Document 3aJbzEb5yKgYQ9qm0YeYkp7a

ion :GE COMMISSION 2. 2 6 5 4 9 SCHEDULE 142-5 SC LI CITATION/ RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(C!.4; OE THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. i A.P. GREEN INDUSTRIES, INC. NAME OE SUBJECT COMPANY! A..?. GREEN INDUSTRIES, INC. (NAME CE PERSON IS) FILING STATEMENT; COMMON STOCK, PAP VALUE SI.00 PEP SHARE 'TITLE OE CLASS OF SECURITIES; 3S305510C (CUSIP NUMBER OF CLASS OF SECURITIES! MICHAEL B. COONEY, ESQ. SENIOR VICE PRES I DENT--LAW/ADMINISTRATION AND SECRETARY A.F. GREEN INDUSTRIES, INC. GREEN BOULEVARD MEXICO, MISSOURI 65265 (573) 473-3626 'NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE OTICE AND COMMUNICATION ON BEHALF OF THE PERSON(S! FILING STATEMENT) WITH A CORY TO: ROBERT M. LARCSE, ESQ. THOMPSON COBURN SNL MERCANTILE CENTER ST. LOUIS, MISSOURI 63101 (314( 552-60CG PLAINTIFF'S EXHIBIT ( Disclosure Page I EXHIBIT 1 AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), Gated as of March 3, 1998, among A.P. Green Industries, Inc., a Delaware corporation (the "Company"), Global Industrial Technologies, Inc., a Delaware corporation ("Purchaser"), and 3GN Acquisition Ccrp., a Delaware corporation and a wholly-owned subsidiary of Purchaser ("Merger Sub"), the Company and Merger Sub sometimes beir.a herematter collectively referred to as the "Constituent Co roc rations. " RECITALS WHEREAS, the Boarcs of Directors of Purchaser and the Company each have determined that it is m me best interests of their respective sharenolders for Purchaser to acquire the Company upon the terms and subject the conditions set forth nereir.; and to WHEREAS, the Company, Purchaser and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with this NOW, THEREFORE, in consideration of me premises, and of the representation, warranties, covenants and agreements contained herein the parties hereto hereby agree as follows: ARTICLE I THE TENDER OFFER Disclosure Page 2 a ve f the oaet he ha assoc iatec Fights ; as defined in price of 322. Cl per Share in cash, net t: tr.e sealer, subject tc the teres and conditions set terth rr. Annex A terete 'the "Offer Conditions". One initial expiration date of the Offer shall ce the o.ate twenty business days from and including the date (the "Commencement Sate" tr.e Offer Documents -as hereinafter defined) are first fiiea with the Se :u.: : t : es: ana Excnange Commission 'the "SEC"': . Purcnaser and Merger Sub expressi/ reserve the r:at;, in tr.err sole discretion, to waive any condition alter ttar. the Minimum . t : a a at, as cefir.ed m the Offer Conditions) and tc set : r t r. ta cr.ange any other term and condition of the Offer, provided that, unless previously approved cy tne Company in writing, no provision may be set fart.t or changed which decreases the price per Share payable m the Offer, changes the form of consideration payable in the Offer (other than by adding consideration), reduces the .maximum number of Shares to be purchased in the Offer, or rmc-oses conditions tc the Offer rr. addition tc those set forth nerem that are materially adverse to holders of tne Shares. Merger Sub covenants and agrees that, subject to tne terms and conditions of the Offer, including but not limited to the Offer Conditions, it wiil accept for payment and pay for Shares as soon as it is permitted to do sc unaer applicable law, provided that Merger Sub shall have the right, in its sole discretion, to extend the Offer from time to time notwithstanding the prior satisfaction of the Offer Conditions. It is agreed that the terms and conditions set forth m the Offer, including but not limited to the Offer Conditions, are for the benefit of Purchaser and Merger Sub ana may be assertea to Purchaser and Merger Sub regardless of the circumstances giving rise to any fc: Che Company r.erecy approves of and consents to the Offer and represents and warrants that: i; its Board of Directors, at a meeting duly oaliec. ar.c held on Manor. 1, ire?, has unanimously (A: determined tnat this Agreement ar.d the t rar.sac t it ns contemplated hereby, including each of the Offer and tr.e Merger las defined m Section 2.1> , are fair to and m the best interests of tne nclders o: Snares, (B; approved this Agreement and the 11 a o. s a s t r s ns contemplated herebv, including each of the Offer ar.c the Merger, and S resolved tc recommend that the stockholders of the Company accept the Offer, tenner tr.err Shares t: Merger Sub t.nereur.der and approve this Agreement art:: tr.e transactions center plated heresy,' ar.d 'rr', Credit Suisse First Boston tas delivered to tne Board of Directors of tr.e Ccmoanv its written opinion that tr.e so r.s idera t icr. to ce received by raiders of Shares, torer tear. Purcnaser ar.c Merger Sue, pursuant tc each of the Offer ana the Merger is fair to such holders from a financial point of view. The Company has beer. a.:r.cn:ea by the Financial Advisor tc permit, subject to prior review and consent cy such Financial Advisor 'such consent not tc be unreasonably witr.r.eld , the inclusion c: s ich fairness opinion (or a reference thereto) m a Sc 1 oci:attor./'Peccxmendatic.t Statement on Schedule 14D-9 (the "Schedule 14D-9"; e roe no zf tr.0 Offer and ir. rhe Proxy Disclosure Past* 3 en:s ::. a s e ; jme r. * related Letter aac the as tc the Schedule 14D-9, that such documents snail, in all s, comply with the requirements of the Securities Exchange Act it , as arte ded, ar.d the rules and regulations thereunder (the "Exchange ar.d other spplicacle laws. The Company and its counsel, as to the Offer ants, and Purchaser ar.d its counsel, as tc the Schedule 140-9, shall be a. 'v portunity to review such documents a reasonable time prior to their with the SEC. Purchaser, Merger Sub and the Company each agrees aiy tc correct any information provided by it for use in the Offer ants or the Schedule 141-1, as applicable, that shall have become false or ading :n any material respect, and Purcnaser and Merger Sub, cn the one hand :her ree taka ateps the Schedule disseminated tc holders c o corrected o ce filed es , in each. ase as and h the SEC and the extent required by so! In connection with the Offer, the Company will cause its transfer agent to furnish promptly tc Merger Sub a list, as of a recent date, of the record holders of Shares ana their addresses, as well as mailing labels containing the names and addresses of all record holaers of Shares and lists of security positions of Shares helc in stock depositories. The Company will furnish Merger Sub with. suer, additional information (including, but not limited tc, updated lists of holders of Shares and their addresses, mailing labels and lists of security positions; and such other assistance as Purchaser or Merger Sub or their agents may reasonably request in communicating the Offer to the record ar.d beneficial holders of Shares. :r.ereason cease ARTICLE II CLOSING; EFFECTIVE TIME ect tc the terms and conditions of this 2 :as defined ir. Section 2.3, Merger Sub shall be / and the separate corporate existence of Merger "Merger") . The Company shall be the surviving except as ec in me 6d te existence c: the Company with ell its iwers and franchises shall continue unaffected m Section 3.1. The Merger snail have the General Corccraticr. Law (the "TGCL"). : ir.c c the Meraer -the "Cl: shall take reet, New York, Nev ast tc ice ed or Disclosure Page 4 orp re Artie le IX hereof, the Company ana Purchaser will cause a Certificate of Mercer the "Delaware Certificate of Merger") to be executed and filed with the Secretary of State of Delaware as provided m Section 251 of the DGCL. The Merger shall become effective on the date or. which the Delaware Certificate of Merger has been duly files with the Secretary of State of Delaware, and such time is hereinafter referred to as the "Effective Time." APT CERTIFICATE OF INCORPORATION AND BY-LAWS SF THE STRVIVING CORPORATION 2.1. The Certificate of Incorporation. The Restated Certificate of Incorporation of the Company '.the "Company Certificate") in effect at the Effective Time shall be the Certificate of Incorporation of the Surviving Corporation, until duly amended in accordance with the terms thereof and the DGCL, except that Article Fourth of the Company Certificate shall be amended to read in its entirety as follows: "The aggregate number of shares which the Corporation shall have the authority to issue is 1,000 shares of Common Stock, par value SI.CO per share." 3.2. The By-Laws. The By-Laws of the Company (the "Company By-Laws") it effect at the Effective Time shall be the By-Laws of the Surviving Corporation, until ouly amended in accordance with the terms thereof and the ARTICLE IV OFFICERS AND DIRECTORS SE THE SURVIVING CORPORATION 1.1. Officers arc Directors. The directors of Meraer Sub ar.a me :.: receive .ime, be ne Effect essers ha .ter neat zr.'s Cert Time snail, from and after the cers, respectively, of tne Surviving eer. duly elected cr appointed ana esignation or removal m accordance ate of Incorporation and By-Laws. 1.2. Beards ..irectcrs; Committees. If requested by purchaser, the Company will, subject t; mr.pliar.ee with applicable law and promptly following tne purchase by Merger Sue cf Snares pursuant to the Offer, take ail actions necessary to cause persons designated by Purchaser to become directors cf the any sc that the total runner cf suer, persons equals not less than the ct c" ii the teta- r.rrohe r c f directors or. the Eos -- ci cf directors of *~he un Disclosure Pace 5 r unera c o ''e r g e r iS f 1; 0 the Cos,' e sire toe 5, to secure toe resignation of directors, or both, as rs necessary tc permit Purchaser's designees to be elected tc the Board of Directors of the Company. At such time, the Company, if sc requested, will use its reasonable efforts to cause persons designated by Purchaser to constitute the same proportionate representation of each committee of the 3oard of Directors of the Company, each board of directors of each, subsidiary of the Company and each committee of each .such, ocard :m each case to the extent of the Company's ability tc elect such persons.. he directors appointed by Purchaser shall be entitled to receive any compensation or benefits currently ir. effect fer the Company's non-employee directors. The Company's obligations to appoint designees tc the Board of Directors of the Company shall re subject tc Section 14 ') of the Exchange Act a.ic Pule 14 f -- 1 promulgated thereunder. The Company shall promptly take all actions required pursuant t: such Section ana .Pule tn order to fulfill its obligations under this Section 1.2 and shall include m the Schedule 14D-9, or m a separate Rule 14 f -- 1 information statement provided to stockholders, such information with respect to the Company and its officers and directors as is required under Section 14 if; and Rule 14f-i fc fulfill its obligations under this Section 4.2. Purchaser and Merger Sub will supply to the Company and will be solely responsible fer any information with respect to either of them anc their nominees, officers, directors and affiliates required by Section 14(f) and Rule 141-1. 4.3 Actions by Directors. For purposes of Article IX and Sections ij.3 and 10.4, no action taken by the Board of Directors of the Company after the date of the consummation of the Offer and prior tc the Merger shall be effective unless such action is approved by the affirmative vote of at least a majority of the directors of the Company which are not officers of Purchaser or designees, stockholders or affiliates of Purchaser. ARTICLE V CONVERSION OR CANCELLATION OF SHARES IN THE MERGER 1.1. Conversion or Cancellation of Shares. The manner of converting or canceling shares of the Company and Merger Sub ir. the Merger shall be as a1 At the Effective Time, each Share of the Concern.' issuec ar.d tuistanumg immeaiately prnr ti the Effective Time other than Shares owned by Rurcr.aser , Me*rcer Sue or a - ~zr.er subsidiary cf rurch3201 i ccl I pctiyp 17 ~hs ssenima C p' .........v-:ue Q * *- V- o thereof, ::e cor.vertec into cash, the "Merger Considers pursuant, tc Section 2c2 or the DGSL< ig without any action on tne part cf the holder :ght tc receive, without interest, an amount ir. equal tc $22.00 or such greater amount wnich rurchaser Compsnies > , cy virtu cf the holders thereof, snail se tc ex1 All Snares 'ether than tn.ese owned by the he Merger ana without any action on the part ger be outstanding and snail be canceled and d each Disclosure Pace 6 : ' cf a certificate representing any seen Shares shall thereafter cease to ' I'.'e my rights with respect to such Shares, except the right tc receive the Merger S' tr.si derat ion for such Snares upon the surrender of such certificate in accordance wit.n Section 1.2 or the right, if any, t; receive payment from the Surviving Corporation of the "fair value" of such Shares as determined m accordance with Section 262 of the SGCL. ;fc At the Effective Time, each Share issued and outstanding at the Effective Time and owned by any of the Purchaser Companies, and each Share issued ar.a n.eld m the Company's treasury at the Effective Time, shall, by virtue of the Merger and without any action on the part of the holder thereof, cease to ce outstanding, shall be canceled and retired without payment of any cor.s i oe r a t: cn therefor and shall cease tc exist. :c; At the Effective r share, of Merger Sub Time shall, by virtue Sub or the holders of Time, each share of Common Stoc.r, par value issued and outstanding immediately prior tc of the Merger and without any action or. the such shares, be converted into cue Share. the part Payment for Shares. purchaser snaii make available or cause tc oe n pr i c callable to the paying agent appointed by Purchaser with the Company's rival [the "Paying Agent", amounts sufficient in the aggregate to provide all funds necessary for the Paying Agent to make payments pursuant tc Section 5.1 (a) hereof to holders of Shares issued and outstanding immediately nor to the Effective Time (other than Shares owned by the Purchaser ompames;. Such funds shall be invested by the Paying Agent as directed by Purcnaser, provided that such investments shall be in obligations of or guaranteed by the United States of America, in commercial paper obligations rated A-i or P-1 or better by Moody's Investors Service, Inc. or Standard & Poor's Corporation, respectively, or in certificates of deposit, bank repurchase agreements or banker's acceptances cf commercial banks with capital exceeding $500 million. Any net profit resulting from, or interest or income produced by, such investments will be payable to the Surviving Corporation or Purchaser, as Purcnaser directs. Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed to each person who was, at the Effective Time, a holder cf record 'other tr.an any of the Purchaser Companies) of Shares a form (mutually agrees tc cy Purchaser and the Company) of letter of transmittal and instructions for use m effecting the surrender of the certificates which, immediately prior tc the Effective Time, represented any of such Shares it. exchange for payment therefor. Upon surrender tc the Paying Agent cf such certificates, together with suer, letter of transmittal, duly executed and completed ir. accordance with tr.e instructions thereto, the Surviving Corporation shall promptly cause to be paid t; the persons entitled thereto a check in the amount tc which such persons are entitled as Merger Consideration, after giving effect tt any required tax. wt thr.: 1 o: ngs . No interest will be paid or will accrue or. the amcur.t payable upon toe surrender cf any such certificate. If raiment ts t: oe mace tc a persir. liter than the registered roller of the certificate surrendered, it shal. re a condition cf such payment that the O T7 -c- surrendered shall be properly endorsed or otherwise m proper form for transfer an a mat me person requesting suer, payment shall pay any transfer or other taxes required by reason of the payment to a person, other than the registered holder cf the certificate surrendered cr establish tc the satisfaction of the Surviving Corporation or the Paying .Agent that such tax has been, paid or is r.ot Disclosure Pure ca'.'s : o i .ow: r.a me r_rteccive 11 me, cne - - d -----Y1- - ---- led *. cause che PsYino Aaen.c cc aeliver receiver wim respect thereto') made Y3 : ' 2 ~o *;r.e Pay in have not peer, disbursed to holders of ; ; ;caies :c mer f y hares outstanding on the Effective Time, Y.i:: 2 i fie: such holder itled to loos, to the Surviving Ccrporati , a a i :: e r a ' credit; th respect to the cash payable upon due 3.. r rer. l : ica2* twithstanding the foregoing, neither the Payino Aoe.31 30r any p :ty he: ail be liable to any holder of certifies f t me r :y representiap :a:es : c r any amount pain to a public official pursua "CO 3 3 y applicable acan Dr.ed p: operty , escheat or similar law. The Surviving C: rpc-r ai:cn snail pay LI cha: ces an d expenses, including those of the Payin Aden 2, ; n connection w :h the exchan ae of cash for Shares and Purchaser shal he Survi mg Ccrpci acicn for such charges and expenses. Dissenters' Rights. If any Dissenting Stockholder shall be entitles tt ce paid the "fair value" of his or her Shares, as provided in Section HI of the DGCL, the Sompar.y shall give Purchaser notice thereof and Purchaser shall nave the riant to participate in all negotiations and proceedings with respect to any such demands. Neither the Company nor the Survvviuv Corporation shall, except with the prior written consent of Purchaser, vclur.tarily make any payment with respect tc, or settle or offer to settle, any suer, demand for payment. If any Dissenting Stockholder shall fail to perfect or shall nave effectively withdraws, or lost me right to dissent, the Shares held by suer. Dissenting Stocknolder shall thereupon be treated as though such Shares nau oeen converted into the Merger Consideration pursuant to Section 5.1. Transfer of Shares After the Effective Time. No transfers of Shares snail be made on the sccck transfer bocks of the Surviving Corporation at or after the Effective Time. ARTICLE VI REPRESENTATIONS AND WARRANTIES c.l. Representations and Warranties of the Company. The Company nereoy represents and warrants tc Purchaser and Merger Sub that: .a Corporate Crgariration and Qualification. Each of the Company arm :as subsiciaries is a corporation duly organized, validly existing and m -7- laws :1 its respective -uriscicc:on of incorporation and is m good standing as a 1; refer. eurocrat ion :r. earn mrtsdiction where the properties owned, leased cr iperateu, cr the business conducted, by it require such qualification, except far suer failure to sc qualify tr ce in such good standing, which, when taken tcuetner w: tr. ail ether suer, far lures, is net reasonably likely to nave a material adverse effect or. me financial condition, properties, business or results t: operations of the Company and its subsidiaries taken as a whole. Earn tf me Company and its suesiaiaries has the requisite corporate power and aumcrity to carry on its respective businesses as they are now being conducted. The Company has made available tc Purchaser a complete and correct copy of the orr.par.y Certificate ar.c Company By-Laws, each as amended to date. The Company ertificate and Company By-laws sc delivered are in full force and effect. The Company has delivered tc Purmaser prior to the date hereof (i! a true, correct and complete list of the suesi:: iaries and associated entities of the Company uu Disclosure Page 8 i c\ *:r.e Cvixicar'. v, ir. suer, subsidiaries o: ac reenter* is am parrnersr.: cf :he Company is a party anc as in vs'hicn the Company interest. ie authorized capital stock of me Company consists or 1C,COO,000 Shares, of which 0,068,665 Shares were outstanding on February 26, 1 996 , and 2,000,000 shares of Preferred Stock par value SI.00 per scare '.the "Preferred Shares"!, of which no shares were outstanding as of the date r.ereof. All of the outstanding Shares have been duly authorized and are validly issued, fully paid anc nonassessable. The Company has no Shares or Preferred Shares reserved for issuance, except that, as of February 26, 1998, there were an aggregate of 919,150 Shares reserved for issuance under thencurrent -outstanding stock cpttcr.s pursuant to tne 150F Long-Term Performance Plan 'the "1987 Plan"':, One 1989 Long-Term Performance Plan doe "1989 Plan"), tne 1993 Performance Fiat. tne "1993 Flan": and the 1996 Long-Term Performance the "1996 Pian" and collectively with the Plans listed in this sentence, the "Stock Plans"; and 120,098 Preferred Shares reserved for issuance upon exercise c: one ngets 'tee "tights") issued pursuant tc the Rights Agreement, aatea as cf Noverooer 13, 1997, between the Company and Harris Trust and Savings Ear.k (the "Rigr.ts Agreement"' . Each of the outstanding shares of capital stock of each cf the Company's subsidiaries (as defined in Rule 1.02(v) of Regulation S-X promulgated pursuant to the Exchange Act) is duly authorized, validly issued, fully paid and nonassessable and, except as set forth in the Disclosure Letter, owned, either directly or indirectly, by the Company free and clear of ail liens, pledges, security interests, claims or other encumbrances. Except as set forth above, there are no shares of capital stock of the Company authorized, issued cr outstanding ana except as set forth above, there are no pre emptive ria.ols nor any outstanding subscriptions, options, warrants, rights, convertible securities cr other agreements or commitments of any character relating to the issued or unissued capital stock or other securities of the Company cr any of 1 '5 SUC5 ldlfiri6S . -e- Immediately crior to tne oor.s ummaticn of the Offer and the Mercer, r.c Preferred Shares :r ar.y other securities of the Company will be subject tc issuance pursuant to tr.e Rights Acreemer.t, no Distribution Date (as defined in the Rights Acreem.er.t shall have occurred and, at cr after the Effective Time, the Summit: Corporation will nave r.c obligation tc issue, transfer or sell any Shares ; r lomm.or. stock cf tr.e Surviving Corporation pursuant tc any Benefit Plat. Subject only to approval c: this Agreement by tne misers cf a naicruy :: tr.e outstanding Snares, the Company nas tne reams! te corporate power am: aut.ocrity and has taker, all corporate action necessarv it order tc execute ana deliver this Agreement and to consummate the transactions contemplated nerery. This Agreement is a valla and binding aoreerer.t of tne Company enter teae-ie against the Company in accordance with its terms, assuming the due act n.cricat ion, execution and delivery hereof by Purchaser and Mercer Sub. Disclosure Page 9 red under the Hart-3cott-F.ooi.no Antitrust t") ana as reauired under the Exchanae Act the "Reaulatcry :; ings"; , r.c notices, reports tr other filings are required to be made by the Company with, r.cr are any consents, registrations, approvals, permits or authorizations requires to be obtained by t.ne Company from, any governmental or regulatory authority, agency, commission or otter entity, domestic or foreign ("Governmental Entity"!, in connection with the execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby, the failure to make or obtain ant' or ail of which is reasonably likely to have a material adverse effect cn the financial condition, properties, business or results of operations of t.ne Company and its subsidiaries taken as a whole, or could prevent, delay or materially burden the transactions contemplated by this Agreement. :i; Except as tc matters described m the disclosure letter delivered tc Purchaser cn or prior to the date hereof (the "Disclosure Letter"', the execution ana delivery of this Agreement by the Company do not, and the consummation by tr.e Company of the transactions contemplated by tnis Agreement will not, constitute or result m <i) a breach or violation of, or a default oncer, tr.e Company Certificate or Company By-Laws or the comparable governing instruments of any of its subsidiaries, (ir) a breach or violation of, a default under or the triggering of any payment or ocher material obligations pursuant to, any of the Company's existing Benefit Plans (as defined in Section 7.1(d)! or any grant or award made under any of the foregoing, (iii) a breach or violation of, or a default under, the acceleration of or the creation of a iier., pledge, security interest or other encumbrance on assets (with or without the giving of notice or the lapse of time) pursuant to, any provision of any agreement, lease, permit, contract, joint venture agreement, partnership agreement, note, mortgage, indenture, arrangement or other legal obligation ("Contracts") of the Company or -9- any of its subsidiaries or any law, rule, ordinance or regulation or judgment, decree, order, award or governmental or non-governmental permit or license to which the Company or any cf its subsidiaries is subject or (iv! any change m the Hires cr obligations of any party under any of the Contracts, except, in tr.e use cf clause Liu or iv above, for suer, breaches, violations, defaults, accelerations cr changes that, aicne or in the aggregate, are net reasonably iixely tc nave a material adverse effect cn the financial condition, properties, business cr results of operations cf the Company and its subsidiaries taken as a wr.ole cr tr.at could net prevent, delay or materially burden the transactions ccntem.pl a tec cy this Agreement. The Disclosure Letter (ii specifically identifies ail Contracts tr.at contain any "change cf control" or otter similar proves iir.s a r.c ,ii sets forth, tc the best Knowledge of the officers of the Compar.c , a list of any consents required inter ar.y Contracts tc ce obtained prior tt cor.sumrr.attor. of the transactions contemplated by this Agreement .wr.etr.er or not subject to tr.e exception set fertn with respect to clause 'iii aoeve . Tr.e Company will use ics Pest efforts to obtain the consents referred tc . r. tr.e Disclosure Letter. Company Reports; ,-ir.anciai Statements. The Company has delivered informa "Compar. cn registrati cement requi: ="' oreoared cement, schedule, report, proxy statement or ce filed or otherwise filed with the SEC (the since December 31, 1996 (the "Audit Date"), Disclosure Page IU L':r:eTMxe: 31, 1996 aril the Fcrx. 8-K cased November 19, 1991, each ;r. the lore, 'inducing exhibits and any anenanents thereto: filed with the SEC. As cf their respective aates, the Company Reports complied m all material respects with the applicable requirements under the Exchange Act and did not, and any Company Reports filed with the SEC subsequent to the date hereof will not, contain any intrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the cireamstances in which they were made, not misleading. Each of the consolidated balance sheets anc statements of financial position includedin or incorporated by reference into t.ne Company Reports (including the related notes ar.o schedules! fairly presents the consolidated financial position of the Company and ics subsidiaries as cf its date and each of the consolidated statements cf earnings, stoekhoiders' equity and cash flews included in or incorporated by reference ir.tc the Company Reports (including ar.y related notes ltd scr.edules: fairly presents the results of operations, stocK.hclders ' equity and manges m cash flows, as the case may be, of the Company and its s i.c s: ci a r: es for the persons set forth therein (subject, in the case of maucioeo statements, to .normal year-end audit adjustments which will not be material in amount or effect:, m each case in accordance with generally accepted accounting principles consistently applied during the periods involvec, except as may be notec tnerem. Other than the Company R.epcrts specifically recites above, the Company has net filed anv other -10- defmitive reports or statements with the SEC since the Audit Date. The Company will provide Purchaser with the most current draft version of the Company's Annual Report on Form iC-K, including documents incorporated therein by reference, for the year ended December 31, 1997, (the "1997 10 -- K") promptly after preparation of suer, draft. As soon as practicable after receiving its auditor's opinion with respect to the Company's financial statements for the f i s c 0 i year ended December 31, 1997 (the "1997 Financial Statements"), the Corneanv will deliver tc Purchaser a copy of su ch 1997 Fi nanciai Statements including such auditor's opinion) and, either simultaneously therewith or as s:m mereafter as is practicable, a copy cf the 1997 10-K m substantially the term. :: be filed with tr.e SEC. The 1997 10-K, as filed with the SEC, will simply wotn tr.e standards set forth m this Section 6.1(e) for tr.e Company Alssence cf Certain Changes. Except as disclosed in the Company "3 err". 5 D 2 1 e ci with tr.3 y f C crior t c v h e have h9i0cf or cvherwise o-sclcsec ir. wo Iiscivsure Letter, rir.ie tr.e Aucit Date, th.e Company and its smsicianes nave wr.cucvec their reststive cosinesses only m, anc nave net -engaged m 0: r. y material t r a n s a c 111 r. c 1 r. e r t n a r. a c c c r o 1 r.c t c, one o r o 1 na r y anv. u s u a 1 course :: cosinesses anc mere r.as not beer. .'1; ar.y material adverse change in tr.e financial condition, properties, business or results of operations of the Cim.par.y anc. its subsidiaries taken as a whole or any development or combination of neve 1cpments of which .management cf the Company has knowledge that is reasmaciy likely to result ir. any such change; (ii! any material change in the r.et projected liability relating to ascestos or silica or projected insurance recovery related thereto included ir. the Company Reports cr any development or combination of developments cf wnicn management of the Company has knowledge t.nat is reasonably likely to result in any such change; ;iii; any declaration, setting aside or payment ;f any dividend or ether distribution with respect to Disclosure Pace 11 mam a 0 ' 0-,- am c.rarme cv tne Domnam ir. etrmms $0nee che A'jciie Dare, sacact as n the Company Reports filet with the SEC ar. in tne ordinary course, there has not payable or wmc.-i conic become payable by heir officers or key employees, or any tinea in Section 7.11 . Litigation and Liabilities. Except as disclosed with reasonable tne Company Reports filed with the SEC prior to the date hereof osure Letter, there are no (lj civil, criminal or administrative claims, hearings, investigations or proceedings (collectively, ing or, to the knowledge of the management of the Company, threater.ee agarr.st the Company tr any of its subsidiaries or ii) obligations or liatilities, wr.ether or not accrued, contingent cr otherwise, including, without finical: :r., these relating tc matters involving any Environmental Law (as cerineo m Settles 6.1:n; , ci ar.y other facts or circumstances of which tne na.uacerrer.c cf the Company is aware that could result ir. any claims against or cb 1. cat i: r.s or liacilic:es s: me Company cr any of its subsidiaries, that, alone :r ; r. tne accregate, are reasonable likely to -11- r.ave a material adverse effect m. the financial condition, properties, business or results cm' operations of the Company and its subsidiaries taken as a whole. The Company has set form, m the Disclosure Letter a true description of all ciairs, obligations and liacilities relating to asbestos and silica, including, wim.out limitation, product ana general liability. i'h; Employee Benefits. !i) All bonus, deferred compensation, pension, retirement, profitsharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock ana stock option, employment, termination, severance, compensation, medical, health or other plan, contract, policy or arrangement whim, covers current cr former employees of the Company and its subsidiaries mhe "Employees") and current cr former directors cf the Company (the ar.d 3enetit .-Cans"' including, but r.ct limited to, "employee tenet it plans" within tne meaning of Section 3(3; of the Employee Retirement mcm.e Celerity .Act cf is amended '"ERISA."' are listed ir. the Disclosure "change of centrtl" cr similar previsions therein are certifies m. me Eiscicsure Letter. True and complete copies of m. ana Benefit Elans and such ether benefit plans, contracts cr including, cm r.ct limited to, ar.y trust instruments and insurance my, firming a part cf any such plans and agreements, and all ii .All Comper.sat: : r. arm Benefit Flans are in substantial compliance -cable law arm all Tr.m.per.sation and Benefit Plans whicr. are employee lies, cm.er than "miltiempioyer plans" within the meaning cf Sections EFIS.A, covering empliyees (the "Flans") to the extent subject to ERISA, bstan.tial compliance with ERISA. Each Plan which is'an "employee er.efit pi an" within me m.eanma cf Section 3 '2 cf ERISA. ("Pension arm whicr. is ir.termed to ne qualified under Section 4C1 (a; of the al Revenue Code cf lim, as amended (the "Cede":, has received a favorable Disclosure Paue 13 the .-'.now ledge cf the Company, threatened litigation relating to the Compensation and Benefit Flans. Neither the Company ncr any subsidiary has engaged in a transaction with respect to any Flan that, assuming the taxaole period of such transaction expired as of the date Hereof, could subject the Company or ar.y of its sucsidiaries to a material tax or penalty imposed by either Section 4515 of th,e Code or Section 502(i) of ERISA. (in! No liability under Subtitle C or D of Title IV cf ERISA has been or is expected to be incurred by the Company or any subsidiary with respect to any ongoing, frozen or terminated "single-employer plan", within the meaning of Section 4001 (ai (15! of ERISA, currently or formerly maintained by any of them, or the single-employer plan of ar.y entity which is considered one employer with the Company under Section 4001 ot ERISA or Section 414 tf the Code !an "ERISA Affiliate"). The Company and its subsidiaries have not incurred and do not expect to incur any withdrawal liability with respect tc a multiemployer plan under Subtitle E of Title IV cf ERISA. No notice of a "reportable event", within the meaning of Section 4043 of EFISA for which the 50-day reporting requirement has not been waived, has beer, required to be filed for any Pension Plan or by any ERISA Affiliate within the 12-month period ending on the date hereof. fiv) All contributions required to be made under the terms of any Plan have been timely made. Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has an "accumulated funding deficiency" (whether or not waived) within the meaning of Section 412 cf the Code or Section 302 of ERISA. Neither the Company nor its subsidiaries has provided, or is required to provide, security tc any Pension Plan or tc any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code. (v) Except as set forth in the Disclosure Letter, under each Pension Plan which is a single-employer plan, as of the last day of the most recent plan year ended prior to the date hereof, the actuarially determined present value of ail "benefit liabilities", within the meaning of Section 4001(a) (16) of ERISA (as determined on the basis of the actuarial assumptions contained m the Plan's most recent actuarial valuation), did .nor exceed the then current value of the assets of such Plan, and there has been no material change ir. the financial condition cf such Plan since t.ne last day of the most recent Plan Year. The withdrawal liability c: tr.e Company and its subsidiaries under each Benefit Plan which is a multiemployer plan to which the Company, its subsidiaries or an ERISA Affiliate has contributes, during the preceding 12 months, determined as if a "complete withdrawal", within the meaning of Section 4203 of ERISA, had occurrec. 5 3 c f th? o 5 ti 0 r. e r e c f 2 c 0 5 n c " 0 x c 0 ci 3 10 0,0 0 0 .vi) Neit.ter the Company ncr the subsidiaries have ar.y cciiga :;r retiree healtr. ana life benefits under ar.y Plan, except as set fcrtr. Disclosure Letter. Che Company cr its subsidiaries may amend cr termir.a Si.ch Plan pursuant t; tr.e terms thereof. ivii) Except as set forth in. the Disclosure Letter, the consummation of t.ne transactions contemplated by this Agreement will not (x) entitle any employees of the Company cr ar.y of its subsidiaries tc severance pay, (y; accelerate the time cf payment or vesting cr trigger any payment of compensation cr benefits under, increase the amount payable or trigger any other material obligation pursuant tc, ar.y of the Compensation and Benefit Plans or (z) result ir. any breach or violation cf, or a default under any of the Compensation and Disclosure Pace I 3 O uj All Cor.per.sat ter. and Benefit eriai respect; with apple canle Letter, the Company ana its s res with respect tc any Per.sio a.ns severing ncn-'J.S. Employees seal ilaaww .. Except aas set forth sidiaries have nc material Plan which covers non-'J.S. (ix) The method of allocating the portion of the proceeds of the ffer from the suspense account which is part of the A.P. Green Industries, Inc. mpioyee Stock Ownership Trust, which implements and forms part of the A.F. Green Investment Plan (collectively, the "ESOP") to participants' accounts in accordance with Section 7.8 (a: hereof will not violate the terms of the ESOP. Compliance. heitner the Company nor any of its subsidiaries is set.:.ict with, or in aelau-f :r violation of, ;i; any law, ru.e, regulation, truer, "uagmer.t or decree applicable tc the Company or any of its suosidiaries or cy whirr, its or any of their respective properties are bound or affected, or il. any Contract tc which the Company or any of its subsidiaries is a party cr by which the Company or any of its subsidiaries or its or any of their respective properties are bound cr affected, except for any such conflicts, defaults or violations that, individually or in the aggregate, are not reasonably likely to have a material adverse effect on the financial condition, properties, business or results cf operations of the Company ana its subsidiaries taken as a whole, or could prevent, delay or materially burden the transactions contemplated by this Agreement. i g ) Brokers and Finders. Neither the Company nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders, fees in connection with the transactions contemplated herein, except that the Company has employed Credit Suisse First Boston as its financial advisor, the arrangements with which have been disclosed in writing tc Purchaser prior to the date hereof. ;k) Other Actions. 'i; The transactions contemplated hereby have been approved by the f Directors of the Company in. accordance with Article Sixth of the Certificate and, as a result thereof, Article Sixth is inapplicable to er and the Mercer. :iii The Company r.as taker, ail necessary action under one Rights nt to provide that tne execution of this Agreement and the consummation transactions contemplated hereby will net cause .'i'1 Mercer Sub ana/or tc become sr. Acuuirir.c Person 'as defined m the rimes Aoreerrient cr D i s t r i bu t ion Date cr a Stock Acquisition Dace :as such terms are defined F.igr.rs Agreement; tc cccur, irrespective cf Che number cf Shares acquired t c c c r. e Offer. Takeover Scatices. No "fair price", "moratorium", "control share acqutsicicn" cr other simiiar ar.cicakeover scacuce or regular ion : including, without limitation, Section 2Fi c: the DGCL; each a "Takeover Scacuce"', is applicable tc the Company, cne Snares, the Offer, Che Merger cr the transact ions Disclosure Paee 14 .iscicsuri rp': it tne company s 'iccmpr iar.c wit.n tne 6 a S Or ne !_ i k e I v t o r a v er a material acvi se effect on nc: condi .or. . properties, mess or results f ooerations cf ny ar.d its subsidiar ds taken as a whole: i; the Company and its nes have complied at ill times with ail applicable Environmental Laws; properties currently iwned or operated by the Company or any subsidiar \q soils, groundwater, surface water, buildings or other structures) oeet contaminated with hazardous Substances; ini) any properties owned or operated by t r.pany or any of its subsidiaries were not ited with Hazardous Substances on or prior to such period of ownership :icn; (iv; neither the Company nor any subsidiary is subject to / for any Hazardous Substance disposal or contamination on any third :perty; v; neither the Company nor any subsidiary is subject to ftr any release or threat of release of any Hazardous Substance; (vi) tne _ompc nor any si has rece vpH am, once, emand, letter, :r mformat: :mc tr.at t .may be in violation of or inner any ivironmental . ; neither the Company nor any subsidiar; ?;;t to ani uder, decrt :ion or ct er arrangement with any -ntal entity or any indemnity or other agreement with any tmrc party : to liability under any Environmental Law; (viii) none of the properties Company or any subsidiary contain any underground storage tanks, -containing material, silica, lead products, or polychlorinated .s; 'ix) there are no other circumstances or conditions involving the or any subsidiary that could reasonably be expected to result m any ciaim.s, liability, investigations, costs or restrictions on the ownership, use, or trar. ot any property pursuant to any Environmental Law; and (x) the Company nas delivered or made available to Purchaser copies of all environmental reports studies, assessments, sampling data and all other information in its possess or. relating to asbestos and silica liability and claims including without limitation product and sales information, filing rates, settlements, proiec ed claims, legal advice, reserves, insurance and the use and disposal of as be stv s containing material and silica. used herein, the term. "Environmental Law" means any federal, state real law, regulation, order, decree, permit, authorization, opinion, common :r aoency requirement relating to: (A) the protection, investigation or oration cf the environment, health, safety, or natural resources, (B) the h a r .mo, use, presence, disposal, release or threatened release of any Ha: Substance, (C) noise, : dor, wetlands, pollution, contamination or anv threat of injury to pei sens cr property or -D) standards cf conduct : protection of human hi alto. ; including, without limitation, employee : safety;, in each case as amended and as now or hereafter m effect, o t r. e sons rsuar.t to any Environmental Law; E any petroleum, product or bu rst os-containing material, silica, lead-containing paint cr . ychic r i.na ted bipher.ils, radioactive materials cr raoo.o; cr (C) any ;ce which may be the suc;ect of regulatory action by any authority pursuant :: any Environmental Law. Tax Matters. The Tomcat.y and each cf its subsidiaries, and any combined, unitary or aggregate group for tax purposes of which the y cf its subsidiaries : s or has beer, a member, has timely filed ail Disclosure Patzc 15 1t dec cv ia w. All sucn .ax :r.s are true, correct ar.u ccnpiete i r. ar_ material respects. Tne lix.par./ :a each of its subsidiaries rave pare all Taxes ir.cludina interest and penalties due cr required tc be witr.held from, amounts owing tc any employee, ire::.tor ; r third party or nave previced adequate reserves m their financial sfa turner, ts for any Taxes that have not been paid, whetner or not shown as being cr ary returns. Except as has been disclosed tc Purchaser m the Disclosure letter: i. nc material claim, for unpaid Taxes has become a lien cr encumbrance of any tine against the property of the Company or any of its subsidiaries or is being assertec against the Company cr any of its subsidiaries; !ii) no audit, examination, investigation cr other proceeding in respect of Taxes is pending, threatened or being conducted oy a Tax Authority; (iii) no extension or waiver of tne statute of limitations on the assessment of any Taxes has been granted by the Company or any of its subsidiaries and is currently m effect; !iv) neither tne Company nor any of its subsidiaries is a party to, is bound by, or has any cciigatior. under, or potential liability with regards to, any Tax sharing agreement, Tax indemnification agreement cr similar contract or arrangement; (v) r.c power of attorney has been granted by cr with respect to the Company or any of its sucsidiaries with respect to any matter relating to Taxes; (vi! neither the Company nor any of its sucsidiaries is a party to any agreement, plan, contract or arrangement (whether oral or in writing; that would result, separately cr in the aggregate, m the payment of any "excess parachute payments" within the meaning of Section 280G of the Code; (vii; neither the Company nor any of its subsidiaries has any deferred intercompany gain or loss arising as a result of a deferred intercompany transaction within the meaning of Treasury Regulation Section i. 1502-13 (or similar provision under state, local or foreign law) or any excess loss accounts within the meaning of Treasury Regulation Section 1.1502-19; (viii) the Company is not and has not been a Unitec States real property holding corporation (as defined m Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(ii) of the Code. A.s used herein, "Taxes" shall mean any taxes of any kind, including but not limited to those on cr measured by or referred to as income, gross receipts, capital, sales, use, ad valorem, franchise, profits, license, with.ncicir.g, premium, value added, property or windfall profits taxes, customs, duties or similar fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any governmental authority, domestic or -16- A.s used herein, "Tax Return" shall mean any return, report or statement require:: tc be filed with any governmental authority with respect tc Taxes. ,c; Intangioie Property. Except as set forth in the Disclosure e Company and its subsidiaries own or have adequate rights to use all rademarks, trade narr.es, service marks, brands, logos, copyrights, trade secrets, customer lists anc other proprietary intellectual igr.ts cci iectively, "intellectual Property") required for, used in or :ncioent to one business of tne Company anc: its subsidiaries as now conducted or proposes, to be conducted. To t.oe knowledge of the Company, all Intellectual Property owned by the Company is valid and enforceable. Except as set forth in t.oe Disclosure Letter, the Company has not received notice, and has no reason to .-:ncw of ary claim or threafer.es infringement of the rights of others with respect oo any Intellectual Property used cr owned by the Company, the loss of w.oicr. could have a material adverse effect or. the financial condition, properties, business or results of operations of the Company and its subsidiaries taken as a whole. Except as disclosed in the Disclosure Letter, the Company and its subsidiaries have not been sued within the past two years 'or with respect tc a subsidiary of the Company, since such subsidiary was Disclosure Page 16 .r.e cast used without appropriate authorization., ar.y ccr.fiier.tiai information or trade secrets cf ar.y third party. The Company has r.ct receives any notice alleging such conduct within the past two years and, with respect to notices received prior to such time, there is no Action pending cr, to the knowledge of tree Company, a.nreate.oed with respect thereto. 6.2. Recresentaticns and Warranties cf Purchaser and Mercer Sub. Purcr.aser and Mercer Sub represent and warrant to the Company that: Corporate Crgamcation and Qualification. Each or Purchaser and Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation and is in gone standinc as a foreign corporation in each, jurisdiction where the properties owned, leased cr operated, or the business conducted, by it require suer, quaii f ication except for suer, failure to so qualify or to be in such good standinc, wnich, when taker, tocetner with all ct.ner such failures, is not reasonably lixely to have a material adverse effect on the financial condition, properties, business cr results cf operations cf Purchaser ar.a its subsidiaries, taker, as a whole. Each of Purcnaser and its subsidiaries has tne requisite corporate power and authority tt carry on its respective businesses as they are now .oeir.c conducted. Corporate Authority. Purchaser and Merger Sub each has the requisite corporate power and authority and has taken all corporate action necessary m order to execute and deliver this Agreement and to consummate the transactions contemplated -17- hereby. This Agreement is a valid and binding agreement of Purchaser and Merger Sub enforceable against Purcnaser and Merger Sub m accordance with its terms, assuming the due authorization, execution and delivery hereof by the Company. :o; Governmental Filings; No Violations. !i) Other than the V 0 ' 0 r'u rc.na n^ake ; t ransa ry Filings, no notices, reports or other filings are required to be made aser and Merger Sub witr., nor are any consents, registrations, s, permits or author nations required to be obtained by Purchaser and ic from, any Governmental Entity in connection with the execution and cf this Agreement rry Purcnaser and Mercer Sub and the cor.summation by r ana Merger Sub cf tne transactions contemplated hereby, the failure tc retain any cr ail c: wrier, could prevent, delay or materially burden the ions ccntemoiated by tms Aareement. n The execut'd, and delivery cf this Agreement oy Purchaser and Merger Sue do r.ct, and the ::ns inmation by Purchaser and Merger Sub of the transactions contemplated by ms Agreement will not, constitute cr result in i a creacr. cr violation cf, : r a default under, the Certificate cf Incorporation cr By-laws cf Purcnaser cr Merger Sub cr the comparacie governing instruments cf any of their subsidiaries or ;ii) a breach or violation of, a default ur. her, the accelera: i or. cf or the creation cf a lien, p ledge, secant interest ; r other e n c umJo r a r. c e c n a s s e t s { with or wi thout the gi vmg cf notice the lapse of time' pursuant tc, any prove sion of an y Contract c f Purchaser or Merger Sub c r any of their suns idiaries o r any raw, ordinance, rule or regulation cr judgment, decree, order, award cr governmental or non-governmental permit cr license tc wnich Purcnaser cr Merger Sub cr any of their subsidiaries are sucject, except, in tne case tf clause ui! above, for such breaches, Disclosure Page I 7 revest c.oanges :nat, alone or in the raterialiy burden one transactions cor.se.T~. a re me transa Aareemer.t . ARTICLE VII COVENANTS Interim Operations of the Company. The Company covenants and agrees, as tc itself and its subsidiaries, that, except as set forth in the disclosure Letter, after the cate hereof and prior tc the Effective Time (unless Purchaser shall otherwise agree it. writing and except as otherwise permitted or required by this Agreement,: ioi me business of tr.e Company and its subsidiaries snail be connected only m the crainary and usual course and, to the extent consistent therewith, each of the Company and its subsidiaries snail use its best efforts to preserve its business organization intact and maintain its existing relations with customers, suppliers, employees and business associates; ;b> the Company shall not (i) sell or pledge or agree to sell or pledge any stock owned by it in any of its subsidiaries; (11) amend the Company Certificate cr Company By-Laws or amend, modify or terminate the Fights Agreement, or redeem, the Rights issued pursuant thereto; (iii) split, combine or reclassify the outstanding Shares; or (iv) declare, set aside or pay any dividend payable in cash, stock or property with respect tc the Shares; 'c' neither the Company nor any of its subsidiaries shall (i! issue, sell, pledge, dispose of or encumber any additional shares of, or securities convertible cr exchangeable for, cr options, warrants, calls, commitments or rights of ar.y kind tc acquire, any shares of its capital stock of any class cf tr.e Company cr its subsidiaries or any other property or assets other than, or. the case of the Company, Shares issuable pursuant to options distancing cr. tr.e date hereof under the Stock Rians; {ii) transfer, lease, liceo.se, guarantee, sell, mortgage, pledge, dispose of or encumber any assets or incur or modify any indebtedness or ether liability other than ir. tr.e ordinary and usual course cf business; (iii; acquire directly or indirectly cy redemption or otherwise any shares of the capital stock of the Company; (;v( autr.erize capital expenditures for items ttr.er t.nan tr.cse relating tc the Company's Palmetto, South Carolina facility in excess cf Sltl,iCf inaivicuailv cr SI,500,000 ir. the aggregate; Faimetto, South Carolina facility ir. excess of SS, 500, 000 rr. the aggregate :r vi. make any acquisition of another person or entity 'by merger, o o r. s; ( i ua 11 on cr acquisition cf stcox or assets! cr any investment ir., assets cr stoc,< cf any ether person cr entitv; "d( neither the Company nor any cf ots subsidiaries shall grant any severance cr termination pay to, or enter into any employment or severance agreement wit.o ar.y director, officer or ether employee of the Company or such subsidiaries; and neither the Company r.or any of its subsidiaries shall establish, adopt, enter into, maxe ar.y new grants or awards under or arena, ar.y collective cargair.mg, bonus, profit shar inc, thrift. Disclosure Page I 8 owners c erred cement u stc; , census., retirement, emciovee . p:_;cy or arrar.qement for one employees 'the "Benefit Plans"!; ie; except in the ordinary and usual course of business and with the consent of Purchaser, neither the Company nor any of its subsidiaries shall settle or compromise any material claims or litigation or, modify, amend or terminate any of its joint venture agreements, partnership agreements or material Contracts or waive, release or assign any material rights or :: neither tic tax election or perm less payable payee t; Pirmaser, except m ompan.y nor any of its subsidiaries shall make any any insurance policy naming it as a beneficiary or e canceled or terminated without notice to e cruir.ary and usual course of business; a g ' except as may ce regmrec as a result of a change ir. law or in generally accepted accounting principles, neither the Company nor any of .ts subsidiaries shall change any of the accounting practices or principles _sec nv it; rC neither the Company nor any of its subsidiaries shall adopt a p.ar. of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization, or other reorganization of tr.e Company cr any of its subsidiaries not constituting an inactive subsidiary (other than the Merger); and ; i' neither the Company nor any of its subsidiaries will authorize or enter into an agreement to do any of the foregoing or take any action that would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect as of the date when made if such action had then been taken, or would result in any of the Offer Conditions set forth in Annex A not being satisfied. 7.2. Acquisition Proposals. The Company, its affiliates and its and tr.e:r respective officers, directors, employees, representatives and agents unci -gir.g, without limitation, any investment banker, attorney or accountant retainer: cy the Company or any if its subsidiaries! shall immediately cease all existing discussions or negotiations, if any, with any parties conducted heretofore with respect to anno acquisition cr exchange of all cr any material portion of the assets of, cr more t.ian 151 of the equity interest in, the Company or any of its subsidiaries by direct purchase from tr.e Company, tender or excr.ange offer or otherwise cr any business combination, merger, oir.s:!lOiticn or similar transaction (including an exchange of stock cr assets; who o: involving the Company or ar.y subsidiary cr division of tr.e Company (an "A ;q-i s i o i or Transaction" . (.'either the Company nor any of its affiliates, nor r.eg per 5I 1 r t.oeir respect; including, w:tr.e retained by the i y, encourage, sc with, or provi: her entity or c: associate of Ft - officers, directors, employees, epresentatives limitation, ar.y investment banker attorney or paru/ or arc.- of its subsidiaries, mail, directly sit, participate m or initiate a scissions or ar.y information tc, any corporate: n, partnership, p ether than Purchaser and Merge Sub, any baser and Merger Sub or any Disclosure Page 19 : .-urchaser ar.a Merger Set' wire respect re ar.y inquiries cr the tt tr.e stockholders of the Company; concerting ar. Acquisition cr. : ar. "Acquisition Proposal"! , unless i i the Beard of Birectors of me dmpa r. / determines m goes faith after consultation with outside legal counsel that suen action is necessary in order for its directors to comply witn mem respective fliterary duties under applicable law ana (i;; the Board of Directors of tr.e Company determines in good faith (after consultation with its financial advisor! that such Acquisition Proposal, if accepted, is reasonably liiceiy to be consummated :taking into account ail legal, financial and regulatory aspects of the proposal, the person making the proposal and all other relevant factors'! and would, if consummated, result m a transaction more favorable to the Company's stockholders from a financial point of view than the transaction contemplated by this Agreement (any such more favorable Acquisition Proposal being referrec to m this Agreement as a "Superior Proposal"). The Comrar.v will take tne necessary steps to inform the individuals cr entities referred m it. me first sentence hereof of the obligations undertaker, in this Seem m ~ . 2 . The Company will notify Purchaser immediately if any such .rmom.es :r proposals are received by, ar.y such information is requested from., cr ar.y sim. neqctiatic.es cr discussions are sought to be initiated or continued wim. me Company, the name tr.e person making such proposals (unless identifying such person is prohibited by a binding confidentiality agreement in effect as cf February 25, 1 Jr? , the material terms and conditions of such proposals and thereafter shall keep Purchaser informed, on a current basis, of tne status and terms of suer, proposals ana the status of such negotiations or discussions. The Company agrees not to release any tnird party from, or waive any provisions of, any confidentiality or standstill agreement to which the Company is a party, unless the Board of Directors cf the Company shall have determined m good faith, based upon the advice of outside counsel to the Company, that failing to release such third party or waive such provisions would constitute a breach of the fiduciary duties of the Board of Directors of the Company under applicable law. 7.3. Meetings cf the Company's Stockholders. (a) If required following termination of the Drier, the Company will take, consistent with applicacle law, the Company Certificate and the Company By-Laws, all action necessary to convene a meeting cf holders cf Shares as promptly as practicable following the purchase of Shares pursuant to the Offer to consider and vote upon the approval of this Agreement and the Merger. Subject to fiduciary requirements of applicable law, the Board of Directors cf the Company shall recommend such approval and the Company shall take ail lawful action to solicit suer, aepreva.. At any such meeting of the Company all of the Shares then owned ry me Fur chaser Companies will be voted in favor of this Agreement. The Company's proxy or information statement with respect to suer, meeting cf sharehemers the "Proxy Statement";, at the date thereof and at the date of s with the applicable induce an untrue statement of required to be stated therein ighr cf the cireams lances under ; provided, however, that the foregoing shall not apply' to the extent uch untrue statement t f a material fact cr omission to sta te a set was made ny tne Ccmpany in reliance upon ana m con formaty with f z- rma t i or. concern mu tr.e Purchaser Companies furnished to the Company er specifically ftr use in. the Proxy St a tement. The ?r exy Statement Disclosure Page 20 'JO' to ' c Notwithstanding tr.e foregoing, in the event that Merger Sub snarl acquire at least SC"- cf the outstanding Shares, me Company agrees, at the request t: Merger Sue, subject to Article VIII, to take all necessary and appropriate action to cause the Merger to become effective as soon as reasonably practicable after such acquisition, without a meeting of the Company's stocknoiders, in accordance wins. Section 253 of the DGCL. Filings; Other Action. (ai Subject to the terms and conditions herein provided, the Company ana Purchaser shall: (i) promptly make their respective filings and thereafter make any other required submissions under the HSR Act and other Regulatory Filings with respect to the Offer and the Merger; and (ii; use ail reasonable efforts to promptly take, or cause to be taken, all other action and do, or cause to be cone, ail ether things necessary, proper or appropriate under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including out not limited to cooperating in the preparation and filing cf the Offer Documents, the Scnecule 11D-9, me Proxy Statement, any' required filings under the HSR Act cr ether foreign filings and any amendments fc any thereof. The Company shall use ail reasonable efforts to obtain ail licenses, permits, consents, approvals, autnorizations, qualifications and orders of governmental authorities and parties to Contracts with the Company and its subsidiaries as are necessary for the consummation of the transactions contemplated by this Agreement and to fulfill the conditions to the Offer and the Merger. The Company will cooperate with Purchaser and Merger Sub with respect to consummating the financing for the Offer and the Merger and any refinancing of the Company's indebtedness.. Notwithstanding anything contained herein to the contrary, Purchaser shall be under no obligation whatsoever to make or accept or engage in negotiations for any settlement with any governmental entity or any other arrangement involving the sale, disposition, or separate holding, through the establishment of a trust, or otherwise, of the business or any of the assets of the Company or any of its subsidiaries acquired pursuant to this Agreement, or any portion thereof, or particular assets of Purchaser or its subsidiaries or any of the Purchaser Companies in order to complete the transactions contemplated herein. ;b) The Company and Purchaser each shall keep the other apprised of the status of matters relating to completion cf the transactions contemplated herepy, including promptly furnishing the other with copies of notices or other communications received by Purchaser or the Company, as the case may be, or any cf :r.e: r subsidisri. 05 , fr oft. el r. v Goverrjner.tai Entity with res transactions contemplated by and cooperate with one ar.cz r. another in connection witr. a briefs, arguments, opinions or an.' ctr.er antitrust law. c the Offer cr the Merger or any of tne other Agreement. The parties hereto will consult .d cons ice r i.u good faith the views of one lyses, appearances, presentations, memoranda, eposais made or submitted by or cr, behalf of n proceedings i.xer cr relating to tne HSR Act Access. The Timpani' shall (and shall cause each c its subsiaiaries to,' afford Purcr.aser's officers, employees, counsel, lenders, accountants and other authorize;: representatives '"Representatives": access, during normal business hours throughout the period prior to the Effective Time, to the Representatives cf the Company (ana each cf its subsidiaries) and its properties, bocks, Contracts ar.o. records and, during such period, the Company shall .'ana shall cause each cf its subsidiaries to: furnish promptly to Disclosure Pace 2 I iu rsus : icn : meet or re ueemea to modify a r g ptovtciet., t u r t n e r, that toe foregoing snail not require toe Compant' to permit ar.y inspection, cr to disclose any information, which in the reasonable judgment of the Company would result in the disclosure of any trade secrets of third parties or violate any ocligscion of the Company with respect to confidentiality if the Company shall have used reasonable efforts to obtain the consent of such third party to such inspection or disclosure. Ail requests for information made pursuant to this Section shall be directed tc ar. executive officer of the Company or such person as .may be designated by any such officer. upon any termination of this Acreement, Purchaser will collect and deliver to the Company all documents obtained by it cr any of its Representatives then in their possession and any Notification of Certain Matters. The Company shaii give prompt notice tc Puror.aser of: .a: ar.y notice of, cr ether communication relating to, ar.y environmental matter, a cefauit cr event that, with notice cr lapse cf time cr both, would become a default, received by the Company cr ar.y cf its sucsiaiaries subsequent to the date of this Agreement and prior to the Effective Time, under any Contract tc which the Company cr any of its subsidiaries is a party cr is subject; (bi ar.y oranges or developments relating to any Action pending or, to the knowledge cf management cf the Company, threatened against the Company or any of its subsidiaries existing as of the date hereof; ic) any new Actions pending or, to the knowledge of management cf the Company, threatened against the Company or any of its subsidiaries since the date hereof; ;d', any material adverse change in the financial condition or results of operations of the Company and its subsidiaries taken as a whole as compared to the financial condition and results of operations of the Company and its subsidiaries disclosed in the consolidated financial statements of the Company as cf and for the year ended December 31, 1997 which are .set forth in the Disclosure Letter or the occurrence of any event which, so far as reasonably can be foreseen at the time of its -2 3- occurrence, is reasonably lonely to result m any such change; and 'eJ ar.y material acverse change ir. me properties or business of the Company and its subsidiaries taken as a whole cr the occurrence of any event which, so far as reasonably can be foreseen, at me time cf its occurrence, is reasonably likely m result it. any such change. Each of trie Company a.nd Purchaser shall give prompt notice tc the other party of any notice or other commur.ication from any thirc party alleging that the consent cf such third party is or may be required mi connection with the transactions contemplated by this Agreement. .re initial cress release rei the execution tr.is Acreem.ent shall re a -tint press release and thereafter the Company ana rurm.aser, unless they nave crevicusiy agreed ir. writing tc the contrary, will net issue any press release ;r cm.erwise mane a public statement with respect tt m.e t r at.sac 11 or.s contemplates .hereby cr make any filings with ar.y Governmental Entity cr witn any national securities exchange with respect thereto, unless ir. m.e written opinion cf counsel to the party desiring to make such disclosure, a eery of wrier, opinion shall ce delivered tc the ether party as promptly as practicable under the circumstances, such disclosure is required cy raw cr stock exchanoe rule cr reouiaticr. Stocx Centers and Employee Benefits. Disclosure Page 23 icc.en e) / prior Pc phe Effective Time, Che Company snail take suer, actions as nap ce necessary such that immediately prior pc the Effective Time each stock c-cti'.r. c at standi n c and unexercisec pursuant to the Stock Flans (ehe "Option"!, whether or net then exercisable, shall oe canceled and shall cease to be exercisable. In consideration for such cancellation, the holaer thereof, as soon as practicable after the Effective Time, will receive an amount in cash from, Purchaser equal to the result of multiplying the number of shares of Company Common Stock previously subject to such Option by the difference between the Merger Consideration and the per share exercise price of such Option. (b) Stock Options - Option Exchange. (i) The executives of the Company that are listed in Exhibit "'.9(b) may, by written notice to Purchaser received cy Purchaser not less than ten :10) business cays prior to the Effective Time, elect to convert the Options held by them, up tc the number of Options sc designated in Exhibit ".Bib), into options ("Purchaser Options"; to purcr.ase purchaser common stock. ."Purchaser Common Stock") . Any suc.n election shall identify the Options tc be converted into Purchaser Options and shall oeconie irrevocable upon receipt by Purchaser of the notice of election. If such election is made, at the Effective Time, each Option to be converted shall be deemed tc constitute an option tc acquire Purchaser Common Stock on the same terms of the applicable Stock Plan and the stock option agreement by which it is evidenced. From and after the Effective Time, (A) each such Option may be exercised solely for shares of Purchaser Common Stock, (B) the number of shares of Purchaser Common Stock subject to such Option shall be equal -24- to the result (rounded down to the nearest whole share) of multiplying the number of shares of Company Common Stock subject to such Option immediately prior to the Effective Time by a fraction (the "Conversion Fraction"), where (x) the numerator is equal to the Merger Consideration and (y) the denominator is equal tc the average of the last reported sales prices cf the Purchaser Common Stock on the five business days immediately prior to the date hereof and (C) the per share exercise price under each such Option shall be equal to the result ;rounded up tc the nearest cent; cf dividing the per share exercise price under eacr. such Option by the Conversion Fraction; provided, however, that with respect tc arc,' Option which is an "incentive stock option", wior.ir. cr.e meaning of Section 422 of the Code, the adjustments provided by this Section 7.3'b;!i; shall be effected m a manner consistent with the requirements cf Section 424ia) of the Code. No payment shall be made pursuant to Section 7.8(a) with respect to ary portion cf an Option that is converted into a Purchaser Option as 1 ii (AC A.t or trier to the Effective Time, Purc.naser shall take all ccrpcrate action necessary tc reserve for issuance a sufficient number cf snares cf Purchaser Common Stccx for delivery upon exercise of Options assumes by it m accordance win. Section 7.8(b) )i) and ,B) as soon as admit, i s t r a 11 veil' feasible following one Effective Time, file a registration statement on Form S-3 (or any successor or other appropriate form.; with respect tc the Purchaser Common Stock subject to such Options (or shall cause such Option tc be deemed an option issued pursuant tc a Purchaser- stock option plan for wrier. Purc.naser Common Stock nave previously beer, registered pursuant to ar. appropriate registration form;. Purchaser shall use its best efforts to maintain the effectiveness of such registration statement (ana maintain the current status cf one prospectus or prospectuses contained therein) for so long as the Disclosure Page 23 0 00 at Deriod c:me:cmg at the Effective Time and ending on the first anniversary thereof, tee mi;, syces of the Company will continue to re provided with benefits under employee conefit plans oother than stoce options or other plans involving the potential issuance of securities of the Company or Purcr.aser) wh.ich in the aggregate are substantially comparable to chose currently provided by the Compare, to suer, employees; provided, however, mat employees covered by collective bargaining agreements need not be provided with such benefits. Purchaser will cause each employee benefit plan cf Purchaser in which employees of the Company are eligible to participate to take into account for purposes of eligiriiity ar.d vesting thereunder the service of such employees with the Company as if such service were with Purchaser. Purchaser will, and will cause the Cmviving Corporation to, toner without modification ail employee benefit mlmamms to current ar.a former employees of the Company accrued as cf the Effective Timm and, to me extent set forth, m the Disclosure Letter, all employe- s-everar.ee plans m existence on the date hereof and ail employment or several ce agreements adoptee tiy me Board of Directors cf the Company ana -25- o,SCr Distributions ana Termination. As soon as practicable following the Effective Time, Purchaser ar.a the Company shall take all actions necessary or appropriate to cause the A..?. Green Industries, Inc. Employee Stock Ownership Trust, which, implements and forms part of the A.P. Green Investment Plan i coliectiveiy, the "ESOP"!, to provide for the use of all proceeds received pursuant to the Offer from the tender of Shares allocated to the suspense account of the ESOP, as follows; first, such proceeds shall be applied to repay any outstanding loan, incurred ey the ESCP; and secondly, the balance of such proceeds shall be allocated to participants' Employer Match ESCP account in proportion to the total aggregate value of such accounts of the participants as cf the accounting date immediately preceding the Effective Time, except tc the extent sues, allocations couic exceed the limits on annual contributions pursuant tc Section 415 of the Code. Ir. addition, as soon as is reasonably practicable following the 'Effective Time (or, if deemed appropriate by Purchaser and the Company, after receipt cf a favoracle determination letter from the Internal Revet. ,9 Service on the effect cf termination of the ESOP) Purchaser and the Ccmpat', stall terminate the ESSR and distribute all proceeds to the participants it. aootrdar.ee therewith. N11 wi t .'.standing the foregoing. Purchaser shall have no cm teati:t tc implement this Section 7.6-dj if such implementation would violate the terms if me ESOP or jeopardize the tax-qualified status of the ESOP. ~.y. Indemnifica11:r.; Directors' and Officers' Insurance. (a) From vQa user agrees mat it will cause the Survivin armless each present ar.d former director an. as of me Effective Time (the "Indemnified against any costs r expenses (including reasonable attorneys' fees', augments, fines, losses, claims, carnages or liabilities (collectively, "Costs") incurred ir. connection with any Action, whether civil, criminal, administrative cr investigative, arising out matters existing or occurring at or prior tc the Effective Time, wr.ether assertec or claimed prior to, at cr after the Effective Time, to the fullest extent mat the Company is permitted tc do so under Delaware law and the Company Certificate cr Company By-Laws in effect on the gate r.ereof -and Purchaser snail also advance expenses as incurred to the Disclosure Page 14 e:tpensec are advances rrtvitie; ;r. required :c ce maoe wtt.o respect to whether an r3C--- ' c condu;:t cent 1 ' es with "he star.dards set forth under Pels.-,are 5V. and tr.e Company Certificate ar.c Company By-Caws shall be made b i r.aepenaer. t counsel selectee by the Surviving Corporation. b' Any Indemnified Party wishing to claim indemnification under paragraph (a; of this Section 7.9, upon learning of any such Action, shall promptly notify Purchaser the:reef. In the event of any such. Action (whether aristr.a oefore or after the EhIfective Time), (i) Purchaser or the Surviving Eorpcratior. shall have the ricpot to assume the defense thereof and Purchaser sr.al 1 r.ct be liable to such lr.damnified Parties for any legal expenses of other course'. :r ary other expenses sursequent 1y incurred by such Indemnified Parties : mereef, except that if Purchaser or the Surv;vire Corporation elects ri:t m assume such defense or counsel for the Indemnified Parties advises cr.at, rn such counsel's reasonable tuagmer.t, there are material issues that cons::_cure conflicts of interest between Purchaser or the Indemnified Parties, the Indemnified Parties may retain counsel satisfact;:ry to them:, and Purchaser or the Surviving corporation shari pay all reas^enable fees and expenses of such counsel for the Incenir.i f: eo Parties promptly cis statements therefor are received; provided, however, that Purchaser shall be obligated pursuant to this paragraph (b) to pay for only or.e firm of counsel :lor all Indemnified Parties in any jurisdiction. ill; me Indemnified Parties v.ill cooperate in the defense of any such matter ana 'lit; Purchaser shall net be liable for any settlement effected without its prior written consent; and pretvidec, further, however, that Purchaser shall not have any obligation hereunder tc ar.y Indemnified Party when and if a court of competent jurisdiction shall'.alternately determine, and such determination shall have become final, that the r:'.nerr.nificatron of such Indemnified Party in the manner contemplated hereby is pre hibited by applicable law. c, :he survivin'! .Itineration shall be permitted tc maintain the Company1s existing officers' =it.c directors ' liability insurance '"DSC <1 years after the Effective Time sc long as the annual premium, therefor is : ; r. excess cf 1501 of the last annual premium paid prior :: me date nereof tr.e ":iC Premium"); provided, however, if the existing ESC Insurance me Eirvmmo in excess or. expires, is ter:nr.ated cr canceled during such two year period, Corporation aiC_ ose its test efforts to ottain as mver. D&O ::r the remainder cf such period for a premium not an annualitea sis' cf the E<i.G Premium. . Ei Imgs. The Company shall promptly make all notifications, appliorations, permit transfers and ether submissions relating t: the Offer and tier:rer that may be required pursuant to any Environmental Caws including >;it.-.out limitation those relating tc the ownership. cperaticr. ir transfer cf real property, underground storage tanks, waste isotsal locations or landfills and closure and post closure financial assurances "environmental Sue:m.: s?ions " ; . The Company shall provide Purchaser wit.n copies cf all Environment al Eubmissions at the time of filing and Purchaser nall reiterate with the Cornea rv .t the creoaratior. and execution cf ail Disclosure Paee 25 Takeover Statutes. If are. Takeover Statute shall become aoc)tootle tc tne transactions contemplated hereby, the Company and of the Board of Directors of the Company shall grant such approvals such actions as are necessary sc that the transactions contemplated oe cor.summatea as oromotiy as practicable on the terms contemplated ctnerwise act to eliminate or minim,ize the effects cf such the members and take hereby may hereby and statute r reuuiaticu cn the transactions contemplated hereby. c Rights. prior tc the commencement of the Offer, the Board of rectors tf tr.e Comoany stall amend the Rignts Agreement so that the consumrr.a t r or. of the transactions contemplated hereby will not cause (x) Merger Sue and/or Purchaser to become an Acquiring Person .as defined m the Rights Agreement; or :yi a Distribution Date or a Stock Acquisition Date (as such terms are cefir.ed in the Rignts Agreement) to occur, irrespective of the number of Shares acquired pursuant to the Offer. In addition, the Board of Directors of tne Company shall either ' i) amend the Rights Agreement prior to the commencement of the Offer so that all outstanding Rights will expire upon the accecta.tce of Shares for payment pursuant to the Offer, whether or not tendered ap.o surenased pursuant tc the Offer, and neither the Company, Merger Sub nor Purcnaser shall have any obligations under the Rights or the Rights Agreement to any holder (or former holder! of Rights following consummation of the Offer or (i 1 ' redeem all of the outstanding Rights immediately prior to the consummation cf the Offer so that the Company, Merger Sub and Purchaser shall have no obligations under the Rights or the Rights Agreement following such time and the holders shall have no rights under the Rights or the Rights Agreement following such time, other than the redemption payment of $0,001 per Right as provided in Che Rights Agreement. ARTICLE VIII CONDITIONS r.l. Ccnoitior.s tc Obligations cf Purchaser and Merger Sub. The respective obligations of Purchaser and Merger Sub to consummate the Merger are surmecr tc tne fulfillment cf each cf the following conditions, any or all of wr.ich may oe waived in whole cr ir. part by Purchaser or Merger Sub, as the case may be, tc tne extent permittee cy applicable law: a. Stockholder Aotrcvai. If required, this Agreement snail have been truly ape roved by tne tellers cf a majority cf the Shares, m accordance with applicable law and the Company Certificate ana the Company By-Laws; b Purchase cf Shares. Merger Sub Or one of the Purchaser Companies shall have purchased Shares pursuant to the Offer; c; Governmental Consents and Regulatory Approvals. The waiting period apelicabie tc the consummation of the Merger under the HSR Act snail have expiree cr beer, terminated and, ether tear, the filings provided for in Section Disclosure Page 26 nee11on wioh the exe of the Merger cy the .pprovais"; shall hav' 0 effective i ims from, Gc tier, and delivery of this Agr ompany, Purchaser ana Merger been made or obtained sas the r nme r, t a 1 meat and the O i th ase may be); T-cve rnmer. a e o r ee ;cr.tern,c. a Injunction. he united States or state court or other Entity of competent jurisdiction shall have enacted, issued, enforced or enterea any statute, rule, regulation, judgment, ctior, or otter craer .wnether temporary, preliminary or ich is : r, effect ana prohibits consummation of the transactions by this Agreement or imposes material restrictions cm. Purchaser r. connection in:, consummation of the Merger or wit.c respect to s operations, either prior to or subsequent to t.ne Merger , an "Order"'; and or Other Obligations. The Company shall have fulfilled its obligations unaer Section 7 . 8 a and the representations set forth m Section 6 . i ( k; shall be true and correct as of the Closing Date as if made on such date. 8.2. Conditions to Obligations of the Company. The obligations of tne Company to consummate the Merger are subject to the fulfillment of each of the following conditions, any or ail of which may be waived in w.nole or ip. part by the Company to the extent permitted by applicable law: ia; Stockholder Approval. If required, this Agreement shall have teen only approved by the holders of a majority of the Shares, m accordance with applicable law and the Company Certificate and the Company By-Laws; b, Purchase of Shares. Merger Sub (or one of the Purchaser Companies snail have purchased Shares pursuant to the Offer; s Governmental Csnsents. The waiting period appiicatle to the consumnat:on of the Merger under the HSR Act snail have expiree or been a0 e 0r . TERMINATION Termination cy Mutual Consent. This Agreement may be terminated and tne trar.sact-ons contemplated nereby may be abandoned at any time prior to the Effective G_ Disclosure Pase 27 Termination b v e i t r.e r Purchaser or the Company. This Agreement t f. . :: ? t: ~ :u 16o cite t ne t ra tsacticr.s contemplated nerefcy may be abandonee at on: \:::e rr::r to tne Effect: :e Time, before or after the approval by holders of Cns res, by sot tor. of the Bear-.3 of Directors of either Purchaser or the Company :: Merger Sue, or anv Per rhaser Company, shall have terminated tne Offer w11 r.out ot r cr.a s :nq ar*.y Sna res pursuant thereto; or (11! the Merger shall not r.avs neon :::r,summated by Augu ;t 31, 1558 whether or net such date is before or after the approval by holders of Shares; or liiii if recurred, the approval of shareholders recurred bv Sect or: 8.1 fa) shall not have been obtained at a r.eetir.g duly convened therefo '; or (iv) any court cf competent jurisdiction or outer Covernmental Entity locoated cr having jurisdiction within the United "cooes :r sr.y country in wheel . either the Company or Purchaser, directly or indirect' nas material asse*_s or operations, shall have issued a final order, decree o: r .u :o or taken anv itr.er final action restraining, eryoir.ing or ;i or the Merger and such order, decree, ruling cr cener :s or snail nave r.esom.e final and nonappeaiabie. Purchaser. This Agreement may be terminated ana the transactions contemplated r.ereoy may be abandoned at any time prior to the Effective Time, oefore or aft*-=r tne approval by holders cf Shares, by action of tne Bearn if Streeters of ?.:r maser, if ! i' the Company shall have breached or fallen t: perform m any mate til respect any of the covenants cr agreements contained in tnis Agreement t: ne complied with cr performed by the Company pr.cr to such cate of termina*nor. which breach or failure shall not have been cured trior tc the earlier of 'A' five business days following the giving of written notice to the Company of such breach or failure and (B) two business cays prior to the date on whic;h the Offer is then scheduled to expire, or any representation or warranty of the Company set forth in this Agreement shall have beer, inaccurate or incomplete when made except for such failures to be complete or accurate that, individual!;, or in the aggregate, could net reasonably be exoected to have a material a;iverse effect on the financial condition. properties, business or resub:s of operations of the Company and its sucsicisnes taken as a whole cr could prevent or materially delay the transactor. s contemplated cy mis Agreement cr impair the ability cf Purchaser, Mercer Tun, the Company or an cf their respective affiliates, following consummation of the Offer or me Merger, to conduct any material business or ocerati :r.s m any punsdrccic' where they are now being conducted, )ii) the Board :: C:rectors of tne Com cars, 'or a SDeciai committee thereof' shall have arer.ee::, nicified or wiredraw i ; r. a manner adverse tc Purchaser or Merger Sub _cs arrrtva- or reccmmencatit of the Offer, this Agreement cr tne Merger or the -'arc -br^nrs of the dm -~-v 'or a ^oecia' comrrrttee thereof, noon request ry Puronaser, snail fail to m;af:irm suen approval cr recommendation, or shall nrvr,ended any ether Acquisition Proposal, or shall r.ave resmvea to ao^ any or t.vr foregoing, or ini) if the Company or any of the :::oeu m Section ".2 shall take any A - - - ,r. - n - - - - - . ^ c; - - >:-c by Section .2 out for the exception therein -r taxer, if requires by fiduciary ocligaticns under ' - as adviseo in ,.rating by counsel. tr.e Company. This Agreement may be terminated a r. u t h e transactions cent err c 1 a;teu hereby may be abandoned at any time prior to :.oe effective Time, before : r after the approval by holders of Shares by action he Company, 'i) if Purchaser or Merger Sub !or snail nave breacned or failed to perform lr. any Disclosure Patze 28 her. scheduled he expire, or y; shall have failed to commence the Offer within the time required in Section i.i, or In! if (w; the Company is not in material breach of any of the terms of this Agreement, (x) the Board of Directors of the Company authorizes the Company, subject to complying with the terms of this Agreement, to enter into a binding written agreement concerning a transaction that constitutes a Superior Proposal and the Company notifies Purchaser in writing that it intends to enter into such an agreement, attaching the most current version of such agreement (which shall include all of the material terms, including the price proposed tc be paid for Shares pursuant thereto) to such, notice, !yi Purchaser does not make, within two Business days of receipt of the Company's written notification of its intention to enter into a binding agreement for a Superior Proposal, an offer that the Board of Directors of the Company determines, in good faith after consultation with its financial advisors, is at least as favorable, from a financial point of view, to the stockholders of the Company as the Superior Froposai and (2) the Company, prior to such termination, pays tc Purchaser in immediately available tunas the fees required to be paid pursuant tc Section 9.5(b). 9.5. Effect of Termination and Abandonment. (a) In the event of the termination of this Agreement pursuant to this Article IX, no party hereto lor any of its directors or officers', shall have any liability or further obligation to any other party to this Agreement, except as provided in Section 9.5(b) below and Section 10.2 and except that nothing herein will relieve any party from liability for any willful breach of this Agreement; provided, however, that if this Agreement is terminated by Purchaser pursuant to Section 9.3 (1) or the Company pursuant to Section 9.4(i), the terminating party's rights to pursue all legal remedies will survive suen termination unimpaired. (b) If (i) (x) the Offer shall have remained open for a minimum of at least 20 business days, (y) after the date hereof any corporation, partnership, person, other entity or group las defined in Section 13(d)(3) of the Exchange Act! other than Purchaser or Merger Sub or any of their respective subsidiaries or affiliates (collectively, a "Person") shall have become the beneficial owner of 209 or it,ore of the outstanding Shares or shall have publicly -31- annc-ur.ced a proposal or intention tc make an Acquisition Proposal or any Person snail have commenced, or shall have publicly announced an intention to commence, a tender offer or exchange offer for 20* or more of the outstanding Shares, and :z: the Minimum Condition .as defined in Annex A) shall net have been satisfied anc me Offer is terminated without the purchase of any Shares thereunder, or 'ii Purchaser shall have terminated this Agreement pursuant tc Section 9.3!ii; or Seotim. 9.2' in! or Ii:i, tr.e Company shall save terminated this Agreement pursuant to Section 9.4 (if , t.-.er. me Company shall promptly, but m no event later mar. two days after the cate of such termination, pay Purchaser a fee of S3,C3C,23.; and snail reimburse Purchaser and Merger Sub !not later than one business cay after request by Purchaser cr Merger Sub) for ail of the out-ofpoexet Charges and expenses, including financing fees, incurred by Purchaser or Merger Sub in connection wim. this Agreement and the transactions contemplated by mis Agreement up to a maximum, amount of $1,500,000, in each case payable by wire transfer 1.0 same day funds. The Company acknowledges that the agreements contained in this Section 9.5 b' are an integral part of the transactions contemplated in this Agreement, and that, without these agreements, Purchaser and Merger Sub would not enter into this Agreement; accordingly, if the Company Disclosure Page 29 [-n o paragraph .hi , the Company snail pay tc Purchaser or Merger Sub its costs anc expenses ''including attcrneys' lees' an connecrrcn with such suit, together with uteres: or. the amount of the fee at the prime rate of Pane of America National Trust ar.d Savings Association or. the cate suer, payment was required tc be made. Tr.e payments made by the Company pursuant to this Section 9-. 5 ft1 are the sole and exclusive remedy cf Purchaser and Merger Sub for any claim, that Purchaser or Mercer Sub may have arising from or relating to the events set forth ir. Section 9 . 5(ci i r; , 11ii or ( iii) . ARTICLE X Miscellaneous and General 10.1. Payment of Expenses. Whether or not the Merger sha consummated, each party hereto snail, subject tc Section S.5fb., pay its own expenses incident to preparing fer, entering into and carrying cut this Agreement and the consummation cf the Merger. 10.2. Survival. The agreements of the Company, Purcnaser and Merger Sub contained in Sections 5.2 'Payment for Shares) (but only tc the extent that such Section expressly relates tc actions to be taken after me Effective Time), 5.3 (Dissenters' Rights), 5.4 (Transfer of Shares After the Effective Time), 7.8 (Stock Options and Employee Benefits), 7.9 (Indemnification; Directors' and ffleers' Insurance), 7.11 (Other Actions by the Company) and IC'.i (Payment of xper.ses) shall survive the consummation cf the Merger. -32- The agreements of the Company, Purchaser and Merger Sub contained in Confidentiality Agreement, dated as of December 12, 1997 between the Company and Purcnaser and Sections 7.5 ''Access), 9.5 (Effect of Termination and Abandonment), 10.1 (Payment cf Expenses!, 10.6 (Governing Law;, 10.7 (Notices), 10.8 (Severability), 10.S (Entire Agreement, etc.), 10.10 (Parties in Interest), 10.11 (Definition of "Subsidiary"1, 10.12 (Obligation of Purchaser) and 10.13 (Captions) shall survive the termination of this Agreement. Ail ether representations, warranties, agreements and covenants in this Agreement shall not survive cue consummation tf the Merger or the termination of mis Agreement. 10.5. Modification :r .Amendment. Subject tc the acpiicable provisions of the DGCL, at any time prior to the Effective Time, the parties hereto may modify or amend this Agreement, by written agreement executed and delivered by duly authorize: ifficers cf the resoective Dartres. 15.4. Waiver of Conditions. The conditions to each cf me parties' ob-licatims to consummate the Mercer are fer the sole oenerit c: such cart'.- ar.d may be waived by suet party in wncle or m part to the extent term.ittea cv Counterparts. .-cr the convenience of the parties r.ereto, this Agreement may be executed in any number of counterparts, eacr. such counterpart Deir.g deemed tc be an original instrument, and all such counterparts snail together constitute the same aoreement. 15.6. Governing Caw. This Agreement shall be governed by ana Disclosure Paae 30 ri C C - Cl ci V: C 0 a I tl cr. * a 'a' S -- 1 fi t w t. c: tl S Cl j6.aW3E6 . Notices. Any notice, request, instruction or ether document to oe r ; or. a 1 1 / cr sent joy registered cr certified mail, postage prepaid, if to Purc.naser cr Merger Sue, addressed tc Purchaser or Merger Sub, as the case may oe, at Global Industrial Technologies, Inc., 2121 San Jacintc Street, Suite 250C, Sailas, Texas 75201, Attention: Graham L. Adelman, Esq. Senior Vice President, General Counsel and Secretary (with a copy tc James C. Morphy, Esq., Sullivan s Cromwell, 125 Broad Street, New York, New York 10004'; and if to the Coronary, addressed to the Company at A.p. Green. Industries, Inc., Green Sou. Mexico, Missouri 652 65, Attention: Michael B. Cooney, Esq., Senior Vice President -Law/Adar.ir.istration, and Secretary (with a copy to Rooert LaRose, Esq., Tnomrson Coburn, One Mercantile Center, St. Louis, Missouri, 3101j, or to suer, tc.-.er persons or addresses as nay be designated in. writing oy the party to Severability. If ar.y term or other provision of this Agreement is invalid, illegal cr incapable of being enforced by any rule cf law or public pone,, all other -33- ccnditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term cr other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate m good faith to modify this Agreement so as tc effect the original intent of the parties as cicselv as possible m an acceptacle manner to the end that the transactions contemplated hereby are fulfilled tc the fullest extent possible. 10.1. Entire Agreement, etc. This Agreement (including the Gisclisure Letter and any exhibits cr Annexes hereto! (a! constitutes the entire adeemed, ana supersedes all ether prior agreements, understandings, representations and warranties bct.c written and oral, among the parties, with resoecc t: the subject matter hereof, ar.c :b; shall not be assignable by oceracior. cf law or otherwise ar.o os not intended to create ar.y coligations to, cr rrants on respect of, any persons other than the parties hereto; provided, however, mat Purchaser may designate, by written notice to the Company, another w.nolIv-oweed direct or indirect s ms miary to be a Constituent Corporation in lie.: :: Mercer Cub, in tne event if wr.ich, all references herein tc Merger Sub snail ce teemed references to sm: liter snbsidiarv except that all recresettatic.ns ana warranties made herein with respect tc Merger Sub as of the date i: mis Acreemer.t shall be aeer.ea representations and warranties made with resceit ic suer, other subsidiary as if the cate cf such, oesigr.aticn. 12.10. Parties in Interest. This Agreement shall be binding upon and mure silely tc the benefit of earn, party hereto, and .nothing in tr.is Agreement, exoress cr implied, is intended ti cr shall confer upon any other person any riorum, nenefits cr remedies cf ar.y nature wr.atsoever under cr by reason of this Disclosure Paee 31 Definition cf "Subsidiary". When a reierer.ee is nace in this '-.greener.'. re a SuCSidiary of a party, tr.e word "subsidiary" means any e : r p t : a t : : r. cr '.tier organization wr.ezner incorporated or unincorporated of wrier at least a rayinty of tr.e securities cr interests having by the terms tr.ereil i ternary voting power to erect at least a majority of t.oe beard of directors or ttners performing similar functions with respect to such corporal tor. cr other organization is directly or inairectiy owned or controlled by such party cr by any one or more of its subsidiaries, cr by such party and one or more of its subsidiaries, and, with respect to the Company, snail also include Empresa de Rerractarios Coicmbianos S.A. and Materiaies Industriales 3.A, 'the "CoicmDian Companies"); provided, however, that any representations ar.c warranties relating to the Colombian Companies shall be deemed qualified by reference to the knowledge of the officers of the Company. 11.12. Obligation of Purchaser. Whenever this Agreement requires Verger lib to take any action, such requirement shall be deemed to include an under ta : mg cr. the part of Purchaser to cause Merger Sub to take such action. -04- 10.12. Captions. The Article, Section and paragraph captions herein are for convenience of reference only, do not constitute part cf this Agreement and shall not be deemed to limit or otherwise affect any of the provisions Qf . -35- IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto on the date first hereinabove written. A.P. GREEN INDUSTRIES, INC. 3y /s/ Paul F. Hummer Name: Title: Paul F. Hummer Chairman cf the Board, President and Chief Executive Officer GLOBAL INDUSTRIAL TECHNOLOGIES, INC. By /s/ Graham L. Adelmar. Name: Graham L. Adelmar. Title: Senior Vice President 3GN ACQUISITION CORP. 3y /s/ Graham. L. Adelman Name: Graham, . Adelman Title: Senior ice President Disclosure Page 32 ANNEX CERTAIN CONiiT:DNS Or TH.u CFrEF. The capitalized terms _sea :r. this .nr. ex A. have the meamr.as set forth in the attached Agreement. Notwithstanding ny finer provision of the Offer, Merger Sub shall not be required to accept for a orient or, subject to any applicable rules and regulations of the SEC, nciudmc Rule 14e-lic- under the Exchange Act (relating to Merger Sub's bligation to pay for or return tendered Shares promptly after termination or ithdrawal of the Offer?, pay for, or may delay the acceptance for payment of or aymer.t for, any tenderec Shares, or may, m its sole discretion, terminate or .T.er.o the Offer as to any Shares not then paid for if, (i) prior to the xpiration of the Offer, y. a number of Snares which, together with any Shares weed by Purchaser or Mercer Sub, ccnstitutes mere than 501 of the voting power determined or. a fuliy-n:iutea basis; of all the securities of the Company r.titled to vote ger.erallv tn the eleettor. of directors or in connection with a erger shall not have been validly tendered ar.c not withdrawn prtor to the xptrattor, of the Cuter the "Minimum Condition"! or ;y! any waiting periods rider the HSR Act appiioacie to the purenase of Shares pursuant to the Offer, no any applicable waitrr.g periods under any foreign statutes or regulations hat are applicable to the lifer or tne Merger shall not .nave expired or been emanated, or any Regulatory Approvals applicable to the Offer and the Merger nail net have been obtained on terms satisfactory to Purchaser in its easonabie judgment, or yh on or after March 3, 1998, and at or before the time of payment for any of such Shares (whether or not any Shares have theretofore been accepted for payment), any of the following events shall occur: (a) there shall have occurred (i) any general suspension of, or limitation on prices for, trading in securities on the NYSE, !ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in tne United States, (iii) a commencement or escalation of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States, (iv) any limitation 'whether or not mandatory) by any Governmental Entity on, or any other event which might affect, the extension of credit by' banks or other lending institutions, (vi a material change in United States or any other currency exchange rates or a suspension of, or limitation or., the markets therefor, vi; or in the case of any of the foregoing existing at the time of the commencement of tne Cffer, a material acceleration or worsening thereof, vn; ar.y extraordinary or material adverse change in the carnet price c: one Shares or in one United States securities cr financial markets generally, including, without limitation, a decline of at least 20 in eit.ner the Dow Uon.es Average of industrial Stocks or the Standard & Poor's 501 index from tr.e date of the Agreement or (viii! any material adverse change m the relevs.no financial markets that could reasonably be expected to materially ar.c: adversely affect the debt facilities related to tne D' the Ccmcar.v snail have creacr.ed cr failed to perform m any material respect any :: its ocligafion.s, oovenar.es or agreemenos contained in tne Agreement :i any representation or warranty of the Company set forth the Agreement shai respect wren made ar.v material reset been inaccurate or incomplete in any material reafter shall become inaccurate cr incomplete ir. Disclosure Pace 33 i. ;hailer.ging che acquis it.: or. cy Purchaser or Mercer Sub of Shares, r or.r er.r j. a c ec oy the Offer or the Merger or other subsequent business oone tea11on, seeking to obtain any materiai cartages or otherwise directly or indirectly relating to the transactions centexpiated by the Offer or the Merger or other subsequent business combination; (ii' seeking to prohibit, or impose any material limitations or., Purchaser's or Merger Sub's ownership or operation of aii or any portion of their or the Company's business or assets .including the business or assets of their respective affiliates and subsidiaries), or to compel Purchaser or Merger Sub to dispose of or hold separate ail or any portion of Purchaser's or Merger Sub's or t.ne Company's business or assets (including the business or assets if their respective affiliates and subsidiaries; as a result of the transactions contemplated by the Offer or the Merger or ether subsequent business combination; .ill; seeming tc make the acceptance fer payment, ourcr.ase cf, or payment for, some or ail of the Shares illegal or render Merger Sub unable tc, or result m a delay in, cr restrict, the ability of Merger Sub to, accept for payment, purchase or pay for some or aii cf the Shares; :iv' seeking t; impose material limitations on the ability cf Purchaser or Mercer Sue effectively tc acquire cr held cr to exercise full ngr.ts cf ownership of tne Shares including, without limitation, tne right tc vote the Shares purcr.ased by them on an equal basis with aii other Snares on aii matters properly presented to the stockholders; or (v) that, ir. ar.y event, m the judgment of Purchaser, is reasonably lixeiv to have a material adverse effect on the financial condition, properties, business or operations of the Company or Purchaser or Merger Sub (or any of their respective affiliates cr subsi diaries; or the value of the Shares to Purchaser or Merger Sub cr the benefits expected to be derived by Purchaser or Merger Sub as a result of consummation of the transactions contemplated oy the Offer and the Merger; (d) any statute, rule, regulation, order or injunction shall be sought, proposed, enacted, promulgated, entered, enforced or deemed or become applicable to the Offer, the Merger, the Agreement or other subsequent business combination, or any ether action shall have been taken, proposed or threatened, by any court or other Governmental Entity other than the application to the Offer, the Merger, the Agreement or other subsequent busi- A-2 ness combination of waiting periods under the HSR Act, that, m the judgment of Purchaser, could be expected tc, directly or inairectiy, result m ar.y of the effects or, or have any cf the consequences sought to be obtained cr ao.ti.eveo it, ar.y Action referred tc m clauses : i' through (v( a a c'261' z ~ e x c r. a nc e c 110 r * c r scrr.0 ocr 11cr. c r cl _ c i m n e 3h3 r00 mall have cee.n crrr~.er.19c cr pedicle proposed to be made oy another person cis ciosea cr Eurm.aser snail have learned than \ i any person .inducing me Company or ms suesidiaries ` , enemy or "group" (as defines in Section 13'd: of me Exchange Am ana the rules promulgated mereu.naer; shall have become tne beneficial rwr.er las defined m Section 12;g) cf the Exchange Act and tne rules prend gated thereunder; of more than 201 cf any class cr series cf capital stick cf the Company '.including the Shares, ether than for bena fide arbitrage purposes or ;ii! any person, entity or group shall r.ave entered into a definitive agreement or an agreement m principle or made a proposal nth respect to a tender offer or exchange offer for some Disclosure Pane 34 ess o.oar.ge seals rave otcurrea cr any sievescpmer.: sra.i nave me financial condition, properties, easiness or resiles of s of the Company and ins subsidiaries taken as a whole; one Bears of directors of the Company for a special committee snail have amended, modified or withdrawn its approval or recomenaatior. of the Offer, t.ne Agreement or the Merger, or shall have fatlec to publicly reconfirm such approval or recommendation upon request oy Purchaser or Merger Sub, or shall have endorsed, approved or recommended ar.v otter Acauisition Prcocsa., or shall have resolved to do any of the r.. me Acrcement shall have beer, terminated by the Company or Purchaser or Merger Sub tt. accordance with its terms or Purcnaser or Merger Sun shall nave reached an agreement or understanding in writing with the Company providmc for termination cr amendment of tr.e Offer or delay in A-3 whim:, m. the sole ludgment of Purchaser and Merger Sub, in any such case, and reaardless of the circumstances :including any action or inaction by Purchaser or Mercer Sub' giving rise to any such conditions, makes it inadvisable to proceed with the Offer and/or witn such acceptance for payment cf cr payment for Che foregoing conditions are for the sole benefit of Purchaser and Merger Sub and may be asserted by Purchaser or Merger Sub regardless of the circumstances (including any action or inaction by Purchaser or Merger Sub) giving rise to such condition or may be waived by Purchaser or Merger Sub, by express anc specific action to mat effect, in whole or in part at any time and from time to time m. its sole discretion. Any determination by Purchaser and Mercer Sue concerning ar.y event described ir. this Annex A shall be final and binding upon ail parties. The failure by Merger Sub at any time to exercise any cf the foregoing rights shall not se deemed a waiver of any such right, the waiver c f any such right wim. respect to particular facts and ether o_rm.mstantes snail not be deemed a waiver with respect to any other facts and c i r: ms tames, and each such iio.nt snail be deemed an ongoing rigr.o that may be asserted at any time and frm time to time. A- 4 -g - -- ' ' Tpjy, P- *" p-0C easiness cays p Cnief cix utive Officer c .e Cornea ny mav, receive' aser not -ess cr.ar. ten 0 E f fec t e T iite elect to convert up to e Opt ions, ursuan tc Section ".r^b; cf the Disclosure Pate 35