1
EXHIBIT 10(ii)
STRICTLY PRIVATE & CONFIDENTIAL
August 16, 1996
SUPPORT LETTER
TO: ATLAS CORPORATION (the "Shareholder")
Granges Inc. ("Granges") and Da Capo Resources Ltd. ("Da
Capo") propose to enter into an agreement (the "Definitive Agreement")
providing for the amalgamation (the "Amalgamation") of Granges and Da Capo to
become effective under the provisions of the British Columbia Company Act (the
"Act").
Under the Amalgamation, each issued and outstanding common
share of Granges will be exchanged for one common share in the capital of the
amalgamated company ("Amalco") and each issued and outstanding common share of
Da Capo will be exchanged for two common shares in the capital of Amalco.
This letter is intended to set out the terms and conditions of
the agreement of Atlas Corporation (the "Shareholder"): (i) to support the
Amalgamation, including any Alternative Transaction (as defined in section
1.3); (ii) to vote its common shares (the "Shares") in Granges as set out
opposite its name in Schedule "A" in favour of the Amalgamation and any
Alternative Transaction; and (iii) to abide by the restrictions and covenants
set forth herein.
1. SHAREHOLDER COMMITMENTS TO THE AMALGAMATION
1.1 Commitment, Non-Solicitation. Subject to the covenants of
Granges herein, the Shareholder covenants that until the date upon which the
certificate is issued under the Act giving effect to the Amalgamation (the
"Effective Date"):
-1-
2
(a) except to the extent permitted hereunder, the Shareholder will
not take any steps, directly or indirectly, which may in any
way adversely affect the transactions contemplated hereby and
to be contemplated in the Definitive Agreement;
(b) the Shareholder will not solicit, initiate or encourage
submissions, proposals or offers from any other person, entity
or group relating to, or facilitate or encourage any effort or
attempt with respect to, the acquisition or disposition of all
or any substantial part of the issued or unissued shares of
Granges or Da Capo or their respective subsidiaries, or any
arrangement, amalgamation, merger, sale of all or any
substantial part of their respective assets, take-over bid,
reorganization recapitalization, liquidation or winding-up of,
or other business combination or similar transaction involving
Granges or Da Capo or any of their respective subsidiaries and
any other party (each an "Extraordinary Business
Combination"). The Shareholder will not participate in any
discussions or negotiations regarding, or (except as required
by law) furnish to any other person, entity or group, any
information with respect to, or otherwise cooperate in any way
with, or assist or participate in, any Extraordinary Business
Combination. If the Shareholder receives any such inquiry,
submission, proposal or offer, the Shareholder will promptly
notify Granges and Da Capo in writing of all relevant details
relating thereto; and
(c) the Shareholder will use all reasonable efforts to assist
Xxxxxxx and Da Capo to complete the Amalgamation or an
Alternative Transaction as the case may be.
1.2 Voting. The Shareholder covenants that it will vote its
Shares in favour of the Amalgamation at each meeting or adjournment or
adjournments thereof (the "Meeting") of holders of shares of Granges to be held
to consider the Amalgamation.
-2-
3
1.3 Change In Nature of Transaction. The Shareholder agrees that
if Granges and Da Capo mutually agree that it is necessary or desirable to
proceed with another form of transaction (an "Alternative Transaction") whereby
either Granges or Da Capo or any of their respective affiliates is effectively
to acquire 100% of the Common Shares of the other and merge such entities on
economic terms (including tax treatment) which, in relation to the Shareholder,
are substantially equivalent to or better than those contemplated by the
Agreement, and provided that the consideration paid to shareholders of either
continues to be satisfied in common shares of the other, the Shareholder will
support the completion of such Alternative Transaction in the same manner as
the Amalgamation.
1.4 Meeting of Shareholders. If the Alternative Transaction
involves a meeting or meetings of holders of shares of Granges, the Shareholder
agrees to vote in favour of any matters necessary or ancillary to the
completion of the transactions contemplated by the Alternative Transaction.
1.5 Change of References. In the event of any proposed
Alternative Transaction, the references in this agreement to "Amalgamation"
shall be changed to "Alternative Transaction" and all terms covenants,
representations and warranties of this agreement shall be and shall be deemed
to have been made in the context of the Alternative Transaction. All
references to the "Effective Date" herein shall also refer to the date of
closing of the transactions contemplated by the Alternative Transaction.
1.6 No Dissent. The Shareholder covenants that it will not
exercise any rights of dissent provided under sections 231 and 273 of the Act
with respect to the Amalgamation or any Alternative Transaction.
2. GENERAL
2.1 Personal Warranties. By executing this Agreement, the
Shareholder represents and warrants to Granges and Da Capo that the Shareholder
has the sole right to vote its Shares at the Meeting.
-3-
4
2.2 Transfer of Shares. The Shareholder agrees with Granges and
Da Capo that it will not during the term of this Agreement transfer or assign
or agree to transfer or assign any of the Shares without the prior consent of
Granges and Da Capo, which consent shall not be unreasonably withheld if it is
sought for bona fide tax, planning purposes which does not prejudice, directly
or indirectly, Granges or Da Capo; provided however that such consent is not
necessary if the transfer is (i) to a holding company beneficially owned by the
Shareholder; or (ii) a transfer by the Shareholder, which is a holding company,
to a shareholder who controls the holding company, where such holding company
or shareholder of such holding company, as the case may be, executes this
Agreement.
2.3 Acquired Shares. The Shareholder agrees that any shares of
Granges or Da Capo purchased or as to which the Shareholder acquires beneficial
ownership after the execution of this Agreement, shall be subject to the terms
of this Agreement to the same extent as if they constituted Shares. The
Shareholder agrees not to purchase or sell any shares of Granges or Da Capo
until the Amalgamation becomes effective or the Definitive Agreement is
terminated.
2.4 Standstill. Granges agrees not to purchase or sell any shares
of Da Capo until the Amalgamation becomes effective or the Definitive Agreement
is terminated. Da Capo agrees not to purchase or sell any Shares of Granges
until the Amalgamation becomes effective or the Definitive Agreement is
terminated.
2.5 Covenants of Granges. Granges covenants and agrees with the
Shareholder, and Xxxxxxx' compliance with such covenants shall be a condition
to the Shareholders' obligations hereunder, as follows:
(a) to use all reasonable efforts to assist the Shareholder in
reducing the number of Shares pledged by the Shareholder as
security for the 7% Exchangeable Debentures due October 25,
2000 issued by the Shareholder;
(b) to negotiate in good faith an amendment to the Gold Bar joint
venture agreement between Granges and the Shareholder
consistent with discussions
-4-
5
between Xxxxxxx and the Shareholder immediately prior to the
signing of this Agreement;
(c) to file and use its reasonable best efforts to cause to become
effective not later than November 30, 1996 all registration
statements and other filings (federal, provincial or state) as
shall be necessary on the part of Granges to enable the
Shareholder to dispose of its Shares on The Toronto Stock
Exchange and American Stock Exchange without restriction of
any kind whatsoever under applicable securities laws and to
maintain, in the case of any registration statement filed with
the U.S. Securities and Exchange Commission, the effectiveness
of such registrations and other filings until at least
December 31, 2000, with the costs incurred by Granges in
connection with the preparation of such registration
statements and filings to be borne by Granges;
(d) to cause Xxxx Xxxxxxxx, if and when requested by the
Shareholders, to resign from the Board of Directors of the
Shareholder; and
(e) to reimburse promptly all expenses incurred by the Shareholder
in connection with this Agreement, the Amalgamation or any
Alternative Transaction or any of sub-paragraphs (a) to (d)
above including, without limitation, all reasonable fees of
the Shareholder's counsel in connection with any such matter.
2.6 Disclosure. No disclosure of this Agreement and any resulting
agreement shall be made by Granges, Da Capo or the Shareholder or any
corporation or other entity which is associated with the Shareholder except as
may be required by applicable law or regulatory authorities. The parties shall
coordinate the making and dissemination of any public announcement relating to
the subject matter of this Agreement.
-5-
6
2.7 Time of the Essence. Time shall be of the essence of this
Agreement.
2.8 Termination Date. It is intended that the Effective Date
shall occur as soon as is practicable following receipt of the appropriate
shareholder, court and regulatory approvals but not later than December 31,
1996 and (except with the written consent of the Shareholder) if the Effective
Date does not occur by such date, the Agreement shall be of no further force
and effect.
2.9 Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same agreement.
------------------------
If the terms and conditions of this letter are acceptable to
you please indicate your acceptance by dating and signing the same as noted
above.
Yours very truly,
GRANGES INC.
By: /s/ XXXXXXX X. XXXXXXXX
---------------------------
DA CAPO RESOURCES LTD.
By: /s/ XXXX XXXXX
---------------------------
------------------------
We irrevocably agree with and accept the terms of this letter.
ATLAS CORPORATION
By: /s/ XXXXXX XXXX
-------------------------
-6-
7
SCHEDULE A
DA CAPO SHAREHOLDERS
SHAREHOLDER NUMBER OF DA CAPO COMMON SHARES
----------- -------------------------------
Xxxx Xxxxx 800,000
416554 B.C. Ltd. 3,497,308
Kestrel Holdings Ltd. 124,000
GRANGES SHAREHOLDERS
SHAREHOLDER NUMBER OF GRANGES COMMON SHARES
----------- -------------------------------
Atlas Corporation 12,714,900
-7-
