EXHIBIT 99.10
AMENDMENT NO. 1 TO INTEREST PURCHASE AGREEMENT
This Amendment No. 1 to Interest Purchase Agreement (this "Amendment"),
dated as of _____________, 2004, is made by and among Oglebay Norton Company, an
Ohio corporation (the "Buyer"), Xxxxxxx Mining Inc., a Delaware corporation, The
Xxxx Mining Company Inc., a Delaware corporation, and Michigan Minerals
Associates, Inc., a Delaware corporation (each individually, a "Seller" and
collectively, "Sellers"), and Michigan Limestone Operations, Inc., a Michigan
corporation formerly known as "Global Stone Port Inland, Inc." (the "Company").
Background
A. On April 14, 2000, Oglebay Norton Company, a Delaware corporation
("ONCO"), Sellers, and Michigan Limestone Operations Limited Partnership ("MLO")
entered into an Interest Purchase Agreement (the "Original Purchase Agreement")
for the sale of all of the general and limited partnership interests in MLO, all
of the membership interests in MLO-Ohio Ltd., a Ohio limited liability company
("MLO-Ohio"), and all of the membership interests of Michigan Equipment Leasing
L.L.C., a Michigan limited liability company ("XXX") and ONCO assigned its
rights under the Original Purchase Agreement to the Company.
B. Following the consummation of the transactions contemplated by the
Original Purchase Agreement, MLO dissolved, and MLO-Ohio and XXX were merged
with and into the Company. Accordingly, the Company became the owner of the
business and assets formerly owned by MLO, MLO-Ohio, and XXX. On May 1, 2001,
ONCO was merged into the Buyer, with the Buyer as the surviving corporation.
C. On February 23, 2004, Buyer and 32 of its affiliates (collectively, the
"Debtors") filed for bankruptcy protection under Chapter 11 of the U.S.
Bankruptcy Code (the "Chapter 11 Cases") in the United States Bankruptcy Court
for the District of Delaware. The Parties agree that the Original Purchase
Agreement constitutes an executory contract within the meaning of section 365 of
the Bankruptcy Code, 11 U.S.C. Sections 101-1330 (the "Bankruptcy Code"). Buyer,
Sellers and the Company wish to enter into this Amendment to amend and modify
the Contingent Payments provided for in the Original Purchase Agreement. In
connection with the Chapter 11 Cases, the Debtors filed the Second Amended Joint
Plan of Reorganization, dated July 30, 2004 (as the same may be amended,
modified or supplemented, the "Plan"), which provides for the assumption and, to
the extent necessary, assignment of the Original Purchase Agreement, as amended
by this Amendment (the "Purchase Agreement").
Agreement
1. DEFINED TERMS.
(a) Except as specifically provided in this Amendment, capitalized
terms not otherwise defined in this Amendment will have the same meanings as in
the Original Purchase Agreement.
(b) Whenever the defined term "Agreement" is used in the Purchase
Agreement, it means the Original Purchase Agreement, as amended by this
Amendment.
(c) The term "Effective Date" means the Effective Date, as defined
in the Plan, and is the effective date of the Plan and of this Amendment.
2. EFFECTIVE DATE. This Amendment will become effective and legally
binding on the Effective Date.
3. ASSUMPTION AND ASSIGNMENT. The Purchase Agreement shall be assumed by
the Buyer and, to the extent necessary, assigned to the reorganized Buyer,
pursuant to section 365 of the Bankruptcy Code and Section V.A of the Plan, as
of the Effective Date. The Sellers shall not assert or seek to recover any cure
amounts or adequate assurance of future performance within the meaning of
section 365 of the Bankruptcy Code, beyond the payments and agreements
specifically identified in this Amendment.
4. AMENDMENT TO SECTION 1.1(c). Section 1.1(c) of the Original Purchase
Agreement is amended and restated in its entirety as follows.
(c) "Change in Control" means:
(i) the sale of the Operations;
(ii) the sale of more than 50% of the capital stock of any
subsidiary of the Buyer that is, directly or indirectly, the owner of one or
more of the Operations;
(iii) the sale of all or substantially all of the assets of the
Buyer, or
(iv) the acquisition of beneficial ownership, directly or
indirectly, after the Effective Date, by any person or any group, of shares
representing more than fifty percent (50%) of the aggregate ordinary voting
power represented by the outstanding capital stock of Buyer or any successor or
assign of Buyer (a "Stock Acquisition") and either :
(x) a majority of the members of the Board of Directors of the
Buyer or any successor or assign of Buyer are neither (1) persons who were
members of the Board of Directors of Buyer as constituted on the Effective
Date nor (2) persons nominated or appointed by the Board of Directors of
Buyer or any successor or assign of Buyer (provided that such persons were
not nominated or appointed in connection with or in anticipation of the
Stock Acquisition); or
(y) any two (2) or more of Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx
or Xxxxxxxx X. Walk are terminated without cause or are removed from their
respective duties as CEO and President, Vice President, CFO and Treasurer,
and Vice President, General Counsel and Secretary or resign because of
diminution of duties or authority or hostile work environment within
twelve (12) months of the Stock Acquisition.
5. AMENDMENT TO SECTION 1.1(g). Section 1.1(g) of the Interest Purchase
Agreement is amended and restated in its entirety as follows.
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"EBITDA" means, for any period, in accordance with generally accepted
accounting principles, the net income (loss) for the Buyer for such period as
determined in accordance with GAAP, excluding without duplication (i) interest
income and expense, (ii) provisions for taxes based on income, (iii)
depreciation expense, (iv) amortization expense, other than pre-production costs
which are being amortized, (v) extraordinary gain or losses, (vi) gains or
losses on the sale or disposal of assets not in the ordinary course of business,
(vii) unusual or non-recurring (such as restructuring charges) income and
expenses, (ix) any losses (credits) for which Buyer has been indemnified by and
recovered from Sellers, (x) fees and expenses incurred in connection with the
transactions contemplated by this Agreement.
6. AMENDMENT TO SECTION 1.1(m). Section 1.1(m) of the Interest Purchase
Agreement is amended and restated in its entirety as follows.
"Fundamental Change" means any material change in the manner in which
Sellers operated the MLO Quarries or Buyer operated the Port Inland Quarry prior
to the Closing Date that reduces or is reasonably likely to reduce the tonnage
shipments from the Operations, excluding synergistic or other changes
necessitated solely by the transaction contemplated by this Agreement or by
applicable laws.
7. AMENDMENT TO SECTION 2.3. Effective for each calendar year beginning
after December 31, 2002, Section 2.3 of the Interest Purchase Agreement is
hereby amended and restated in its entirety as follows.
(a) 2003 Payment. For the year 2003, Buyer will pay to Sellers $625,000
within ten (10) business days after the Effective Date.
(b) Tonnage Payment. For each year during the period 2004-2016 (the
"Tonnage Payment Period"), only if the aggregate tonnage of shipments from the
Operations for such year exceeds 12,500,000 net tons ("Tonnage Target"), Buyer
will pay to Sellers a tonnage payment ("Tonnage Payment") as set forth in the
table below; provided that Tonnage Payments will be made for no more than eleven
of the thirteen years in the Tonnage Payment Period. For each year during the
period 2004-2016 for which a Tonnage Payment is made, and if the aggregate
tonnage of shipments from the Operations for such year exceeds 15,000,000 net
tons ("Second Tonnage Target"), Buyer will pay to Sellers an additional tonnage
payment as set forth in the table below ("Second Tonnage Payment"), in addition
to the Tonnage Payment. In the event of Force Majeure, the time period used to
determine whether one or more Tonnage Targets or Second Tonnage Targets have
been met and the years in which Sellers are eligible to receive a Tonnage
Payment or Second Tonnage Payment shall be extended in a manner reasonably
agreed to by the Parties including consideration of the seasonality of the
business of the Operations.
Tonnage Second Tonnage
Measuring Tonnage Payment Tonnage Payment Payment
Year Year 12.5 Million Tons 15 Million Tons
--------- --------------- ----------------- ---------------
2004 2005 $375,000 $350,000
2005 2006 $375,000 $350,000
2006 2007 $375,000 $350,000
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2007 2008 $1,750,000 $600,000
2008 2009 $1,750,000 $600,000
2009 2010 $1,750,000 $600,000
2010 2011 $1,750,000 $600,000
2011 2012 $1,750,000 $600,000
2012 2013 $1,750,000 $600,000
2013 2014 $1,750,000 $600,000
2014 2015 $1,750,000 $600,000
2015 2016 $1,750,000 $600,000
2016 2017 $1,750,000 $600,000
(c) EBITDA Payment. For any year from 2004 through 2016, if (i) Buyer is
required by Section 2.3(b) to make a Tonnage Payment and (ii) Buyer's EBITDA
equals or exceeds the annual EBITDA target amount for that year set forth in the
table below, Buyer will pay to Sellers up to $300,000 in accordance with this
Section. 50% of the EBITDA payment will be paid if Buyer's EBITDA is equal to or
greater than 100% of the EBITDA target amount and an additional 50% of the
EBITDA payment will be paid only if Buyer's EBITDA equals or exceeds 110% of the
EBITDA target amount.
EBITDA EBITDA
Measuring Payment
Year Year EBITDA Target
--------- ------- -------------
2004 2005 $61,552,000
2005 2006 $63,682,000
2006 2007 $65,404,000
2007 2008 $69,874,000
2008 2009 $74,534,000
2009 2010 $76,770,020
2010 2011 $79,073,120
2011 2012 $81,445,313
2012 2013 $83,888,672
2013 2014 $86,405,332
2014 2015 $88,997,491
2105 2016 $91,667,415
2016 2017 $94,417,437
(d) Guaranty. Concurrently with the execution and delivery of this
Amendment, Buyer will cause all of its domestic subsidiaries listed on Schedule
2.3(d) to execute and deliver a guaranty agreement ("Guaranty") in substantially
the form attached to this Amendment as Exhibit A. The Guaranty will become
effective on the Effective Date. The execution and delivery of the Guaranty will
constitute adequate assurance of future performance of the Purchase Agreement
pursuant to section 365 of the Bankruptcy Code. Buyer will also cause all future
domestic subsidiaries to execute and deliver the Guaranty.
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(e) Contingent Payment. Except as provided in Section 2.3(b) with respect
to Force Majeure, the measurement periods for the Contingent Payments will be
based upon the fiscal year of the Buyer (January 1 through December 31),
beginning with January 1, 2004 of the Buyer's fiscal year 2004. Buyer will make
one annual Contingent Payment as required by Section 2.3(a)-(c) to Sellers
within the earlier of (i) thirty (30) days after the actual filing date of
Buyer's annual report on Form 10-K ("10-K") or (ii) thirty (30) days after the
due date of the 10-K. If no 10-K is required to be filed, the annual Contingent
Payment will be due on April 30th of each year.
(f) [Reserved].
(g) Change in Control; Sale of Assets
(i) At any time during the Tonnage Payment Period, if there is
a Change in Control, then Buyer will (1) within ten (10) business days of
such Change in Control provide Sellers with written notice of such Change
in Control, and (2) at the written election of Sellers, pay to Sellers the
Accelerated Payment within thirty (30) days of date of such written notice
of Sellers' election to demand the Accelerated Payment. The term
"Accelerated Payment" means (i) an amount equal to the sum of the present
values of annual payments of $725,000 for each year remaining during the
period 2004-2006 of the Tonnage Payment Period and (ii) an amount equal to
the sum of the present values of annual payments of $2,350,000 for each
year remaining during the period 2007-2016 of the Tonnage Payment Period
as if such payments were made in consecutive years starting with the next
date on which a Tonnage Payment or Second Tonnage Payment would otherwise
come due and calculated using a discount rate equal to the applicable
interest rate at the most recent auction of federal ten year treasury
notes prior to the date the Accelerated Payment is due and payable. The
Accelerated Payment will be calculated taking into account the fact that
Section 2.3(b) provides that Tonnage Payments will be made in not more
than eleven of the thirteen years in the Tonnage Payment Period.
(ii) If, during the Tonnage Payment Period, (1) Buyer sells
all or substantially all of the assets or equity interests relating to one
or two of the Port Inland Quarry and the MLO Quarries, or (2) Buyer makes
a Fundamental Change, in Sellers' reasonable judgment, in the business of
the Operations other than a Fundamental Change implemented with the
written concurrence of Sellers' Representative (provided that Sellers'
Representative is knowledgeable regarding the quarrying, processing, and
selling of limestone and is not, directly or indirectly, affiliated with a
competitor of Buyer or the Operations, and provided further that Xxxxx
Xxxxxxx, Xxx Xxxxx, Xxxx Xxxxx, and Xxxxxx Xxxx, Sr. will each be deemed
by Buyer to have the requisite degree of knowledge to serve as a Sellers'
Representative) or a change resulting from a Force Majeure, Buyer will (A)
within ten (10) business days of the occurrence of such sale or change
provide written notice of such sale or change to Sellers, and (B) at the
written election of Sellers, will pay to Sellers an amount equal to the
Accelerated Payment multiplied by (X) in the case of an asset or equity
interest sale involving either the Port Inland Quarry or one of
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the MLO Quarries, the percentage set forth on Schedule 2.3(g) and, (Y) in
the case of a Fundamental Change in the Operations as described above,
100%, within thirty (30) days of Buyer's receipt of written notice of
Sellers' election to accept such amount. If an asset or equity interest
sale as described in subsection 2.3(g)(ii)(X) occurs for which less than
100% of the Accelerated Payment is paid, then the Tonnage Target and the
Second Tonnage Target will be reduced by the percentage set forth in
Schedule 2.3(g) times the Tonnage Target and the Second Tonnage Target
previously in effect.
(iii) If an Event of Default occurs during the Tonnage
Payment Period, then Buyer will (1) within ten (10) business days of the
occurrence of such Event of Default provide Sellers with written notice of
such Event of Default, and (2) at the written election of Sellers, pay to
Sellers the Accelerated Payment within thirty (30) days of the date of the
written notice.
(iv) Acceptance by Sellers of the full amount of the
Accelerated Payment will terminate immediately all of Buyer's obligations
under this Agreement. Acceptance by Sellers of any payment offered by
Buyer in an amount less than the amount then due will be deemed an
acceptance on account only, and Sellers' acceptance of any such partial
payment shall not constitute a waiver of Sellers' right to receive the
entire amount due under this Agreement. Upon the occurrence of an event
with respect to which Sellers may demand an Accelerated Payment pursuant
to subsection 2.3(g)(i), (ii) or (iii) (an "Acceleration Event"), neither
the failure of Sellers to promptly exercise their right to declare the
Accelerated Payment to be immediately due and payable, nor the failure of
Sellers to demand strict performance of any other obligation of Buyer (or
any successor) set forth in Section 2.3 or 2.4, will constitute a waiver
of any such rights, nor a waiver of such rights in connection with any
future Acceleration Event. The election by Sellers not to demand the
Accelerated Payment upon the occurrence of an Acceleration Event will not
waive the right of Sellers to demand the Accelerated Payment upon the
occurrence of any subsequent Acceleration Event. The election by Sellers
to demand the Accelerated Payment with respect to an asset or equity
interest sale as described in subsection 2.3(g)(ii)(X) for which less than
100% of the Accelerated Payment is paid will not preclude Sellers from
demanding any remaining amount of such Accelerated Payment upon the
occurrence of a subsequent Acceleration Event.
(v) Notwithstanding any provision in this Agreement to the
contrary, upon the occurrence of an Acceleration Event, Sellers must elect
in writing to have Buyer pay the Accelerated Payment within thirty (30)
days of the date of the written notice of the occurrence of the
Acceleration Event from Buyer. If Sellers fail to make such election
within such thirty (30) day period, then Sellers will have waived their
right to the Accelerated Payment for such Acceleration Event.
(h) Subordination. Sellers acknowledge that the Contingent Payments and
the Guaranty obligations will be unsecured and will be subordinated in all
respects to the senior secured credit facility in the principal amount of $310
million that will be entered into by the reorganized Buyer and certain of its
affiliates, the facility agent and the other financial
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institutions party thereto on the Effective Date on substantially the terms set
forth on Exhibit I.A.19 to the Plan (the "Confirmation Facility") and any
indebtedness that refinances the Confirmation Facility. Sellers further agree to
enter into a subordination agreement customary for transactions of this type
with respect to the Contingent Payments and the Guaranty obligations with the
facility agent and other financial institutions party to the Confirmation
Facility (and any amendment, restatement, replacement or refinancing thereof) in
form and substance customary for transactions of this type and reasonably
satisfactory to the facility agent for the Confirmation Facility (or the
facility agent under any amended, restated, replacement or refinancing
facility).
8. AMENDMENT TO SECTION 2.4. Effective for each calendar year beginning
after December 31, 2003, Section 2.4 of the Original Purchase Agreement is
hereby amended and restated in its entirety as follows.
(a) Tonnage Statement. Within thirty (30) days following the completion of
each of the years referred to in Section 2.3(b), Buyer will prepare and deliver
to Seller a statement showing the tonnage of shipments from the Operations for
such year (the "Preliminary Tonnage Statement"). Following receipt of the
Preliminary Tonnage Statement, Sellers will be afforded a period of thirty (30)
days to review the Preliminary Tonnage Statement (the "Tonnage Review Period").
To assist in any such review, Buyer will make available to Sellers'
Representative within ten (10) business days of Sellers so requesting, and to
any independent accounting firm selected by Sellers (subject to such firm's
prior execution of Buyer's standard confidentiality agreement attached hereto as
Exhibit 2.4(a)(1) and Buyer's independent accounting firm's standard release
attached hereto as Exhibit 2.4(a)(2)), whose fees and expenses shall be borne by
Sellers, access to the books and records of the Operations solely as they relate
to the tonnage of shipments from the Operations for such year. The Tonnage
Review Period will be extended by one day for each day that access to such books
and records of the Operations is denied or delayed by Buyer. At or before the
end of the Tonnage Review Period, Sellers' Representative must either (i) accept
the Preliminary Tonnage Statement in its entirety or (ii) deliver to Buyer a
written notice setting forth a detailed explanation of those items in the
Preliminary Tonnage Statement that Sellers dispute (a "Notice of Tonnage
Dispute"). If Sellers' Representative does not deliver a Notice of Tonnage
Dispute to Buyer within the Tonnage Review Period, Sellers will be deemed to
have accepted the Preliminary Tonnage Statement in its entirety.
(b) EBITDA Statement. Within ninety (90) days following the completion of
each year referred to in Section 2.3(c), Buyer will prepare and deliver to
Sellers a statement showing the annual EBITDA of Buyer (the "Preliminary EBITDA
Statement"). Following receipt of the Preliminary EBITDA Statement, Sellers will
be afforded a period of sixty (60) days to review the Preliminary EBITDA
Statement (the "EBITDA Review Period"). To assist in any such review, Buyer will
make available to Sellers' Representative within ten (10) days of Sellers so
requesting, and to any independent accounting firm selected by Sellers (subject
to such firm's prior execution of Buyer's standard confidentiality agreement
attached hereto at Exhibit 2.4(a)(1) and Buyer's independent accounting firm's
standard release attached hereto as Exhibit 2.4(a)(2)), whose fees and expenses
shall be borne by Sellers, access to any publicly available information
regarding the Buyer, including audit reports. The Review Period shall be
extended by one day
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for each day that access to such information of Buyer is denied or delayed by
Buyer. At or before the end of the EBITDA Review Period, Sellers' Representative
must either (i) accept the Preliminary EBITDA Statement in its entirety or (ii)
deliver to Buyer a written notice setting forth a detailed explanation of those
items in the Preliminary EBITDA Statement that Sellers dispute (a "Notice of
EBITDA Dispute"). If Sellers' Representative does not deliver a Notice of EBITDA
Dispute to Buyer within the EBITDA Review Period, Sellers will be deemed to have
accepted the Preliminary EBITDA Statement in its entirety.
(c) Resolution of Disputes. Within a period of thirty (30) days after
delivery of a Notice of Tonnage Dispute or a Notice of EBITDA Dispute, Buyer and
Sellers will attempt to resolve in good faith any disputed items. If they are
unable to do so, any disputed items will be submitted to a mutually agreeable
nationally recognized firm of independent accountants for resolution (the
"Independent Public Accountants"). Sellers and Buyer will share equally the cost
of the Independent Public Accountants. The determination of the disputed items
by the Independent Public Accountants will be final and binding on the parties
and a judgment on the determination of the Independent Public Accountant may be
entered by a court of competent jurisdiction. Any other disputes, including
those involving a Fundamental Change, shall be resolved in accordance with
Section 11.7 hereof.
9. EFFECT ON ORIGINAL PURCHASE AGREEMENT. Except as specifically modified
by this Agreement, the Original Purchase Agreement is ratified and confirmed in
all respects; provided, however, that nothing in this Amendment shall constitute
or be deemed to constitute: (a) an assumption or assumption and assignment of
the Purchase Agreement unless and until the Effective Date occurs; or (b) a
postpetition agreement.
10. PAYMENT OF EXPENSES. Buyer will pay the Sellers' reasonable and
necessary out-of-pocket expenses (including reasonable and necessary attorneys'
fees) incurred in connection with the negotiation, documentation and execution
of this Agreement. Buyer will pay such expenses within ten (10) business days
after receiving a detailed invoice for such expenses from Sellers or, if Buyer
disputes any amounts included in the invoice, within ten (10) business days of
the resolution of such dispute.
11. NO CHANGE OF CONTROL. The Sellers consent to any Change in Control
resulting from the commencement or pendency of the Chapter 11 Cases or Buyer's
emergence from the Chapter 11 Cases and waive any rights they may have (or may
have had) to demand an Accelerated Payment based on any Change of Control
resulting from the commencement or pendency of the Chapter 11 Cases or Buyer's
emergence from the Chapter 11 Cases.
[SIGNATURE PAGE TO FOLLOW]
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The parties hereto agree to be bound by this Amendment, in accordance with
its terms, as of the Effective Date.
OGLEBAY NORTON COMPANY
By:_________________________
Name:
Title:
XXXXXXX MINING INC.
THE XXXX MINING COMPANY, INC.
MICHIGAN MINERALS ASSOCIATES, INC.
By:_________________________
Xxx Xxxxx, as Sellers'
Representative
MICHIGAN LIMESTONE OPERATIONS, INC.
By:_________________________
Name:
Title:
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SCHEDULE 2.3(d)
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EXHIBIT A
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GUARANTY
This Guaranty ("Guaranty") is made as of this _________ day of _______,
2004 by and among the undersigned domestic subsidiaries (each a "Guarantor" and
any and all collectively, the "Guarantors") of Oglebay Norton Company, an Ohio
corporation ("Buyer") in favor of Xxxxxxx Mining Inc., a Delaware corporation,
The Xxxx Mining Company Inc., a Delaware corporation, and Michigan Minerals
Associates, Inc., a Delaware corporation (each individually, a "Seller, and
collectively, "Sellers").
Background
A. On April 14, 2000, Oglebay Norton Company, a Delaware corporation ("ONCO"),
Sellers, and Michigan Limestone Operations Limited Partnership ("MLO") entered
into an Interest Purchase Agreement (the "Original Purchase Agreement") for the
sale of all of the general and limited partnership interests in MLO, all of the
membership interests in MLO-Ohio Ltd., a Ohio limited liability company
("MLO-Ohio"), and all of the membership interests of Michigan Equipment Leasing
L.L.C., a Michigan limited liability company ("XXX") and ONCO assigned its
rights under the Original Purchase Agreement to Michigan Limestone Operations,
Inc., a Michigan corporation formerly known as "Global Stone Port Inland, Inc."
(the "Company").
B. Following the consummation of the transactions contemplated by the Original
Purchase Agreement, MLO dissolved and MLO-Ohio and XXX were merged with and into
the Company. Accordingly, the Company became the owner of the business and
assets formerly owned by MLO, MLO-Ohio, and XXX. On May 1, 2001, ONCO was merged
into the Buyer, with the Buyer as the surviving corporation.
C. On February 23, 2004, Buyer and the Guarantors (collectively, the "Debtors")
filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code
(the "Chapter 11 Cases") in the United States Bankruptcy Court for the District
of Delaware. In connection with the Chapter 11 Cases and the Debtors' Second
Amended Joint Plan of Reorganization, dated July 30, 2004 (as the same may be
amended, modified or supplemented, the "Plan"), Buyer, Sellers and the Company
wish to amend and modify the Contingent Payments provided for in the Original
Purchase Agreement. Accordingly, on even date herewith, Buyer, Sellers and the
Company have entered into that certain Amendment No. 1 to Interest Purchase
Agreement (the "Amendment"). As used herein, the term "Plan" refers to a plan of
reorganization incorporating the assumption and, to the extent necessary,
assignment of the Original Purchase Agreement, as amended by the Amendment (as
amended, the "Purchase Agreement").
D. As a condition to modifying and amending the Contingent Payments under the
Purchase Agreement and as adequate assurance of future performance of the
Purchase Agreement,
pursuant to section 365 of the Bankruptcy Code, Sellers have requested that the
Guarantors enter into this Guaranty.
E. Capitalized terms used and not otherwise defined will have the meanings
ascribed to such terms in the Purchase Agreement.
In consideration of the mutual covenants, representations, and agreements
set forth in this Guaranty and intending to be bound, the parties agree as
follows:
Agreement
1. Effective Date. This Guaranty shall become effective upon (a) the
occurrence of the Effective Date (as such term is defined in the Plan) and (b)
the assumption by Buyer and, to the extent necessary, assignment to the
reorganized Buyer of the Purchase Agreement, pursuant to section 365 of the U.S.
Bankruptcy Code and Section V.A of the Plan, as of the Effective Date.
2. Representations and Warranties. Each of the Guarantors represents and
warrants that:
(a) It is a corporation, limited liability company, partnership, or
other business organization duly incorporated or formed, validly existing and in
good standing under the laws of its jurisdiction of incorporation, organization
or formation and has all requisite authority to conduct its business in each
jurisdiction in which its business is located.
(b) It has the power and authority to execute and deliver this
Guaranty and to perform its obligations under this Guaranty. The execution and
delivery by it of this Guaranty and the performance of its obligations under
this Guaranty have been duly authorized by proper company proceedings, and this
Guaranty constitutes a legal, valid and binding obligation of the Guarantor
enforceable against it in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally.
(c) Neither the execution and delivery by it of this Guaranty, nor
the consummation of the transactions contemplated by this Guaranty, nor
compliance with the provisions of this Guaranty will violate (i) any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on it or
any of its subsidiaries, (ii) its articles or certificate of incorporation,
articles or certificate of organization or operating or other management
agreement or (iii) the provisions of any indenture, instrument or agreement to
which it or any of its subsidiaries is a party or is subject, or by which it, or
any of its property or assets, is bound, or conflict with or constitute a
default, or result in, or require, the creation or imposition of any lien in, of
or on any of the property or assets of the Guarantor or any subsidiary pursuant
to the terms of any such indenture, instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, or other action in respect of
any governmental or public body or authority, or any subdivision of any
governmental or public body or authority, which has not been obtained by it or
any of its subsidiaries, is required to be obtained by it or any of its
subsidiaries in connection with the
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execution and delivery of this Guaranty or the performance by it of its
obligations under this Guaranty or the legality, validity, binding effect or
enforceability of this Guaranty.
3. Guaranty. Each of the Guarantors unconditionally and irrevocably
guarantees, jointly with the other Guarantors and severally, the full and
punctual payment when due of all contingent payments due from the Buyer under
the Purchase Agreement, as the Purchase Agreement may be amended after the date
of this Guaranty (the "Guaranteed Obligations"), including without limitation,
(i) the 2004 Payment, (ii) the Tonnage Payment, (iii) the Second Tonnage
Payment, and (iv) the EBITDA Payment. Upon the failure by the Buyer to pay
punctually any such amount, each of the Guarantors agrees that it will on demand
pay such amount at the place and in the manner specified in the Purchase
Agreement; provided, however, that Sellers are not entitled to recover any more
than any amount they are due at the time; there shall be no double recovery for
any Seller. Each of the Guarantors agrees that this Guaranty is an absolute,
irrevocable and unconditional guaranty of payment and is not a guaranty of
collection.
4. Guaranty Unconditional. The obligations of each of the Guarantors is
unconditional and absolute and, without limiting the generality of the
foregoing, will not be released, discharged or otherwise affected by:
(a) Any extension, renewal, or settlement in respect to the
Guaranteed Obligations or any part of the Guaranteed Obligations, or with
respect to any obligation of any other guarantor of any of the Guaranteed
Obligations, whether (in any such case) by operation of law or otherwise, or any
failure or omission to enforce any right, power or remedy with respect to the
Guaranteed Obligations or any part of the Guaranteed Obligations or any
agreement relating to the Guaranteed Obligations, or with respect to any
obligation of any other guarantor of any of the Guaranteed Obligations.
(b) Any modification or amendment of or supplement to the Purchase
Agreement.
(c) Any other guaranties with respect to the Guaranteed Obligations
or any other obligation of any person or entity with respect to the Guaranteed
Obligations; provided, however, that Sellers are not entitled to recover any
more than any amount they are due at the time; there shall be no double recovery
for any Seller.
(d) Any change in the corporate, partnership or other existence,
structure or ownership of the Buyer or any other guarantor of any of the
Guaranteed Obligations, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Buyer or any other guarantor of the Guaranteed
Obligations, or any of their respective assets or any resulting release or
discharge of any obligation of the Buyer or any other guarantor of any of the
Guaranteed Obligations.
(e) The existence of any claim, setoff or other rights which the
Guarantors may have at any time against the Buyer, any other guarantor of any of
the Guaranteed Obligations, whether in connection with this Guaranty or in
connection with any unrelated
3
transactions, provided that nothing in this Guaranty shall prevent the assertion
of any such claim by separate suit or compulsory counterclaim.
(f) The enforceability or validity of the Guaranteed Obligations or
any part of the Guaranteed Obligations or the genuineness, enforceability or
validity, or any other invalidity or unenforceability relating to or against the
Buyer or any other guarantor of any of the Guaranteed Obligations, for any
reason related to the Purchase Agreement or any provision of applicable law or
regulation purporting to prohibit the payment by the Buyer or any other
guarantor of the Guaranteed Obligations, of any of the Guaranteed Obligations.
(g) The failure of any other Guarantor to sign or become party to
this Guaranty, or to any amendment, change, or reaffirmation of this Guaranty.
(h) Any other occurrence or circumstance which might otherwise
constitute a legal or equitable defense or discharge of the liabilities of any
other guarantor or surety or which might otherwise limit recourse against
Guarantor.
5. Discharge; Reinstatement In Certain Circumstances. Each of the
Guarantors' obligations will remain in full force and effect until all
Guaranteed Obligations have been paid in full. Notwithstanding the foregoing,
any given Guarantor's obligations will automatically terminate, and this
Guaranty will be of no further force and effect as against such Guarantor, at
such time as the Buyer determines to remove such Guarantor from its status as a
domestic subsidiary of Buyer (whether as a result of the sale of the assets or
stock of such Guarantor or otherwise) so long as no Event of Default has
occurred and is continuing at such time. If at any time any payment of the
Guaranteed Obligations is rescinded or must be otherwise restored or returned
upon the insolvency, bankruptcy or reorganization of the Buyer or otherwise,
each of the Guarantors' obligations with respect to such payment will be
reinstated as though such payment had been due but not made at such time.
6. Waivers. Without limiting the generality of the foregoing, the
Guarantors unconditionally waive (a) any right of subrogation to the rights of
the Sellers against the Buyer, (b) the Sellers' acceptance of this Guaranty, (c)
any set-offs or counterclaims against the Sellers which would otherwise impair
the Sellers' rights against the Guarantors, (d) any demand or notice of any
action that the Sellers take regarding the Buyer or the Guaranteed Obligations,
which any Guarantor might be entitled to by law or under any other agreement,
and (e) any requirement of diligence on the part of anyone.
7. Subrogation. Each of the Guarantors agrees not to assert any right,
claim, or cause of action, including a claim for subrogation, reimbursement,
indemnification or otherwise, against the Buyer arising out of or by reason of
the Guaranty or the Guaranteed Obligations.
8. Stay of Acceleration. If acceleration of the time for payment of any
amount payable by the Buyer under the Purchase Agreement is stayed upon the
insolvency, bankruptcy or reorganization of Buyer, all such amounts otherwise
subject to acceleration under the terms of the Purchase Agreement will
nonetheless be payable by each of the Guarantors.
9. Subordination. Notwithstanding anything to the contrary contained
herein, Sellers acknowledge that the obligations under this Guaranty will be an
unsecured claim and will
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be subordinated in all respects to the senior secured credit facility in the
principal amount of $310 million that will be entered into by the Debtors, the
facility agent and the other financial institutions party thereto on the
Effective Date (such facility being on substantially the terms set forth on an
Exhibit to the Plan) (the "Confirmation Facility") and any amendment,
restatement, replacement or refinancing thereof. Sellers further agree to enter
into a subordination agreement with respect to the obligations under this
Guaranty with the facility agent and other financial institutions party to the
Confirmation Facility (and any amendment, restatement, replacement or
refinancing thereof) in form and substance customary for transactions of this
type and reasonably satisfactory to the facility agent for the Confirmation
Facility (or the facility agent under any amended, restated, replacement or
refinancing facility).
10. Notices. All notices that are required or permitted under this
Guaranty must be in writing and will be sufficient if personally delivered or
sent by registered or certified mail, return receipt requested, facsimile
message (provided that a confirmation sheet is emitted from the machine making
the transmission), or Federal Express, or other nationally recognized, overnight
delivery service. Any notices will be deemed given upon the earlier of the date
when received at, or the third day after the date when sent by registered or
certified mail or the day after the date when sent by Federal Express, or other
nationally recognized, overnight delivery service to, the address or fax number
set forth below, unless such address or fax number is changed by notice to the
other party given in accordance with the foregoing notice procedures:
If to Buyer:
Oglebay Norton Company
Xxxxx Xxxxx Xxxxx
00xx Xxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
FAX: 000-000-0000
Attention: Xxxxxxxx X. Walk, Esq.
With required copies to:
If to Sellers, to Sellers' Representative:
Xxx Xxxxx
[insert address]
[insert fax]
With a required copy to:
Xxxxxx Xxxxxxx PLLC
0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
FAX: 000-000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
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If to [Guarantor]:
Oglebay Norton Company
Xxxxx Xxxxx Xxxxx
00xx Xxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
FAX: 000-000-0000
Attention: Xxxxxxxx X. Walk, Esq.
11. No Waivers. No failure or delay by the Sellers in exercising any
right, power or privilege under this Guaranty will operate as a waiver nor will
any single or partial exercise preclude any other or further exercise or the
exercise of any other right, power or privilege. The rights and remedies
provided in this Guaranty and the Purchase Agreement will be cumulative and not
exclusive of any rights or remedies provided by law.
12. No Duty to Advise. Each Guarantor assumes all responsibility for being
and keeping itself informed of the financial condition and assets of the Buyer
and of all other circumstances bearing upon the risk of nonpayment of the
Guaranteed Obligations and the nature, scope and extent of the risks that the
Guarantors assume and incur under this Guaranty, and agree that the Sellers do
not have any duty to advise the Guarantors of information known to it regarding
those circumstances or risks.
13. Successors and Assigns. This Guaranty is for the benefit of the
Sellers and their respective successors and permitted assigns and in the event
of an assignment of any amounts payable under the Purchase Agreement to the
extent applicable to the indebtedness so assigned, will be transferred with such
indebtedness. This Guaranty will be binding upon the Guarantors and their
successors and permitted assigns.
14. Changes in Writing. Other than in connection with the addition of
additional domestic subsidiaries of the Company which become parties to this
Guaranty by executing an addendum in the form attached as Exhibit A. neither
this Guaranty nor any provision of this Guaranty may be changed, waived,
discharged or terminated orally, but only in writing signed by the Guarantors
with the consent of the Sellers.
15. GOVERNING LAW: WAIVER OF JURY TRIALS. THIS GUARANTY WILL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO. EACH OF THE
GUARANTORS, AND THE SELLERS ACCEPTING THIS GUARANTY, IRREVOCABLY WAIVE ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED BY THIS GUARANTY.
16. Taxes, etc. All payments required to be made by each Guarantor under
this Guaranty will be made without setoff or counterclaim and free and clear of
and without deduction or withholding for or on account of, any present or future
taxes, levies, imposts, duties or other charges of whatsoever nature imposed by
any government or any political or taxing authority thereof; provided, however,
that if any Guarantor is required by law to make such
6
deduction or withholding, the Guarantor will forthwith (i) pay to the Sellers
such additional amount as results in the net amount received by the Sellers
equaling the full amount which would have been received by the Sellers, had no
such deduction or withholding been made, (ii) pay the full amount deducted to
the relevant authority in accordance with applicable law, and (iii) furnish to
the Sellers, certified copies of official receipts evidencing payment of such
withholding taxes within 30 days after such payment is made.
17. Setoff. Without limiting the rights of the Sellers under applicable
law, if all or any part of the Guaranteed Obligations is then due, whether
pursuant to the occurrence of an Event of Default or otherwise, then the
Guarantor authorizes the Sellers to apply any sums standing to the credit of the
Guarantor with the Sellers toward the payment of the Guaranteed Obligations.
18. Costs and Expenses. The Guarantors, jointly and severally, shall pay
or reimubruse Sellers on demand for all out-of-pocket expenses (including in
each case all reasonable fees and expenses of legal counsel) incurred by Sellers
arising out of or in connection with any failure of any Guarantor to fully and
timely perform any obligations under this Guaranty.
(SIGNATURE PAGE TO FOLLOW)
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The parties hereto agree to be bound by this Guaranty, in accordance with
its terms, as of the Effective Date of the Plan.
[GUARANTOR]
By:_____________________________
Name:
Title:
[GUARANTOR]
By:____________________________
Name:
Title:
8
EXHIBIT A
Reference is made to the Guaranty (the "Guaranty") made as of the ________
day of September, 2004, by and among the domestic subsidiaries of Oglebay Norton
Company ("Buyer") listed on the signature pages to the Guaranty (the "Initial
Guarantors" and along with any additional domestic subsidiaries of the Company,
which become parties to the Guaranty and together with the undersigned, the
"Guarantors") for the benefit of Xxxxxxx Mining Inc., The Xxxx Mining Company,
Inc., and Michigan Minerals Associates, Inc. Capitalized terms used and not
otherwise defined will have the meanings given to them in the Guaranty. By its
execution below, the undersigned [insert name of new guarantor], a [corporation]
[partnership] [limited liability company], agrees to become, and does become, a
Guarantor under the Guaranty and agrees to be bound by the Guaranty as if
originally a party. By its execution below, the undersigned represents and
warrants as to itself that all of the representations and warranties contained
in Section 2 of the Guaranty are true and correct in all respects as of the date
written above.
[Name of Guarantor] has executed and delivered this Exhibit A to the
Guaranty as of the date stated above.
By:____________________________________
Name:
Title:
9
