and Ferenco
Corporation.
Section III.22 No Other Representations or Warranties . Except for
--------------------------------------
the representations and warranties contained in this Article III, neither
Seller, the Company, its Subsidiary nor any other Person has made or makes any
other express or implied representation or warranty, either written or oral, on
behalf of Seller, the Company or its Subsidiary.
ARTICLE IV
Representations and Warranties of Purchaser
-------------------------------------------
Purchaser represents and warrants to Seller as of the date hereof and
as of the Closing Date (except that representations and warranties that are made
as of a specific date need be true only as of such date) as follows:
-21-
Section IV.1 Organization and Authority of Purchaser. Purchaser is
---------------------------------------
a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada, has all requisite corporate or similar power and
authority, and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement. This Agreement is a
legal, valid and binding obligation of Purchaser, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditor's rights and to general equity principles. The execution,
delivery and performance of this Agreement by Purchaser do not, and the
consummation by Purchaser of the transactions contemplated hereby will not,
constitute or result in (i) a breach or violation of, or a default under, the
certificate of incorporation or by-laws of Purchaser; (ii) a breach or violation
of, or a default under, the acceleration of any obligations or the creation of a
lien, pledge, security interest or other encumbrance on the assets of Purchaser
(with or without notice, lapse of time or both) pursuant to, any Contracts
binding upon Purchaser; (iii) to the Knowledge of Purchaser, assuming compliance
with the matters referred to in Sections 3.11 and 4.5, violate any Law, Order or
governmental or non-governmental permit or license to which Purchaser is
subject; or (iv) any change in the rights or obligations of any party under any
of the Contracts to which Purchaser is party, except, in the case of clause
(ii), (iii) or (iv) above, for any breach, violation, default, acceleration,
creation or change that, individually or in the aggregate, is not reasonably
likely to materially delay or materially impair the ability of Purchaser to
consummate the transactions contemplated by this Agreement.
Section IV.2 Brokers and Finders. Other than Xxxxxxxx & Co. Inc.,
-------------------
Purchaser has not employed any broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement who would be
entitled to a broker's, finder's or similar fee or commission in connection
therewith or upon the consummation thereof, or if the Closing does not occur.
Purchaser agrees to bear all costs it incurs, including fees and expenses of
Xxxxxxxx & Co. Inc., in connection with the transactions contemplated by this
Agreement unless otherwise expressly provided herein.
Section IV.3 Financial Capability. On the Closing Date Purchaser
--------------------
shall have sufficient funds to purchase the Shares on the terms and conditions
contemplated by this Agreement.
Section IV.4 Securities Act. Purchaser is acquiring the Shares
--------------
solely for the purpose of investment and not with a view to, or for sale in
connection with, any distribution thereof in violation of the Securities Act.
Purchaser acknowledges that the Shares are not registered under the Securities
Act or any applicable state securities law, and that such Shares may not be
transferred or sold except pursuant to the registration provisions of the
Securities Act or pursuant to an applicable exemption therefrom and pursuant to
state securities laws and regulations as applicable.
-22-
Section IV.5 Consents and Approvals. Other than the filings and/or
----------------------
notices under the HSR Act, no notices, reports or other filings are required to
be made by Purchaser or its affiliates with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
Purchaser or its affiliates from, any Governmental Entity, in connection with
the execution and delivery of this Agreement by Purchaser and the consummation
by Purchaser of the transactions contemplated hereby.
Section IV.6 No Other Representations or Warranties. Except for
--------------------------------------
the representations and warranties contained in this Article IV, neither
Purchaser nor any other Person has made or makes any other express or implied
representation or warranty, either written or oral, on behalf of Purchaser.
ARTICLE V
Tax Matters
-----------
Section V.1 Section 338(h)(10). (a) Election. At the option of
------------------
the Purchaser, Seller and Purchaser shall make a joint election under Section
338(h)(10) of the Code, and shall make any comparable elections available under
the laws of any state or local jurisdiction with respect to the purchase of the
Shares (collectively, the "Section 338 Elections"). Seller represents that its
---------------------
sale of the Shares is eligible for, and Purchaser represents that it is
qualified to make, the election under Section 338(h)(10) of the Code. Purchaser
and Seller shall comply fully with all filing and other requirements necessary
to effectuate such Section 338 Elections on a timely basis, and agree to
cooperate with each other in good faith in connection with the making of such
Section 338 Elections. Seller shall pay any Taxes attributable to the Section
338 Elections and will indemnify Buyer in accordance with Section 5.2(a) against
any adverse consequence arising out of any failure to make the Section 338
Elections, or to pay the resulting Taxes.
(b) For purposes of making the Section 338 Elections, the Purchaser
shall determine the value of the intangible and tangible assets of the Company
and shall provide Seller, within one hundred twenty (120) days of the due date
for the filing of the Section 338(h)(10) election under the Code, with an
allocation of the Purchaser's "adjusted grossed-up basis" in the Shares (within
the meaning of the Treasury Regulations) of the Company to such assets (the
"Allocation"). The Allocation shall be binding upon the Purchaser and Seller
-----------
for purposes of allocating the "deemed selling price" (within the meaning of the
Treasury Regulations) among the assets of the Company; provided, however, that
-------- -------
if the Seller believes that all or a portion of the Allocation is materially
incorrect, and notifies the Purchaser of such belief, in writing, within fifteen
(15) days of Seller's receipt of the Allocation, the CPA Firm shall determine,
within thirty (30) days of the due date for the filing of the Section 338(h)(10)
-23-
election under the Code, whether the Allocation is materially incorrect and such
determination shall be final and binding on the parties. If the CPA Firm
determines the Allocation (or any portion thereof) is materially incorrect the
Purchase and Seller shall be bound by the Allocation as adjusted by the CPA
Firm. The Purchaser and Seller agree to file their Tax Returns, and any other
reports required by the Code, in accordance with the Allocation as finally
determined, and neither Seller nor Purchaser shall take any position with a Tax
authority that is inconsistent with the Allocation.
Section V.2 Liability for Taxes and Related Matters. (a)
---------------------------------------
Liability for Taxes. Except to the extent treated as a liability in the
calculation of Closing Date Net Asset Value, Seller shall be liable for and
indemnify Purchaser for all Taxes, including, without limitation, any obligation
to contribute to the payment of a Tax determined on a consolidated, combined or
unitary basis with respect to a group of corporations that includes or included
the Company or the Subsidiary and Taxes resulting from the Company or the
Subsidiary ceasing to be a member of Seller's Group, or attributable to the
Section 338 Elections, (i) imposed on Seller's Group (other than the Company or
the Subsidiary) for any taxable year; or (ii) imposed on the Company or the
Subsidiary or for which the Company or the Subsidiary may otherwise be liable
for any taxable year or period that ends on or before the Closing Date or, with
respect to any taxable year or period beginning before and ending after the
Closing Date, for the portion of such taxable year ending on and including the
Closing Date. Except as set forth in Section 5.2(e), or to the extent treated
as an asset in the calculation of Closing Net Asset Value, Seller shall be
entitled to any refund of Taxes of the Company received for such periods.
Notwithstanding the foregoing, the indemnity provided herein extends only to
costs borne directly or indirectly by Purchaser and does not extend to costs
borne by any other party, including without limitation any other holder of
limited liability company membership interests in the Subsidiary.
(b) Except to the extent treated as an asset in the calculation of
Closing Net Asset Value, Purchaser shall be liable for and indemnify Seller for
the Taxes of the Company and the Subsidiary for any taxable year or period that
begins after the Closing Date or, with respect to any taxable year or period
beginning before and ending after the Closing Date, for the portion of such
taxable year beginning after the Closing Date. Except to the extent treated as
a liability in the calculation of Closing Net Asset Value, Purchaser shall be
entitled to any refund of Taxes of the Company received for such periods.
Notwithstanding the foregoing, the indemnity provided herein extends only to
costs borne directly or indirectly by Seller and does not extend to costs borne
by any other party, including without limitation any other holder of limited
liability company membership interests in the Subsidiary.
(c) Taxes for Short Taxable Year. For purposes of Sections 5.2 (a)
and (b), whenever it is necessary to determine the liability for Taxes of the
Company or the Subsidiary for a portion of a taxable year or period that begins
before and ends after the Closing Date, the determination of the Taxes of the
Company and the Subsidiary for the
-24-
portion of the year or period ending on, and the portion of the year or period
beginning after, the Closing Date shall be determined by assuming that the
Company and Subsidiary each had a taxable year or period which ended at the
close of the Closing Date, except that exemptions, allowances or deductions that
are calculated on an annual basis, such as the deduction for depreciation, shall
be apportioned on a time basis.
(d) Adjustment to Purchase Price. Any payment by Purchaser or Seller
under this Section 5.2 will be an adjustment to the Purchase Price.
(e) Refunds from Carrybacks. If Seller becomes entitled to a refund
or credit of Taxes for any period for which it is liable under Section 5.2(a) to
indemnify Purchaser and such Taxes are attributable solely to the carryback of
losses, credits or similar items attributable to the Company and from a taxable
year or period that begins after the Closing Date, Seller shall promptly pay to
the Purchaser the amount of such refund or credit together with any interest
thereon. In the event that any refund or credit of Taxes for which a payment
has been made is subsequently reduced or disallowed, the Purchaser shall
indemnify and hold harmless the Seller for any Tax liability, including interest
and penalties, assessed against Seller by reason of the reduction or
disallowance.
(f Tax Returns. Seller shall file or cause to be filed when due all
Tax Returns that are required to be filed by or with respect to the Company and
Subsidiary for taxable years or periods ending on or before the Closing Date and
shall pay any Taxes due in respect of such Tax Returns, and Purchaser shall file
or cause to be filed when due all Tax Returns that are required to be filed by
or with respect to the Company and Subsidiary for taxable years or periods
ending after the Closing Date and shall remit any Taxes due in respect of such
Tax Returns. Seller shall pay Purchaser the Taxes for which Seller is liable
pursuant to Section 5.2(a) but which are payable with Tax Returns to be filed by
Purchaser pursuant to the previous sentence within 10 Business Days prior to the
due date for the filing of such Tax Returns.
(g Contest Provisions. Purchaser shall promptly notify Seller in
writing upon receipt by Purchaser, any of its affiliates or the Company of
notice of any pending or threatened federal, state, local or foreign income or
franchise tax audits or assessments which may materially affect the tax
liabilities of the Company or the Subsidiary for which Seller would be required
to indemnify Purchaser pursuant to Section 5.2(a), provided that failure to
comply with this provision shall not affect Purchaser's right to indemnification
hereunder. Seller shall have the sole right to represent the Company's and the
Subsidiary's interests in any Tax audit or administrative or court proceeding
relating to taxable periods ending on or before the Closing Date, and to employ
counsel of its choice at its expense. Notwithstanding the foregoing, Seller
shall not be entitled to settle, either administratively or after the
commencement of litigation, any claim for Taxes which would adversely affect the
liability for Taxes of the Purchaser, the Company or the Subsidiary for any
period after the Closing
-25-
Date to any extent (including, but not limited to, the imposition of income tax
deficiencies, the reduction of asset basis or cost adjustments, the lengthening
of any amortization or depreciation periods, the denial of amortization or
depreciation deductions, or the reduction of loss or credit carryforwards)
without the prior written consent of Purchaser. Such consent shall not be
unreasonably withheld, and shall not be necessary to the extent that Seller has
indemnified the Purchaser against the effects of any such settlement.
Seller shall be entitled to participate at its expense in the defense
of any claim for Taxes for a year or period ending after the Closing Date which
may be the subject of indemnification by Seller pursuant to Section 5.2(a) and,
with the written consent of Purchaser, and at its sole expense, may assume the
entire defense of such Tax claim. None of Purchaser, the Company or the
Subsidiary may agree to settle any Tax claim for the portion of the year or
period ending on the Closing Date which may be the subject of indemnification by
Seller under Section 5.2(a) without the prior written consent of Seller, which
consent shall not be unreasonably withheld.
(h Termination of Tax Allocation Agreements. Any tax allocation or
sharing agreement or arrangement, whether or not written, that may have been
entered into by Seller or any member of Seller's Group and the Company shall be
terminated as to the Company as of the Closing Date, and no payments which are
owed by or to the Company pursuant thereto shall be made thereunder, except to
the extent such obligation is reflected on the Closing Balance Sheet.
Section V.3 Transfer Taxes. All applicable sales, transfer
--------------
recording, deed, stamp and other similar Taxes which may be imposed on or
assessed against Purchaser, Seller or any of their respective Subsidiaries as a
result of or in connection with Purchaser's acquisition of the Shares, including
but not limited to any real property transfer taxes, shall be borne 50% by
Purchaser and 50% by Seller.
Section V.4 Information to be Provided by Purchaser. With respect
---------------------------------------
to the taxable year of Seller ending December 31, 1998 and the portion of
Seller's current taxable year prior to the Closing Date, Purchaser shall
promptly cause the Company to prepare and provide to Seller a package of Tax
information materials reasonably requested by Seller (the "Tax Package"), which
shall be completed in accordance with past practice including past practice as
to providing the information, schedules and work papers and as to the method of
computation of separate taxable income or other relevant measure of income of
the Company and the Subsidiary. Purchaser shall cause the Tax Package for the
portion of the taxable period ending on the Closing Date to be delivered to
Seller within one hundred twenty (120) calendar days after the receipt of such
request from Seller.
Section V.5 Assistance and Cooperation. After the Closing Date,
--------------------------
each of Seller and Purchaser shall:
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(a assist (and cause their respectiv e affiliates to assist) with
reasonable requests from the other party regarding the preparation of any Tax
Returns or reports which such other party is responsible for preparing and
filing in accordance with this Article V;
(b cooperate fully with reasonable requests from the other party
regarding the preparation for any audits of, or disputes with taxing authorities
regarding, any Tax Returns of the Company or the Subsidiary;
(c make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to Taxes
of the Company or the Subsidiary;
(d provide timely notice to the other in writing of any pending or
threatened tax audits or assessments of the Company or the Subsidiary for
taxable periods for which the other may have a liability under this Article V;
and
(e furnish the other with copies of all correspondence received
from any taxing authority in connection with any tax audit or information
request with respect to any such taxable period.
Section V.6 Section 1445. At the Closing, Seller shall deliver to
------------
Purchaser an affidavit, in a form reasonably satisfactory to Purchaser, stating
under penalties of perjury the Seller's U.S. taxpayer identification number and
that Seller is not a foreign person within the meaning of Section 1445(b)(2) of
the Code.
ARTICLE VI
Certain Covenants and
Agreements of Seller and Purchaser
----------------------------------
Section VI.1 Access and Information. (a) Seller shall permit
----------------------
Purchaser and its representatives after the date of execution of this Agreement
until the Closing Date to have complete access, during regular business hours
and reasonable non-business hours and upon reasonable advance notice, to the
real property owned or leased by the Company and its Subsidiary and to the
officers and operating level employees of the Company and its Subsidiary, and
shall promptly make available, or cause to be promptly made available, to
Purchaser any financial and operating data and all other information that is
available with respect to the Business and properties of the Business as
Purchaser shall from time to time reasonably request and shall use its
reasonable best efforts to arrange meetings with third parties as reasonably
requested by Purchaser and shall permit Phase I environmental
-27-
assessments; provided, however, that Purchaser shall not permit any of its
-------- -------
operating personnel or other personnel responsible for pricing matters to have
access to any information obtained from the Company or its Subsidiary relating
to current or future pricing matters.
(b All information provided or obtained pursuant to clause (a) above
shall be held by Purchaser in accordance with and subject to the terms of the
Confidentiality Agreement, dated February 10, 1999, between Purchaser and Seller
(the "Confidentiality Agreement").
-------------------------
Section VI.2 Registrations, Filings and Consents . (a) Seller and
-----------------------------------
Purchaser will cooperate and use their respective reasonable best efforts to
fulfill the conditions precedent to the other party's obligations hereunder,
including but not limited to, securing as promptly as practicable all consents,
approvals, waivers and authorizations required, necessary or desirable in
connection with the transactions contemplated hereby. Purchaser and Seller will
promptly file documentary materials required by the HSR Act and each of the
items listed in Schedule 3.11 and Schedule 4.5 and promptly file any additional
information requested as soon as practicable after receipt of request thereof;
provided; that each party shall duly file with the FTC and the Antitrust
-------- ----
Division the notification and report form (the "Report") required under the HSR
------
Act with respect to the sale and purchase of Shares no later than ten (10)
Business Days after the date hereof. Purchaser and Seller shall use their
respective reasonable best efforts to promptly take, or cause to be taken, all
other action and do, or cause to be done, all other things necessary, proper or
appropriate under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement as soon as
practicable. Notwithstanding the foregoing, Purchaser shall be under no
obligation to sell or dispose any of the assets of the Company or its Subsidiary
acquired pursuant to this Agreement, or any assets or businesses of Purchaser,
in order to complete the transactions contemplated herein.
(b Without limiting the foregoing, each party agrees, if necessary,
to litigate in good faith any judicial action brought by any Governmental Entity
seeking the entry of a preliminary or permanent injunction to enjoin, in whole
or in part, the transactions contemplated herein.
Section VI.3 Conduct of Business. (a) Prior to the Closing, and
-------------------
except as otherwise expressly provided for by this Agreement or consented to or
approved by Purchaser in writing, which consent shall not be unreasonably
withheld or delayed, Seller covenants and agrees that the Company and its
Subsidiary shall, and Seller shall cause the Company and its Subsidiary to,
operate the Business only in the ordinary and usual course consistent with past
practice.
(b Without limiting the generality of the foregoing, prior to the
Closing, except as otherwise expressly provided for by this Agreement or
consented to or approved
-28-
by Purchaser in writing, which consent shall not be unreasonably withheld or
delayed, the Company shall not, and covenants and agrees to cause its Subsidiary
not to: (i) change the authorized or issued capital stock of the Company or its
Subsidiary; (ii) grant any stock option, warrant, or other right to purchase
shares of the capital stock of the Company or its Subsidiary; (iii) issue any
security convertible into the capital stock of the Company or its Subsidiary;
(iv) grant any registration rights in respect of the capital stock of the
Company or its Subsidiary; (v) reclassify, combine, split, subdivide, purchase,
redeem, retire, issue, sell, or otherwise acquire or dispose, directly or
indirectly, of any shares of the capital stock of the Company or its Subsidiary;
(vi) amend any term of any outstanding security of the Company or its
Subsidiary; (vii) declare, set aside or pay any dividend (whether in cash,
securities or other property) or otherwise make any distribution or payment in
respect of the shares of the capital stock of the Company; (viii) sell or pledge
any stock or other equity interests owned by the Company in its Subsidiary; (ix)
issue or sell any capital stock, notes, bonds or other securities, or any
option, warrant or other right to acquire the same of the Company or its
Subsidiary; (x) sell, transfer, lease, sublease, license or otherwise dispose of
any material property or assets, real personal or mixed (including, without
limitation, leasehold interests and intangible assets) other than the sale of
inventory in the ordinary course of business consistent with past practice; or
(xi) take any of the actions specified in Section 3.6.
Section VI.4 Employee Benefit Plans.
----------------------
(a Purchaser shall, or shall cause the Company and its Subsidiary
to, during the period commencing at the Closing Date and ending on the second
anniversary thereof, provide employees and former employees of the Company and
its Subsidiary with employee benefit plans, programs, policies and arrangements
which in the aggregate are no less favorable than those provided to such
employees as of the date of this Agreement, specifically to include the
understanding that should an employee of the Company be terminated by Purchaser
within two years from the date of sale that he or she will receive the severance
benefits described under Section 2.2(a) of the Global Industrial Technologies
Employee Severance Pay Plan in the same manner and under the same terms, limits,
conditions, and restrictions as if such benefits were paid pursuant to such
severance plan, offset by any benefit due to the employee by the Purchaser or
any affiliate of the Purchaser. Employees of the Company and its Subsidiary
shall be given credit under each employee benefit plan, program, policy or
arrangement of Purchaser in which the employees are eligible to participate for
all service with the Company, its Subsidiary and their affiliates and
predecessor employers for all purposes, unless such service credit would result
in the duplication of benefits. Purchaser shall honor in accordance with their
terms, all benefit obligations and other contractual rights to current and
former employees of the Company and its Subsidiary existing as of the Closing
Date, as well as all employment or severance agreements, plans or policies of
the Company and its Subsidiary; this obligation shall apply only to those
obligations, contracts, agreements, plans, and policies which are listed in
Schedule 3.15 of the Company Disclosure Schedule. Purchaser shall also have the
right to amend or terminate any
-29-
such obligation, contract, agreement, plan, or policy to the same extent the
Seller, the Company, or its Subsidiary could have taken any such action as of
the date of this Agreement; provided, however, that no change may be made which
-------- -------
would decrease the benefits provided for in the first two sentences of this
Section 6.4(a). Except as scheduled, the Company will not amend, modify or
terminate any of the Company Plans without the express written consent of
Purchaser, except as required to comply with ERISA or to maintain qualification
under Section 401(a) of the Code.
(b If employees of the Company or its Subsidiary become eligible to
participate in a medical, dental or health plan of Purchaser, Purchaser shall
cause such plan to (i) waive any preexisting condition limitations for
conditions covered under the applicable medical, health or dental plans covering
such employees at the Closing Date (the "Company Welfare Plans") and (ii) honor
---------------------
any deductible and out-of-pocket expenses incurred by the employees and their
beneficiaries under the Company Welfare Plans during the portion of 1999
preceding the Closing Date. If employees of the Company or its Subsidiary
become eligible to participate in a group term life insurance plan maintained by
Purchaser, Purchaser shall cause such plan to waive any medical certification
for such employees up to the amount of coverage the employees had under the life
insurance plan covering such employees at the Closing Date (but subject to any
limits on the maximum amount of coverage under Purchaser's life insurance plan).
(c Purchaser shall establish or designate a defined benefit plan
(the "Transferee Plan") intended to be qualified under Section 401(a) of the
---------------
Code which covers employees of the Company and its Subsidiary who were
participants in the Global Industrial Technologies, Inc. Retirement Income Plan
(the "Employee Pension Benefit Plan"). Seller agrees to cause the transfer from
-----------------------------
the trust or trusts funding the Employee Pension Benefit Plan to the trust or
trusts or other funding agent of the Purchaser Transferee Plan, in cash,
securities, other property or a combination thereof, as reasonably determined by
Seller, of an amount equal to (X) less (Y) as adjusted by (Z), where (X) is the
amount equal to the "accumulated benefit obligation" (as defined in Statement of
Financial Accounting Standards No. 87) under the Employee Pension Benefit Plan
with respect to the current employees, retirees, and vested former employees of
the Company and its Subsidiary who were participants in the Employee Pension
Benefit Plan on the Closing Date (the "Employee Pension Benefit Plan
-----------------------------
Participants"), as determined by the actuary for the Employee Pension Benefit
------------
Plan in accordance with paragraph (d) below; where (Y) equals aggregate payments
made from the trust relating to the Employee Pension Benefit Plan in respect of
Employee Pension Benefit Plan Participants from the Closing Date through the
date of complete transfer; and where (Z) equals the amount of the net earnings
or losses, as the case may be, from the Closing Date through the date of
transfer, on the average of the daily balances of (X) and (Y) and based upon the
actual rate of return earned by the Employee Pension Benefit Plan during such
period. Notwithstanding the foregoing provisions of this Section, each such
transfer shall be adjusted, if and to the extent necessary, to comply with
Section 414(l) of the Code and the regulations promulgated thereunder.
Notwithstanding anything contained
-30-
herein to the contrary, in no event shall such transfer take place until the
Purchaser furnishes to Seller a favorable determination letter from the Internal
Revenue Service with respect to the qualification of the Purchaser Transferee
Plan under Section 401(a) of the Code. Pending completion of such transfer,
Seller and Purchaser shall make arrangements for any required payments to the
Employee Pension Benefit Plan Participants from the Employee Pension Benefit
Plan. Seller and Purchaser shall provide each other with access to information
reasonably necessary to carry out the provisions of this paragraph.
(d As soon as practicable following the Closing Date, but in no
event later than 60 days thereafter, Seller's actuary ("Seller's Actuary") shall
----------------
deliver to Purchaser a certification of the actuarial present value (as of the
Closing Date) of the accrued benefit under the Employee Pension Benefit Plan
with respect to the Employee Pension Benefit Plan Participants; provided,
--------
however, that the actuarial present value of such accrued benefit shall be
-------
calculated utilizing the actuarial assumptions set forth in Employee Pension
Benefit Plan.
Purchaser's actuary ("Purchaser's Actuary") shall have 30 days to
-------------------
review such certification and to notify Seller of any disputes Purchaser may
have relating to such certification. Purchaser's notice to Seller of any
dispute shall specify in detail all points of disagreement and demand that a
review of such dispute (a "Pension Review") be conducted. Purchaser and Seller
--------------
shall promptly cause Seller's Actuary and Purchaser's Actuary to consult with
respect to such points of disagreement in an effort to resolve all disputes. If
Purchaser's Actuary and Seller's Actuary are unable to resolve such disputes
within 30 days of Seller's receipt of notice of a Pension Review, Purchaser's
Actuary and Seller's Actuary shall jointly select a firm of independent
actuaries which has not performed any service since January 1, 1995 for
Purchaser or Seller to act as arbitrator (the "Pension Arbitrator"). The
------------------
Pension Arbitrator, within 30 days after having been selected hereunder, shall
decide all remaining points of disagreement with respect to such certification
and deliver a written notice of its determination of the disputed items to
Purchaser and Seller. All decisions of the Pension Arbitrator shall be final,
conclusive and legally binding on all parties hereto with respect to such
certification. Each of Purchaser and Seller shall pay one-half the fees and
expenses of the Pension Arbitrator.
Section VI.5 Retention of Books and Records . Purchaser shall cause
------------------------------
the Company and its Subsidiary to retain, until all applicable Tax statutes of
limitations (including periods of waiver and extension) have expired, all books,
records and other documents pertaining to the Company and its Subsidiary in
existence on the Closing Date that are required to be retained under current
retention policies and to make the same available after the Closing Date for
inspection and copying by Seller or its agents at Seller's expense, during
regular business hours and upon reasonable request and upon reasonable advance
notice. After the expiration of such period, no such books and records shall be
destroyed by Purchaser without first advising the treasurer of Seller in writing
detailing the contents thereof and giving Seller at least 120 days to obtain
possession thereof. Seller agrees that such
-31-
records will be kept strictly confidential and used only for Tax purposes.
Seller shall retain, until all applicable Tax statutes of limitations (including
periods of waiver and extension) have expired, all books, records and other
documents pertaining to the Company and its Subsidiary in existence on the
Closing Date (other than any books, records and other documents, copies of which
have been provided to Purchaser, the Company or the Subsidiary) that are
required to be retained under current retention policies and to make the same
available after the Closing Date for inspection and copying by the Purchaser or
its agents at Purchaser's expense, during regular business hours and upon
reasonable request and upon reasonable advance notice. After the expiration of
such period, no such books and records shall be destroyed by Seller without
first advising Purchaser in writing detailing the contents thereof and giving
Purchaser at least 120 days to obtain possession thereof. Purchaser agrees that
such records will be kept strictly confidential and used only for Tax purposes.
Section VI.6 Provision of Financial Statements. For a period of one
---------------------------------
year from and after the Closing Date, to the extent necessary for Seller or its
Affiliates to prepare consolidated financial statements or any governmental
permits, licenses or required filings and to comply with reporting obligations
in respect thereof, upon written request of Seller, the Company and its
Subsidiary will provide, and Purchaser shall use its best efforts to cause the
Company and its Subsidiary to provide, to Seller and its accountants within
twenty (20) Business Days of such request with such computer support, access to
employees and Purchaser's accountants and financial information of the Company
or its Subsidiary as of the Closing Date as Seller may reasonably request in the
format customarily required by Seller or its Affiliates and, upon Seller's
request, it will be accompanied by supplemental financial schedules customarily
required by Seller or its Affiliates in support of such financial information.
Seller agrees that such records will be used only for required regulatory
purposes.
Section VI.7 Delivery of Corporate Minutes and Bank Signature Cards.
------------------------------------------------------
Promptly following the Closing, Seller shall deliver to Purchaser the minutes
and stock books of the Company and its Subsidiary and shall deliver signature
cards from all banks or financial institutions with which the Company or its
Subsidiary has any account designating signatures approved by Purchaser.
Section VI.8 Use of "AP Green, APG and APG Lime" Names. After the
-----------------------------------------
Closing Date, the Seller shall have all rights in and exclusive use of the names
"AP Green, APG and APG Lime", and any and all other designs, logos and slogans,
related to the "AP Green, APG and APG Lime" names, and all other rights (whether
tangible or intangible, statutory, at common law or otherwise) in connection
therewith, whether alone or in combination with one or more other words or marks
in connection therewith. As promptly as practicable after the Closing Date, but
in any event no later than three months after the Closing Date, the Company and
its Subsidiary shall cease using the "AP Green, APG and APG Lime" names and
marks, including without limitation, in any Company or Subsidiary
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name, on any signs, badges, parking stickers, letterhead, business cards,
invoices and other business forms, telephone directory listings, and advertising
and promotional materials. Without the prior written consent of Purchaser,
Seller shall not use the name "APG Lime" after the Closing Date.
Section VI.9 Acquisition Proposals. (a) Prior to the Closing
---------------------
Date, Global, Seller and the Company agree that, none of them, nor any of the
officers and directors of Global, Seller or the Company shall, and that Global,
Seller and the Company shall not permit their employees, agents and
representatives (including any investment banker, attorney or accountant
retained by Global or Seller) to, directly or indirectly, initiate, solicit,
encourage or otherwise facilitate any inquiries or the making of any proposal or
offer with respect to a merger, reorganization, share exchange, consolidation or
similar transaction involving, or any purchase of all or any significant portion
of the assets or any equity securities of, the Company or of its Subsidiary (any
such proposal or offer being hereinafter referred to as an "Acquisition
-----------
Proposal"). Global, Seller and the Company further agree that none of Global,
Seller, the Company or any of the officers and directors of Global, Seller or
the Company shall, and that Global, Seller and the Company shall direct their
employees, agents and representatives (including any investment banker, attorney
or accountant retained by Global, Seller or the Company) 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, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; provided, however, that nothing contained in
-------- -------
this Agreement shall prevent Global, Seller or their respective board of
directors from providing information or engaging in any negotiations or
discussions with any Person who has made a non-refundable $5,000,000 deposit to
Global or Seller.
(b Global and Seller agree that they will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing. Global
and Seller agree not to, and to cause the Company not to, without the prior
written consent of Purchaser, release any Person from, or waive any provision
of, any confidentiality or standstill agreement to which Global, Seller or the
Company is a party. Global and Seller agree that they will take the necessary
steps to promptly inform the individuals or entities referred to in the first
sentence hereof of the obligations undertaken in this Section 6.9 and in the
Confidentiality Agreement. Global or Seller shall notify Purchaser promptly of
the payment of any non-refundable $5,000,000 deposit or the receipt of any
written Acquisition Proposal received by Seller or Global and shall indicate in
reasonable detail the terms and conditions of such written Acquisition Proposal
(with the identity of the other party omitted).
(c From the date hereof until April 12, 1999, or if later, the date
on which the conditions to Closing specified in Section 7.1(d) and 7.3 shall
have been satisfied, Purchaser shall have the right to match the terms of each
and any Acquisition Proposal
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(except for the obligation to make a $5,000,000 non-refundable deposit) (the
"Matching Right"). A Matching Right shall exist with respect to each Acquisition
--------------
Proposal. A Matching Right will begin when notice, including all material terms
thereof and a copy of the proposed acquisition agreement relating to such
Acquisition Proposal (with the identity of the counterparty redacted), of an
Acquisition Proposal is received by Purchaser, and such Matching Right shall
expire 72 hours thereafter if not properly exercised by Purchaser. For a
Matching Right to be exercised properly, Purchaser must (within 72 hours of
receipt of such notice) provide Global with (i) a written, irrevocable offer to
amend this Agreement so that the amended terms of this Agreement are
substantially the same as the terms set forth in the proposed acquisition
agreement relating to such Acquisition Proposal (excluding for purposes of
comparison the non-refundable deposit of $5 million); and (ii) a form of
amendment to this Agreement in accordance with the provisions of clause (i)
above. Global shall not enter into any agreement relating to an Acquisition
Proposal until at least 72 hours after receipt by Purchaser of such notice of
such Acquisition Proposal. Global shall accept Purchaser's offer pursuant to a
Matching Right if such Matching Right has been properly exercised pursuant to
the provisions of this Section 6.9(c). Global shall not accept any Acquisition
Proposal containing terms similar, or with a similar effect, to the Matching
Right.
Section VI.10 Labor Matters, WARN. (a) Purchaser shall not, and
-------------------
shall cause the Company and its Subsidiary not to, at any time prior to the 61st
day following the Closing Date, without fully complying with the notice and
other requirements of the Worker Adjustment and Retraining Notification Act of
1988 ("WARN Act"), effectuate (i) a "plant closing" (as defined in the WARN Act)
--------
affecting any site of employment or one or more facilities or operating units
within any site of employment of the Company or its Subsidiary, or (ii) a "mass
layoff" (as defined in the WARN Act) affecting any site of employment of the
Company or its Subsidiary.
(b Purchaser has the present intention to maintain the principal
place of business of the Company and its Subsidiary at its present location for
at least one year after the Closing Date. If Purchaser takes any action within
180 days after the Closing Date which independently, or in connection with any
reduction in the size of the Company's work force occurring within the ninety
day period prior to the Closing Date, could be construed as a "plant closing" or
"mass layoff," as those terms are defined in the WARN Act, Purchaser shall be
solely responsible for providing any notice required by the WARN Act and for
making payments, if any, and paying all penalties and costs, if any, which may
result from any failure to provide such notice.
Section VI.11 INFORMATION. PURCHASER ACKNOWLEDGES AND AGREES THAT
-----------
NONE OF SELLER, THE COMPANY OR ANY OTHER PERSON HAS MADE ANY REPRESENTATION OR
WARRANTY, EXPRESSED OR IMPLIED, AS TO THE COMPANY, ITS SUBSIDIARY OR THE
BUSINESS OR AS TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION REGARDING THE
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COMPANY, ITS SUBSIDIARY OR THE BUSINESS FURNISHED OR MADE AVAILABLE TO PURCHASER
AND ITS REPRESENTATIVES, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE
DISCLOSURE SCHEDULE, AND NONE OF SELLER, THE COMPANY OR ANY OTHER PERSON SHALL
HAVE OR BE SUBJECT TO ANY LIABILITY TO PURCHASER OR ANY OTHER PERSON RESULTING
FROM THE DISTRIBUTION TO PURCHASER, OR PURCHASER'S USE OF OR RELIANCE ON, ANY
SUCH INFORMATION AND ANY INFORMATION, DOCUMENTS OR MATERIAL MADE AVAILABLE TO
PURCHASER IN ANY "DATA ROOMS", MANAGEMENT PRESENTATIONS OR IN ANY OTHER FORM IN
EXPECTATION OF THE TRANSACTIONS CONTEMPLATED HEREBY.
Section VI.12 Non-Competition. (a) For a period of five (5) years
---------------
after the Closing (the "Restricted Period"), other than as may be required as
-----------------
part of Seller's or its affiliates' refractories or other businesses, neither
Seller nor its affiliates shall engage, directly or indirectly, in any business
anywhere in the United States that manufactures, produces or supplies products
or services of the kind manufactured, produced or supplied by the Business, the
Company or its Subsidiary as of the Closing Date or, without the prior written
consent of the Purchaser, directly or indirectly, own an interest in, manage,
operate, join, control or participate in or be connected with, as an officer,
employee, partner, stockholder, consultant or otherwise, any Person that
competes with the Purchaser, the Business, the Company or any subsidiary in
manufacturing, producing or supplying products or services of the kind
manufactured, produced or supplied by the Business, the Company or its
Subsidiary as of the Closing Date, provided, however, that, for the purposes of
this Section 6.12, ownership of securities having (i) no more than five percent
of the outstanding voting power of any competitor which are listed on any
national securities exchange or traded actively in the national over-the-counter
market (ii) no more than ten percent of the outstanding voting power of any
competitor, which is privately held, shall not be deemed to be in violation of
this Section 6.12 so long as the Person owning such securities has no other
connection or relationship with such competitor. Nothing contained in this
Section 6.12 shall prohibit Seller or its affiliates from acquiring, directly or
indirectly, control of a company if such company is not primarily engaged in a
business which competes with the Business or which manufactures, produces or
supplies products or services of the kind manufactured, produced or supplied by
the Business.
(b The Restricted Period shall be extended by the length of any
period during which Seller is in breach of the terms of this Section 6.12.
Section VI.13 Release of Indemnity Obligations. Seller covenants
--------------------------------
and agrees, on or prior to the Closing, to execute and deliver to the Company,
for the benefit of the Company and its Subsidiary, a general release and
discharge, in form and substance satisfactory to the Purchaser releasing and
discharging the Company and its Subsidiary from
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any and all obligations to indemnify the Seller or otherwise hold it harmless
pursuant to any agreement or other arrangement entered into prior to the
Closing.
Section VI.14 Capital Expenditures of the Plant. (a) Seller shall
---------------------------------
be responsible for the Company's pro rata share of the costs to complete the
First Phase up to a maximum amount of $15,300,000 (taking into account the
amount already funded by the Company on or prior to December 31, 1998).
(b To the extent that the Company's pro rata share of the costs to
complete the First Phase exceed $15,300,000 (the "Overage"), Seller shall
-------
reimburse Purchaser for 50% of the Overage up to a maximum reimbursement amount
of $1,020,000.
ARTICLE VII
Conditions to Closing
---------------------
Section VII.1 Conditions to Obligations of Purchaser. The
--------------------------------------
obligation of Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction, or waiver by Purchaser in
writing, on or prior to the Closing Date of each of the following conditions:
(a Each of the representations and warranties of Seller contained in
this Agreement, other than the representation and warranty set forth in
Section 3.19, that are (i) qualified by a Material Adverse Effect, shall be
true and correct in all respects when made and as of the Closing Date, in
each case with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except that
representations and warranties that are made as of a specific date need be
true and correct in all material respects only as of such date); and (ii)
not qualified by Material Adverse Effect, shall be true and correct in all
respects when made and as of the Closing Date, in each case with the same
effect as though such representations and warranties had been made on and
as of the Closing Date (except that representations and warranties that are
made as of a specific date need be true and correct in all material
respects only as of such date), unless the failure of any such
representation or warranty to be so true and correct, has not had or is not
reasonably likely to have, a Material Adverse Effect. The representation
and warranty contained in Section 3.19 shall not be taken into account in
determining whether this Section 7.1(a) has been satisfied. Each of the
covenants and agreements of Seller to be performed on or prior to the
Closing Date shall have been duly performed in all material respects.
Purchaser shall have received at the Closing certificates to the foregoing
effect, dated as of the Closing Date and executed on behalf of Seller by
its
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Chief Executive Officer or any of its Vice Presidents and its Secretary or
any of its Assistant Secretaries.
(b Seller shall have delivered to Purchaser resignations of (i) all
directors of the Company and (ii) all directors of the Subsidiary that
Seller has the right to designate.
(c Seller shall have delivered to Purchaser a FIRPTA affidavit
pursuant to Section 5.6.
(d Each of the consents and approvals set forth in Schedule 3.11 of
the Disclosure Schedule shall have been obtained and must be in full force
and effect.
(e The Purchaser shall have received the release referred to in
Section 6.13.
Section VII.2 Conditions to Obligations of Seller. The obligation
-----------------------------------
of Seller to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction, or waiver in writing by Seller, on or prior to the
Closing Date, that each of the representations and warranties of Purchaser
contained in this Agreement shall be true and correct in all material respects
when made and as of the Closing Date, in each case with the same effect as
though such representations and warranties had been made on and as of the
Closing Date (except that representations and warranties that are made as of a
specific date need be true and correct in all material respects only as of such
date). Each of the covenants and agreements of Purchaser to be performed on or
prior to the Closing Date shall have been duly performed in all material
respects. Seller shall have received at the Closing certificates to the
foregoing effect, dated as of the Closing Date and executed on behalf of
Purchaser by its Chief Executive Officer or any of its Vice Presidents and its
Secretary or any of its Assistant Secretaries.
Section VII.3 Conditions to Obligations of Purchaser and Seller.
-------------------------------------------------
The obligations of the parties to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, or waiver in writing by
both parties, on or prior to the Closing Date of the following conditions:
(a Each party shall have duly filed with the FTC and the Antitrust
Division the Report required under the HSR Act with respect to the sale and
purchase of the Shares and the waiting period required by the HSR Act, and
any extensions thereof obtained by request or other action of the FTC
and/or the Antitrust Division, shall have expired or been earlier
terminated by the FTC or the Antitrust Division.
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(b No Governmental Entity shall have enacted, issued, promulgated,
enforced or entered any Law or non-appealable Order which is in effect on
the Closing Date and prohibits the consummation of the Closing.
ARTICLE VIII
Termination
-----------
Section VIII.1 Termination. This Agreement may be terminated at
-----------
any time prior to the Closing:
(a by the mutual written agreement of Purchaser and Seller;
(b without prejudice to Purchaser's rights under Section 9.1, by
Purchaser, by giving written notice of such termination to Seller (i) in
the event that Seller has breached any covenant contained in this Agreement
in any material respect or has materially breached any representation or
warranty in Article III (other than the representation and warranty set
forth in Section 3.19 which shall not be taken into account for purposes of
this Section 8.1(b)) hereto and (ii) Purchaser has notified Seller of such
breach and such breach has continued without cure for a period of 30 days
after the notice of such breach;
(c by Purchaser, upon the occurrence after December 31, 1997 of a
Material Adverse Effect;
(d by Seller, (i) by giving written notice of such termination to
Purchaser, (A) in the event that Purchaser has breached any covenant
contained in this Agreement in any material respect or has materially
breached any representation or warranty in Article IV hereto and (B) Seller
has notified Purchaser of such breach and such breach has continued without
cure for a period of 30 days after the notice of such breach; or (ii) if
Purchaser notifies Seller, in writing, of its intention to decrease the
Purchase Price prior to Closing; provided, however, that Seller may not
-------- -------
exercise its termination right pursuant to clause (ii) of this Section
8.1(d), (A) until 72 hours after delivery of such notice or (B) if within
72 hours after delivery of such notice, Purchaser revokes in writing such
notice;
(e by Seller, by giving written notice of such termination to
Purchaser, if Purchaser fails to exercise properly any Matching Right as
set forth in Section 6.9(c);
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(f by either Purchaser or Seller, by giving written notice of such
termination to the other party, if there shall be in effect any Law or non-
appealable Order that prohibits the consummation of the Closing or if
consummation of the Closing would violate any Law or non-appealable Order;
or
(g by either Purchaser or Seller, by giving written notice of such
termination to the other party, if the Closing shall not have occurred by
July 31, 1999; provided, however, the right to terminate this Agreement
-------- -------
pursuant to this Section 8.1(g) shall not be available to (i) any party
whose failure to fulfill any obligation under this Agreement shall have
been the cause of, or shall have resulted in, the failure of the Closing to
occur on or prior to such date; or (ii) any party if Purchaser or Seller is
litigating in good faith pursuant to Section 6.2(b).
Section VIII.2 Effect of Termination. (a) In the event of the
---------------------
termination of this Agreement in accordance with Section 8.1 or Article IX
hereof, this Agreement shall thereafter become void and have no effect, and no
party hereto shall have any liability to the other party hereto or their
respective Affiliates, directors, officers or employees, except for the
obligations of the parties hereto contained in this Section 8.2 and in Sections
11.3, 11.4 and 11.12 hereof, and except that nothing herein will relieve any
party from liability for any willful breach of this Agreement prior to such
termination.
(b In the event of the termination of this Agreement pursuant
Section 8.1(d), Purchaser shall pay to Seller within two Business Days of such
termination in immediately available funds a termination fee of $3,000,000.
(c In the event that this Agreement is terminated for any reason,
Purchaser shall deliver to Global within 3 Business Days of such termination,
all of the drilling and geological data generated by Purchaser's onsite
drilling, testing and evaluation of the Company's limestone reserves.
ARTICLE IX
Due Diligence Termination Right
-------------------------------
Section IX.1 Due Diligence Termination Right. This Agreement may
-------------------------------
be terminated by Purchaser, if (i) any of the representations and warranties
(without regard to any standards of materiality or Material Adverse Effect in
such representation or warranty) of Seller contained in this Agreement fails to
be true and correct in all material respects (it being agreed that a
representation and warranty shall be deemed not to be true and correct in all
material respects if the effect of such inaccuracy (A) would cause any item on
the Balance Sheet set forth on Schedule 3.5 of the Company Disclosure Schedule
to be misstated
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in an amount equal to or greater than $3,000,000 with respect to any individual
item or to be inaccurate or misstated in amounts equal to or greater than
$300,000 individually which aggregate at least $5,000,000 or (B) would cause any
income statement or cash flow item for purposes of 1998 historical financial
statements or any future annual period(s) to be inaccurate or misstated in an
amount equal to or greater than $500,000 with respect to any individual item or
to be inaccurate or misstated in amounts equal to or greater than $150,000
individually which aggregate at least $1,000,000); and (ii) Purchaser gives
written termination notice to Seller within 21 days after the date hereof
specifying in detail the reasons for such termination (under clause (i) above)
(the "Due Diligence Termination Notice"). If the Due Diligence Termination
--------------------------------
Notice is delivered to Seller in accordance with this Section 9.1, this
Agreement shall automatically terminate 72 hours after such Due Diligence
Termination Notice is received by Seller unless such Due Diligence Termination
Notice is revoked by Purchaser prior to the expiration of such 72-hour period.
Notwithstanding anything contained herein to the contrary, it is expressly
understood and agreed that if Purchaser does not terminate this Agreement
pursuant to and in accordance with the provisions of this Section 9.1 after
delivery of a Due Diligence Termination Notice to Seller, then Purchaser may not
thereafter assert, or bring any claim for indemnification pursuant to Article X
for a breach or an inaccuracy in any of the representations or warranties
contained in Article III or a failure of any condition set forth in Article VII
based upon or relating to any items identified in such Due Diligence Termination
Notice.
ARTICLE X
Indemnification
---------------
Section X.1 Indemnification by Global. (a) From and after the
-------------------------
Closing, Global shall indemnify Purchaser and its affiliates and each of their
respective officers, directors, employees, and representatives (the "Indemnified
-----------
Parties") against and in respect of, and hold them harmless from, against and in
-------
respect of any loss, liability, claim, damage, charge, cost or expense
(including reasonable legal fees and expenses) ("Losses"), sustained or incurred
------
by any Indemnified Party, to the extent relating to, arising out of or resulting
from:
(i0 any breach of any representation or warranty of Seller (other
than the representation and warranty set forth in Section 3.19 which shall
not be taken into account for any purposes of this Article X) set forth in
this Agreement made on or prior to the Closing Date; or
(ii0 any breach or failure to perform fully any covenant of Seller
set forth in this Agreement.
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(b Global shall not be required to indemnify any Indemnified
Party, and shall not have any liability under clauses (i) and (ii) of Section
10.1(a):
(i0 unless the aggregate of all Losses exceeds on a cumulative
basis an amount equal to $1,000,000, and then only to the extent of any
such excess;
(ii0 for any individual occurrences, events, circumstances, acts or
omissions where the Loss relating thereto is less than $50,000 and any such
occurrences, events, circumstances, acts or omissions shall not be taken
into account for purposes of clause (i) of this Section 10.1(b);
(iii0 for any Losses in the aggregate in excess of $25,000,000; or
(iv0 for any Losses, sustained or incurred by any Indemnified Party,
relating to, arising out of or resulting from (A) any breach or inaccuracy
of the representation or warranty contained in Section 3.19 or (B) any
breach or inaccuracy of any representation or warranty contained in Article
III based upon or relating to the items identified in any Due Diligence
Termination Notice.
(c Except in cases of fraud, Purchaser acknowledges that its sole
and exclusive remedy after the Closing with respect to any and all claims and
Losses relating to this Agreement and any transactions contemplated hereby shall
be pursuant to the indemnification provisions set forth in this Article X. In
furtherance of the foregoing, Purchaser hereby waives, from and after the
Closing, any and all rights, claims and causes of action it may have against
Global, Seller, or any of their respective affiliates, directors, officers or
employees arising under or based upon any Law or arising under or based upon
common Law or otherwise (except pursuant to the indemnification provisions set
forth in this Section 10.1).
Section X.2 Calculation of Losses; No Consequential Damages, Etc.
----------------------------------------------------
(a The amount of any Loss for which indemnification is provided under this
Article X shall be net of any amounts recoverable by the Indemnified Party under
insurance policies with respect to such Loss and shall be reduced to take
account of the present value of any Tax benefit realized by the Indemnified
Party arising from the incurrence or payment of any such Loss. In computing the
amount of any such Tax benefit, the Indemnified Party shall be deemed to
recognize and receive the benefit of all items of loss deduction or credit
resulting from the Loss giving rise to indemnification at such time such items
are allowable under the Code (or other applicable Tax laws) and without regard
to whether the Purchaser receives immediately the benefit of such items (e.g.,
because the Purchaser lacks taxable income or has other items of deduction or
credit).
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Section X.3 Termination of Indemnification. Global's obligations
------------------------------
to indemnify and hold harmless any Indemnified Party shall terminate when the
applicable representation or warranty or covenant terminates pursuant to Section
11.1; provided, however, that such obligations to indemnify and hold harmless
-------- -------
shall not terminate with respect to any item as to which an Indemnified Party
shall have, before the expiration of the applicable period, previously made a
claim by delivering a notice of such claim (in accordance with the terms of
Section 10.4) to Global.
Section X.4 Procedures Relating to Indemnification. (a) In order
--------------------------------------
for any Indemnified Party, to be entitled to any indemnification provided for
under this Agreement in respect of, arising out of or resulting from a claim
made by any Person against the Indemnified Party (a "Third Party Claim"), such
-----------------
Indemnified Party must notify Global in writing (and in reasonable detail) of
the Third Party Claim promptly (but in no event more than 30 days) following
receipt by such Indemnified Party of notice of the Third Party Claim. The
failure to so notify shall not relieve Global of any liability they may have to
such Indemnified Party if such failure does not materially prejudice Global.
Thereafter, the Indemnified Party shall deliver to Global, promptly following
the Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the Third
Party Claim.
(b) If a Third Party Claim is made against an Indemnified Party,
Global shall be entitled to participate in the defense thereof and, if it so
chooses, to assume the defense thereof at Global's expense with counsel selected
by Global; provided, however, that such counsel is not reasonably objected to by
-------- -------
the Indemnified Party. Should Global so elect to assume the defense of a Third
Party Claim, Global shall not be liable to the Indemnified Party for any legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof. If Global assumes such defense, the Indemnified Party shall
have the right to participate in the defense thereof and to employ counsel (not
reasonably objected to by Global), at its own expense, separate from the counsel
employed by Global (it being understood that Global shall control such defense).
The Indemnified Party shall be entitled to reimbursement for all costs, fees and
expenses (including the fees and expenses of counsel employed by the Indemnified
Party) for any period during which Global has not assumed the defense thereof
(other than during any period in which the Indemnified Party shall have failed
to give notice of the Third Party Claim as provided above). If Global chooses
to defend or prosecute a Third Party Claim, all the Indemnified Parties shall
cooperate fully in the defense or prosecution thereof. Such cooperation shall
include the retention and (upon Global's request) the provision to Global of
records and information that are reasonably requested by Global or that are
reasonably relevant to such Third Party Claim, and making employees available on
a mutually convenient basis during normal business hours to provide additional
information and explanation of any material provided hereunder. Whether or not
Global assumes the defense of a Third Party Claim, (x) the Indemnified Party
shall not admit any liability with respect to, or settle, compromise or
discharge such Third Party Claim without
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Global's prior written consent (which consent shall not be unreasonably
withheld) and (y) Global shall not, without the Indemnified Party's prior
written consent, admit any liability with respect to, or settle, compromise or
discharge, such Third Party Claim on a basis that would result in the imposition
of a judgment that would restrict the future activity or conduct of the
Indemnified Party or any subsidiary or affiliate thereof.
(c) Other Claims. In the event any Indemnified Party should have a
claim against Global under Section 10.1 that does not involve a Third Party
Claim being asserted against or sought to be collected from such Indemnified
Party, the Indemnified Party shall deliver notice of such claim promptly (but in
no event more than 30 days) following discovery by the Indemnified Party of such
claim to Global. If Global does not notify the Indemnified Party within 30
calendar days following its receipt of such notice that Global disputes
liability to the Indemnified Party under Section 10.1, such claim specified by
the Indemnified Party in such notice shall be conclusively deemed a liability of
Global under Section 10.1 and Global shall pay the amount of such liability to
the Indemnified Party on demand or, in the case of any notice in which the
amount of the claim (or any portion thereof) is estimated, on such later date
when the amount of such claim (or such portion thereof) becomes finally
determined. If Global has timely disputed its liability with respect to such
claim, as provided above, and the Indemnified Party shall proceed in good faith
to negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved by binding arbitration in
accordance with Section 11.13 hereof.
(d) Detailed Notice. Any claim for indemnification under this
Agreement shall describe the claim in reasonable detail, include copies of any
material written evidence thereof and indicate the estimated amount of such
claim.
(e) Mitigation. Each Indemnified Party shall make commercially
reasonably efforts to mitigate any claim or liability that an Indemnified Party
asserts under this Article X. In the event that an Indemnified Party shall fail
to make such commercially reasonable efforts to mitigate any claim or liability,
then notwithstanding anything else to the contrary contained herein, Global
shall not be required to indemnify any Indemnified Party for any Loss that could
reasonably be expected to have been avoided if the Indemnified Party had made
such efforts.
Section X.5 Tax Adjustment. Any indemnity payments made pursuant
--------------
to this Article X shall be treated for Tax purposes as adjustments to the
Purchase Price.
ARTICLE XI
Miscellaneous
-------------
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Section XI.1 Survival. The representation and warranty contained
--------
in Section 3.19 (Lime Reserves) shall expire 21 days after the date hereof;
provided, however, that the expiration thereof shall not prejudice Purchaser's
-------- -------
rights pursuant to Section 9.1. This Article XI and the agreements of the
Seller and Purchaser contained in Article V (Tax Matters), Article X
(Indemnification), Sections 6.4 (Employee Benefit Plans), 6.5 (Retention of
Books and Records), 6.6 (Provision of Financial Statements), 6.8 (Use of "AP
Green, APG and APG Lime" Names) and 6.12 (Non-Competition) shall survive the
consummation of the transactions contemplated by this Agreement. All other
representations, warranties, covenants and agreements in this Agreement (other
than that provided in Section 3.19) shall survive the consummation of the
transactions contemplated by this Agreement until March 31, 2001, except that
the representations set forth in (i) Section 3.16 (Environmental Matters) shall
survive for five years from the date of this Agreement, (ii) Section 3.12 (Tax
Matters) shall survive the Closing for the duration of the applicable Statutes
of Limitation and (iii) the second sentence of Section 3.3 shall survive the
Closing indefinitely. Notwithstanding anything contained herein to the
contrary, Purchaser and Seller expressly agree that, for all purposes of this
Agreement, any and all of the representations and warranties made in this
Agreement are not made and shall not be deemed to have been made on any date
after the Closing Date.
Section XI.2 Amendment and Waiver. Any provision of this Agreement
--------------------
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by Global, Seller and Purchaser, or in
the case of a waiver, by the party against whom the waiver is to be effective.
No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
Section XI.3 Expenses. Except as otherwise expressly provided in
--------
this Agreement, whether or not the transactions contemplated by this Agreement
are consummated, the parties shall bear their own respective expenses
(including, but not limited to, all compensation and expenses of counsel,
financial advisors, consultants, actuaries and independent accountants) incurred
in connection with this Agreement and the transactions contemplated hereby.
Section XI.4 Public Disclosure. Each of the parties to this
-----------------
Agreement hereby agrees with the other parties hereto that, except as may be
required to comply with the requirements of applicable law or the rules and
regulations of each stock exchange upon which the securities of one of the
parties or its Affiliates is listed, no press release or similar public
announcement or communication shall be made or caused to be made concerning the
execution, price or other terms, or performance of this Agreement unless
specifically approved in advance by both parties hereto; provided, however, that
-------- -------
to the extent that either party to this Agreement determines, based upon the
advice of legal counsel, that it is required
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by law or the rules and regulations of any stock exchange upon which the
securities of one of the parties or its Affiliates is listed to make such a
public disclosure, such public disclosure shall only be made after prior
consultation with the other party to this Agreement.
Section XI.5 Assignment. No party to this Agreement may assign any
----------
of its rights or obligations under this Agreement without the prior written
consent of the other party hereto; provided, however, Purchaser shall, upon
-------- -------
written notice provided to Global, be permitted to assign its rights pursuant to
this Agreement to any of its wholly owned subsidiaries and Purchaser shall
remain bound by all provisions under this Agreement and hereby guarantees the
assignee's performance of any and all obligations of Purchaser under this
Agreement. Purchaser shall provide promptly a copy of any such assignment.
Section XI.6 Entire Agreement. This Agreement (including all
----------------
Annexes and Schedules hereto) and any agreement between Purchaser and Seller
making specific reference to this Section 11.6 contains the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral or written, with
respect to such matters (including, without limitation, the Exclusivity
Agreement dated as of March 2, 1999 between Purchaser and Global (the
"Exclusivity Agreement"), except for the Confidentiality Agreement which will
----------------------
remain in full force and effect for the term provided for therein. The
Exclusivity Agreement shall be terminated as of the date hereof.
Section XI.7 Fulfillment of Obligations. Any obligation of any
--------------------------
party to any other party under this Agreement, which obligation is performed,
satisfied or fulfilled by an Affiliate of such party, shall be deemed to have
been performed, satisfied or fulfilled by such party.
Section XI.8 Parties in Interest; No Third Party Beneficiaries.
-------------------------------------------------
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any Person other than
Purchaser, Seller, or their successors or permitted assigns, any rights or
remedies under or by reason of this Agreement.
Section XI.9 Schedules. The inclusion of any matter in any
---------
schedule to this Agreement shall also be deemed to be an inclusion for all other
purposes of this Agreement, including each representation and warranty to which
it may relate (provided that for all such other purposes there are sufficient
facts to reasonably inform a Person of the purpose for which such disclosure is
made). The inclusion of any matter in the Disclosure Schedule shall expressly
not be deemed to constitute an admission by Global, Seller, the Company or its
Subsidiary, or otherwise imply, that any such matter is material or creates a
measure for materiality for the purposes of this Agreement.
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Section XI.10 Counterparts. This Agreement and any amendments
------------
hereto may be executed in one or more counterparts, each of which shall be
deemed to be an original by the parties executing such counterpart, but all of
which shall be considered one and the same instrument.
Section XI.11 Section Headings. The section and paragraph headings
----------------
and table of contents contained in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
Section XI.12 Notices. All notices hereunder shall be deemed given
-------
if in writing and delivered personally or sent by facsimile or by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other addresses as shall be specified by like notice):
(a) if to Seller, to:
Global Industrial Technologies, Inc.
0000 Xxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
With copies to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. XxXxxxxx
Fax: (000) 000-0000
(b) if to Purchaser, to:
Chemical Lime Company
X.X. Xxx 000000
Xxxx Xxxxx, Xxxxx 00000-0000
Attention: Xxxxx Xxxxxx
Fax: (000) 000-0000
With copies to:
Shearman & Sterling
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000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx Fax: (000) 000-0000
SECTION XI.13 GOVERNING LAW; ARBITRATION. THIS AGREEMENT SHALL BE
--------------------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF. EACH PARTY HERETO
AGREES THAT ANY CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR THE BREACH THEREOF, SHALL BE SETTLED BY BINDING ARBITRATION
ADMINISTERED BY THE AMERICAN ARBITRATION ASSOCIATION AND TITLE 9 OF THE U.S.
CODE. JUDGMENT ON THE AWARD RENDERED BY THE ARBITRATOR MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION THEREOF. THE NUMBER OF ARBITRATORS SHALL BE ONE AND
THE ARBITRATOR SHALL BE APPOINTED BY THE AMERICAN ARBITRATION ASSOCIATION. THE
PLACE OF ARBITRATION SHALL BE NEW YORK CITY, NEW YORK. THE ARBITRATOR SHALL
HAVE NO AUTHORITY TO AWARD PUNITIVE DAMAGES OR ANY OTHER DAMAGES NOT MEASURED BY
THE PREVAILING PARTY'S ACTUAL DAMAGES, AND MAY NOT, IN ANY EVENT, MAKE ANY
RULING, FINDING OR AWARD THAT DOES NOT CONFORM TO THE TERMS AND CONDITIONS OF
THIS AGREEMENT. EITHER PARTY MAY MAKE AN APPLICATION TO THE ARBITRATOR SEEKING
INJUNCTIVE RELIEF TO MAINTAIN THE STATUS QUO UNTIL SUCH TIME AS THE ARBITRATION
AWARD IS RENDERED OR THE CONTROVERSY IS OTHERWISE RESOLVED. EITHER PARTY MAY
APPLY TO ANY COURT HAVING JURISDICTION HEREOF AND SEEK INJUNCTIVE RELIEF IN
ORDER TO MAINTAIN THE STATUS QUO UNTIL SUCH TIME AS THE ARBITRATION AWARD IS
RENDERED OR THE CONTROVERSY IS OTHERWISE RESOLVED.
Section XI.14 Severability. The provisions of this Agreement shall
------------
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions hereof.
If any provision of this Agreement, or the application thereof to any person or
entity or any circumstance, is invalid or unenforceable, (i) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision; and (ii) the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
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IN WITNESS WHEREOF, this Agreement has been signed on behalf of each
of the parties hereto as of the date first written above.
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
By:
-----------------------------------
Name:
Title:
A.P. GREEN INDUSTRIES, INC.
By:
-----------------------------------
Name:
Title:
CHEMICAL LIME COMPANY
By:
-----------------------------------
Name:
Title:
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