1
Exhibit 10.1
THE PRE-ACQUISITION AGREEMENT entered into this 15th day of April, 1998.
B E T W E E N:
OGLEBAY NORTON COMPANY, a corporation existing under the laws
of the State of Delaware,
(hereinafter called the "Acquiror")
- and -
GLOBAL STONE CORPORATION, a corporation existing under the
laws of Canada,
(hereinafter called the "Company")
RECITALS
WHEREAS:
1. There is an outstanding take-over bid to the shareholders of the Company
offering to purchase all of the outstanding common shares of the Company at a
price of $6.45 per common share;
2. The board of directors of the Company wishes to encourage the Acquiror to
make a take-over bid to the shareholders of the Company offering to purchase all
of the outstanding common shares of the Company at a price of $7.80 per common
share in cash (the "Offer Price");
3. The board of directors of the Company has determined that it would be in the
best interests of the Company and its shareholders to recommend acceptance of
the Acquiror's offer to the shareholders of the Company, to cooperate with the
Acquiror and take all reasonable action to support the Acquiror's offer and to
waive the application of the Company's Shareholder Rights Plan to the Acquiror's
offer;
4. The board of directors of the Company has determined that it would be in the
best interests of the Company and its shareholders to enter into this Agreement;
and
5. The Acquiror will make an offer subject to the terms and conditions of this
Agreement.
NOW THEREFORE IN CONSIDERATION of the mutual covenants
hereinafter set out, the parties hereto hereby agree as follows:
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ARTICLE I
THE OFFER
I.1 THE OFFER. Subject to the terms and conditions of this Agreement, the
Acquiror agrees to mail as soon as practicable but in any event no later than
April 27, 1998 to the holders of common shares of the Company, an offer to
purchase all of the common shares (including the associated rights issued
pursuant to the Company's Shareholder Rights Plan, hereinafter called the
"Rights" and together with the common shares called the "Shares" and the holders
of Shares are hereinafter called "Shareholders") at the Offer Price, subject to
the terms and conditions set out in Schedule "A" to this Agreement as the same
may be amended pursuant to the terms hereof (the "Offer"). The Acquiror further
agrees that it will not amend the terms of the Offer other than to increase the
consideration payable thereunder, to extend the expiry thereof or to waive any
conditions thereof, except with the prior consent of the Company.
I.2 COMPANY APPROVAL OF THE OFFER. The Company represents that its board of
directors, upon consultation with its advisors, has determined unanimously that:
(a) the Offer is fair to the Shareholders and is in the best
interests of the Company and the Shareholders;
(b) the board of directors will recommend that Shareholders accept
the Offer; and
(c) this Agreement is in the best interests of the Company and the
Shareholders.
I.3 COMPANY COOPERATION. The Company covenants to cooperate with the Acquiror,
to take all reasonable action to support the Offer and to provide the Acquiror
with a draft copy of any Directors' Circular to be issued, from time to time,
prior to the mailing thereof, on a confidential basis, and to provide the
Acquiror with a reasonable opportunity to review and provide comments thereon.
The Company further covenants to use reasonable commercial efforts to mail the
Directors' Circular to be issued in connection with the mailing of the Offer on
the same date that the Acquiror mails the Offer to the Shareholders. The
Acquiror covenants to cooperate with the Company and to provide the Company with
a draft copy of the Offer and any take-over bid circular to be issued in respect
of the Offer, prior to the mailing thereof, on a confidential basis, and to
provide the Company with a reasonable opportunity to review and provide comments
thereon.
I.4 JOINT PRESS RELEASE AND PUBLIC DISCLOSURE. The parties agree to jointly
issue a press release as soon as practicable in a mutually agreeable form.
I.5 POST OFFER COVENANTS. If the Acquiror takes up and pays for Shares pursuant
to the Offer, the Acquiror and the Company agree to use all reasonable efforts
to enable the Acquiror to acquire the balance of the Shares as soon as
practicable after
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completion of the Offer by way of compulsory acquisition, arrangement,
amalgamation or other type of acquisition transaction carried out for a
consideration per Share of not less than the Offer Price. The Company agrees and
represents that its board of directors has determined unanimously to use its and
their respective reasonable efforts to enable the Acquiror to elect or appoint
all of the directors of the Company as soon as possible after the Acquiror takes
up and pays for in excess of 50% of the Shares pursuant to the Offer.
I.6 SHAREHOLDER RIGHTS PLAN.
(a) The Company represents that its board of directors has
resolved to waive the application of the Shareholder Rights
Plan to: (i) the Offer, (ii) any other actions taken by the
Acquiror in furtherance of acquiring all of the Shares, and
(iii) any other "Triggering Event" as required under the
Shareholder Rights Plan; and the Company covenants to take all
action necessary pursuant to the Shareholder Rights Plan to
effect such waiver, such waiver to become effective on the
date (the "Waiver Date") that is the earlier of June 14, 1998
or the expiry date of the Offer, as set forth on Schedule "A"
hereto, as it may be extended from time to time pursuant to
the terms of the Offer.
(b) The Company covenants and agrees and represents that, except
as provided in Section 1.6(a) above, its board of directors
has resolved not to waive the application of the Shareholder
Rights Plan or to redeem any of the outstanding Rights or take
any other action which would limit the application of the
Shareholder Rights Plan to any transaction other than an
Acquisition Proposal (as defined in section ERROR! REFERENCE
SOURCE NOT FOUND.).
I.7 OUTSTANDING STOCK OPTIONS. The Company agrees and represents that its board
of directors has unanimously resolved to use its and their respective reasonable
efforts to encourage all persons holding options to purchase Shares pursuant to
the Company's employee stock option plan and other compensation arrangements or
otherwise, to exercise their options prior to the expiry of the Offer and to
tender all Shares issued in connection therewith to the Offer. The Company
further agrees and represents that the board of directors of the Company has
also resolved and has authorized and directed the Company to, cause the vesting
of option entitlements under its employee stock option plans and other
compensation arrangements to accelerate prior to the expiry of the Offer, such
that all outstanding Options to acquire Shares become exercisable prior to and
expire concurrently with the expiry of the Offer, and to arrange for all Shares
that are fully paid thereunder to be distributed to those persons entitled
thereto so as to be able to be tendered into the Offer and to thereafter satisfy
all other obligations of the Company under such plans or, upon the acquisition
by the Acquiror of Shares pursuant to the Offer, to cause all entitlements under
such arrangements to terminate upon the payment of an amount in respect of each
outstanding option equal to the difference between the exercise price thereof
and the Offer price.
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ARTICLE II
COVENANTS OF THE COMPANY
II.1 ORDINARY COURSE OF BUSINESS. The Company covenants and agrees that, prior
to the time (the "Effective Time") of the appointment or election to the board
of directors of the Company of persons designated by the Acquiror pursuant to
Section ERROR! REFERENCE SOURCE NOT FOUND., unless the Acquiror shall otherwise
agree in writing or as otherwise expressly contemplated or permitted by this
Agreement:
(a) the Company shall, and shall cause each of its direct and
indirect subsidiaries (collectively its "Subsidiaries") to,
conduct its and their respective business only in and not take
any action except in, the usual, ordinary and regular course
of business and consistent with past practice;
(b) the Company shall not directly or indirectly do or permit to
occur any of the following, whether directly or indirectly:
(i) issue, sell, pledge, lease, dispose of, grant any
interest in, encumber or agree to issue, sell,
pledge, lease, dispose of, grant any interest in or
encumber (or permit any of its Subsidiaries to issue,
sell, pledge, lease, dispose of, grant any interest
in, encumber or agree to issue, sell, pledge, lease,
dispose of, grant any interest in or encumber):
(A) any additional shares of, or any options,
warrants, calls, conversion privileges or
rights of any kind to acquire any shares of,
any capital stock of the Company or any of
its Subsidiaries (other than pursuant to the
exercise of employee stock options currently
outstanding), or
(B) any assets of the Company or any of its
Subsidiaries (except for sales of inventory
in the ordinary course of business and sales
and other dispositions of equipment and
other personal property not required in
running the current business operations of
the Company and having an aggregate
acquisition cost not in excess of $500,000);
(ii) amend or propose to amend its articles or by-laws or
those of any of its Subsidiaries;
(iii) split, combine or reclassify any outstanding Shares,
or declare, set aside or pay any dividend (other than
as disclosed in writing to the Acquiror prior to the
date hereof) or other distribution payable in cash,
stock, property or otherwise with respect to the
Shares;
(iv) redeem, purchase or offer to purchase (or permit any
of its Subsidiaries to redeem, purchase or offer to
purchase) any Shares
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or other securities of the Company or any of its
Subsidiaries;
(v) reorganize, amalgamate or merge the Company or any of
its Subsidiaries with any other person, corporation,
partnership or other business organization
whatsoever;
(vi) except for the potential acquisition disclosed to the
Acquiror under the code name "Watergate", acquire or
agree to acquire (by merger, amalgamation,
acquisition of stock or assets or otherwise) any
person, corporation, partnership or other business
organization or division or acquire or agree to
acquire any material assets; or
(vii) incur or commit to incur any indebtedness for
borrowed money or issue any debt securities except
for the borrowing of working capital in the ordinary
course of business and consistent with past practice
and except borrowings or guarantees necessary to
facilitate the financing of the exercise of options
pursuant to Section 1.7
(c) the Company shall not, and shall cause each of its
Subsidiaries to not (otherwise than as may be contemplated in
Section ERROR! REFERENCE SOURCE NOT FOUND. of this Agreement):
(i) enter into or modify any employment, severance,
collective bargaining or similar agreements, policies
or arrangements with, or grant any bonuses, salary
increases, severance or termination pay to, any
officers or directors of the Company other than
pursuant to agreements in effect (without amendment)
on the date hereof; or
(ii) in the case of employees who are not officers or
directors, take any action other than in the
ordinary, regular and usual course of business and
consistent with past practice (none of which actions
shall be unreasonable or unusual) with respect to the
entering into or modifying of any employment,
severance, collective bargaining or similar
agreements, policies or arrangements or with respect
to the grant of any bonuses, salary increases, stock
options, pension benefits, retirement allowances,
deferred compensation, severance or termination pay
or any other form of compensation or profit sharing
or with respect to any increase of benefits payable
otherwise than pursuant to agreements, policies or
arrangements in effect (without amendment) on the
date hereof;
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(d) the Company shall use its reasonable efforts to cause its
current insurance (or re-insurance) policies not to be
cancelled or terminated or any of the coverage thereunder to
lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by
insurance and re-insurance companies of nationally recognized
standing providing coverage equal to or greater than the
coverage under the cancelled, terminated or lapsed policies
for substantially similar premiums are in full force and
effect;
(e) the Company shall:
(i) use its reasonable efforts, and cause each of its
Subsidiaries to use its reasonable efforts, to
preserve intact their respective business operations,
business organizations and goodwill, to keep
available the services of its officers and employees
as a group and to maintain satisfactory relationships
with suppliers, agents, distributors, customers and
others having business relationships with it or its
Subsidiaries;
(ii) not take any action, or permit any of its
Subsidiaries to take any action, that would render,
or that reasonably may be expected to render, any
representation or warranty made by it in this
Agreement untrue in any material respect at any time
prior to the Effective Time if then made; and
(iii) promptly notify the Acquiror orally and in writing of
any material adverse change in the normal course of
its or any of its material Subsidiaries' businesses
or in the operation of its or any of its material
Subsidiaries' properties, and of any material
governmental or third party complaints, orders,
investigations or hearings (or communications
indicating that the same may be contemplated);
(f) the Company shall not settle or compromise any claim brought
by any current, future, former or purported holder of any
securities of the Company in connection with the transactions
contemplated by this Agreement or the Offer prior to the
Effective Time without the prior written consent of the
Acquiror; and
(g) the Company shall not enter into or modify any contract,
agreement, commitment or arrangement with respect to any of
the matters set forth in this Section ERROR! REFERENCE SOURCE
NOT FOUND. without the prior consent of the Acquiror.
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II.2 NON-SOLICITATION.
(a) The Company shall not, directly or indirectly, through any
officer, director, employee, representative or agent of the
Company or any of its Subsidiaries, solicit or encourage
(including by way of furnishing information or entering into
any form of agreement, arrangement or understanding) the
initiation of any inquiries or proposals regarding any merger,
amalgamation, reorganization, recapitalization, take-over bid,
sale of substantial assets, sale of treasury shares or similar
transactions involving the Company or any Subsidiaries of the
Company (any of the foregoing inquiries or proposals being
referred to herein as an "Acquisition Proposal"), provided
nothing contained in this SECTION ERROR! REFERENCE SOURCE NOT
FOUND. or any other provision of this Agreement shall prevent
the board of directors of the Company from considering,
negotiating, approving and recommending to the Shareholders an
unsolicited bona fide written Acquisition Proposal for which
adequate financial arrangements have been made, which the
board of directors of the Company determines in good faith
(after consultation with its financial advisors, and after
receiving a written opinion of outside counsel, or advice of
outside counsel that is reflected in the minutes of the board
of directors of the Company, to the effect that the board of
directors is required to do so in order to discharge properly
its fiduciary duties) would, if consummated in accordance with
its terms, result in a transaction more favourable to the
Shareholders than the transaction contemplated by this
Agreement (any such Acquisition Proposal being referred to
herein as a "Superior Proposal").
(b) The Company shall immediately cease and cause to be terminated
any existing discussions or negotiations with any parties
(other than the Acquiror) with respect to any potential
Acquisition Proposal. The Company agrees not to release any
third party from any confidentiality agreement to which the
Company and such third party is a party or to waive any of the
provisions of such agreements provided, however, that the
Company may waive the standstill provisions contained in
confidentiality agreements entered into before the date
hereof. The Company shall immediately request the return or
destruction of all information provided to any third parties
who have entered into a confidentiality agreement with the
Company relating to a potential Acquisition Proposal and shall
use all reasonable efforts to ensure that such requests are
honoured.
(c) The Company shall immediately notify the Acquiror of any
existing Acquisition Proposals or of any future Acquisition
Proposal or any request for non-public information relating to
the Company or any of its Subsidiaries in connection with an
Acquisition Proposal or for access to the properties, books or
records of the Company or any Subsidiary by any person or
entity that informs any member of the board of directors of
the Company or such Subsidiary that it is considering making,
or has made,
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an Acquisition Proposal. Such notice to the Acquiror shall be
made, from time to time, orally and confirmed in writing and
shall indicate such details of the proposal, inquiry or
contact known to such person as the Acquiror may reasonably
request including the identity of the person making such
proposal, inquiry or contact.
(d) If the board of directors of the Company receives a request
for material non-public information from a party who proposes
to the Company a bona fide Acquisition Proposal and the board
of directors of the Company determines that such proposal is a
Superior Proposal pursuant to Section ERROR! REFERENCE SOURCE
NOT FOUND., then, and only in such case, the Company may,
subject to the prior execution and delivery of a
confidentiality agreement in substantially the same form and
containing the same restrictions and limitations as are set
forth in the confidentiality agreement then in effect between
the Company and the Acquiror, provide such party with access
to information regarding the Company; provided that, in
respect of any Acquisition Proposal currently outstanding, no
such term need be imposed that would be inconsistent with, or
would render the party unable to make, the unamended
Acquisition Proposal or to complete the unamended Acquisition
Proposal pursuant to the terms thereof. The Company agrees to
send a copy of any such confidentiality agreement to the
Acquiror immediately upon its execution.
(e) The Company shall ensure that the officers, directors and
employees of the Company and its Subsidiaries and any
investment bankers or other advisors or representatives
retained by the Company are aware of the provisions of this
section, and the Company shall be responsible for any breach
of this Section ERROR! REFERENCE SOURCE NOT FOUND. by such
bankers, advisors or representatives.
II.3 ACCESS TO INFORMATION. Subject to the existing Confidentiality Agreement
between the Company and the Acquiror dated March 18, 1998 (the "Confidentiality
Agreement"), upon reasonable notice, the Company shall (and shall cause each of
its Subsidiaries to) afford the Acquiror's officers, employees, counsel,
accountants and other authorized representatives and advisors
("Representatives") reasonable access, during normal business hours from the
date hereof and until the expiration of this Agreement, to its properties,
books, contracts and records as well as to its management personnel, and, during
such period, the Company shall (and shall cause each of its Subsidiaries to)
furnish promptly to the Acquiror all information concerning its business,
properties and personnel as the Acquiror may reasonably request. For greater
certainty, the Company hereby waives the standstill provisions in section 9 of
the Confidentiality Agreement.
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ARTICLE III
FEES AND OTHER ARRANGEMENTS
III.1 PAYMENT OF FEE.
(a) If at any time after the execution of this Agreement:
(i) the board of directors has withdrawn, redefined or
changed, during the term of the Offer, any of its
recommendations, resolutions or determinations
referred to in Sections ERROR! REFERENCE SOURCE NOT
FOUND., ERROR! REFERENCE SOURCE NOT FOUND., 1.6 or
ERROR! REFERENCE SOURCE NOT FOUND. in a manner
adverse to the Acquiror or shall have resolved to do
so;
(ii) any third party acquires by any means whatsoever
during the term of the Offer Shares so as to own in
excess of 50% of the Shares; or
(iii) the Company breaches in any material respect any of
its representations, warranties or covenants made in
this Agreement, including, without limitation, the
representations and covenants in Section ERROR!
REFERENCE SOURCE NOT FOUND.;
(each of the above being a "Full Fee Event"), then the Company
shall pay to the Acquiror $8,000,000, in immediately
available funds to an account designated by the Acquiror,
such amount to be due and payable within one business day
after the first to occur of the Full Fee Events described
above.
(b) If following the execution of this Agreement,
(i) an Acquisition Proposal is made to the Shareholders
or to the Company, or the currently outstanding
Acquisition Proposal is amended to increase the
consideration offered thereunder and upon the expiry
of the Offer the Minimum Condition (as defined in
Schedule "A" to this Agreement) of the Offer has not
been satisfied; and
(ii) a Full Fee Event (as defined in Section 3.1(a)) has
not occurred
then the Company shall pay to the Acquiror $4,000,000, in
immediately available funds to an account designated by the
Acquiror, such amount to be due and payable within one
business day after the occurrence of the event (a "Half Fee
Event") described in clause (b)(i) above. Full Fee Events and
the Half Fee Event being hereinafter referred to as Fee
Events.
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ARTICLE IV
COVENANTS OF THE ACQUIROR
IV.1 EMPLOYMENT AGREEMENTS. The Acquiror covenants and agrees, and after the
Effective Time will cause the Company and any successor to the Company to agree,
to honour and comply with the terms of those existing employment and severance
agreements and policies of the Company which the Company has disclosed to the
Acquiror prior to the date hereof.
IV.2 OFFICERS' AND DIRECTORS' INSURANCE. The Acquiror agrees to use reasonable
efforts to secure directors' and officers' insurance coverage for the Company's
current and former directors and officers on a seven year "trailing" (or
"run-off") basis on terms and conditions no less advantageous to the directors
and officers of the Company than those contained in the policy in effect on the
date hereof. If a trailing policy is not available at a reasonable cost (a
"reasonable cost" being not greater than the estimated cost of providing the
coverage referred to in this and the next sentence), then the Acquiror agrees
that for the entire period from the Effective Time until three years after the
Effective Time, the Acquiror will cause the Company or any successor to the
Company to maintain the Company's current directors' and officers' insurance
policy or an equivalent policy, subject in either case to terms and conditions
no less advantageous to the directors and officers of the Company than those
contained in the policy in effect on the date hereof, for all current and former
directors and officers of the Company, covering claims made prior to or within
three years after the Effective Time.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
V.1 REPRESENTATIONS. The Company hereby provides to the Acquiror those
representations and warranties as set forth in Schedule "B" to this Agreement
(and acknowledges that the Acquiror is relying upon those representations and
warranties in connection with entering into this Agreement).
V.2 INVESTIGATION. Any investigation by the Acquiror and its advisors shall not
mitigate, diminish or affect the representations and warranties of the Company
provided pursuant to this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
VI.1 REPRESENTATIONS. The Acquiror hereby represents and warrants to the Company
as provided in Schedule "C" to this Agreement (and acknowledges that the Company
is relying upon such representations and warranties in connection with the
entering into of this Agreement).
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ARTICLE VII
MUTUAL COVENANTS
VII.1 CONSULTATION. The Acquiror and the Company agree to consult with each
other in issuing any press releases or otherwise making public statements with
respect to the Offer or any other Acquisition Proposal and in making any filings
with any federal, provincial or state governmental or regulatory agency or with
any securities exchange with respect thereto. Each party shall use its
reasonable efforts to enable the other party to review and comment on all such
press releases prior to release thereof.
VII.2 FURTHER ASSURANCE. Subject to the terms and conditions herein, the
Acquiror and the Company agree to use their respective reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations, to
consummate the transactions contemplated by this Agreement and the Offer. The
Company and the Acquiror will, and will cause each of their respective
Subsidiaries to, use their reasonable efforts (i) to obtain all necessary
waivers, consents and approvals from other parties to material loan agreements,
leases and other contracts or agreements (including, in particular but without
limitation, the agreement of any persons as may be required pursuant to any
agreement, arrangement or understanding relating to the Company's or to its
Subsidiaries' operations), (ii) to obtain all necessary consents, approvals and
authorizations as are required to be obtained under any federal, provincial,
state or foreign law or regulations with respect to this Agreement or the Offer,
(iii) to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby or by the Offer, and (iv) to fulfil all conditions and
satisfy all provisions of this Agreement and the Offer. For greater certainty,
the Company and the Acquiror agree that an order of a regulatory authority
having jurisdiction which cease trades the Rights issued pursuant to the
Company's Shareholder Rights Plan does not in and of itself constitute a breach
of this Agreement or relieve either party of its obligations hereunder.
ARTICLE VIII
TERMINATION
VIII.1 TERMINATION. This Agreement may be terminated prior to the
Effective Time:
(a) by mutual written consent of the Acquiror and the Company;
(b) by the Company after June 30, 1998 if the Acquiror has not
become legally obligated to accept and take-up any Shares
pursuant to the Offer by such date;
(c) by either the Acquiror or the Company, if the Minimum
Condition or any other condition of the Offer has not been
satisfied or waived on the expiry of the Offer, as the same
may be extended from time to time by the
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Acquiror pursuant to the terms of the Offer;
(d) by the Acquiror at any time following the occurrence of a Fee
Event as provided in Section 3.1; or
(e) by the Company, if the Acquiror does not mail the Offer as
provided in Section ERROR! REFERENCE SOURCE NOT FOUND.,
provided that no Fee Event has occurred;
except that the obligations set forth in Section ERROR!
REFERENCE SOURCE NOT FOUND. shall survive the termination of
this Agreement, other than in respect of a termination
pursuant to Section 0 above.
VIII.2 WITHDRAWAL OF OFFER. If this Agreement is terminated as provided in
Section ERROR! REFERENCE SOURCE NOT FOUND. above, the Acquiror may terminate or
withdraw the Offer without any liability or further obligation on its part under
this Agreement.
ARTICLE IX
MISCELLANEOUS
IX.1 AMENDMENT OR WAIVER. This Agreement may be amended, modified or superseded,
and any of the terms, covenants, representations, warranties or conditions
hereof may be waived, but only by written instrument executed by the Acquiror
and the Company; provided, however, that either the Acquiror or the Company may
in its discretion waive a condition herein which is solely for its benefit
without the consent of the other. No waiver of any nature, in any one or more
instances, shall be deemed or construed as a further or continued waiver of any
condition or any breach of any other term, representation or warranty in this
Agreement.
IX.2 ENTIRE AGREEMENT. This Agreement and the documents referred to herein
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements, arrangements or understandings
with respect thereto.
IX.3 HEADINGS. The descriptive headings are for convenience of reference only
and shall not control or affect the meaning or construction of any provisions of
this Agreement.
IX.4 NOTICES. All notices or other communications which are required or
permitted hereunder shall be communicated confidentially and in writing and
shall be sufficient if delivered personally, or sent by confidential telecopier
addressed as follows:
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To the Acquiror:
c/o Oglebay Norton Company
0000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xx. Xxxxxxx X. Xxxx
Vice President - Corporate Development and Legal Affairs
Facsimile: (000) 000-0000
With a Copy to:
Stikeman, Xxxxxxx
Suite 0000
Xxxxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxx X. Stransman
Mr. Xxxxxx W.A. Nicholls
Facsimile: (000) 000-0000
To the Company:
000 Xxxxx Xxxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mr. Xxxxxx Xxxxx
Facsimile: (000) 000-0000
With a Copy to:
XxXxxxxx, Xxxxxxxx
00 Xxxx Xxxxxx Xxxx
TD Xxxx Xxxxx
XX Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mr. Xxxxx Xxxxxxxxx
Xx. Xxxxxx Gow
Facsimile: (000) 000-0000
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IX.5 COUNTERPARTS. This Agreement may be executed in any number of counterparts
and each such counterpart shall be deemed to be an original instrument but all
such counterparts together shall constitute but one Agreement.
IX.6 EXPENSES. Each party will pay its own expenses. The Acquiror and the
Company represent and warrant to each other that, except for CIBC Wood Gundy
Securities Inc. in the case of the Company, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission, or to
the reimbursement of any of its expenses, in connection with the Offer. The
Company has provided to the Acquiror a correct and complete copy of all
agreements between the Company and each of its financial advisors as are in
existence at the date hereof. The Company covenants not to amend the terms of
any such agreements relating to the payment of fees and expenses without the
prior written approval of the Acquiror.
IX.7 ASSIGNMENT. The Acquiror may assign all or any part of its rights or
obligations under this Agreement to a direct or indirect Subsidiary of the
Acquiror, but, if such assignment takes place, the Acquiror shall continue to be
liable to the Company for any default in performance by the assignee. This
Agreement shall not otherwise be assignable by either party without the prior
written consent of the other party.
IX.8 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be effected, impaired or invalidated and the parties shall negotiate
in good faith to modify the Agreement to preserve each party's anticipated
benefits under the Agreement.
IX.9 CURRENCY. All references to dollars or "$" in this Agreement refer to
Canadian dollars.
IX.10 CHOICE OF LAW. This Agreement shall be governed by, construed and
interpreted in accordance with the laws of the Province of Ontario.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed on their behalf by their officers thereunto duly
authorized as of the date first written above.
OGLEBAY NORTON COMPANY
By: /s/ Xxxx X. Xxxxx
----------------------------------
Name: Xxxx X. Xxxxx
Title: President and C.E.O.
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GLOBAL STONE CORPORATION
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman
16
SCHEDULE "A"
TERMS OF THE OFFER
1. GENERAL TERMS. The Offer shall be made by a circular bid prepared in
compliance with the Securities Act (Ontario) and other applicable
provincial securities laws and in accordance with the
Multi-Jurisdictional Disclosure System to United States Shareholders.
2. EXPIRY DATE. The Offer shall be open until midnight on the 21st day
following the mailing thereof (provided that the Acquiror may extend
such period of time in its sole discretion).
3. OFFER PRICE. The Offer shall be made in cash at a price of not less
than $7.80 per Share (including Shares which may become outstanding on
the exercise of options, warrants or other rights to purchase Shares
(other than rights issued pursuant to the Shareholder Rights Plan)).
4. The Offer shall not be subject to any conditions other than those
substantially described as follows:
(a) at the expiry time there shall have been validly deposited
under the Offer and not withdrawn a number of Shares which
constitutes at least 66 2/3% of the outstanding Shares
(calculated on a fully diluted basis) (the "Minimum
Condition");
(b) the Acquiror shall have determined, acting reasonably, that no
material right, property, franchise or license of the Company
or any of its Subsidiaries has been or may be impaired (which
impairment has not been cured or waived) or otherwise
adversely affected as a result of the making of the Offer or
the taking up and paying for Shares deposited under the Offer
including, for greater certainty, through the triggering of
any third party's right (including subject to the provision of
notice, the lapse of time, or both) to acquire any material
asset of the Corporation or any of its Subsidiaries;
(c) all requisite governmental, stock exchange or regulatory
approvals, consents and exemptions with respect to the Offer
or any other transaction contemplated by the Offer shall have
been obtained on terms satisfactory to the Acquiror acting
reasonably including without limitation:
(i) all approvals or exemptions required under the
Investment Canada Act shall have been obtained on
terms satisfactory to the Acquiror acting reasonably;
(ii) no proceedings shall have been taken or threatened
under the merger provisions of Part VIII or under
Part VI of the Competition Act (Canada) in respect of
the transaction which may result from
17
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the Offer; and
(iii) any applicable waiting periods under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976
shall have expired or been earlier terminated;
(d) no act, action, suit or proceeding shall have been threatened
or taken before or by any Canadian or United States federal,
provincial, state or foreign court or other tribunal or
governmental agency or other regulatory or administrative
agency or commission or by any elected or appointed public
official or private person (including without limitation any
individual, corporation, firm, group or other entity) in
Canada, the United States or elsewhere, whether or not having
the force of law, and no law, regulation or policy shall have
been proposed, enacted, promulgated or applied, whether or not
having the force of law, which could reasonably be expected to
have the effect of:
(i) making illegal, or otherwise directly or indirectly
restraining or prohibiting or making materially more
costly, the making of the Offer, the acceptance for
payment of, payment for, or ownership, directly or
indirectly, of some or all of the Shares by the
Acquiror, the completion of a compulsory acquisition
or any subsequent acquisition transaction or the
consummation of any of the transactions contemplated
by the Offer;
(ii) prohibiting or materially limiting the ownership or
operation by the Company or any of its Subsidiaries,
or by the Acquiror (or the parent of the Acquiror),
directly or indirectly, of all or any material
portion of the business or assets of the Company, on
a consolidated basis, or the Acquiror (or the parent
of the Acquiror), directly or indirectly, or
compelling the Acquiror (or the parent of the
Acquiror), directly or indirectly, to dispose of or
hold separate all or any material portion of the
business or assets of the Company, on a consolidated
basis, or the Acquiror (or the parent of the
Acquiror), directly or indirectly, as a result of the
transactions contemplated by the Offer;
(iii) imposing or confirming limitations on the ability of
the Acquiror, directly or indirectly, effectively to
acquire or hold or to exercise full rights of
ownership of the Shares, including without limitation
the right to vote any Shares acquired or owned by the
Acquiror (or the parent of the Acquiror), directly or
indirectly, on all matters properly presented to the
Shareholders of the Company, including without
limitation the right to vote any shares of capital
stock of any Subsidiary (other than immaterial
Subsidiaries) directly or indirectly owned by the
Company;
(iv) requiring divestiture by the Acquiror, directly or
indirectly, of any
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Shares; or
(v) materially adversely affecting the business,
financial condition or results of operations of the
Company and its Subsidiaries taken as a whole or the
value of the Shares or of the Offer to the Acquiror;
(e) there shall not exist any prohibition at law against the
Acquiror making the Offer or taking up and paying for all of
the Shares under the Offer or completing any compulsory
acquisition or any subsequent acquisition transaction;
(f) there shall not have occurred (or if there shall have occurred
prior to the commencement of the Offer and not publicly
disclosed, there shall not have been generally disclosed or
disclosed to the Acquiror in writing after the commencement of
the Offer) any change (or any condition, event or development
involving a prospective change) in the business, assets,
capitalization, financial condition, licenses, permits,
rights, privileges or liabilities (including without
limitation any contingent liabilities that may arise through
outstanding, pending or threatened litigation or otherwise),
whether contractual or otherwise, of the Company and its
Subsidiaries considered as a whole which, in the reasonable
judgment of the Acquiror, is materially adverse and there
shall not have occurred any change (or any condition, event or
development involving a prospective change) in the business,
assets, capitalization, financial condition, licenses,
permits, rights, privileges or liabilities (including without
limitation any contingent liabilities that may arise through
outstanding, pending or threatened litigation or otherwise),
whether contractual or otherwise, of the Acquiror which is
materially adverse (other than a material adverse change that
has occurred as a result of acts or omissions within the
reasonable control of the Acquiror);
(g) (A) neither the board of directors of the Company nor any
committee thereof shall have approved or recommended any
proposal or any other acquisition of Shares other than the
Offer, (B) no corporation, partnership, person or other entity
or group shall have entered into a definitive agreement or an
agreement in principle with the Company with respect to a
take-over bid (other than the Offer), tender offer or exchange
offer, merger, sale of assets, amalgamation, plan of
arrangement, reorganization, consolidation, business
combination, recapitalization, liquidation, dissolution or
similar transaction with or involving the Company or any of
its Subsidiaries and (C) neither the board of directors of the
Company nor any committee thereof shall have resolved to do
any of the foregoing; and
(h) there shall not have occurred any material breach by the
Company of any of the representations, warranties or covenants
of the Pre-Acquisition Agreement or any termination of the
Pre-Acquisition Agreement pursuant to the terms thereof.
19
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The foregoing conditions shall be for the exclusive benefit of
the Acquiror and may be waived by the Acquiror in whole or in part at any time
and from time to time, both before or after the expiry time.
20
SCHEDULE "B"
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
(a) ORGANIZATION. Each of the Company and each of its direct and indirect
Subsidiaries (collectively, the "Subsidiaries") has been duly
incorporated or formed under applicable law, is validly existing and
has full corporate or legal power and authority to own its properties
and conduct its businesses as currently owned and conducted. All of the
outstanding shares of capital stock and other ownership interests of
the Subsidiaries are validly issued, fully paid and non-assessable and
all such shares and other ownership interests owned directly or
indirectly by the Company are owned free and clear of all material
liens, claims or encumbrances, and except as disclosed in writing to
the Acquiror prior to the date hereof, there are no outstanding
options, rights, entitlements, understandings or commitments
(contingent or otherwise) regarding the right to acquire any shares of
capital stock or other ownership interests in any of the Subsidiaries.
(b) CAPITALIZATION. As of the date hereof, there are 29,679,025 Shares
issued and outstanding. As at the date hereof, up to a maximum of
2,199,000 Shares may be issued pursuant to outstanding stock option
entitlements. Except as described in the immediately preceding
sentence, there are no options, warrants, conversion privileges or
other rights, agreements, arrangements or commitments obligating the
Company or any Subsidiary to issue or sell any shares of any capital
stock of the Company or any of its Subsidiaries or securities or
obligations of any kind convertible into or exchangeable for any shares
of capital stock of the Company, any Subsidiary or any other person,
nor, except as disclosed to the Acquiror prior to the date hereof, is
there outstanding any stock appreciation rights, phantom equity or
similar rights, agreements, arrangements or commitments based upon the
book value, income or any other attribute of the Company or any
Subsidiary.
(c) AUTHORITY. The Company has the requisite corporate power and authority
to enter into this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this
Agreement have been duly authorized by the board of directors of the
Company and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms subject to bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and other laws relating to or affecting creditors'
rights generally and to general principles of equity. Except as
disclosed in writing to the Acquiror prior to the date hereof, the
execution and delivery by the Company of this Agreement and performance
by it of its obligations hereunder and (subject to satisfying the
conditions to the Offer specified in clause 4(d) of Schedule "A" with
respect to subparagraph A(ii) below) the completion of the Offer and
the transactions contemplated thereby, will not:
21
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(A) result in a violation or breach of, require any consent to be
obtained under or give rise to any termination rights under
any provision of:
(i) its or any Subsidiary's certificate of incorporation,
articles, by-laws or other charter documents,
including any unanimous shareholder agreement or any
other agreement or understanding with any party
holding an ownership interest in any Subsidiary;
(ii) any law, regulation, order, judgment or decree; or
(iii) any material contract, agreement, license, franchise
or permit to which the Company or any Subsidiary is
bound or is subject or is the beneficiary;
(B) give rise to any right of termination or acceleration of
indebtedness, or cause any indebtedness to come due before its
stated maturity or cause any available credit to cease to be
available; or
(C) result in the imposition of any encumbrance, charge or lien
upon any of its material assets or the material assets of any
Subsidiary, or restrict, hinder, impair or limit the ability
of the Company or any Subsidiary to carry on the business of
the Company or any Subsidiary as and where it is now being
carried on or as and where it may be carried on in the future.
(d) ABSENCE OF CHANGES. Since September 30, 1997, and except as has been
publicly disclosed in any document filed with the Ontario Securities
Commission (i) the Company and the Subsidiaries have conducted their
respective businesses only in the ordinary course, (ii) no liability or
obligation of any nature (whether absolute, accrued, contingent or
otherwise) material to the Company or any Subsidiary has been incurred,
and (iii) there has not been any material adverse change in the
financial conditions, results of operations or businesses of the
Company or any Subsidiary.
(e) NO MATERIAL MISREPRESENTATION. As at their respective dates, the public
filings made by the Company under the Securities Act (Ontario) did not
contain any material misstatement or any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statement made therein, in light of the
circumstances under which they were made, not misleading.
(f) FINANCIAL STATEMENTS. The audited consolidated balance sheets and
consolidated statements of loss and deficit and consolidated statements
of changes in financial position as at or for the periods ended
September 30, 1997 and September 30, 1997, as applicable, as contained
in the Company's 1997 Annual Report, were prepared in accordance with
generally accepted accounting principles in Canada consistently
applied, and fairly present the consolidated financial condition of the
Company at the respective dates indicated and the results of operations
of the Company (on a consolidated basis) for the periods covered.
22
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(g) LITIGATION, ETC. Except as set forth or specifically reflected in any
document filed with the Ontario Securities Commission, or as disclosed
in writing to the Acquiror prior to the date hereof, there is no claim,
action, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or relating to the Company or any
Subsidiary or affecting any of their properties or assets before any
court or governmental or regulatory authority or body that, if
adversely determined, is likely to have a material adverse effect on
the Company or any Subsidiary or prevent or materially delay
consummation of the transactions contemplated by this Agreement or the
Offer, and the Company is not aware of any basis for any such claim,
action, proceeding or investigation. Neither the Company nor any
Subsidiary is subject to any outstanding order, writ, injunction or
decree that has had or may have a material adverse effect or prevent or
materially delay consummation of the transactions contemplated by this
Agreement or the Offer.
(h) ENVIRONMENTAL. Except as has been disclosed in writing to the Acquiror
prior to the date hereof, neither the Company nor any Subsidiary is
aware of, or has received:
(i) any order or directive which relates to environmental
matters which requires any material work, repairs,
construction, or capital expenditures; or
(ii) any demand, notice or other communication with
respect to or alleging the material breach of any
environmental, health, or safety law applicable to
the Company or any Subsidiary, including, without
limitation, any regulations respecting the use,
storage, treatment, transportation, or disposition of
environmental contaminants or hazardous substances or
materials.
(i) INSURANCE. Policies of insurance in force as of the date hereof naming
the Company as an insured adequately cover all risks reasonably and
prudently foreseeable in the operation and conduct of the business of
the Company and the Subsidiaries as would be customary in respect of
the businesses carried on by the Company.
(j) TAX MATTERS.
(A) DEFINITIONS. For purposes of this Agreement, the following
definitions shall apply:
(i) The term "Taxes" shall mean all taxes, however
denominated, including any interest, penalties or
other additions that may become payable in respect
thereof, imposed by any federal, territorial, state,
local or foreign government or any agency or
political subdivision of any such government, which
taxes shall include, without limiting the generality
of the foregoing, all income
23
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or profits taxes (including, but not limited to,
federal income taxes and provincial income taxes),
payroll and employee withholding taxes, unemployment
insurance, social insurance taxes, sales and use
taxes, ad valorem taxes, excise taxes, franchise
taxes, gross receipts taxes, business license taxes,
occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, transfer taxes,
workers' compensation and other governmental charges,
and other obligations of the same or of a similar
nature to any of the foregoing, which the Company or
any of its material Subsidiaries is required to pay,
withhold or collect.
(ii) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax, information statements
and returns relating to, or required to be filed in
connection with, any Taxes.
(B) RETURNS FILED AND TAXES PAID. All Returns required to be filed
by or on behalf of the Company or any material Subsidiaries
have been duly filed on a timely basis and such Returns are
true, complete and correct. All Taxes shown to be payable on
the Returns or on subsequent assessments with respect thereto
have been paid in full on a timely basis, and no other Taxes
are payable by the Company or any material Subsidiaries with
respect to items or periods covered by such Returns.
(C) TAX RESERVES. The Company has paid or provided adequate
accruals in its financial statements for the year ended dated
September 30, 1997 for Taxes, including income taxes and
related deferred taxes, in conformity with generally accepted
accounting principles applicable in Canada.
(E) TAX DEFICIENCIES; AUDITS; STATUTES OF LIMITATIONS. Except as
disclosed in writing to the Acquiror, no deficiencies exist or
have been asserted with respect to Taxes of the Company or any
material Subsidiary. Neither the Company nor any material
Subsidiary is a party to any action or proceeding for
assessment or collection of Taxes, nor has such event been
asserted or threatened against the Company or any material
Subsidiary or any of their respective assets. No waiver or
extension of any statute of limitations is in effect with
respect to Taxes or Returns of the Company or any material
Subsidiary. Except as has been disclosed in writing to the
Acquiror, the Returns of the Company and any material
Subsidiary have never been audited by a government or taxing
authority, nor is any such audit in process, pending or
threatened.
(k) PENSION AND TERMINATION BENEFITS. Other than as disclosed in writing to
the Acquiror prior to the date hereof, the Company has provided
adequate accruals in its financial statements for the year ended
September 30, 1997 (or such amounts are fully funded) for all pension
or other employee benefit obligations of the Company arising under or
relating to each of the pension or retirement income plans or other
employee benefit plans or agreements or policies maintained by or
binding on the Company or any of its Subsidiaries as well as for any
other
24
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payment required to be made by the Company in connection with the
termination of employment or retirement of any employee of the Company
or any Subsidiary.
25
SCHEDULE "C"
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
(a) ORGANIZATION. The Acquiror has been duly incorporated and organized,
and is validly existing, as a corporation under the laws of the State
of Delaware and has the requisite corporate power and authority to
carry on its business as it is now being conducted.
(b) AUTHORITY. The Acquiror has the requisite corporate power and authority
to enter into this Agreement and to carry out its respective
obligations hereunder. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized and no other corporate proceedings on the part of the
Acquiror are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by the Acquiror and constitutes a valid and binding
obligation of the Acquiror, enforceable by the Company in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and to general principles of equity.
(c) FINANCING. The Acquiror has made adequate arrangements to ensure that
required funds are available to effect payment in full for all Shares
offered to be acquired pursuant to the Offer and pursuant to Section
ERROR! REFERENCE SOURCE NOT FOUND. of the Agreement.
