SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-3295
--
MINERALS TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 25-1190717
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
405 Lexington Avenue, New York, New York 10174-1901
(Address of principal executive offices, including zip code)
(212) 878-1800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
---------- ----------
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
CLASS OUTSTANDING AT July 24, 1998
Common Stock, $.10 par value 22,268,312
<PAGE>
MINERALS TECHNOLOGIES INC.
INDEX TO FORM 10-Q
Page No.
--------
PART I. FINANCIAL INFORMATION
---------------------
Item 1.
- -------
Financial Statements:
Condensed Consolidated Statement of Income for
the three-month and six-month periods ended
June 28, 1998 and June 29, 1997 3
Condensed Consolidated Balance Sheet as of
June 28, 1998 and December 31, 1997 4
Condensed Consolidated Statement of Cash Flows for
the six-month periods ended June 28, 1998 and
June 29, 1997 5
Notes to Condensed Consolidated Financial Statements 6
Independent Auditors' Report 9
Item 2.
- -------
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
-----------------
Item 1.
- -------
Legal Proceedings 13
Item 4.
- -------
Submission of Matters to a Vote of Security Holders 13
Item 6.
- -------
Exhibits and Reports on Form 8-K 13
Signature 14
Page 2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
(thousands of dollars, June 28, June 29, June 28, June 29,
except per share data) 1998 1997 1998 1997
---- ---- ---- ----
Net sales.............. $155,752 $151,765 $299,854 $289,391
Operating costs and
expenses:
Cost of goods sold... 107,256 107,400 206,529 204,501
Marketing,
distribution and
administrative
expenses........... 19,829 19,007 38,683 37,336
Research and
development expenses. 5,282 5,179 10,159 10,224
------- ------- ------- -------
Income from operations. 23,385 20,179 44,483 37,330
Non-operating deductions,
net.................. 2,517 1,619 3,826 3,088
------- ------- ------- -------
Income before provision
for taxes on income
and minority interests 20,868 18,560 40,657 34,242
Provision for taxes on
income............... 6,820 5,940 13,248 10,957
Minority interests..... (609) 259 (49) 356
------- ------- ------- -------
Net income............. $14,657 $12,361 $27,458 $22,929
======= ======= ======= =======
Earnings per share:
Basic................ $ 0.65 $ 0.55 $ 1.22 $ 1.02
Diluted.............. $ 0.63 $ 0.54 $ 1.18 $ 1.00
Cash dividends declared
per common share $ 0.025 $ 0.025 $ 0.050 $ 0.050
Shares used in the computation of earnings per share:
Basic................ 22,464 22,563 22,505 22,575
Diluted.............. 23,203 23,036 23,208 23,036
See accompanying Notes to Condensed Consolidated Financial
Statements.
Page 3
<PAGE>
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
(thousands of dollars) June 28, December 31,
1998* 1997**
-------- --------
Current assets:
Cash and cash equivalents.......... $39,716 $41,525
Accounts receivable, net........... 109,030 108,146
Inventories........................ 57,997 61,166
Other current assets............... 11,212 15,745
------- -------
Total current assets........... 217,955 226,582
Property, plant and equipment,
less accumulated depreciation
and depletion - June 28, 1998 -
$355,285; Dec. 31, 1997 - $349,538 495,665 500,731
Other assets and deferred charges.... 21,430 14,094
------- -------
Total assets................... $735,050 $741,407
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt.................... $ 13,471 $ 13,989
Accounts payable................... 32,227 33,163
Other current liabilities.......... 45,791 47,066
------- -------
Total current liabilities...... 91,489 94,218
Long-term debt..................... 88,323 101,571
Other noncurrent liabilities....... 81,832 78,621
------- -------
Total liabilities ............. 261,644 274,410
------- -------
Shareholders' equity:
Common stock....................... 2,550 2,537
Additional paid-in capital......... 142,463 139,113
Retained earnings.................. 438,594 412,264
Accumulated other comprehensive
loss.............................. (20,907) (14,344)
------- -------
562,700 539,570
Less treasury stock................ 89,294 72,573
------- -------
Total shareholders' equity..... 473,406 466,997
------- -------
Total liabilities and
shareholders' equity......... $735,050 $741,407
======= =======
* Unaudited
** Condensed from audited financial statements.
See accompanying Notes to Condensed Consolidated Financial
Statements.
Page 4
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MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended
--------------------
(thousands of dollars) June 28, June 29,
1998 1997
OPERATING ACTIVITIES
Net income............................. $27,458 $22,929
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion and
amortization.................... 26,588 25,860
Other non-cash items.............. 4,226 824
Net changes in operating assets
and liabilities................. 5,223 (3,090)
------ ------
Net cash provided by operating
activities........................... 63,495 46,523
------ ------
INVESTING ACTIVITIES
Purchases of property, plant and
equipment............................ (35,621) (30,126)
Acquisition of business................ (33,486) --
Proceeds from disposition of business.. 32,357 --
Other investing activities, net........ 452 3,762
------ ------
Net cash used in investing activities.. (36,298) (26,364)
------ ------
FINANCING ACTIVITIES
Proceeds from issuance of short-term
and long-term debt................... 273 11,528
Repayment of debt...................... (13,799) (25,000)
Purchase of common shares for treasury. (16,721) (3,576)
Dividends paid......................... (1,128) (1,130)
Proceeds from issuance of common stock 3,363 878
Other financing activities, net........ -- 1,423
------- -------
Net cash used in financing activities.. (28,012) (15,877)
-------- -------
Effect of exchange rate changes on
cash and cash equivalents............ (994) (343)
-------- -------
Net increase (decrease) in cash and
cash equivalents....................... (1,809) 3,939
Cash and cash equivalents at beginning
of period............................ 41,525 15,446
------- -------
Cash and cash equivalents at end of
period............................... $39,716 $19,385
======= =======
Interest paid.......................... $ 3,601 $ 4,240
======= =======
Income taxes paid...................... $ 7,489 $ 6,576
======= =======
See accompanying Notes to Condensed Consolidated Financial
Statements.
Page 5
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MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared by management in accordance with
the rules and regulations of the United States Securities and
Exchange Commission. Accordingly, certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Therefore, these
financial statements should be read in conjunction with the
consolidated financial statements and notes thereto contained
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997. In the opinion of management, all
adjustments, consisting solely of normal recurring adjustments
necessary for a fair presentation of the financial information
for the periods indicated, have been included. The results for
the three-month and six-month periods ended June 28, 1998 are
not necessarily indicative of the results that may be expected
for the year ending December 31, 1998.
NOTE 2 -- INVENTORIES
The following is a summary of inventories by major
category:
June 28, December 31,
(thousands of dollars) 1998 1997
--------- ---------
Raw materials.................... $ 17,027 $ 19,605
Work in process.................. 4,727 5,858
Finished goods................... 19,544 19,812
Packaging and supplies........... 16,699 15,891
-------- --------
Total inventories................ $ 57,997 $ 61,166
======== ========
NOTE 3 -- LONG-TERM DEBT
The following is a summary of long-term debt:
June 28, December 31,
(thousands of dollars) 1998 1997
--------- -----------
7.75% Economic Development Revenue
Bonds Series 1990 Due 2010 (secured)... $4,600 $4,600
Variable/Fixed Rate Industrial
Development Revenue Bonds Due 2009..... 4,000 4,000
Variable/Fixed Rate Industrial Develop-
ment Revenue Bonds Due April 1, 2012... 7,545 7,545
Variable/Fixed Rate Industrial Develop-
ment Revenue Bonds Due August 1, 2012.. 8,000 8,000
6.04% Guarantied Senior Notes Due
June 11, 2000.......................... 26,000 39,000
7.49% Guaranteed Senior Notes Due
July 24, 2006.......................... 50,000 50,000
Other borrowings......................... 1,649 1,914
------- -------
101,794 115,059
Less: Current maturities................. 13,471 13,488
------- -------
Long-term debt...........................$88,323 $101,571
======= =======
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NOTE 4 -- EARNINGS PER SHARE (EPS)
Basic earnings per share are based upon the weighted
average number of common shares outstanding during the period.
Diluted earnings per share are based upon the weighted average
number of common shares outstanding during the period assuming
the issuance of common shares for all dilutive potential common
shares outstanding. The following table sets forth the
computation of basic and diluted earnings per share:
BASIC EPS THREE MONTHS ENDED
-----------------------
(in thousands, except per share data) June 28, June 29,
1998 1997
-------- --------
Net income..............................$ 14,657 $ 12,361
Weighted average shares outstanding..... 22,464 22,563
-------- --------
Basic earnings per share................$ 0.65 $ 0.55
======== ========
DILUTED EPS
Net income..............................$ 14,657 $ 12,361
------- --------
Weighted average shares outstanding..... 22,464 22,563
Dilutive effect of stock options........ 739 473
------- -------
Weighted average shares outstanding,
adjusted.............................. 23,203 23,036
------- -------
Diluted earnings per share..............$ 0.63 $ 0.54
======= =======
BASIC EPS SIX MONTHS ENDED
-----------------------
(in thousands, except per share data) June 28, June 29,
1998 1997
-------- --------
Net income..............................$ 27,458 $ 22,929
Weighted average shares outstanding..... 22,505 22,575
-------- --------
Basic earnings per share................$ 1.22 $ 1.02
======== ========
DILUTED EPS
Net income..............................$ 27,458 $ 22,929
-------- --------
Weighted average shares outstanding..... 22,505 22,575
Dilutive effect of stock options........ 703 461
-------- --------
Weighted average shares outstanding,
adjusted.............................. 23,208 23,036
-------- --------
Diluted earnings per share.............. $ 1.18 $ 1.00
======== ========
NOTE 5 -- COMPREHENSIVE INCOME
The Company has adopted Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income,"
which establishes standards for the reporting and display of
comprehensive income and its components in general purpose
financial statements for the year ending December 31, 1998.
The following are the components of comprehensive income:
THREE MONTHS ENDED
-------------------
(thousands of dollars) June 28, June 29,
1998 1997
-------- --------
Net income................................. $14,657 $12,361
Other comprehensive income, net of tax:
Foreign currency translation adjustments.. (5,603) 198
Unrealized holding gains (losses)......... (44) 30
------- -------
Comprehensive income.................... $ 9,010 $12,589
======= =======
SIX MONTHS ENDED
-------------------
(thousands of dollars) June 28, June 29,
1998 1997
-------- --------
Net income................................. $27,458 $22,929
Other comprehensive income, net of tax:
Foreign currency translation adjustments.. (6,565) (7,017)
Unrealized holding gains (losses)......... 2 18
------- -------
Comprehensive income.................... $20,895 $15,930
======= =======
The components of accumulated other comprehensive loss, net of
related tax are as follows:
June 28, December 31,
1998 1997
-------- -----------
Foreign currency translation
adjustment........................... $(20,021) $(13,456)
Minimum pension liability adjustments.. (1,001) (1,001)
Unrealized holding gains............... 115 113
------- -------
Accumulated other comprehensive loss $(20,907) $(14,344)
======= =======
Page 7
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NOTE 6 -- ACQUISITION AND DIVESTITURE
On April 30, 1998 the Company acquired for approximately
$33.5 million in cash a precipitated calcium carbonate (PCC)
manufacturing facility in the United Kingdom from Rhodia
Limited. This acquisition allows the Company to establish a
base for its specialty PCC business in Europe. The transaction
was accounted for as a purchase. The purchase price exceeded
the fair value of net assets acquired by approximately $8
million, which is being amortized on a straight-line basis over
25 years.
On April 28, 1998 the Company sold its limestone operation
in Port Inland, Michigan to Oglebay Norton Company for cash and
receivables approximating $34 million. The sales price was
equivalent to the net book value of the assets.
Page 8
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INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Minerals Technologies Inc.:
We have reviewed the condensed consolidated balance sheet of
Minerals Technologies Inc. and subsidiary companies as of June
28, 1998 and the related condensed consolidated statements of
income for each of the three-month and six-month periods ended
June 28, 1998 and June 29, 1997 and cash flows for the six-
month periods then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in
scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed consolidated
financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet of
Minerals Technologies Inc. and subsidiary companies as of
December 31, 1997, and the related consolidated statements of
income, shareholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated January
22, 1998, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1997 is fairly
presented, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
KPMG Peat Marwick LLP
New York, New York
July 31, 1998
Page 9
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INCOME AND EXPENSE ITEMS
As a Percentage of Net Sales
----------------------------
Three Months Ended Six Months Ended
------------------ ----------------
June 28, June 29, June 28, June 29,
1998 1997 1998 1997
-------- -------- -------- --------
Net sales................ 100.0% 100.0% 100.0% 100.0%
Cost of goods sold....... 68.9 70.8 68.9 70.7
Marketing, distribution
and administrative
expenses............... 12.7 12.5 12.9 12.9
Research and development
expenses............... 3.4 3.4 3.4 3.5
----- ----- ----- -----
Income from operations... 15.0 13.3 14.8 12.9
Net income............... 9.4% 8.1% 9.2% 7.9%
===== ===== ===== ====
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 28, 1998 AS COMPARED WITH THREE MONTHS
ENDED JUNE 29,1997
Net sales in the second quarter of 1998 increased 2.6% to
$155.8 million from $151.8 million in the second quarter of
1997. Sales growth from ongoing operations, which exclude the
divested Midwest limestone business, was 6.3%. The stronger
U.S. dollar had an unfavorable impact of approximately $3.5
million or 2.3 percentage points of sales growth.
Worldwide sales of Precipitated Calcium Carbonate (PCC),
which is used in manufacturing processes of the paper industry,
grew 16.6% to $85.6 million from $73.4 million in the second
quarter of 1997. This increase was primarily attributable to
the startup of seven new satellite plants since the second
quarter of 1997 and to initial sales to the paper industry from
the acquisition of a specialty PCC business in the United
Kingdom.
Currently, one PCC satellite facility is under construction,
located in Courtland, Alabama. This plant, which will be
equivalent to five satellite units, is scheduled to begin
operations during the first half of 1999. (A "satellite unit"
produces between 25,000 and 35,000 tons of PCC annually.) The
Company now operates 53 satellite plants in 12 countries
worldwide.
Beginning in 1998, sales of pyrolytic graphite products,
previously reported in the Processed Minerals product line, are
reported in the Refractory product line. Prior year's sales
have been reclassified to reflect this change. Net sales for
the four quarters of 1997 were $1.1 million, $1.0 million, $0.5
million and $0.7 million respectively.
In April 1998, the Company divested its Midwest limestone
business in Port Inland, Michigan. References to ongoing
operations exclude the results from this facility. Net sales
from the Midwest limestone business in the second, third and
fourth quarters of 1997 were $6.4 million, $8.3 million and
$5.9 million, respectively. Net sales from this facility in
the second quarter of 1998, prior to the divestiture, were $1.3
million.
Net sales from the ongoing operations of processed mineral
products decreased 4.1% in the second quarter of 1998 to $20.9
million, compared to $21.8 million reported in second quarter
1997. However, the operating margin as a percentage of sales
showed significant improvement over the second quarter of 1997.
Net sales of refractory products, primarily used in the
steel industry, decreased 4.6% in the second quarter of 1998 to
$47.9 million from $50.2 million in the same period last year.
Foreign exchange had an unfavorable impact of approximately
$1.8 million on refractory product sales.
Income from operations rose 15.9% in the second quarter of
1998 to $23.4 million. This increase was due primarily to
growth in the PCC product line; improved profitability in
refractory products, due primarily to the successful execution
of the Company's strategy of introducing high value innovative
products, and to increased profitability in the processed
minerals product line.
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Non-operating deductions increased primarily as a result of
foreign exchange losses in Asia.
Net income grew 18.6% to $14.7 million from $12.4 million in
the prior year. Earnings per common share, on a diluted basis,
were $0.63 as compared to $0.54 in the same period last year.
SIX MONTHS ENDED JUNE 28, 1998 AS COMPARED WITH SIX MONTHS
ENDED JUNE 29, 1997
Net sales in the first half of 1998 increased 3.6% to $299.9
million from $289.4 million in 1997. Excluding the effect of
foreign exchange and the divested Midwest limestone business,
sales growth was 8.0%. This increase was due primarily to the
continued expansion of the PCC product line. PCC sales
increased 14.7% to $165.1 million compared with $144.0 million
in the first half of 1997. Worldwide sales from the ongoing
operations of processed mineral products decreased 4.5% to
$39.4 million. Refractory product sales decreased 3.9% to
$93.7 million compared with $97.5 million in the first half of
1997. This decrease was primarily due to unfavorable foreign
exchange rates.
Net sales in the United States increased 5.3% in the first
half of 1998 primarily due to the growth in the PCC product
line and solid growth of refractory products. Net foreign
sales increased approximately 5.9% in the first half of 1998 as
a result of the continued international expansion of the PCC
product line.
Income from operations rose 19.3% to $44.5 million in the
first half of 1998 from $37.3 million in the previous year.
Non-operating deductions increased primarily as a result of
foreign exchange losses in Asia.
Net income increased 19.8% to $27.5 million from $22.9
million in 1997. Diluted earnings per common share were $1.18
as compared with $1.00 for the first six months of 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position remained strong in the
first half of 1998. Cash flows in the first half of 1998 were
provided from operations and the divested Midwest limestone
business and were applied principally to fund $35.6 million of
capital expenditures, the acquisition of a specialty PCC
business, the repurchase of common shares for treasury and to
remit the required principal payment of $13 million under the
Company's Guarantied Senior Notes due June 11, 2000. Cash
provided from operating activities amounted to $63.5 million in
the first half of 1998 as compared to $46.5 million in the
prior year. This increase was primarily due to an improvement
in working capital.
On February 26, 1998, the Company's Board of Directors
authorized a $150 million stock repurchase program under which
the stock will be purchased on the open market from time to
time. As of July 24, the Company had repurchased approximately
384,000 shares under this program at an average price of
approximately $52 per share.
On April 28, 1998, the Company sold its limestone operation
in Port Inland, Michigan to Oglebay Norton Company for
approximately $34 million, which was equivalent to its net book
value. This high volume commodity operation no longer
complemented the Company's long-term strategic vision. Sales
for the facility were approximately $21 million in 1997.
On April 30, 1998, the Company acquired for approximately
$33.5 million a PCC manufacturing facility located near
Birmingham in Kings Norton, England from Rhodia Limited, a
specialty chemicals company. This acquisition will allow the
Company to establish a base for its specialty PCC business in
Europe. The Company's specialty PCC products are used in food
and pharmaceutical applications, as well as in plastics,
sealants and coatings, and paper. Sales of this business in
1997 were about $18 million.
The Company has available approximately $110 million in
uncommitted, short-term bank credit lines, none of which were
in use at June 28, 1998. The Company anticipates that capital
expenditures for all of 1998 will approximate $90 million,
principally related to the construction of satellite PCC
plants, expansion projects at existing satellite PCC plants,
and other opportunities which meet the strategic growth
objectives of the Company. The Company expects to meet such
Page 11
<PAGE>
requirements from internally generated funds, the
aforementioned uncommitted bank credit lines and, where
appropriate, project financing of certain satellite plants.
PROSPECTIVE INFORMATION AND FACTORS THAT MAY AFFECT FUTURE
RESULTS
The Securities and Exchange Commission encourages companies
to disclose forward-looking information so that investors can
better understand a company's future prospects and make
informed investment decisions. This report may contain such
forward-looking statements that set out anticipated results
based on management's plans and assumptions. Words such as
"anticipate," "estimate," "expects," "projects," and words and
terms of similar substance used in connection with any
discussion of future operating or financial performance
identify these forward-looking statements.
The Company cannot guarantee that any forward-looking
statement will be realized, although it believes it has been
prudent in its plans and assumptions. Achievement of future
results is subject to risks, uncertainties and inaccurate
assumptions. Should known or unknown risks or uncertainties
materialize, or should underlying assumptions prove inaccurate,
actual results could vary materially from those anticipated,
estimated or projected. Investors should bear this in mind as
they consider forward-looking statements and should refer to
the discussion of certain risks, uncertainties and assumptions
under the heading "Cautionary Factors That May Affect Future
Results" in Item 1 of the Company's Annual Report on Form 10-K
for 1997.
RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1998, the Financial Accounting Standards Board
issued SFAS No. 132, "Employers' Disclosure about Pensions and
Other Postretirement Benefits," which revises employers'
disclosures about pension and other postretirement benefit
plans. It does not change the measurement or recognition of
those plans. The statement is effective for fiscal years
beginning after December 15, 1997. The adoption of this
statement has no impact on the consolidated financial
statements.
In March 1998, the American Institute of Certified Public
Accountants issued Statement of Position 98-1 ("SOP 98-1"),
"Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." The statement is effective for
fiscal years beginning after December 15, 1998. Earlier
application is encouraged in fiscal years for which annual
financial statements have not been issued. The statement
defines which costs of computer software developed or obtained
for internal use are capitalized and which costs are expensed.
The Company adopted SOP 98-1 in 1998. The adoption of SOP 98-1
does not materially affect the consolidated financial
statements.
In April 1998, the American Institute of Certified Public
Accountants issued Statement of Position 98-5 ("SOP 98-5"),
"Reporting on the Costs of Start-Up Activities." The statement
is effective for fiscal years beginning after December 15,
1998. The statement requires costs of start-up activities and
organization costs to be expensed as incurred. The Company
will adopt SOP 98-5 for calendar year 1999. The adoption of
SOP 98-5 will not materially affect the consolidated financial
statements.
In June 1998, the Financial Accounting Standards Board
issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities." The statement establishes accounting and
reporting standards for derivative instruments and for hedging
activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value.
The statement is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. The Company will adopt
SFAS 133 by January 1, 2000. Adoption of SFAS 133 is not
expected to have a material effect on the consolidated
financial statements.
YEAR 2000 CONVERSION
Management has initiated an enterprise-wide program to
improve the capability of the current information systems and
to prepare the Company's computer systems and applications for
the year 2000. The Company is presently in the midst of
installing systems which are year 2000-compliant and will
replace the majority of the legacy information technology
systems and applications. It is anticipated that such systems
will be installed by the middle of 1999. The Company does not
expect
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the total cost of the year 2000 conversion to have a material
adverse effect on the Company's future results of operations
and financial condition.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and its subsidiary Specialty Minerals Inc. are
defendants in a lawsuit, captioned EATON CORPORATION V. PFIZER
INC, MINERALS TECHNOLOGIES INC. AND SPECIALTY MINERALS INC.,
which was filed on July 31, 1996 and is pending in the U.S.
District Court for the Western District of Michigan. The suit
alleges that certain materials sold to Eaton for use in truck
transmissions were defective, necessitating repairs for which
Eaton now seeks reimbursement. While all litigation contains
an element of uncertainty, the Company and Specialty Minerals
Inc. believe that they have valid defenses to the claims
asserted by Eaton in this lawsuit, are continuing to vigorously
defend all such claims, and believe that the outcome of this
matter will not have a material adverse effect on the Company's
consolidated financial position or results of operations.
The Company and its subsidiaries are not party to any
other material pending legal proceedings, other than ordinary
routine litigation incidental to their businesses.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting on May 28, 1998. At
the meeting, (1) John B. Curcio was elected a director of the
Company, by a plurality of 20,032,017 votes, with 304,608 votes
being withheld; (2) William C. Steere, Jr. was elected a
director of the Company, by a plurality of 20,044,448 votes,
with 292,177 votes being withheld; (3) the appointment of KPMG
Peat Marwick LLP as independent auditors of the Company for the
year 1998 was approved by a vote of 20,285,133 for and 21,278
against, with 30,214 abstentions; and (4) an amendment to the
Company's Stock and Incentive Plan was approved by a vote of
11,387,347 for and 7,435,610 against, with 57,283 abstentions.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
10.1 - Sale of Business Agreement dated 5 April 1998 among
Minteq U.K. Limited, Specialty Minerals Inc., John &
E. Sturge Limited and Rhodia Limited.
10.2 - Asset Sale Agreement dated as of April 27, 1998
between Specialty Minerals (Michigan) Inc. and
Oglebay Norton Limestone Company.
15 - Accountants' Acknowledgment (Part I Data).
27.1 - Financial Data Schedule for the six months ended
June 28, 1998.
27.2 - Financial Data Schedule for the six months ended
June 29, 1997.
b) No reports on Form 8-K were filed during the second quarter
of 1998.
Page 13
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
Minerals Technologies Inc.
By: /s/ John R. Stack
------------------------
John R. Stack
Vice President-Finance and
Chief Financial Officer
August 6, 1998
Page 14
SALE OF BUSINESS AGREEMENT
THIS AGREEMENT is made this 5th day of April 1998
BETWEEN:-
(1) MINTEQ UK LIMITED a company incorporated in England and Wales
(Reg. No. 2123886) whose registered office is at Beaufort House,
10th Floor, Bodulph street, London EC3A 7EE ("the Purchaser")
(2) SPECIALTY MINERALS INC. a company incorporated in the state
of New York whose registered address is 405 Lexington Avenue, New
York NY 10174 ("the Purchaser's Guarantor")
(3) JOHN & E. STURGE LIMITED a company incorporated in England
and Wales (Reg. No. 107667) whose registered office is at Oak House,
Reeds Crescent, Watford, Herts, WD1 1QH ("the Vendor")
(4) RHODIA LIMITED a company incorporated in England and Wales
(Reg. No. 213674) whose registered office is at Oak House,
Reeds Crescent, Watford, Herts, WD1 1QH ("the Guarantor")
WHEREBY IT IS AGREED as follows:-
1. DEFINITIONS & INTERPRETATION
Definitions
1.1 In this Agreement, and unless the particular context demands
otherwise, the following words and expressions have the meanings
ascribed to them below:-
"Assets" means all of the assets agreed to be sold and purchased
under this Agreement, as follows:-
(a) the Business;
(b) the Intellectual Property;
(c) the Plant & Equipment;
(d) the Stock;
(e) the benefit together with the burden of the Lease;
(f) the Property;
but excludes any Excluded Assets;
"Assignment" means an assignment of the Guarantor's interest
in the Lease, in such form as is required by the Landlord of the Lease;
"Business" means all of the business and goodwill of the Vendor
(including the benefit and the burden of the Contracts) and the
right to carry on the Business as successor in title to the Vendor
relating to the manufacture, development and sale of the Products
from the Site;
"Certificate of Title" the certificate of title to be produced by
Eversheds in respect of the site and the property the subject of
the Lease in the form exhibited hereto as Exhibit 5;
"Claim(s)" means any alleged cause of action whatsoever of the
Purchaser against the Sellers (or either of them) or any other
liability they may have arising out of or in connection with
this Agreement (including, without limiting the foregoing, any or
any alleged breach of any Warranty or claim under Schedule 5) or
otherwise touching or concerning any of the Assets or the Site or
any agreement exhibited into in connection with this Agreement;
"Completion" means the completion of all the documents and transactions
set out in Clause 3;
"Completion Date" means 30 April 1998, or such other date on
which the parties may agree to hold the Completion Meeting;
"Completion Meeting" the meeting of the Parties to be held at the
offices of Jones Day Reavis & Pogue, 62 Rue du Faubourg St. Honore,
Paris France (or such other reasonable venue as the Buyer shall
nominate) on the Completion Date for the purpose of Completion;
"Contract(s)" means the Sellers' contracts, understandings and
arrangements with (respectively) their customers and suppliers of
goods and services, distributors, utilities and their facilities in
connection with the Assets and the Site, including (without limiting
the foregoing) the Leased Assets Contracts, the Environmental Licenses
and any and all other permits, licenses, consents or other
authorisations issued by any governmental or quasi-governmental
agency which relate exclusively to the Business, and any licenses
for the use of computer software which relate exclusively to the
Business, including the documents listed in Schedule 6;
"the Consideration" the aggregate consideration payable by the Purchaser
being the sum of the Goodwill Consideration, the P&E Consideration the
Property Consideration and the Stock Consideration;
"Customer List" means the list of customers with which the Sellers have
done business in relation to the Products;
"Customer List Consideration" means 4,750,000 pounds sterling
(four million seven hundred fifty thousand pounds sterling) as
consideration for the Customer List;
"Disclosure Letter" means the letter in agreed form from the Sellers to
the Purchaser in respect of the Warranties exhibited hereto as Exhibit 1;
"Documents" means the Sellers' books, records and other recorded
information, whether in paper, electronic or other recorded form (not
comprised in the Manuals), relating exclusively to the Assets which
are material to the use and operation of the Assets or which have been
compiled or kept exclusively in relation to the Assets or to the Site;
"Employees" means those of the Sellers'employees listed in Schedule 4;
"the Environmental Report" the "Phase II" environmental report to be
produced by Dames & Moore as commissioned by the Guarantor in accordance
with the instructions and specifications exhibited to this Agreement
as Exhibit 6;
"Excluded Assets" means
(a) all of the Sellers' know-how, commercial or confidential information,
intellectual or industrial property right of any description and secrets,
other than the Intellectual Property;
(b) cash in hand and at bank, and trade debts and receivables (including
receivables concerning Products in respect of which either Seller has
issued invoices prior to the Completion Date);
(c) any liability (of any description) in relation to any such business
or ssets, and all of the foregoing;
"Goodwill Consideration" means 5,000,000 pounds sterling (five million
pounds sterling) as consideration for the Assets excluding the Plant &
Equipment, the Stock, the benefit and burden of the Lease and the Property;
"Guarantor's Account" means the sterling denominated account of the
Guarantor at a bank situated outside the United Kingdom as may be
notified by the Guarantor to the Purchaser from time to time;
"Intellectual Property" means the PCC Know-How, and includes without
limiting the generality of the foregoing the full and complete written
documentation of all past operations on the Site which are in the
possession of the Vendor including the installation and operation
of the pilot scale carbonator;
"Intellectual Property Consideration" means 249,000 pounds sterling
(two hundred forth nine thousand pounds sterling) as consideration
for the Intellectual Property;
"Lease" means a lease dated 2 July 1996 for warehousing facilities
at Units 1 and 4, Breedon Cross, Lifford Lane, Kings Norton,
Birmingham B30 3JW and made between PMG Investments Limited and
the Guarantor;
"Leased Assets" means those assets used exclusively by the Vendor in
connection with the Business and leased or otherwise hired by the
Guarantor under the Leased Assets Contracts including those listed
in Part 2 of Schedule 1;
"Leased Assets Contracts" means those Contracts for the leasing,
hiring or other financing of the Leased Assets including those
listed in Part 2 of Schedule 6;
"Manuals" means all of the Vendor's manuals, operations, drawings,
process descriptions, records and other information currently
used in the production of the Products including those listed
in Exhibit 7;
"Marks" means the trademarks used exclusively in the Business as set out
in Schedule 7 and registered in the name of Rhodia Chimie;
"Marks Consideration" means 1,000 pounds sterling (one thousand pounds
sterling) as consideration for the Marks;
"Material Adverse Change" shall mean any material adverse change
in the financial condition or results of operations or prospects
of the Business taken as a whole not caused by any public
announcement of the Purchaser's acquisition of the Business and
which, for the purpose hereof, shall be deemed not to comprise
changes that result from general economic or political conditions
or other conditions affecting the chemical industry generally;
"Material Contracts" those contracts listed in Part 1 of Schedule 6;
"P&E Consideration" means 11,680,000 pounds sterling (eleven million six
hundred and eighty thousand pounds sterling) as consideration for the
Plant & Equipment;
"PCC Know-How" means all of that part of the Vendor's know-how, technology,
confidential information, trade or other secrets and processes whether or
not currently used by the Vendor relating to the Business and comprised in
or referred to in the Manuals and/or the Documents;
"Plant & Equipment" means the Guarantor's plant, equipment and vehicles
as set out in Schedule 1;
"Products" means the precipitated calcium carbonate products, lime and
"CALOXOL" products manufactured by the Vendor at the Site, which are
listed in Schedule 2;
"Property" title to the land and the buildings on the Site;
"Property Consideration" means 1,999,999 pounds sterling (one million
nine hundred ninety nine y thousand nine hundred ninety nine pounds
sterling) as consideration for the Property;
"Regulations" means the Transfer of Undertakings (Protection of
Employment) Regulations 1981 as amended by the Collective Redundancies
and Transfer of Undertaking (Protection of Employment) Regulations
1995, and the Acquired Rights Directive;
"Sale Agreement & Conveyance" means an agreement for the sale by the
Guarantor of its freehold title to the Site and the conveyance thereof
to the Purchaser substantially in the form exhibited hereto as
Exhibit 2;
"Seller(s)" means the Vendor and the Guarantor jointly and severally
or either of them, as the particular context requires;
"Site" means the Guarantor's site at Lifford Lane, Kings Norton,
Birmingham, B30 3JW;
"Stock" means work in progress and the stock of raw materials, spare
parts, promotional materials and finished goods of the Business as
at the Completion Date;
"Stock Consideration" means 1,320,000 pounds sterling (one million three
hundred and twenty pounds sterling) as consideration for the Stock
subject to adjustment in accordance with Clause 4;
"Stock Auditors" means Messrs Coopers & Lybrand or such other person(s)
as the parties may agree;
"Stock Valuation" means the value (in pounds sterling) of Stock as
at the Completion Date as agreed or determined in accordance with
Clause 4;
"Stock Valuation Principles" means the principles pursuant to which
the Stock is to be valued as set out in Schedule 8;
"the Supply Contract" a long term contract for the supply of Products
by the Purchaser to the Guarantor and associated companies in the
form exhibited hereto as Exhibit 3;
"Vendor's Account" means the sterling denominated account at a bank
situated outside the United Kingdom as may be notified to the Buyer
from time to time;
"Warranty(ies)" means the warranties set out in Schedule 3.
Interpretation
1.2 This Agreement (including the Schedules and Exhibits) is the entire
agreement between the Parties and supersedes and is to the exclusion of
any prior oral or written agreement or undertaking or representation of
the Parties, in relation to the sale to and purchase by the Purchaser of
the Assets other than any obligation of secrecy or non-disclosure.
1.3 References to an agreement or document in agreed form are references
to agreements or documents in substantially the same form as the drafts
exhibited hereto.
1.4 This Agreement (and each right, obligation or remedy not fully
performed or discharged on Completion) shall unless otherwise expressed
survive Completion.
1.5 This Agreement is personal to the Parties and accordingly no
Party shall purport to assign, sub-contract or otherwise transfer
any of its rights or obligations hereunder without the prior written
consent of the others; provided that the Purchaser may assign any or
all of its rights under this Agreement to any entity controlled by or
under common control with the Purchaser.
1.6 The Purchaser's Guarantor shall guarantee the obligations of
the Purchaser (and any assignee of the Purchaser) under this Agreement,
and the terms of Clause 7 shall apply to such guarantee by the Purchaser's
Guarantor mutatis mutandis for the benefit of the Sellers.
1.7 No waiver, time granted or other indulgence granted by any
Party shall in any way impair the rights and remedies of that Party.
1.8 This Agreement (and any agreement in agreed form) may be
executed by each Party in any number of counterparts each of which shall
(when all Parties shall have executed a counterpart) be a binding
original but which shall when taken together constitute one instrument.
1.9 This Agreement shall be interpreted in accordance with English
law and remedies.
2. WARRANTIES
2.1 Each of the Parties hereby warrants to the other Parties:-
2.1.1 that it has full capacity and full authority in accordance with
its memorandum and articles of association or regulations or other
statutes to enter into and be bound by the terms of this Agreement
and that is has taken all corporate or legal steps for the
purposes hereof; and
2.1.2 that it has not relied upon any representation, warranty or
promise whatsoever (including any given by any third party other
than its own professional advisers) other than the express terms
of this Agreement.
2.2 The Sellers hereby warrant and undertake to the Purchaser
in the terms of the Warranties.
2.3 Save as aforesaid, neither Seller makes or gives any warranty or
representation (including any as may otherwise have been implied by
statute or at law) whatsoever.
2.4 The Purchaser acknowledges that:-
2.4.1 no officer, agent or adviser of either Seller is authorised
to make or give any assurance, promise, warranty or representation on
their behalf other than contained in the express provisions of
this Agreement;
2.4.2 it has not relied on any assurance, promise, warranty or
representation other than the Warranties.
2.5 The Sellers hereby warrant to the Purchaser that they have
complied with and, up to and including Completion, will continue
to comply with Regulation 10 of the Regulations.
3. SALE & COMPLETION
Effect of Signature & Completion
3.1 For the avoidance of doubt, risk and title in the Assets shall
not pass to the Purchaser until Completion.
Allocation of Proceeds of Sale
3.2 The Parties have (for the avoidance of doubt) allocated the
proceeds of sale of the Assets as follows:-
3.2.1 the Customer List (4,750,000 pounds sterling);
3.2.2 the Intellectual Property (249,000 pounds sterling);
3.3.3 the Marks (1,000 pounds sterling);
3.2.4 the Plant & Equipment:- The P&E Consideration (11,680,000
pounds sterling);
3.2.5 the Property:- the Property Consideration (1,999,999
pounds sterling);
3.2.6 the benefit together with the burden of the Lease
(1 pound sterling); and
3.2.7 the Stock:- the Stock Consideration (subject to adjustment
in accordance with Clause 4) (1,320,000 pounds sterling).
TOTAL 20,000,000 pounds sterling
Sale
3.3 On the Completion Date, the Sellers hereby agree to sell
with full title guarantee and the Purchaser hereby agrees to buy
the Assets, and the Parties shall execute the agreements in agreed
form, in accordance with this Clause 3. For the avoidance of doubt,
no part of the Excluded Assets shall be included in such sale and
purchase.
Payment
3.4 At the Completion Meeting, the Purchaser shall pay 20,000,000
pounds sterling (twenty million pounds sterling) in respect of the
Consideration by electronic funds transfer to the Vendor's Account
and the Guarantor's Account, in sterling for value on the Completion
Date in whole and without any set-off or deductions whatsoever,
the payments to be made as follows:-
3.4.1 to the Guarantor - 13,680,000 pounds sterling in respect
of the P&E Consideration and the Property Consideration;
3.4.2 to the Vendor - 13,680,000 pounds sterling in respect of the
Goodwill Consideration (excluding the Marks) and the Stock
Consideration (prior to any adjustments in accordance with
Clause 4); and
3.4.3 to Rhodia Chimie - 1,000 pounds sterling in respect of
the Marks.
Documents in Agreed Form
3.5 At the Completion Meeting, the Parties (or the relevant
Parties and any third party, as the case may be) shall complete
each of the following agreements:-
3.5.1 the Sale Agreement and Conveyance;
3.5.2 the Disclosure Letter;
3.5.3 the Assignment;
3.5.4 the Supply Contract;
together with all such other agreements as may be agreed between
the parties prior to Completion.
Delivery & Assignment of Assets
3.6 At the Completion Meeting, the Sellers shall deliver up to the
Purchaser each of the Assets (including the Stock) title to which is
capable of passing by delivery, together with the originals (or
certified copies) of the written Contracts listed in Schedule 6.
3.7 At the Completion Meeting the Sellers shall assign to the
Purchaser all of their rights, interest and title in or to each of
the following:-
3.7.1 the Business;
3.7.2 the Contracts;
3.7.3 the Intellectual Property; and
3.7.4 each other Asset the transfer of title of which is required to
be made in writing.
3.8 At the Completion Meeting the Guarantor shall assign to the
Purchaser all of its right, interest and title in or to that part
of the Plant & Equipment not being a fixture and appurtenant to
the land comprised in the Site and shall procure that Rhodia Chimie
assigns with full title guarantee to the Purchaser all of its
rights, interest and title in or to the Marks.
Creditors & Debtors
3.9 For the avoidance of doubt:-
3.9.1 the Sellers shall remain absolutely entitled to the benefit of
any Excluded Assets and to the extent that the Purchaser receives on
or at any time after the Completion Date payment or part payment on
account of any Excluded Assets the Purchaser shall hold the same as
bare trustee for the Sellers and shall forthwith pay over such payment
and account therefor to the Sellers (or either of them as the
case may be) within five business days of receipt thereof;
3.9.2 to the extent that the Sellers receive on or at any time after
the Completion Date payment or part payment on account of the Business
in relation to the period after the Completion Date they shall hold
the same as bare trustee for the Purchaser and shall forthwith pay over
such payment and account therefor to the Purchaser within five Business
Days of receipt thereof; and
3.9.3 to the extent that the Purchaser receives on or at any time
after the Completion Date any demand for payment or part payment
on account of the Excluded Assets the Sellers shall forthwith discharge
the same upon receipt of notice of demand from the Purchaser and in any
event within five business days of receiving notice thereof and shall
indemnify and keep indemnified the Purchaser from any cost,
claim, demand, expense or other liability in respect thereof.
Apportionment
3.10 Insofar as either of the Sellers have made any payment in the
ordinary and proper course, or as otherwise detailed in the Disclosure
Letter, on account or in advance or other pre-payment in respect of any
of the Contracts or other services, utilities or facilities for the
Assets or the Site in respect of any period both up to and after the
Completion Date the Parties shall apportion such pre-payment between
the Sellers and the Purchaser as nearly as possible so that in relation
to the whole of the period of such pre-payment the Sellers bear an
amount of pre-payment proportionate to that part of such period
preceding the Completion Date and the Purchaser bears the remainder.
Such apportionment shall be made on the Completion Date and the
Purchaser shall within seven days of the Completion Date reimburse
to the Sellers by electronic funds transfer to the Vendor's Account
or the Guarantor's Account (as the case may be) an amount equal to
the amount of such pre-payment apportioned to the Sellers.
Handovers
3.11 The Parties shall co-operate after the Completion Date in order
to transfer customers to the Purchaser with all due expedition and
otherwise as is reasonable in order to facilitate the transition
of the Business to the Purchaser, and shall accordingly co-ordinate
joint customer visits, trade announcements and the familiarisation
of the Purchaser's personnel with sales, ordering and invoicing
procedures established between the Vendor and its customers of
the Business.
Conditions to Completion
3.12 The obligation of the Purchaser and the Purchaser's Guarantor
to consummate the Completion shall be subject to the satisfaction,
or the waiver in writing, of each of the following conditions on or
prior to the Completion Meeting:
3.12.1 the Warranties shall (subject to the Disclosure Letter
and any amendments to it pursuant to clause 3.13) be true and correct
as of the date of signature of this Agreement and as of the Completion
Date as though made on and as of the Completion Date;
3.12.2 any governmental or regulatory approvals required for
completion of the transaction shall have been obtained;
3.12.3 there shall not have been any Material Adverse Change; and
3.12.4 in each case in which assignment to the Purchaser of
a Material Contract requires the consent of a third party, all such
consents shall have been obtained, except where this requirement has
been waived by the Purchaser.
3.13 At any time prior to the Completion Date the Sellers may make
and the Purchaser shall accept any supplement to or amendment to
Schedule 1 (Plant & Equipment), Schedule 2 (Details of Products),
Schedule 4 (Employees), Schedule 6 (Contracts), Schedule 7 (Manuals)
and Schedule 8 (Marks) to this Agreement and/or the Certificate of
Title and/or the Disclosure Letter in respect of any matter necessary
or desirable to supply, correct or update any information required
for the Schedules or to qualify any of the Warranties where such
supplement or amendment relates to a matter which has arisen in the
operation of the Business in the ordinary course between the date hereof
and Completion.
4. STOCK CONSIDERATION ADJUSTMENT
4.1 The authorised nominees of the Parties shall meet on the
Completion Date and shall carry out a physical stock-take of the Stock
in order to agree upon the Stock Valuation. The Stock shall be valued
in accordance with the Stock Valuation Principles.
4.2 If within fourteen days from the Completion Date the Parties
are unable to agree the Stock Valuation, then either Party shall be
entitled forthwith to instruct the Stock Auditors to carry out a
Stock-take of the Stock using the Stock Valuation Principles and to
determine finally and certify to the Parties within fourteen days of
instruction the Stock Valuation, which shall be final and binding except
in case of manifest error. The Stock Auditors shall act independently
of the Parties (who shall co-operate with them so far as is necessary
for their determination of the Stock Valuation) and the Parties shall
bear the Stock Auditors' costs and fees equally.
4.3 On receipt of the Stock Valuation the following balancing payments
shall be made (if appropriate) and shall constitute adjustments to the
P&E and Stock Consideration:-
4.3.1 if the value is greater that 1,320,000 pounds sterling
(one million three hundred and twenty thousand pounds sterling)
then the Purchaser, shall forthwith pay to the Vendor a sum in cash
equivalent to the excess; and
4.3.2 if the value is less than 1,320,000 pounds sterling (one
million three hundred and twenty thousand pounds sterling) then
the Vendor shall forthwith pay to the Purchaser a sum in cash
equivalent to the shortfall.
5. EMPLOYEES
5.1 The Parties acknowledge that the transactions contemplated
herein constitute a transfer of undertaking pursuant to the Regulations
and that accordingly the contracts of employment of all of the Employees
shall transfer from the Sellers (as the case may be) to the Purchaser
on Completion.
5.2 The Purchaser shall indemnify and keep indemnified the Vendor
from and against any and all claims, costs, legal costs (on an
indemnity basis), proceedings, damages, orders (including orders of
reinstatement or re-engagement under the Regulations or under the
Employment Rights Act 1996 or at law) or awards whatsoever arising after
the Completion Date out of or in connection with the contract of
employment of any Employee(s) including, without limiting the
foregoing, the termination of that contract or the terms thereof or the
novation or transfer thereof.
5.3 The Vendor shall indemnify and keep indemnified the Purchaser
from and against any and all claims, costs, legal costs (on an
indemnity basis), proceedings, damages, orders (including orders of
reinstatement or re-engagement under the Regulations or under the
Employment Rights Act 1996 or at law) or awards whatsoever arising
prior to the Completion Date out of or in connection
with the employment of any Employee(s).
5.4 The Sellers hereby agree to indemnify and keep the Purchaser
indemnified fully against all costs, claims, liabilities, demands,
actions and damages in relation to:-
(i) the sickness of Roy Hardy;
(ii) the redundancies of Bryan Upton and Mervyn Smith (if Mervyn
Smith leaves in 1998 according to an agreement entered into with
Sellers on or before the date hereof);
(iii) the early retirement of Peter Hardy, Len Parkes and Alan
Eastwood.
6. NON-COMPETE
6.1 Except as set forth in Article 6.2 below, neither Seller shall,
and the Guarantor shall procure that no member of the Rhodia Group
shall (without the prior written consent of the Purchaser) before the
fifth anniversary of the Completion Date:-
6.1.1 manufacture or sell or distribute precipitated calcium carbonate
products (as a separate product but not as a component of other finished
products), whether on their own account or on the account of any
third party;
6.1.2 be otherwise engaged by joint venture or investment or otherwise
in the manufacture or sale of precipitated calcium carbonate (as a
separate product but not as a component of other finished products)
as aforesaid save where such activity arises from an acquisition by the
Sellers of any business or businesses comprising a capability to
manufacture or sell precipitated calcium carbonate or the acquisition
of shares or other securities in any corporation having such businesses
(provided that such capability does not represent more than twenty five
per cent of the turnover of the acquired business or businesses);
6.1.3 make any offer of employment to, or solicit, entertain or accept
any offer to be employed from, any past or present employee of either
of the Sellers in connection with the Business; or
6.1.4 use the name "Sturge", or any confusingly similar word or name,
in trade or business.
6.2 The provisions of Article 6.1 hereof shall not however prevent
the Sellers and the Rhodia Group from selling or distributing
precipitated calcium carbonate products as pharmaceutical ingredients
save in respect of the United Kingdom and Ireland.
6.3 In order to enable the Rhodia Group to secure its existing
source of supply of precipitated calcium carbonate products
following the sale of the Assets, the Purchaser agrees to execute
with the Rhodia Group with effectiveness on the Completion Date,
and in an agreed form hereby attached as Exhibit 3, a long term
contract for the supply by the Purchaser of precipitated calcium
carbonate products to the Rhodia Group.
6.4 Each Party acknowledges and represents to the other that the
restrictive provisions contained herein (if at all) are fair,
reasonable, objectively justifiable and freely undertaken.
7. GUARANTEE
7.1 In consideration of the Purchaser entering into this Agreement
the Guarantor, at the request of the Vendor, hereby unconditionally
guarantees to the Purchaser together with its successors, transferees
and assigns the due and punctual performance and observance by the
Vendor of all the Vendor's obligations and the punctual discharge by
the Vendor of all the Vendor's liabilities to the Purchaser contained
in or arising under this Agreement.
7.2 If the Vendor shall make default in the payment when due of
any amount payable to the Purchaser under this Agreement, the Guarantor
shall forthwith on demand by the Purchaser unconditionally pay to the
Purchaser in the manner prescribed in this Agreement an amount equal
to the amount payable by the Vendor.
7.3 The guarantee and indemnity contained in this Clause shall be a
continuing guarantee and indemnity and shall continue in full force and
effect until all liabilities or purported liabilities of the Vendor
arising under, and all monies owing or payable or purported to be
owing or payable by the Vendor under this Agreement or arising from
any termination of this Agreement, have been paid, discharged or
satisfied in full and notwithstanding any insolvency of the Vendor
or any change in the status of the Vendor.
7.4 The Guarantor shall not be exonerated or discharged nor
shall its liability be affected by any forbearance, whether as
to payment, time, performance or otherwise howsoever, or by any
other indulgence being given to the Vendor or by any variation of
the terms of this Agreement or by any act, thing, omission or means
whatever which, but for this provision, might operate to exonerate or
discharge the Guarantor from its obligations under the guarantee and
indemnity contained in this Clause 7.
7.5 The Guarantor's obligation hereunder shall be as primary obligor
and not merely as surety and accordingly (and for the avoidance of
doubt):-
7.5.1 the Purchaser shall not be under any obligation to proceed
first against the Vendor before making any or any alleged claim
hereunder against the Guarantor;
7.5.2 each defence, set-off or counterclaim which would have been
available to the Vendor shall likewise be available to the Guarantor
to the extent that the same has not been exhausted by the Vendor;
7.5.3 the Guarantor hereby waives notice to it of any amendment
or modification of this Agreement (other than to this Clause 7)
made between the Purchaser and the Vendor; and
7.5.4 no time, waiver or other indulgence granted by any Party
to the other, and no change in the corporate existence or identity
of the Vendor shall in any way impair, negative or reduce the
Guarantor's obligation hereunder.
8. CLAIMS
8.1 The Sellers shall not be liable in respect of any Claim
unless the Purchaser shall have given written notice thereof,
together with reasonable particulars of the nature and circumstances
thereof, on or before (a) with respect to Claims pertaining to the
Environment, the fifth anniversary of the Completion Date, and
(b) with respect to all other Claims, the second anniversary of
the Completion Date, and (if not settled) shall have commenced
and served legal proceedings in respect of such Claim within
six months of such written particulars having been given to the Sellers.
8.2 The Purchaser shall:-
8.2.1 at all times take all reasonable and practicable steps to
mitigate any loss caused or likely to be caused in connection
with such Claim;
8.2.2 on giving notice in accordance with Clause 8.1, keep the Sellers
regularly advised and informed of the nature and development of the
circumstances of any Claim; and
8.2.3 on giving notice in accordance with Clause 8.1, permit the
Sellers to inspect, survey or audit any thing, site or record and
to give the Sellers access to any of the Purchaser's personnel as
may be reasonably necessary in the circumstances and co-operate to
enable the Sellers to bring or defend any proceedings in connection
with any such Claim and in any event not to make any admission of
liability in or otherwise to compromise any Claim with respect of
any third party.
8.3 The maximum joint aggregate liability of the sellers to the
Purchaser in respect of any and all Claims, is hereby limited to a
sum equivalent to two thirds of the aggregate of the Consideration.
8.4 The Purchaser shall not bring any Claim in respect of any
Warranty unless such individual claim exceeds 50,000 pounds sterling
and until the aggregate of such claims exceeds 250,000 pounds sterling.
These amounts are not intended to establish the standard of materiality
under this Agreement.
8.5 Any amounts paid by either Seller in respect of any Claim shall
be treated as a pound for pound reduction in the Consideration.
8.6 To the extent that the circumstances underlying any Claim are
capable of being remedied then the Purchaser shall afford the Sellers
a reasonable opportunity to remedy the same (which shall not however
extend beyond 90 days after notice is given pursuant to Clause 8.1).
8.7 The Sellers shall not be liable in respect of any Claim to the
extent that:-
8.7.1 the Purchaser caused or contributed to the same or to the acts
and/or omissions giving rise to such Claim; and
8.7.2 the matter to which it relates is fully and promptly made good
by the Sellers without cost to the Purchaser.
8.8 The Purchaser shall not be entitled to recover under any Claim
if and to the extent that the facts or information upon which the Claim
is based are fairly disclosed in the Disclosure Letter.
8.9 The Sellers shall not be liable to make any payment in respect
of any Claim based on a contingent liability of the Purchaser unless and
until the liability of the Purchaser becomes an actual liability.
8.10 The Sellers shall have no liability in respect of any Claim if
and to the extent that it arises or is increased as a result of an
increase in rates of taxation after Completion, or the passing of
any legislation (or making of any subordinate legislation) with
immediate or retrospective effect.
8.11 The Sellers shall have no liability in respect of any Claim to
the extent that it relates to any loss for which the Purchaser is
indemnified by insurance.
8.12 The Sellers shall have no liability in respect of any Claim to
the extent that the circumstances, facts or events giving rise to
the Claim would have been readily apparent to the Purchaser by
virtue of the investigations into the Assets or the Site carried
out on behalf of the Purchaser prior to the Completion Date.
8.13 Where the Purchaser is entitled to recover from some other
person any sum in respect of any matter or event which could give
rise to a Claim the Purchaser shall take all appropriate steps to
recover that sum before making such Claim, and any sum recovered
will reduce the amount of such Claim (and, in the event of the
recovery being delayed until after such Claim has been satisfied
by the Sellers, the sum recovered will be paid to the Sellers,
after deduction of all reasonable costs and expenses of the recovery).
8.14 The Purchaser hereby relinquishes and waives any right of
set-off or counter-claim, deduction or retention which the Purchaser
might otherwise have in respect of any Claim or out of any payments
which the Purchaser may be obliged to make (or procure to be made)
to the Sellers (or any of them) pursuant to this Agreement or otherwise.
8.15 The Purchaser's sole remedy in respect of any Claim (other than
any arising under Clause 6 or Clause 10) shall be damages.
8.16 In the event Completion does not occur (for whatever reason other
than the refusal by a party to do so in circumstances where all
conditions to Completion set out in Clause 3.12 have been satisfied
or waived by the other parties), then it is agreed and acknowledged
that no party shall have any liability to any other party whether
for damages or otherwise.
9. INDEMNITY
9.1 On and from Completion the Purchaser shall indemnify and keep
indemnified the Sellers from and against any claim, damages, costs,
legal costs, orders or awards and any other liability of whatever
nature incurred by them in respect of the Assets and/or products sold
by the Purchaser arising after the Completion Date whether arising in
contract, tort or otherwise at law or under any statute or applicable
European Union laws or directives.
9.2 On and from Completion the Sellers shall indemnify and keep
indemnified the Purchaser from and against any claim, damages, costs,
legal costs, orders or awards and any other liability of whatever
nature incurred by it in respect of the Assets and/or products sold by
the Sellers arising prior to the Completion Date whether arising in
contract, tort or otherwise at law or under any statute or applicable
European Union laws or directives.
9.3 This Clause 9 is without prejudice to any other express right or
obligation of indemnification arising under this Agreement.
10. CONFIDENTIALITY
10.1 Each Party undertakes to each other Party to keep the subject
matter of this Agreement and any confidential or commercially
sensitive information or knowledge relating to the transfer of the
Business (whether or not so labelled and whether or not stored or
recorded in any medium) belonging to or coming from each other Party
as strictly confidential.
10.2 No Party shall disclose or permit the disclosure of any such
information without the prior, written consent of the other Party.
10.3 Each Party shall use its best endeavours to procure compliance
with this Clause 10 by its agents, employees or associates.
10.4 This Clause 10 shall not apply to any such information which is
in or becomes a part of information in the public domain without fault
on the part of the Party making any relevant disclosure of the Party's
information or which is required to be disclosed by compulsion of law
or order of court (and then only so far as is so compelled).
10.5 No Party shall make any statement to the public concerning the
subject matter of this Agreement except as is otherwise agreed, or as
may be required by law or under the rules of any recognised stock
exchange (and then subject to the Party requiring to make such
statement first consulting the other).
11. ENVIRONMENTAL REMEDIATION
The Sellers hereby agree to be bound by the terms of Schedule 5
in respect of remedial works.
12. CONTRACTS
12.1 The Purchaser undertakes to the Vendor with effect from the
Completion Date to assume the obligations and become entitled to the
benefits of the Vendor under the contracts and the Purchaser undertakes
to carry out and perform and complete all the obligations and
liabilities created by or arising under the Contracts (except for any
obligations or liabilities attributable to a breach on the part of the
Vendor or its employees, agents or sub-contractors prior to the
Completion Date) and shall indemnify the Vendor and keep it fully
indemnified against all liabilities, losses, actions, proceedings,
costs, claims, demands and expenses brought or made against or incurred
by the Vendor in respect of:-
12.1.1 the non-performance or defective or negligent performance by
the Purchaser of the Contracts after the Completion Date; and
12.1.2 the performance by the Vendor of any obligations under the
Contracts in respect of the period after the Completion Date.
12.2 The Vendor undertakes with effect from the Completion Date to
assign to the order of the Purchaser or to procure the assignment to
the order of the Purchaser all the Contracts which are capable of
assignment without the consent of other parties.
12.3 In so far as any of the Contracts are not assignable to the
Purchaser without the agreement of or novation by or consent to
the assignment from another party this Agreement shall not constitute
an assignment or attempted assignment if such assignment or attempted
assignment would constitute a breach of such Contracts. In the event
that consent or novation is required to such assignment:-
12.3.1 the Vendor at the Purchaser's request and cost shall use all
reasonable endeavours with the co-operation of the Purchaser to procure
such novation or assignment as aforesaid;
12.3.2 unless and until such Contract shall be novated or assigned
as aforesaid, the Vendor shall continue its corporate existence and
shall hold such Contract in trust for the Purchaser and its successors
in title absolutely and the Purchaser shall (if such subcontracting
is permissible and lawful under the Contract in question) as the
Vendor's subcontractor perform all the obligations of the Vendor under
such Contract;
12.3.3 unless and until any such Contract shall be novated or
assigned the Vendor will (so far as it lawfully may) give all such
assistance to the Purchaser as the Purchaser may reasonably require
to enable the Purchaser to enforce its rights under such Contract and
(without limitation) will provide access to all relevant books,
documents and other information in relation to such Contract as the
Purchaser may require from time to time.
12.4 If such consent or novation is refused or otherwise not obtained
on terms reasonably satisfactory to the Purchaser within 60 business
days of the Completion Date, the Purchaser shall be entitled at its
sole discretion to require the Vendor to serve proper notice to
terminate that Contract and the Purchaser shall indemnify and keep
indemnified the Vendor from and against all losses, damages, costs,
actions, reasonably satisfactory to the Purchaser within 180 business
days of the Completion Date, the Vendor shall be entitled at its sole
discretion to serve proper notice to terminate the Contract and the
Purchaser shall indemnify and keep indemnified the Vendor from and
against all losses, damages, costs, actions, proceedings, claims,
demands, liabilities and expenses (including, without limitation,
legal and other professional fees and expenses) which the Vendor
may suffer, sustain, incur, pay or be put to by reason or on account
of or arising from the termination of such Contract.
12.6 To the extent that any payment is made to the Vendor in respect
of the Contracts on or after the Completion Date the Vendor shall
receive the same as trustee, shall record such payment separately in
its books and shall account to the Purchaser for the same on the
Completion Date or if received thereafter within 5 business days
of receipt.
13. OBLIGATIONS OF THE VENDOR AFTER COMPLETION
Obligations After Exchange
13.1 In the period between exchange of this Agreement and Completion
the Vendor will:-
13.1.1 carry on the Business in the ordinary course and not do
anything which is not of a routine nature without the prior consent
of the Purchaser;
13.1.2 permit the Purchaser such access to the Site as it may
reasonably require, including a pre-closing inspection of the Site
and upon such terms as the Vendor may reasonably direct;
13.1.3 afford to an environmental consultant engaged by the
Purchaser reasonable access to the relevant environmental regulators
for a discussion of regulatory issues at the Site including those
identified at paragraph 13.1.2 of the Disclosure Letter, with the
Vendor's QSE Manager (or any other representatives(s) of the Vendor)
being present at any meetings;
13.1.4 immediately give to the Purchaser copies of all management
accounts (including draft accounts) for periods in 1998 currently in
the Vendor's possession and the Vendor shall pass to the Purchaser
forthwith upon receipt copies of management accounts for subsequent
periods.
13.2 The Parties agree to co-operate and negotiate with each other
in good faith between exchange of this Agreement and Completion in
order to put arrangements in place to facilitate a smooth and efficient
transfer of the Business from the Sellers to the Purchaser. It is
acknowledged that this is likely to include the following:-
13.2.1 the agreement on applicable terms and conditions in
respect of pensions; and
13.2.2 the negotiation of a contract for the provision of
services by the Vendor to the Purchaser after Completion.
Obligations After Completion
13.3 The Sellers undertake to pass to the Purchaser as soon as
reasonably practicable after receipt any orders or inquiries in
relation to the Business which they may receive at any time after
Completion.
13.4 On and at any time after Completion the Sellers will use their
reasonable endeavours to give or procure to be given to the Purchaser
all such material information as is within their possession (including,
without limitation, particulars of customers, suppliers and others who
have dealt with the Sellers in connection with the Business) as the
Purchaser may reasonably require for:-
13.4.1 the conduct of the Business in which case the cost of
giving such information will be borne by the Purchaser; and
13.4.2 the purpose of implementing the provisions of this
Agreement in which case the cost of giving such information will
be borne by the Vendor.
13.5 Not later than two business days after the Completion Date
the Vendor shall send to each of the Employees a letter, in the
agreed form, explaining that his employment has been transferred
to the Purchaser pursuant to the Regulations.
13.6 The Vendor will, if so required by the Purchaser any time within
30 business days after Completion and at the Purchaser's expense, send
a circular in a form provided by the Vendor (such approval not to be
unreasonably withheld or delayed) to persons who have had dealings
with the Sellers in connection with the Business announcing the transfer
to the Purchaser of the Business and the Assets.
13.7 Pension Arrangements
13.7.1 the Vendor and the Purchaser shall, before the Completion,
use their respective reasonable endeavours to agree the pension terms
applicable to those Employees who are, immediately before April 5, 1998,
contributory members of the Pension Scheme ("the Relevant Members");
13.7.2 the Purchaser shall establish or nominate a pension scheme
("the Purchaser's Plan") on no less favorable terms than the Minteq UK
Pension Plan details of which have been provided to the Sellers and
invite relevant Members to join the Purchaser's Plan for future service;
13.7.3 the Vendor and the Purchaser shall each use their
best endeavours:
1. to procure that each Relevant Member shall have the opportunity
to transfer his or her past service benefits to the Purchaser's Plan,
and
2. to procure from their respective actuaries a letter in agreed
form setting out the amount which will enable the Purchaser's Plan to
pay benefits to those Relevant Employees who enroll in the Purchaser's
Plan, taking into account the effect of the past service of Relevant
Members on the amount of future benefits. The actuaries shall disclose
the assumptions on which the calculation of such transfer amount is based.
The enrollment of Relevant Members in the Purchaser's Plan will include
a credit for past service benefits, provided that a transfer is made
from the trustees of the Pension Scheme to the trustees of the
Purchaser's Plan in respect of that past service on the basis agreed
by the actuaries of the Sellers and the Purchasers.
Such transfer will not entail any additional expense to the Sellers
(other than the fees of their actuaries) and the Sellers shall have
no obligation to pay any amount in excess of contributions required
to be made pursuant to the rules of the Pension Scheme.
13.8 The Sellers shall, within 15 business days after Completion
and at the Seller's expense, provide the Purchaser with a sworn,
statutory declaration in respect of the Sellers' full and undisturbed
possession since 1992 of the strip of land adjoining the towpath of the
Stratford on Avon Canal.
13.9 After Completion, the Sellers shall provide the Purchaser with
all reasonable assistance in obtaining a license from the British
Waterways Board authorising the discharge of clean surface water
from the Site into the Stratford on Avon Canal.
13.10 Provided there exists no legal or contractual impediment
the Sellers shall, at their own reasonable expense, provide that
within 30 days after Completion, the name of the Vendor shall be
changed so as not to include the word "Sturge" or any confusingly
similar word or name.
14. GENERAL
14.1 The Purchaser shall account to the Inland Revenue for
(and shall indemnify the Sellers from any liability for) any stamp
or other duty payable upon this Agreement or any agreement or
conveyance executed by the Parties in contemplation hereof.
14.2 The Consideration is exclusive of Value Added Tax.
14.3 The Parties intend that the provisions of Section 49 of the
Value Added Tax Act 1994 and Article 5 of the Value Added Tax
(Special Provisions) Order 1995 shall apply to the sale of the Assets
and the Site and, accordingly, no VAT shall be charged by the Sellers
on them. The Sellers and the Purchaser shall each promptly following
Completion inform their respective VAT Offices of the sale and purchase
under this Agreement, complete all relevant forms for VAT purposes
relating to such sale and purchase and take all reasonable steps to
ensure that the sale of the Assets is treated neither as a supply of
goods nor a supply of services for the purposes of VAT but as the
transfer of a going concern. In the event that it is at any time
etermined by H. M. Customs & Excise or, on appeal, by the Tribunal or
the Court that Section 49 of the Value Added Tax Act 1994 and Article 5
of the Value Added Tax (Special Provisions) Order 1995 do not apply to
the sale of the Assets or the Site or any part of them, the Purchaser
shall pay to the Vendor or the Guarantor (as the case may be), the
amount of the VAT in question on the later of the business day before
such amount is due to be paid by the relevant Seller to Customs & Excise
and the day on which the relevant Seller delivers to the Purchaser,
a valid VAT invoice or invoices in respect thereof.
14.4 The Purchaser undertakes to keep all of the Documents which
relate to the tax and accounting affairs of the Business secure and
complete for not less than six years after the Completion Date and to
allow the Sellers access to them at all reasonable times during this
period for the purposes of inspection and to take copies thereof
where necessary.
14.5 The Parties shall do and give all such deeds and further
assurances as may be reasonable to give effect to each of the
assignments and transactions contemplated herein (the costs of
the preparation, execution and filing of all such deeds and assurances
and any registrations, filings and notifications with or to any
regulatory body to be borne by the Purchaser).
14.6 Save as is expressly provided otherwise, each Party shall bear
its own costs in connection with the negotiation or preparation or
completion of this Agreement.
14.7 Each Party unconditionally waives any rights it may have to
claim damages against the other on the basis of any written or oral
statement made by the other (whether made carelessly or not) not set
out or referred to in this Agreement (or for breach of any warranty
given by the other not so set out or referred to) unless such statement
or warranty was made or given fraudulently or with a reckless disregard
for its truthfulness.
14.8 Each Party unconditionally waives any rights it may have to
rescind or to seek to rescind this Agreement on the basis of any
written or oral statement made by the other (including any Warranty)
(whether made carelessly or not) whether or not such statement is set
out or referred to in this Agreement unless such statement was made
fraudulently or with a reckless disregard for its truthfulness.
14.9 The parties agree to execute, complete and keep the original
and all executed counterparts of this Agreement outside the
United Kingdom at all times, except that a Party shall be entitled
to bring the original or counterpart into the United Kingdom where:
(i) it is a mandatory legal requirement to produce the document
in any judicial or arbitration proceedings:
(ii) the document is to be used as evidence in legal or arbitration
proceedings and the judge or arbitrator responsible for the
determination of the proceedings has ruled that a certified
copy cannot be produced as adequate evidence; or
(iii) the document is required by the Inland Revenue or HM Customs
to determine the liability of either of the Sellers to taxation
arising from the execution of the document or performance of the Agreement.
PROVIDED ALWAYS that the Sellers shall use all reasonable efforts to
procure the agreement of the person or authority requiring production
of the document to accept a certified copy in its place.
15. JURISDICTION
15.1 The Parties hereby submit to the exclusive jurisdiction of the
English Courts but without prejudice to the enforcement or execution
of any judgment, order or award thereof, or to any interlocutory or
injunctive proceedings in any other jurisdiction. This Clause 15.1
is without prejudice to Clause 15.3.
15.2 For the purposes of Order 10, Rule 3, Rules of the Supreme Court
(or any modification thereof), the Parties agree that any process or
other legal proceedings may be served on any of them by leaving a copy
thereof or by posting a copy thereof addressed to a Party at its
address first stated above.
15.3 The Parties hereby agree that they shall use their reasonable
endeavours to seek to settle any dispute and to negotiate the same
in good faith prior to instituting any proceedings.
15.4 Any notice permitted or required to be given under this
Agreement shall be in writing and shall be given, posted, delivered
or transmitted to the Party at the addresses first written above,
provided that a Party may designate a different address by notice
in accordance with this section.
IN WITNESS WHEREOF this Agreement has been signed by the Parties
the day and year first before written:-
For & on behalf of
MINTEQ UK LIMITED
Director: /s/ Christopher Dee, as attorney-in-fact
Witness: /s/ Pierre Philippe Berthe
For & on behalf of
SPECIALTY MINERALS INC.
Director: /s/ John B. Dobson
Witness: /s/ Pierre Philippe Berthe
For & on behalf of
JOHN & E. STURGE LIMITED
Director: /s/ Jean-Claude Bravard
Witness: /s/ Pierre Philippe Berthe
For & on behalf of
RHODIA LIMITED
Director: /s/ Jean-Claude Bravard
Witness: /s/ Pierre Philippe Berthe
ASSET SALE AGREEMENT
dated as of April 27, 1998
by and between
SPECIALTY MINERALS (MICHIGAN) INC.
as Seller
and
OGLEBAY NORTON LIMESTONE COMPANY
as Buyer
ASSET SALE AGREEMENT
-------------------------
AGREEMENT made as of April 27, 1998, by and between
SPECIALTY MINERALS (MICHIGAN) INC., a Michigan corporation
with its principal place of business at P.O. Box 1047, Iron
Mountain, Michigan 49801 (hereinafter, "Seller"), and OGLEBAY
NORTON LIMESTONE COMPANY, a Michigan corporation with its
principal place of business at 1100 Superior Avenue,
Cleveland, Ohio 44114-2598 (hereinafter, "Buyer").
RECITALS
--------
Seller is the owner of certain assets consisting of three
quarries and a processing facility and related real and
personal property located in Mackinac and Schoolcraft
counties in the State of Michigan, and a separate port
facility and related real property located at River Rouge
Dock, Wayne County, Michigan (hereinafter, the "Facilities").
Seller is engaged in the quarrying, processing and sale of
limestone, dolomite and related products at the Facilities
(hereinafter, "Seller's Business").
Buyer desires to buy, and Seller is willing to sell, the
Facilities and the other Included Assets, as defined herein,
all on the terms and subject to the conditions contained in
this Agreement.
Seller desires certain lime suppliers to purchase limestone
products from Buyer following Buyer's acquisition of the
Included Assets, and Buyer desires to sell such products to
such lime suppliers.
I. ACQUISITION OF ASSETS
A. ASSETS TO BE SOLD.
On the Closing Date (as hereinafter defined), and
otherwise on the terms and subject to the conditions
contained in this Agreement, Seller will sell, transfer,
assign and convey to Buyer, and Buyer will purchase and
accept from Seller, the assets, properties and rights
described in this Section I(A), but not including those
assets described in Section I(B). All of said assets,
properties and rights described in this Section I(A) are
collectively referred to in this Agreement as the "Included
Assets".
1. EQUIPMENT.
All equipment, machinery, fixtures, patterns,
apparatus, tools, dies, parts (including office equipment),
jigs for parts, molds, vehicles, desks, chairs, tables, room
dividers, typewriters, computers, computer programs
(including program and source codes to the extent legally
transferrable), automobiles, trucks, communication equipment,
and other similar equipment located at the Facilities and
owned by Seller (hereinafter, "Equipment") including without
limitation the items set forth on Schedule I(A)(1).
2. PRODUCT INVENTORIES.
All inventories of finished products, primary surge stone,
and other work in process located at the Facilities
(hereinafter, "Product Inventories") as set forth in Schedule
I(A)(2).
3. GENERAL INVENTORIES.
All inventories of spare parts, replacement and component
parts, office and other supplies, goods, raw materials, and
other materials, located at the Facilities, excluding
Product Inventories (hereinafter, "General Inventories") as
set forth in Schedule I(A)(3).
4. OFFICE FILES.
All files, records, books, memoranda, mining plans, computer
printouts, databases and related items located at the
Facilities, which are related to Seller's Business or the
Included Assets, provided that if any such item shall be an
integral part of any system, report, file or record of Seller
which does not relate primarily to Seller's Business or the
Included Assets, Seller shall have the option of delivering
to Buyer at Closing (as hereinafter defined) copies of any
portion of such items which are related to Seller's Business
or the Included Assets. Specifically included hereunder,
without limitation however, are blue prints, drawings and
other technical papers, and inventory, maintenance, and asset
history records and ledgers.
5. PREPAID ITEMS.
Any prepaid items, deposits, bonds and escrowed amounts with
respect to the Included Assets or Seller's Business and all
rights in connection with such items.
6. REAL PROPERTY.
All of Seller's interests in real estate, mineral leases,
land, easements, benefits, structures and improvements
(including docks) at the Facilities, whether owned or leased,
as described on Schedule I(A)(6) and subject to the permitted
exceptions described in Section II (hereinafter the "Real
Property"). Buyer shall assume and agree to perform and
discharge when due Seller's obligations under the executory
portion of any matter listed on Schedule I(A)(6). Except as
otherwise specifically provided in this Agreement, Buyer
shall also assume and agree to perform and discharge when due
Seller's obligations for reclamation or restoration of the
Real Property, whether required by federal, state or local
law.
7. PERSONAL PROPERTY LEASES.
All leasehold interests and leasehold improvements created by
all leases of personal property used primarily in connection
with Seller's Business or the Included Assets under which
Seller is a lessee or lessor, as are listed on Schedule
I(A)(7). Except as specifically otherwise provided in this
Agreement, Buyer shall assume and agree to perform and
discharge when due Seller's obligations under the executory
portion of any matter listed on Schedule I(A)(7).
8. CONTRACTS.
All claims and rights of every kind and nature whatsoever
(and benefits arising therefrom) related to or arising
primarily out of the Seller's Business or the Included
Assets, including, but not limited to, customer purchase and
sale orders, customer sales contracts, backlogs, contractual
claims, rights and benefits, rights against suppliers (other
than Seller and Seller's parent, subsidiary and affiliated
companies) under warranties covering Product Inventories and
General Inventories or Equipment, and all licenses, permits
and operating rights related to Seller's Business, but not
including Purchase Commitments, License and Similar
Agreements, and Governmental Permits, to the extent they are
legally transferable by Seller (hereinafter "Contracts"). The
Contracts are listed on Schedule I(A)(8), and copies of all
of the Contracts have been provided to Buyer. Buyer shall
assume and agree to perform and discharge when due Seller's
obligations under the executory portion of the Contracts from
and after the Closing Date.
9. PURCHASE COMMITMENTS.
All purchase orders, contracts, quotations and bids for the
purchase of raw materials, component parts, goods, supplies
and other material relating to Seller's Business or the
Included Assets (hereinafter "Purchase Commitments"). The
Purchase Commitments are listed on Schedule I(A)(9), and
copies of the Purchase Commitments have been provided to
Buyer. Buyer shall assume and agree to perform and discharge
when due Seller's obligations under the executory portion of
such Purchase Commitments from and after the Closing Date.
10. LICENSE AND SIMILAR AGREEMENTS.
All license agreements, distribution agreements, sales
representative agreements, service agreements supply
agreements, franchise agreements and technical service
agreements relating to Seller's Business or the Included
Assets (hereinafter "License Agreements") are listed on
Schedule I(A)(10) and copies of the License Agreements have
been provided to Buyer. Buyer shall assume and agree to
perform and discharge when due Seller's obligations under the
executory portion of such License Agreements from and after
the Closing Date.
11. CUSTOMER LISTS.
All customer lists and customer records and information
relating to Seller's Business.
12. GOVERNMENTAL PERMITS.
All governmental licenses, permits, approvals,
authorizations, license applications, license amendment
applications, product registrations, and the like, of every
kind and nature, relating to Seller's Business or the
Included Assets, used in the conduct of Seller's Business, to
the extent their transfer is permitted by law, (hereinafter,
"Permits"). The Permits are listed on Schedule I(A)(12),
and copies of all Permits have been provided to Buyer. Buyer
shall assume and agree to perform and discharge Seller's
obligations under the executory portion of such Permits from
and after the Closing Date.
13. INTANGIBLE ASSETS.
All of Seller's interests in and to all registered and
unregistered trade names, registered and unregistered
trademarks, service marks, d/b/a names, applications and
notices of allowances, and specifically including the names
"Inland Lime and Stone Company" and "Port Inland"; all
patents and patent applications; and all copyrights and
copyright applications, in each case used by Seller primarily
in Seller's Business, (hereinafter, "Intangible Assets").
Schedule I(A)(13) sets forth all of the Intangible Assets.
14. OTHER PROPERTY.
All proprietary know-how, trade secrets, confidential
information, process technology, inventions, processes,
formulae, plans, drawings and blueprints used in Seller's
Business; and all good will and Deferred Charges (as
hereinafter defined) associated with Seller's Business.
B. EXCLUSIONS.
Notwithstanding anything to the contrary herein contained,
the Included Assets shall not include any of the items listed
in the following portions of this Section I:
1. CASH.
All cash on hand and in banks, cash equivalents and
investments.
2. CHECKBOOKS.
Seller's checkbooks and canceled checks.
3. ACCOUNTS RECEIVABLE.
The accounts receivable generated in the conduct of Seller's
Business and rights in connection therewith.
4. INSURANCE POLICIES.
Insurance policies of Seller and rights in connection
therewith.
5. INTELLECTUAL PROPERTY.
Except as is provided in Sections I(A)(13) and I(C), Seller's
name and that of its parent, subsidiaries, and affiliated
companies, registered and unregistered trade names,
registered and unregistered trademarks, service marks, d/b/a
names, applications, and notices of allowances; all patents
and patent applications; all copyrights and copyright
applications; and all know-how, trade secrets, confidential
information, process technology, inventions, processes,
formulae, plans, drawings, and blue prints not used primarily
in Seller's Business.
6. MISCELLANEOUS.
Except for the properties, assets, and items listed on any
schedule under Section I(A), any other property or asset
which is not and has not been used primarily in the conduct
of Seller's Business.
C. USE OF SELLER'S NAME.
Buyer acknowledges and agrees that it does not have and is
not purchasing any rights in or to Seller's corporate name,
"Speciality Minerals (Michigan) Inc.", or the name of any
Affiliate (as defined in Section V(R)(1) of this Agreement)
of Seller other than the names "Inland Lime and Stone
Company" and "Port Inland"; and Buyer further agrees to
obliterate any reference to Seller or Seller's name from any
material transferred herein that will or may be viewed by
customers, vendors or any member of the general public. It
is the intention of this provision that Buyer take, and Buyer
agrees to take, all reasonable actions necessary to prevent
customers, vendors and any member of the general public from
associating Buyer's use of the Included Assets with Seller
from and after the Closing Date, provided that nothing herein
shall prevent the use of the names "Inland Lime and Stone
Company" or "Port Inland" by Buyer.
D. METHOD OF TRANSFER.
The sale of the Included Assets shall be effected by a Bill
of Sale in substantially the form provided in Exhibit I(D)a,
the delivery of Warranty Deeds to, and Assignments of the
Real Property listed on Schedule I(A)(6) in substantially the
forms provided in Exhibits I(D)b and I(D)c, respectively, and
the execution, delivery, and recording of such documents as
may be reasonably deemed necessary by Buyer's counsel. All
consents and other approvals necessary to transfer the
Included Assets to Buyer and to permit Buyer to operate
Seller's Business in a similar manner to that done by Seller
prior to this Agreement shall be evidenced by such documents
as are reasonably deemed necessary by Buyer's counsel. Title
to Real Property shall be determined in accordance with
Section II.
E. ASSUMPTION OF LIABILITIES.
Buyer assumes and agrees to perform and discharge when due
Seller's obligations described in subsections 6, 7, 8, 9, 10,
and 12 of Section I.A. Seller shall retain responsibility
for the payment of accounts payable relating to transactions
occurring prior to the Closing Date.
II. TITLE AND RISK OF LOSS
A. RISK OF LOSS.
Title to the assets being sold, assigned, transferred and
conveyed hereunder shall pass to Buyer upon delivery of the
portion of the Purchase Price (as hereinafter defined), that
is due at Closing, on the Closing Date (as hereinafter
defined) with the risk of loss being borne by Seller until
such date and time, from and after which time risk of loss
shall be borne by Buyer.
B. TITLE INSURANCE COMMITMENT.
Seller has ordered a commitment for an owner's policy of
title insurance, American Land Title Insurance ("ALTA")
Owner's Policy Form 1992B (the "Title Commitment") from
Chicago Title Insurance Company (the "Title Company") for
each asset comprising a fee interest in real estate. Copies
of Title Commitments with respect to the Real Property
located in Mackinac and Schoolcraft counties and with respect
to the Real Property associated with the River Rouge Dock in
Wayne county have been delivered to Buyer, Buyer acknowledges
the receipt of the same, and Buyer accepts the state of title
to the Real Property as set forth in said Title Commitments,
subject to the title exceptions listed thereon as set forth
on attached Schedule I(A)(6) and identified herein in Section
V(C) as the "Permitted Encumbrances."
III. CLOSING
A. PLACE AND TIME.
The closing of this transaction (hereinafter "Closing") shall
take place at 10:00 a.m. on April 28, 1998, or on such other
date as shall be mutually agreed between the parties in
writing, effective as of 6:01 a.m. on April 27, 1998
(hereinafter "Closing Date"), at the offices of Ulmer & Berne
LLP, Buyer's counsel, at 1300 East Ninth Street, Suite 900,
Cleveland, Ohio or at such other place as the parties hereto
shall agree upon in writing. If for any reason the Closing
has not occurred by April 30, 1998, then this Agreement may
be terminated by either party upon notice to the other party,
and each party shall be relieved of all liability hereunder.
B. DELIVERIES AT THE CLOSING.
1. DELIVERIES BY BUYER.
At the Closing, Buyer shall deliver to Seller:
a. The portion of the Purchase Price
deliverable at Closing.
The payment of the Purchase Price as
required pursuant to Article IV below.
b. Certificate of Incorporation; Bylaws.
Copies of the certificate of
incorporation and bylaws of Buyer, certified by its Secretary
or Assistant Secretary.
c. Certificates of Good Standing.
A certificate of good standing from the
State of Michigan with respect to Buyer, dated not earlier
than 10 days prior to the Closing Date.
d. Board of Directors Resolutions.
A copy of the resolutions of Buyer's
board of directors, approving the transactions contemplated
herein and the execution, delivery and performance of this
Agreement, certified by the Secretary or an Assistant
Secretary of Buyer.
e. Incumbency Certificate.
A certificate of the Secretary or an
Assistant Secretary of Buyer certifying the names and
signatures of the officer or officers of Buyer who are
authorized by Buyers board of directors to sign this
Agreement and related documents.
f. Opinion of Counsel.
An opinion of Ulmer & Berne LLP, counsel
for Buyer, dated the Closing Date, in substantially the form
attached hereto as Exhibit III (B)(1)(f).
g. Closing Certificate.
A closing certificate duly executed by
any officer of Buyer authorized to do so, on behalf of Buyer,
pursuant to which Buyer represents and warrants to Seller
that Buyer's representations and warranties to Seller are
true and correct as of the Closing Date as if then originally
made, that all covenants required by the terms hereof to be
performed by Buyer on or before the Closing Date have been so
performed, and that all documents to be executed and
delivered by Buyer at the Closing have been executed by duly
authorized officers of Buyer.
h. Limestone Availability Agreement.
The Limestone Availability Agreement
referred to in Section VII(O) of this Agreement or a
counterpart thereto fully executed by any officer of Buyer
authorized to do so, on behalf of Buyer.
i. Other Documents.
Such other documents as Seller shall
reasonably request.
2. DELIVERIES BY SELLER.
At the Closing, Seller shall deliver to Buyer:
a. Transfer Documents.
The Bill of Sale, Assignments, Deeds and
other documents required pursuant to Section I.
b. Certificate of Incorporation; Bylaws.
Copies of the certificate of
incorporation and bylaws of Seller, certified by its
Secretary or Assistant Secretary.
c. Certificate of Good Standing.
A certificate of good standing from the
State of Michigan with respect to Seller, dated not earlier
than 10 days prior to the Closing Date.
d. Board of Directors Resolutions.
A copy of the resolutions of Seller's
board of directors, approving the transactions contemplated
herein and the execution, delivery and performance of this
Agreement, certified by its Secretary or an Assistant
Secretary.
e. Incumbency Certificate.
A certificate of the Secretary or an
Assistant Secretary of Seller certifying the names and
signatures of the officer or officers of Seller who are
authorized by Seller's board of directors to sign this
Agreement and related documents.
f. Assignments and Consents.
Such assignments and consents of third
parties or governmental entities as may reasonably be
determined necessary or required by Buyer to transfer the
contracts, leases, permits and licenses and other Included
Assets.
g. Opinion of Counsel.
An opinion of S. Garrett Gray, counsel
for Seller, dated the Closing Date, in substantially the form
attached hereto as Exhibit III (B)(2)(g).
h. Physical Possession.
Physical possession of all real estate
and all tangible personal property included in the Included
Assets.
i. Closing Certificate.
A closing certificate duly executed by
any officer of Seller authorized to do so, on behalf of
Seller, pursuant to which Seller represents and warrants to
Buyer that Seller's representations and warranties to Buyer
are true and correct as of the Closing Date as if then
originally made, that all covenants required by the terms
hereof to be performed by Seller on or before the Closing
Date have been so performed, and that all documents to be
executed and delivered by Seller at the Closing have been
executed by duly authorized officers of Seller.
j. Limestone Availability Agreement.
The Limestone Availability Agreement
referred to in Section VII(O) of this Agreement or a
counterpart thereof fully executed by any officer of Seller
authorized to do so, on behalf of Seller.
k. Title Insurance.
An owner's policy of title insurance as
described in Section II(B) of this Agreement covering the
interests of Buyer or its nominee in the Real Property in the
total amount of the Purchase Price (as hereinafter defined),
allocated to the Real Property, subject only to the Permitted
Encumbrances.
l. Noncompetition Agreement.
A fully executed Noncompetition
Agreement, as defined in Section VII(Q) of this Agreement.
m. Other Documents.
Such other documents as Buyer shall
reasonably request.
IV. PURCHASE PRICE: PAYMENT
A. PURCHASE PRICE.
The purchase price for the Included Assets (hereinafter,
"Purchase Price") shall be an amount equal to the net book
value of the Included Assets as of April 27, 1998, determined
in accordance with accepted accounting principles as
determined by Seller and applied on a consistent basis, which
amount shall include the aggregate amount of all unamortized
Deferred Charges (as defined below).
As used herein, "Deferred Charges" means all costs and
expenses incurred, including compensation and related costs,
repairs and maintenance, and any other costs and expenses
associated with Seller's Business during the non-operating
period between approximately November 15, 1997 and April 6,
1998. For purposes of this Section, recognition of income
and expenses shall be determined in accordance with accepted
accounting principles as determined by Seller and applied on
a consistent basis.
B. ADJUSTMENTS AND REIMBURSEMENTS.
1. REAL AND PERSONAL PROPERTY TAXES.
Real and personal property taxes with respect to the Included
Assets shall be prorated between Buyer and Seller as of the
Closing Date based upon the most recent available tax
duplicate, using the due date method of proration in which
tax bills for the current year shall be deemed payable in
advance.
2. DOCUMENTARY TRANSFER TAXES.
Buyer and Seller shall share equally in the cost of all
Documentary Transfer taxes, real estate transfer taxes and
conveyance fees, if any, with respect to the sale of the
Included Assets.
3. TITLE INSURANCE.
Seller shall be responsible for the cost of the title
examination and the Title Commitment covering Buyer's
interest in the Real Property to be furnished as provided in
this Agreement, and Buyer shall be responsible for the cost
of the title insurance premiums.
4. HART-SCOTT-RODINO FILING.
Buyer and Seller shall share equally in the cost of all
filing or other fees required to satisfy the requirements of
the Hart-Scott-Rodino Anti-Trust Improvements Act.
C. PAYMENTS AT CLOSING.
1. ESTIMATED PURCHASE PRICE.
At the Closing, Buyer shall pay to Seller an amount equal to
the net book value of the Included Assets as of March 29,
1998, determined in accordance with accepted accounting
principles as determined by Seller and applied on a
consistent basis, which amount shall include all Deferred
Charges (hereinafter Estimated Purchase Price"), less the
Deferred Charges incurred by Seller between December 29, 1997
and April 6, 1998 (the Deferred Purchase Price"), by wire
transfer to an account designated by Seller.
2. DEFERRED PURCHASE PRICE.
At the Closing, Buyer shall pay an amount equal to the
Deferred Purchase Price into an escrow account with Key Bank
N.A. (the Escrow Agent) by wire transfer pursuant to an
escrow agreement in the form attached hereto as Exhibit
IV(C)(2) (the Escrow Agreement").
3. OTHER COSTS AND EXPENSES.
At the Closing, Seller and Buyer shall pay and/or reimburse
each other or the Title Company for the amounts required to
be paid or reimbursed pursuant to Section IV(B) of this
Agreement.
D. POST-CLOSING PAYMENTS.
1. DETERMINATION OF AMOUNT.
Within seven (7) days after the Closing Seller shall deliver
to Buyer a written notice (Seller's Notice") which sets forth
the aggregate amount of the Purchase Price, as determined by
Seller in accordance with Section IV(A) of this Agreement,
together with the workpapers and other documentation used or
relied upon by Seller in calculating the Purchase Price.
Within seven (7) days after the receipt of Seller's Notice,
Buyer shall deliver to Seller a written notice (Buyer's
Notice") which sets forth Buyer's objections, if any, to
Seller's determination of the Purchase Price. If Buyer does
not object to the Purchase Price so determined by Seller, or
if Buyer fails to deliver a Buyer's Notice to Seller within
such seven (7) day period, then the Purchase Price, as
determined by Seller, shall be final and binding upon the
parties. If Buyer delivers a Buyer's Notice to Seller within
such seven (7) day period objecting to the Purchase Price
determined by Seller, the parties shall use their best
efforts to resolve any disputes with respect to the
determination of the Purchase Price through good faith
negotiations. If such negotiations have not resulted in an
agreement between the parties with respect to the aggregate
amount of the Purchase Price within thirty (30) days after
the Closing Date, an independent certified public accounting
firm designated by Buyer and reasonably acceptable to Seller
(the "Independent Accountants") shall determine the Purchase
Price based upon the provisions of this Agreement. Buyer and
Seller shall cooperate fully with the Independent Accountants
and shall share equally in all costs and expenses of the
Independent Accountants. The Purchase Price so determined by
the Independent Accountants shall be final and binding upon
the parties.
2. PAYMENT OF BALANCE DUE.
If the Purchase Price, as finally determined in accordance
with Section IV(D)(1) of this Agreement, is greater than the
Estimated Purchase Price, Buyer shall pay Seller an amount
equal to the difference between the Estimated Purchase Price
and the Purchase Price as finally determined, which amount
shall be paid by wire transfer to an account designated by
Seller within three (3) business days after the final
determination of the Purchase Price pursuant to Section
IV(D)(1) of this Agreement. If the Purchase Price, as
finally determined in accordance with Section IV(D)(1) of
this Agreement, is less than the Estimated Purchase Price,
Seller shall pay Buyer an amount equal to the difference
between the Estimated Purchase Price and the Purchase Price
as finally determined, which amount shall be paid by wire
transfer to an account designated by Buyer within three (3)
business days after the final determination of the Purchase
Price pursuant to Section IV(D)(1) of this Agreement.
3. THIRD-PARTY PAYMENTS AFTER CLOSING.
Seller shall remain entitled to the benefit of any assets
described in Section I(B), and to the extent that Buyer
receives on or after the Closing Date payment on account of
any such assets, Buyer shall hold the same in trust for
Seller and shall pay over such payment and account therefor
to Seller within five business days of receipt thereof. To
the extent that Seller received on or after the Closing Date
payment on account of the business or assets sold hereunder
in relation to the period after the Closing Date, Seller
shall hold the same in trust for Buyer and shall pay over
such payment and account therefor to Buyer within five (5)
business days of receipt thereof.
V. REPRESENTATIONS AND WARRANTIES OF SELLER
The term "Disclosure Schedule" as used in his Agreement means
the Disclosure Schedule delivered by Seller to Buyer
concurrently with the execution and delivery of this
Agreement. Except as set forth in the Disclosure Schedule,
Seller represents and warrants to Buyer that, as of the date
of this Agreement and on the Closing Date:
A. DUE INCORPORATION.
Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Michigan and
has all requisite corporate power and authority to own or
lease the Included Assets in the places where such assets are
now owned or leased. Seller has all necessary corporate power
sufficient to enable it to enter into, perform, and carry out
the transactions contemplated by this Agreement.
B. AUTHORIZATION.
No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery
and performance of this Agreement, other than the
Hart-Scott-Rodino filing referred to in Section VII(M) of this
Agreement.
C. TITLE.
Seller has, and will convey to Buyer or its nominee, good and
marketable title in fee simple to the Real Property (other
than leased Real Property), free and clear of all interests,
claims, liens and encumbrances, with no title defects
whatsoever other than Permitted Encumbrances. Seller has the
corporate power and authority to sell, transfer, assign or
convey, as the case may be, such Real Property. As used in
this Agreement, "Permitted Encumbrances" means: those
matters listed on Schedule I(A)(6); zoning, building or other
restrictions, variances, easements and rights-of-way, none of
which, individually or in the aggregate: (A) interfere with
or impair in any material respect the present use of the Real
Property, (B) have more than an insignificant effect on the
value thereof or its present use, or (C) would impair the
ability of Buyer to sell the Real Property for its present
use; and taxes on Real Property not yet due and payable.
Seller has, and will convey to Buyer or its nominee, good and
marketable title to, and has the corporate power and
authority to sell, transfer, assign or convey, as the case
may be, the Included Assets (other than owned Real Property),
free and clear of all liens, leases, pledges, charges,
claims, encumbrances, security interests and equities. As of
the Closing Date, there will be no mortgage, trust deed,
chattel mortgage, conditional sale agreement, security
agreement, financing statement or other instrument
encumbering any of the Included Assets except for Permitted
Encumbrances. There are no contracts, restrictions, liens,
claims or encumbrances which will prevent Seller from giving
to Buyer possession of the Included Assets or which will
limit in any way Buyer's ability, in accordance with its
ownership interest, to use, sell, or in any way handle, use
or dispose of said assets.
D. LIMESTONE AND DOLOMITE RESERVES.
To the best of Seller's knowledge, the written information
with respect to Limestone and Dolomite reserves attached
hereto as Exhibit V(D) is a reasonable estimate of such
reserves located on or under the Real Property and to which a
fee interest, leasehold interest, mineral right, or other
right of exploitation in good standing will be transferred to
Buyer as provided in this Agreement.
E. ALL MATERIAL ASSETS INCLUDED.
There are no material assets or properties that were used in
Seller's Business other than those described in the schedules
to this Agreement or conveyed to Buyer under this Agreement.
Seller has set forth in the Disclosure Schedule a list of all
software program and source codes, all claims and rights
arising out of or related to customer purchase and sales
orders, customer sales contracts, backlogs, contractual
claims, rights and benefits, rights against suppliers under
warranties covering Product Inventories and General
Inventories or equipment, and has set forth in Schedule
I(A)(12) all governmental licenses, permits, approvals,
authorizations, license applications, license amendment
applications, operating rights and product registration,
which in each case relate to Seller's Business or the
Included Assets but which are not legally transferable by
Seller or any Affiliate (as hereinafter defined) of Seller
(collectively the "Nontransferable Assets"). Seller shall
use reasonable efforts to make the Nontransferable Assets
available for use by Buyer in connection with the operation
of Seller's Business by Buyer from and after the Closing Date
for no additional consideration if so requested by Buyer.
F. CONDITION OF ASSETS.
To the best of Seller's knowledge, the plants, structures,
equipment and other items of personal property owned by
Seller which are part of the Included Assets are structurally
sound with no material defects, are in good and safe
operating condition and repair, and are adequate in all
material respects for the uses to which they are being put,
normal wear and tear excepted.
G. CERTAIN CLAIMS.
To the best of Seller's knowledge, there are no facts which,
if known by a potential claimant or governmental authority,
would give rise to a claim or proceeding of any kind or
nature whatsoever which, if asserted or conducted with
results unfavorable to Seller, would have a material adverse
effect on the Included Assets or Buyer's ability to operate
Seller's Business in a similar manner as that conducted by
Seller immediately prior to this Agreement.
H. CERTAIN VIOLATIONS OR PROCEEDINGS.
There is no litigation or proceeding, in law or in equity,
and there are no proceedings or governmental investigations
before any commission or other administrative authority,
pending or to the best of Seller's knowledge threatened
against Seller with respect to or affecting Seller's Business
or the Included Assets, or the consummation of the
transactions herein contemplated, or the use of the Included
Assets (whether by Buyer after the Closing or by Seller prior
thereto) in a manner similar to that conducted by Seller
immediately prior to this Agreement. Seller's operation and
management of Seller's Business, and the Included Assets, are
in compliance in all material respects with all applicable
orders, laws, ordinances, codes, regulations or other
requirements of any governmental authority, including,
without limitation, those relating to environmental
protection, civil rights, occupational safety and health,
mining and zoning, building and use requirements.
I. CERTAIN CONTRACTS, PERMITS AND LICENSES.
All contracts, agreements, leases, warranty agreements,
mineral leases and all licenses, Permits and governmental
approvals and intangible assets listed on Schedule I(A)(6),
Schedule I(A)(7), Schedule I(A)(8), Schedule I(A)(9),
Schedule I(A)(10), Schedule I(A) (12), and Schedule I(A)(13)
are in full force and effect and are, except as otherwise
indicated on those Schedules, freely transferrable to Buyer
or its nominee without the consent or approval of any third
party. There are no defaults, breaches or violations of or
with respect to any such documents, and, to the best of
Seller's knowledge, no event, occurrence or condition has
occurred (or is threatened to occur) which, with the lapse of
time, the giving of notice, or the happening of any further
event or condition, or both would become a default or
violation of any such document. Seller is not bound by, and
Buyer is not assuming, any commitment for the delivery of any
of its products, including the Limestone Availability
Agreement identified in Section VII(O), aggregating in excess
of what can be delivered out of present inventories plus
future production at current practicable capacity during the
time available to satisfy such commitments. There are no
occupancy, sanitary district, water, sewage, air,
environmental protection agency, natural resource department
or other licenses or permits required by any federal, state,
regional or local governmental authority for the ownership,
use or operation of the Included Assets by Buyer in the
conduct of Seller's Business. To the best of Seller's
knowledge, all Permits are in full force and effect, validly
issued, and without violations on the part of Seller or its
affiliates.
J. NO MATERIAL LOSS.
Since January 1, 1997, Seller has not suffered or been
threatened with any material loss of any Included Assets and
has not entered into any material transaction related to the
Included Assets.
K. BROKERS.
Other than as set forth in the Disclosure Schedule, Seller
has not engaged any broker or finder in connection with the
transaction contemplated herein, and Seller hereby agrees to
indemnify and hold harmless Buyer against the claims of any
broker or finder engaged by Seller.
L. INSURANCE.
Seller will maintain in full force and effect through the
Closing Date all insurance coverage which it presently
carries on Seller's Business and the Included Assets.
M. ENVIRONMENTAL AND RECLAMATION LAWS.
1. DEFINITIONS. As used in this Agreement, the
following terms shall have the meanings indicated below:
a. Applicable Permit. Any permit, license
or document issued at or prior to the Closing Date that is
necessary for Seller to do business in connection with
Seller's Business in each of the jurisdictions in which it is
qualified or authorized to do business.
b. CERCLA. The Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42
U.S.C.Section 9601 et seq., as amended.
c. Claims. All liens, encumbrances,
security interests, mortgages, equities, options or pledges
of every kind, nature and description.
d. Governmental Authority. Any national,
state or local government (whether domestic or foreign) and
any political subdivision thereof or any other governmental,
quasi-governmental, judicial, public or statutory
instrumentality, authority, body, agency, bureau or entity,
including, without limitation, any court, zoning authority,
building inspector, or any arbitrator with authority to bind
a party at law.
e. Hazardous Substances. Any "hazardous
substance," as defined in Section 101(14) of CERCLA; any
"hazardous waste" as defined by Section 1004(5) of the
Resource Conservation and Recovery Act, 42 U.S.C.Section 6901
et seq. RCRA; any radioactive material (including "byproduct
material," "depleted uranium," "source material," or "special
nuclear material") as defined by The Atomic Energy Act, 42
U.S.C. Section 2011 and 10 C.F.R. Section 40.4; any
"hazardous chemicals" as defined by 29 C.F.R. Section
190.1200 et seq. any "toxic pollutant," as listed pursuant to
Section 307 of the Federal Water Pollution Control Act, 33
U.S.C. Section 1251 et seq. any "hazardous air pollutant" as
listed under Section 112 of the Clean Air Act, 42 Section
7401 et seq., any oil as defined in The Oil Pollution Act of
1990, 33 Section 2701 et seq. and any other material
regulated by any state statute which is equivalent or
comparable to the foregoing.
2. OPERATIONS IN COMPLIANCE. The operations
of the Seller's Business are in compliance, in all material
respects, with all statutes, laws, ordinances, rules,
regulations, judgments, orders and decrees, which are
presently in effect and which are applicable to the Seller's
Business. These include, without limitation, laws relating
to the protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of
pollutants, contaminants or hazardous or toxic materials or
wastes, contaminated air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or Hazardous Substances.
3. NO VIOLATIONS. There are no outstanding
notices of violation, Claims, citations, complaints, penalty
assessments, suits or other proceedings, administrative,
civil or criminal, at law or in equity, pending or, to
Seller's knowledge, threatened against the Seller by or
before any governmental authority with respect to Seller's
Business. No investigation or review is pending or, to
Seller's knowledge, threatened against Seller by or before
any governmental authority with respect to any alleged
violation of any Applicable Permit, law, regulation,
ordinance, standard or order relating to Seller's Business.
Seller has received no notices stating that any third party
intends to file suit under any environmental statute with
respect to Seller's Business. All Hazardous Substances and
Solid Wastes (as defined in RCRA, 42 U.S.C. Section 6903(27))
of Seller's Business have been transported and disposed of in
compliance with all applicable laws and Applicable Permits.
Seller has no knowledge that any Hazardous Substances have
ever been released, discharged or disposed of on or about the
Facilities, other than incidents or matters which have been
fully resolved under all applicable laws and regulations.
4. WASTE DISPOSAL. Seller has not received from
any Governmental Authority or third party any request for
information, notice of Claim, demand letter, citizen suit
notice or other notification to the effect that Seller may be
potentially responsible with respect to any investigation or
clean-up of Hazardous Substances released or Solid Wastes
disposed of at any site pertaining to Seller's Business. To
Seller's knowledge, no Hazardous Substances or Solid Wastes
generated by Seller from the Facilities have been sent,
directly or indirectly, to any site listed or formally
proposed for listing on the National Priority List
promulgated pursuant to CERCLA, or to any site listed on any
state list of hazardous substance sites requiring
investigation or cleanup.
5. UNDERGROUND STORAGE TANKS. All underground
storage tanks previously located on Facilities currently
occupied by Seller have been closed in place or removed in
compliance with all applicable laws and regulations.
6. NO PCB'S. No electrical, heat transfer or
hydraulic equipment or other equipment containing
polychlorinated biphenyl at levels of regulatory concern is
located on any real property currently leased or occupied by
Seller.
7. HAZARDOUS SUBSTANCES. None of the Facilities
and, to Seller's knowledge, none of the properties leased
and/or operated by Seller in connection with Seller's
Business, is contaminated by or contains any Hazardous
Substance. Neither Seller nor any Affiliate of Seller has
ever applied for "Interim Status" for the Facilities under 42
U.S.C.Section 6925(e), and regulations enacted thereunder,
nor are the Facilities subject to the treatment, storage and
disposal regulations promulgated by any Governmental
Authority under RCRA.
8. ASBESTOS. Seller has not been notified that
any claim has been made against Seller with respect to any of
the Facilities currently occupied by Seller resulting from
any asbestos or similar materials used in the construction
thereof.
N. EXECUTION, DELIVERY, AND PERFORMANCE OF AGREEMENT.
Neither the execution, delivery nor performance of this
Agreement by Seller will, with or without the giving of
notice or the passage of time, or both, conflict with, result
in a default, right to accelerate or loss of rights under, or
result in the creation of any lien, charge or encumbrance
pursuant to, any provision of Seller's certificate of
incorporation or by-laws or any franchise, mortgage, deed of
trust, lease, license, agreement, understanding, law, rule,
or regulation or any order, judgment or decree to which
Seller is a party or by which Seller or the Included Assets
may be bound or affected. This Agreement has been duly
executed and delivered by Seller and constitutes the legal,
valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, except as enforcement
may be affected by bankruptcy, moratorium or similar laws for
the benefit of creditors generally, and subject to the
availability of equitable relief.
O. PRODUCT INVENTORIES
Except as specifically set forth in the Disclosure Schedule,
no material portion of the Product Inventories consists of
items which are not merchantable or which are not suitable
and usable for the production or completion of merchantable
products for sale within a reasonable period of time in the
ordinary course of Seller's Business as first quality goods
at normal mark-ups, or if required to be fit for any
particular purpose of customers of Seller's Business, are so
fit, and no material portion of the Product Inventories
consists of any items which are slow-moving, obsolete, or of
below-standard quality. The quantities of all lines of
Product Inventories are reasonable and appropriate in the
present circumstances of Seller's Business. The inventories
of primary surge stone and other work in process which
constitute part of the Product Inventories on hand on the
date of this Agreement and on the Closing Date are and will
be sufficient to satisfy the normal business needs therefor
of Seller's Business as of the date of this Agreement and of
the Closing Date, respectively, in a manner consistent with
the historical practices of Seller's Business.
P. DOCKS
The docks and dock faces which constitute part of the
Facilities are in a safe and operable condition which will
permit self-unloading bulk vessels of the type which
customarily use the dock to safely reach the dock and remain
afloat. As of the Closing Date, the underwater areas
adjacent to and leading to the docks which constitute part of
the Facilities are adequately dredged by Seller at Port
Inland and by the Corps of Engineers at Rouge dock to permit
such self-unloading bulk vessels to safely reach, tie up next
to, load to midsummer draft, and depart the Port Inland dock,
and to safely reach, tie up next to, discharge cargo, and
depart the Rouge dock in Detroit.
Q. INCLUDED ASSETS SUFFICIENT TO OPERATE SELLER'S
BUSINESS
All Included Assets, including mobile mine equipment and
processing plant facilities, are in a condition which will
permit Buyer to operate Seller's Business in a manner similar
to that as operated by Seller prior to the date of this
Agreement, reasonable wear and tear excepted. The Included
Assets, when taken as a whole, are suitable and sufficient to
operate Seller's Business in a manner similar to that
conducted by Seller immediately prior to the date of this
Agreement.
R. ERISA AND LABOR LAW COMPLIANCE
1. DEFINITIONS. As used in this Agreement, the
following terms shall have the meanings indicated below:
a. Affiliate. The term "Affiliate" shall
include a corporation, which is a member of a controlled
group of corporations with Seller within the meaning of
Section 414(b) of the Code, or a trade or business (including
a sole proprietorship, partnership, trust, estate or
corporation) which is under Common Control with Seller within
the meaning of Section 414(c) of the Code, or any entity
which is a member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Code with Seller.
b. Code. The Internal Revenue Code of 1986,
as amended. Reference to a specific Section of the Code
shall include any regulation promulgated thereunder.
c. ERISA. The Employee Retirement Income
Security Act of 1974, as amended.
d. ERISA Plan. Any ERISA Pension Plan and
any ERISA Welfare Plan, regardless of whether such plan is
tax qualified pursuant to Section 401 of the Code, including
all employee benefit plans as defined in Section 3(3) of
ERISA, and all bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement,
severance and other similar fringe or employee benefit plans,
programs or arrangements, including all obligations,
arrangements or customary practices, whether or not legally
enforceable, to provide benefits other than salary or
compensation for services rendered, to present or former
directors, employees or agents of Seller or any Affiliate of
Seller.
e. ERISA Pension Plan. Any employee pension
benefit plan as defined in Section 3(2) of ERISA which has
been or is established or maintained by Seller or an
Affiliate of Seller.
f. ERISA Welfare Plan. Any employee welfare
benefit plan as defined in Section 3(1) of ERISA which has
been or is established or maintained by Seller or an
Affiliate.
g. Governmental Authority. Any national,
state or local government (whether domestic or foreign) and
any political subdivision thereof or any other governmental,
quasi-governmental, judicial, public or statutory
instrumentality, authority, body, agency, bureau or entity,
including, without limitation, any court, zoning authority,
building inspector, or any arbitrator with authority to bind
a party at law.
h. Multi-Employer Plan. Any plan as defined
in Section 3(37) of ERISA to which Seller or any Affiliate
has or has had an obligation to contribute, and for purposes
hereof, shall include (i) a plan to which the provisions of
Section 413(c) of the Code or Sections 4063 or 4064 of ERISA
apply, and (ii) any union's sponsored welfare plan to which
Seller or any Affiliate contributes.
i. Person. Any natural person, corporation,
partnership, firm, association, Governmental Authority or any
other entity, whether acting in an individual, fiduciary or
other capacity.
2. ERISA MULTIEMPLOYER PLANS. Neither Seller nor
any Affiliate is now or has ever been, a contributing
employer to a Multiemployer Plan.
3. PROVISIONS APPLICABLE TO ERISA PLANS OTHER
THAN MULTIEMPLOYER PLANS.
a. Except as otherwise agreed to in writing
by the Seller and Buyer, Seller shall retain all of the
liabilities and obligations arising under any ERISA Plans
including, without limitation, any obligation with respect to
any Employees or former Employees of Seller or an affiliate,
or any of such person's spouses, children, other dependants
or beneficiaries. Buyer shall not assume or have any
responsibility relating to any ERISA Plan maintained by
Seller.
b. Seller shall pay any claims with respect
to occurrences arising prior to the Closing Date relating to
(i) medical and dental benefits to the extent covered by the
ERISA Plans and (ii) workers' compensation benefits when the
same become due and payable, whether prior to or after the
Closing Date. Seller shall be solely responsible for any
retiree medical liabilities and related costs of medical and
life insurance for persons who shall have retired from Seller
or an Affiliate on or prior to the Closing Date. Seller
shall be responsible for employee benefit claims of Employees
(or their eligible dependents) with respect to Claim Events
occurring prior to the Closing Date, and to the extent that
Buyer implements benefit plans for Employees, Buyer shall be
responsible for such claims with respect to Claim Events
occurring on and after the Closing Date. A Claim Event shall
be defined as the illness or injury giving rise to a claim of
the nature referred to in this Section V(R)(3)(b).
4. COBRA. Seller shall offer to all of its
employees at the time of Closing the right to continue their
coverage under Seller's or an Affiliate's group health
plan(s), such offer to be made in accordance with the
continuation coverage requirement of part b of Subtitle B of
Title I of ERISA and Section 4980B of the Code.
S. INTANGIBLE ASSETS.
Schedule I(A)(13) sets forth a complete and accurate list and
description of all of Seller's Intangible Assets. The
Intangible Assets are free of any liens, claims or
encumbrances and consist of all such rights used by Seller to
conduct Seller's Business as currently being conducted. To
the best of Seller's knowledge, none of the Intangible Assets
conflict with or have been alleged to conflict with or
infringe the patents, trademarks, trade names, service marks,
copyrights or other rights of any third party. Seller has no
knowledge of any use of any of the Intangible Assets by any
third party. All trademarks, trade names, service marks,
d/b/a names, patents and patent applications, and copyrights
and copyright applications which have been used by Seller in
connection with Seller's Business but which are not included
in the Intangible Assets are described in the Disclosure
Schedule.
T. BOUNDARY LINES.
There is no pending litigation or dispute concerning the
location of the lines and corners of the Real Property, and
the improvements constructed on the Real Property are
entirely within the boundary lines of the Real Property.
U. NOTICE OF CONDEMNATION.
Seller has not received notice of, nor is Seller aware of,
any pending, threatened or contemplated action by any
governmental authority having the power of eminent domain,
which might result in any part of the Real Property being
taken by condemnation or conveyed in lieu thereof. Seller
shall, promptly upon receiving any such notice or learning of
any such contemplated or threatened action, give Buyer
written notice thereof.
V. ASSESSMENTS.
No assessments have been made against any portion of the Real
Property which are unpaid (except ad valorem taxes for the
current year which are not yet due and payable), whether or
not they have become liens; Seller has received no notice of,
and Seller is not aware of, any reassessment of the Real
Property or any portion thereof; and Seller shall notify
Buyer upon learning of any such assessments or reassessments.
W. UTILITIES.
Those public utilities (including water, electricity, gas,
sanitary sewage, storm water drainage facilities, and
telephone utilities) sufficient to operate the Real Property
for its current uses are available to the Real Property and
are completed on the Real Property and, as may be
appropriate, are connected to the improvements. Seller has
not received any notice of, nor is Seller aware of, any
pending, threatened or contemplated action by any
governmental authority having jurisdiction or by any other
person or entity seeking to restrict access of such public
utilities to the Real Property or the Facilities or to
increase the cost of such access.
X. GOOD MINING PRACTICES
Seller conducts its operation of Seller's Business
substantially in accordance with good mining practices and
all applicable local state and federal laws and regulations
governing its operation, including, but not limited to:
1. Maintaining all existing means of ingress,
egress and dock facilities and such other roads, bridges,
fire overlooks, water and communication systems, as an
orderly mining development may require.
2. Taking all necessary precautions against
property loss and danger to lives from floods and water
runoffs, installing and maintaining reasonable drainage
courses, culverts and storage dams as may be warranted or
otherwise required by all appropriate governmental
requirements.
3. Maintaining on the real property all safety
systems and facilities (and which are included as a part of
the Included Assets) necessary for the operation of Seller's
Business.
4. Developing and maintaining such natural on-site
water resources and water rights of the Real Property as
are reasonable and sufficient to operate Seller's Business in
a manner substantially equivalent to that conducted by Seller
prior to Closing.
5. Carrying on a reasonable drilling, exploration
and sampling program designed to not detract from the
economic useful life of the mining operation and its mine.
6. Filing with all appropriate governmental
agencies all required permit applications, notices of intent
to mine, mining plans, and all reports of Seller's activities
during its conduct of Seller's Business.
7. Consistently maintaining an ongoing program to
mine, process and ship the known reserve deposits of minerals
on the Real Property with the personnel and appropriate
equipment needed on the Real Property for the efficient
conduct of such activities.
8. Substantially complying with all health,
safety and antipollution regulations of all federal, state,
regional and local agencies and carrying adequate worker's
compensation for its operation.
9. Maintaining proper records of all mineral
production and sales of minerals and other products from
Seller's operation of Seller's Business, logs of drilling,
sampling, maps of proven and indicated reserves, mine
workings, rods and watercourses, and maps of lands to be
reclaimed and restored as required by good mining practices
and mining or environmental permits governing Seller's
Business.
Y. FINANCIAL STATEMENTS.
Seller has delivered to Buyer copies of financial
information, including income statements and statements of
assets, with respect to Seller's Business for the fiscal
years ended December 31, 1995, 1996 and 1997 and for the
three months ended March 29, 1998, together with the
certificate of Seller's Treasurer with respect thereto (the
"Financial Statements"). The Financial Statements have been
prepared internally by Seller or by an Affiliate of Seller in
accordance with accepted accounting principles as determined
by Seller or an Affiliate of Seller and applied on a
consistent basis and present fairly the financial position
and results of operations of Seller's Business at each such
date. There has been no change in accounting procedures or
methods, or in the method of valuing inventories respecting
Seller's Business, during the period covered by the Financial
Statements.
Z. WETLANDS.
Seller has filed an application with the State of Michigan,
Department of Environmental Quality, for a permit pursuant to
Part 303 of Michigan's Natural Resources and Environmental
Protection Act in connection with Seller's proposed five-year
mining plan, and such application is currently pending before
the State.
AA. DISCLOSURE.
No representation, warranty or other statement made by Seller
in this Agreement and no statement in the Disclosure Schedule
contains an untrue statement of material fact or omits to
state a material fact necessary to make the statements in
this Agreement and in the Disclosure Schedule, in the light
of the circumstances in which they were made, not misleading.
Seller does not have knowledge of any fact that has specific
application to Seller's Business (other than general economic
or industry conditions) and that, as far as any officer or
director of Seller or any Affiliate of Seller can reasonably
foresee, materially threatens the Included Assets or the
prospects of Seller's Business that has not been set forth in
this Agreement or the Disclosure Schedule.
VI. REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set forth in the Disclosure Schedule, Buyer
represents and warrants to Seller that, as of the date of
this Agreement and on the Closing Date:
A. CORPORATE ORGANIZATION.
Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the state of its
incorporation with corporate power and authority sufficient
to enable it to carry out this Agreement. Buyer has the power
and authority to own properties and carry on business. As of
the Closing Date Buyer will be duly qualified to do business
in the State of Michigan. The execution, delivery and
performance of this Agreement have been duly authorized by
all necessary corporate action of Buyer.
B. AUTHORIZATION.
No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery
and performance of this Agreement other than the
Hart-Scott-Rodino filing referred to in Section VII(M) of this
Agreement.
C. BROKERS
Buyer has not engaged any broker or finder in connection with
the transactions contemplated herein.
D. CERTAIN PROCEEDINGS.
There is no litigation or proceeding, in law or in equity,
and there are no proceedings or governmental investigations
before any commission or other administrative authority,
pending or to Buyer's knowledge threatened against Buyer with
respect to or affecting the consummation of the transactions
herein contemplated, or the use of the Included Assets by
Buyer after the Closing.
E. EXECUTION, DELIVERY AND PERFORMANCE OF AGREEMENT.
Neither the execution, delivery nor performance of this
Agreement by Buyer will, with or without the giving of notice
or the passage of time, or both, conflict with, result in a
default, right to accelerate or loss of rights under, or
result in the creation of any lien, charge or encumbrance
pursuant to, any provision of Buyer's certificate of
incorporation or bylaws or any franchise, mortgage, deed or
trust, lease, license, agreement, understanding, law, rule
or regulation or any order, judgment or decree to which Buyer
is a party or by which Buyer may be bound or affected. This
Agreement has been duly executed and delivered by Buyer and
constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms,
except as enforcement may be affected by bankruptcy,
moratorium or similar laws for the benefit of creditors
generally, and subject to the availability of equitable
relief.
VII. COVENANTS
A. CONSENTS.
Seller and Buyer shall cooperate to obtain any consent or
governmental approval with respect to the assignment of, or
shall make alternate arrangements reasonably satisfactory to
Buyer with respect to, any contract, lease, license or Permit
which is to be assigned to Buyer hereunder and which may be
required for such assignment to be effective.
B. PERIOD FROM EXECUTION TO CLOSING.
From the date of this Agreement until the Closing, Seller
will not, with respect to the Included Assets, engage in any
material transaction including any material disposition of
any of the Equipment, Inventories or Real Estate, without the
prior written consent of Buyer.
C. PAYMENT OF TAXES.
Seller shall pay when due any consolidated federal income tax
liability, state or local corporate income or franchise tax
liability (applied to each state or locality separately),
payroll or other tax liability for the portion of any taxable
period during which the income from Seller's Business is
included in a consolidated return of the "affiliated group",
within the meaning of Section 1504 of the Internal Revenue
Code of 1986, as amended, of which Seller is a member.
Seller shall also pay when due all sales and use taxes and
all other taxes and assessments of every kind and nature
arising out of the operation of the Seller's Business or the
ownership of the Included Assets prior to the Closing.
D. PURCHASE PRICE ALLOCATION.
Seller and Buyer shall allocate the Purchase Price for the
Included Assets based upon an independent appraisal of the
Included Assets to be completed by Buyer and concurred in by
Seller after the Closing Date. Buyer shall provide notice to
Seller of such proposed allocation within a reasonable time
after Buyer has completed the same, and Seller shall provide
notice to Buyer whether Seller concurs in such allocation
within a reasonable time after Seller's receipt of such
proposed allocation. The allocation shall be in accordance
with federal and state laws and regulations, including but
not limited to Section 1060 of the Internal Revenue Code of
1986, as amended. Buyer and Seller each agree to file
identical (except for taxpayer identification information)
asset acquisition statements (IRS form 8594), in accordance
with the agreed allocations for their respective taxable
years which include the Closing Date. Buyer and Seller shall
each indemnify, defend, save and keep the other party
harmless against and from all liability, demands, claims,
actions or causes of action, assessments, penalties, costs or
expenses, including reasonable attorneys' fees, sustained or
incurred by such other party as a result of the failure of
Buyer or Seller to properly file an asset acquisition
statement in accordance with such agreed allocations.
E. INSPECTION BEFORE CLOSING.
Pending the Closing, Seller shall furnish to Buyer all
documents, reports and other information and data covering
the Included Assets, and shall otherwise cooperate with Buyer
in such manner as, Buyer may reasonably request. Seller
shall provide Buyer and its representatives with reasonable
access to all financial records of Seller and its affiliates
relating to Seller's Business and shall provide Buyer with
copies of any such records requested by Buyer or its
representatives. Seller shall provide Buyer with copies of
Seller's accounts payable records with respect to Seller's
Business for the years ending December 31, 1995, 1996 and
1997 and for the first two months of 1998. At all reasonable
times, Seller shall make the Facilities and the Included
Assets available for examination and inspection by Buyer and
its agents and representatives.
F. INSPECTION OF RECORDS AFTER CLOSING.
From and after the Closing, Seller and Buyer shall each make
their respective books and records, including tax and
financial records, available to the other party with respect
to all transactions of Seller's Business occurring prior to
the Closing or relating to Seller's obligations which are
assumed by Buyer (in the case of records owned by Seller, at
its offices in Bethlehem, Pennsylvania, or such other place
as shall be reasonable under the circumstances and, in case
of records owned by Buyer, at its offices in Gulliver,
Michigan, or its offices in Cleveland, Ohio or such other
place as shall be reasonable under the circumstances), for
inspection by the other party, or by its duly authorized
representatives, for reasonable and necessary business
purposes at all reasonable times during normal business
hours, for a seven-year period after the Closing Date. As
used in this paragraph, the right of inspection includes the
right to make extracts or copies at the expense of the party
requesting such copies. Buyer and Seller shall be permitted
to destroy any of the books and records described in this
Section VII(F) after three years following the Closing Date;
provided, however, that for a period of seven years after the
Closing Date, Buyer and Seller each shall give the other
prior written notice of its intent to destroy any of the
books and records described in this Section VII(F) and the
party desiring to destroy records shall permit the other
party to make reasonable arrangements to preserve or
duplicate such records.
G. EMPLOYEES OF SELLER'S BUSINESS.
Buyer shall offer employment as of the Closing Date to all
employees of Seller's Business on the date immediately prior
to the Closing Date, including any employees on vacation, but
not any employees on short-term disability, worker's
compensation, long-term disability or leave of absence
(hereinafter, "Employees" or, individually, "Employee").
Such offer of employment to each Employee shall be at a rate
of pay at least equal to such Employee's base rate of pay in
effect on the day immediately prior to the Closing Date.
Buyer shall review the benefits provided by Seller to such
Employees prior to the Closing Date and shall provide such
Employees with benefits from and after the Closing Date of
the types and in the amounts which Buyer provides to other
similarly situated employees of Buyer. Prior to the
execution of this Agreement, Seller delivered to Buyer a
listing of the current rates of pay, positions and dates of
hire of the Employees. Buyer shall have no obligation
whatsoever with regard to any persons who are not Employees
or to Employees who do not accept Buyer's offer of
employment. Buyer shall be solely responsible for all
salaries or wages and benefits accruing on or after the
Closing Date. In the event Buyer terminates any Employee's
employment with Buyer other than for cause within six (6)
months after the Closing Date, Seller shall provide
termination payments to such Employee in an amount equal to
such Employee's then-current weekly rate of pay multiplied by
such Employee's combined years of service with Seller and
Buyer. Seller shall retain the responsibility for, and
indemnify, defend and hold Buyer harmless, against, all
liabilities, claims and obligations of and to Employees,
reported or unreported, which arise or accrue prior to the
Closing Date including, but not limited to, their employment
and the conditions thereof, employee welfare benefit plans of
any type (including workers' compensation claims, medical and
dental insurance coverage and long-term disability benefits)
and salary, wages, bonus, deferred compensation, stock
option, retirement, pension, or other benefit arrangement.
H. PRODUCT WARRANTIES.
Buyer will cooperate with Seller concerning product
warranties extended by Seller prior to Closing and shall
promptly inform Seller of any complaints or claims made with
respect to such warranties. All such warranties shall remain
the obligation of Seller, and Seller shall defend, indemnify
and hold harmless Buyer against any loss, damage or expense
relating to the same, provided that Buyer shall have complied
with the requirement of notice and cooperation set forth in
Section VII(I). Buyer shall have the benefit of any express
or implied warranties from the manufacturer or original
seller of the Included Assets if the same is available to a
transferee pursuant to the terms of the warranty, and Seller
shall take all actions necessary and execute such instruments
as are necessary to effect the transfer of the warranty.
I. THIRD PARTY CLAIMS.
From and after the Closing, the parties shall provide prompt
notice to one another and shall cooperate with each other
with respect to any third party investigations and the
defense of any claims or litigation made or commenced by
third parties relating to the Included Assets or Seller's
Business, provided that the party requesting cooperation
shall reimburse the other party for the other party's
reasonable out-of-pocket costs and expenses of furnishing
such cooperation. In the event Seller is required by law to
mitigate impacts at the Facilities relating to Seller's
operations, Buyer shall allow Seller to conduct such
mitigation at the Facilities provided that Seller shall not
unreasonably interfere with Buyer's ongoing or reasonably
anticipated future mining operations.
J. BULK SALES LAWS.
Seller and Buyer shall not give notice under the provisions
of the Uniform Commercial Code of any states relating to bulk
sales. Except as is otherwise specifically provided under
this Agreement, Seller shall remain solely responsible to all
of its creditors with respect to liabilities incurred
relative to the conduct of Seller's Business prior to the
Closing Date. Notwithstanding anything to the contrary in
this Agreement, Seller agrees to indemnify, defend and hold
harmless Buyer for any loss or liability incurred by Buyer
because of the failure to comply with the bulk sales laws of
any state.
K. NOTICE; BEST EFFORTS TO CONSUMMATE TRANSACTION.
Each party shall promptly give the other party written notice
upon its discovery of the existence or occurrence of any
condition which would make any representation or warranty
herein contained of either party untrue or which might
reasonably be expected to prevent the consummation of the
transactions herein contemplated. Neither Buyer nor Seller
shall intentionally perform any act which, if performed, or
omit to perform any act which, if omitted to be performed,
would prevent or excuse the performance of this Agreement by
Buyer or Seller or which would result in any representation
or warranty herein contained being untrue in any material
respect.
L. SCHEDULES.
Buyer and Seller acknowledge that all Schedules and Exhibits
referred to herein and not attached hereto at the time of
execution shall be delivered after the date hereof, in
accordance with this Section VII(L). Each party shall use its
best efforts to deliver to the other each of the Schedules
and Exhibits required to be delivered by such party as soon
as possible and shall update all such Schedules and Exhibits
as reasonably necessary prior to Closing and at Closing.
M. CASUALTY PRIOR TO CLOSING.
1. Effect on Purchase Price.
If, prior to the Closing, any damage to or loss of any of the
Included Assets occurs due to fire, flood, riot, act of God
or other casualty (hereinafter "Casualty"), and if Buyer, in
accordance with the provisions of this Agreement, does not
elect, or is not permitted to elect, to terminate this
Agreement, the Purchase Price (had there been no Casualty)
shall be reduced by an amount equal to the value of such
Casualty determined by the allocation provided under Section
VII(D).
2. Termination Option.
If, between the date hereof and the Closing, Casualty occurs
to the Included Assets having a replacement cost of five
million dollars ($5,000,000.00) or more, Buyer, at its
option, may elect to terminate this Agreement or proceed to
Closing.
N. HART-SCOTT-RODINO FILING.
Seller and Buyer shall each use all reasonable efforts to
expeditiously file completed notification reports under the
Hart-Scott-Rodino Anti-Trust Improvements Act in connection
with the transactions contemplated by this Agreement and will
cooperate with each other in attempting to secure a waiver of
the applicable waiting periods under the Act, and, upon the
request of either the Federal Trade Commission or the United
States Department of Justice, will use all reasonable efforts
to supply such agency with any additional requested
information as expeditiously as possible.
O. LIMESTONE AVAILABILITY AGREEMENT.
As of the Closing Date, Buyer and Seller shall enter into a
Limestone Availability Agreement in the form attached hereto
as Exhibit VII(O).
P. CONFIDENTIALITY.
In the event that the transactions contemplated by this
Agreement are not consummated, Buyer will not use or
disclose, nor will it permit any of its investors, employees,
agents, or representatives to use or disclose, to any third
parties, any written or oral information obtained from Seller
or obtained through investigation of Seller's Business or the
Included Assets, except to the extent that such information
is publicly available or obtainable from independent sources
or is required to be disclosed by law. In the event that the
transactions contemplated by this Agreement are not
consummated, any and all documents and other materials
furnished by Seller to Buyer or its representatives, with
respect to the transactions contemplated hereby, and all
copies thereof, shall be returned to Seller forthwith. This
Section VII(P) shall survive any termination of this
Agreement. In no event shall Buyer disclose to any third
party information relating to any items set forth in the
Disclosure Schedule, unless such disclosure is required by
law, in which case Buyer shall provide advance notice of any
proposed disclosure to Seller and shall afford Seller the
opportunity to participate in such disclosure.
Q. NONCOMPETITION
At Closing, Seller shall deliver a noncompetition agreement
in the form attached hereto as Exhibit VII(Q), which prevents
Seller, Specialty Minerals Inc., a Delaware corporation
("SMI"), Mineral Technologies Inc., a Delaware corporation
("MTI"), and any Affiliate of Seller, SMI or MTI from
competing, directly or indirectly, against Buyer in the sale
of any products currently sold from the Facilities as part of
Seller's Business, in any geographic area serviced by Great
Lakes shipping vessels, for a period of five (5) years after
the Closing Date (the "Noncompetition Agreement").
R. OPERATION OF BUSINESS
Seller shall operate, maintain and protect Seller's Business
from the date of this Agreement until Closing in accordance
with good operating and mining practices. Except for the
Deferred Charges, Seller shall not make, or incur liability
for, any capital expenditures for additions or improvements
to its plant or other business operations without Buyer's
prior written consent. Seller shall not pre-sell any product
beyond that which can be produced through the normal
operating rate of Seller's Business through the date prior to
the Closing Date. Seller shall not transfer or otherwise
dispose of any Included Assets except for sales of Product
Inventories to its customers in accordance with the terms of
applicable customer orders and other transfers of Product
Inventories in the ordinary course of business. Seller shall
not incur any obligation or liability, absolute, accrued,
contingent, or otherwise, whether due or to become due,
except for liabilities and obligations incurred in the
ordinary course of Seller's Business. Seller shall not make,
permit or suffer any adverse change in the financial
condition of Seller's Business, the Included Assets, or its
or Buyer's prospects for any aspect of Seller's Business
prior to or after Closing, or waive any right or cancel or
comprise any debt or claim included as part of the Included
Assets, other than in the ordinary course of business.
Seller shall not make any material change in the rate of
compensation, commission, bonus, perquisites, benefits or
other remuneration payable, or paid or agreed to be paid to
officers, directors, employees, salesmen or agents other than
regularly scheduled increases about which Buyer has received
prior notice and given its written consent.
S. DEFERRED CHARGES.
From November 15, 1997 through the Closing Date, Seller has
not incurred and will not incur any Deferred Charges or
capital additions with respect to Seller's Business except
for Deferred Charges and capital additions of the types and
not in excess of the amounts set forth in Schedule VII(S)
attached hereto.
VIII. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the
Closing Date shall be subject to the satisfaction prior
thereto of the following conditions, upon the nonfulfillment
of which this Agreement may be terminated in accordance with
Section XIII;
A. REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING.
All representations and warranties made by Seller in this
Agreement are true and correct in all material respects when
given and on the Closing Date.
B. PERFORMANCE OF COVENANTS.
Seller shall have performed and complied in all material
respects with each and every covenant, agreement and
condition required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.
C. NO MATERIAL ADVERSE CHANGE.
There shall have been no material adverse change in the
condition of the Included Assets or in the prospects for
Seller's Business since the date hereof other than Casualty
which has not resulted in termination of this Agreement.
D. NO LITIGATION.
No suit or proceeding shall be pending before any court,
administrative agency, governmental body or arbitration
tribunal seeking to restrain, prohibit or restrict in any way
the consummation of the transactions contemplated hereby, or
to obtain damages or other relief in connection with this
Agreement.
E. CORPORATE AUTHORITY.
The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby
shall have been approved by the Board of Directors of Buyer
and by the Board of Directors of Seller.
F. SCHEDULES.
The Schedules and Exhibits which are required by this
Agreement to be delivered to Buyer prior to Closing shall
have been delivered to Buyer in accordance with the terms and
provisions hereof and shall be in form and substance
satisfactory to Buyer.
G. CONSENTS/GOVERNMENT APPROVALS.
All consents to assignment, and all governmental approvals
and consents, including the expiration or early termination
of the Hart-Scott-Rodino waiting period, shall have been
obtained or alternate arrangements reasonably satisfactory to
Buyer shall have been made with respect to those contracts,
leases, licenses or permits for which in Buyer's reasonable
judgment the inability to secure the benefits thereof would
materially and adversely affect Buyer's ability to conduct
business using the Facilities in a manner substantially
equivalent to that conducted by Seller prior to Closing.
H. DELIVERIES.
Buyer shall have received the items to be delivered pursuant
to Section III(B)(2).
I. ENVIRONMENTAL ASSESSMENT.
Buyer shall have received an environmental assessment of the
Facilities reasonably satisfactory to Buyer and performed for
Buyer's account by a consulting engineer chosen by Buyer
("Environmental Assessment"). Buyer shall inform Seller as to
whether the Environmental Assessment is satisfactory to Buyer
no later than the Closing Date. If Buyer does not give
notice to Seller that the Environmental Assessment is not
satisfactory to Buyer on or before the Closing Date, this
Section VIII(I) shall be waived by Buyer and shall be of no
further force or effect.
J. TRANSFER OF ASSETS BY SMI.
SMI shall have transferred to Buyer, for no additional
consideration, all contract rights, permits and other assets
relating primarily to Seller's Business which were titled in
SMI's name prior to the incorporation of Seller and which
remain titled in SMI's name as of the Closing Date, pursuant
to instruments of transfer, assignment and conveyance which
are acceptable to Buyer in form and substance, in each case
to the extent legally transferable.
K. GUARANTY BY SMI AND MTI.
SMI and MTI shall have entered into a Guaranty in the form
attached hereto as Exhibit VIII(K), pursuant to which SMI and
MTI shall, jointly and severally, absolutely and
unconditionally guarantee the obligations of Seller under
this Agreement and each of the other instruments and
documents executed by Seller in connection with the
transactions contemplated by this Agreement.
L. TRANSITION SERVICES AGREEMENT.
Buyer, Seller and SMI shall have entered into a Transition
Services Agreement (the "Transition Services Agreement") in
the form attached hereto as Exhibit VIII(L) pursuant to
which Seller and SMI will provide certain services to Buyer
after the Closing relating to the operation of Seller's
Business.
IX. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
Each and every obligation of Seller to be performed on the
Closing Date shall be subject to the satisfaction prior
thereto of the following conditions, upon the nonfulfillment
of which this Agreement may be terminated in accordance with
Section XIII:
A. REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING.
All representations and warranties made by Buyer in this
Agreement are true and correct in all material respects when
given and on the Closing Date.
B. PERFORMANCE OF COVENANTS.
Buyer shall have performed and complied in all material
respects with each and every covenant, agreement and
condition required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.
C. CORPORATE AUTHORITY.
The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby
shall have been approved by the Board of Directors of Buyer
and the Board of Directors of Seller.
D. NO LITIGATION.
No suit or proceeding is pending before any court,
administrative agency, governmental body, or arbitration
tribunal seeking to restrain, prohibit or restrict in any way
the consummation of the transaction contemplated hereby or to
obtain damages or other relief in connection with this
Agreement.
E. DELIVERIES.
Seller shall have received the items to be delivered pursuant
to Section III(B)(1).
F. APPROVALS AND CONSENTS.
All governmental approvals and consents, including the
expiration or early termination of the Hart-Scott-Rodino
waiting period, shall have been obtained.
G. GUARANTY BY ONC.
Oglebay Norton Company, a Delaware corporation which is an
Affiliate of Buyer ("ONC"), shall have entered into a
Guaranty in the form attached hereto as Exhibit IX(G),
pursuant to which ONC shall absolutely and unconditionally
guarantee the obligations of Buyer under this Agreement and
each of the other instruments and documents executed by Buyer
in connection with the transactions contemplated by this
Agreement.
X. SURVIVAL OF WARRANTIES AND REPRESENTATIONS
The representations and warranties of Seller and Buyer
contained in this Agreement or referred to in any closing
document shall survive the Closing Date as hereinafter
provided. No claim shall be made for breach of any
representation or warranty or indemnification with respect
thereto, unless such claim is asserted in writing within (but
not later than) three (3) years after the Closing Date.
XI. TAX RETURNS
Each of Buyer and Seller shall honor all reasonable requests
of the other for access to information relating to Seller's
Business in the possession of the other that will assist the
requesting party in preparation of a tax return relating to
Seller's Business or the Included Assets for which the
requesting party is responsible, or in the defense of such a
return in the event of a subsequent audit.
XII. INDEMNIFICATION
A. SELLER'S INDEMNIFICATION COVENANTS.
Seller shall indemnify, defend, save and keep Buyer, its
Affiliates, their officers, directors, employees and agents,
and their successors and assigns, harmless against and from
all liability, demands, claims, actions or causes of action,
assessments, penalties, costs, or expenses, including
reasonable attorneys' fees, sustained or incurred by Buyer,
its Affiliates, their officers, directors, employees or
agents, or their successors or assigns:
1. as a result of or arising out of or by virtue
of any incorrect representation or breach of warranty made by
Seller to Buyer herein or in any closing document delivered
to Buyer in connection herewith, provided, however, that
Seller, in the absence of fraud or intentional
misrepresentation by or on behalf of Seller, shall have no
obligation to indemnify Buyer under this Section XII(A)(1)
for any claim asserted by Buyer which arises after twenty-four
(24) months after the Closing Date;
2. as a result of or arising out of or by virtue
of the failure of Seller to comply with, or the breach by
Seller of any of the covenants of this Agreement to be
performed by Seller, provided, however, that Seller, in the
absence of fraud or intentional misrepresentation by or on
behalf of Seller, shall have no obligation to indemnify Buyer
under this Section XII(A)(2) for any claim asserted by Buyer
which arises after twenty-four (24) months after the Closing
Date except for a breach of the covenant given in Section
VII(Q), for which the indemnification period shall be five
(5) years from the Closing Date;
3. notwithstanding any other provision of this
Agreement to the contrary, as a result of or arising out of
or by virtue of any incorrect representation or breach of
warranty made by Seller to Buyer in Section V(B), Section
V(C)(relating to the Included Assets other than Real
Property), Section V(M) or Section V(R), in any closing
document delivered to Buyer in connection with such Sections,
or Seller's failure to honor, discharge, pay or fulfill any
responsibility, liability or obligation not assumed by Buyer
pursuant to this Agreement, regardless of when such claim is
asserted by Buyer; provided, however, that a claim shall not
be asserted by Buyer with respect to any incorrect
representation or breach of warranty made by Seller to Buyer
in Section V(M)(2) unless and until the aggregate amount of
all liabilities, demands, claims, actions or causes of
action, assessments, penalties, costs or expenses, including
reasonable attorneys' fees, sustained or incurred by Buyer,
its Affiliates, their officers, directors, employees or
agents, or their successors and assigns, exceeds the sum of
One Hundred Thousand Dollars ($100,000), and then only to the
extent of such excess;
4. any increase in the cost of operation of
Seller's Business during the 1998 and 1999 shipping seasons
as a result of or arising out of or by virtue of any delay in
the issuance of, or any failure or refusal to issue, the
permit described in Section V(Z). For purposes of
determining the increase in the cost of operation of Seller's
Business pursuant to this Section XII(A)(4), the parties
hereby agree that the amount of such increase shall be deemed
to be five cents ($.05) per ton of Limestone or Dolomite
mined by Buyer until such permit is issued; and
5. as a result of, in consequence of or arising
out of, under or by reason of any ERISA Plan maintained by or
contributed to by the Seller or its Affiliates (including,
but not limited to, any liability pertaining to any of
Seller's obligations under the minimum funding standards of
ERISA and of the Code).
B. BUYER'S INDEMNIFICATION COVENANTS.
Buyer shall indemnify, defend, save and keep Seller, its
Affiliates, their officers, directors, employees and agents,
and their successors and assigns, harmless against and from
all liability, demands, claims, actions or causes of action,
assessments, penalties, costs, expenses, including reasonable
attorneys' fees, sustained or incurred by Seller, its
Affiliates, their officers, directors, employees or agents,
or their successors and assigns:
1. as a result of or arising out of or by virtue
of any incorrect representation or breach of warranty made by
Buyer to Seller herein or in any closing document delivered
to Seller in connection herewith, provided, however, that
Buyer, in the absence of fraud or misrepresentation by or on
behalf of Buyer, shall have no obligation to indemnify Seller
under this Section XII(B)(1) for any claim asserted by Seller
which arises after twenty-four (24) months after the Closing
Date;
2. as a result of or arising out of or by virtue
of the failure of Buyer to comply with, or the breach by
Buyer of, any of the covenants of this Agreement to be
performed by Buyer, provided, however that Buyer, in the
absence of fraud or misrepresentation by or on behalf of
Buyer, shall have no obligation to indemnify Seller under
this Section XII(B)(2) for any claim asserted by Seller which
arises after twenty-four (24) months after the Closing Date;
and
3. as a result of or arising out of or by virtue
of (i) any product liability claims made against Seller or
Seller's Business resulting solely from any Products that are
shipped from the Facilities at any time after the Closing or
(ii) Buyer's failure to honor, discharge, pay or fulfill any
liabilities or obligations assumed by Buyer in this
Agreement.
C. NOTICE OF INDEMNIFICATION.
In the event any legal proceeding or investigation shall be
threatened or instituted or any claim or demand shall be
asserted by any person in respect of which payment may be
sought by one party hereto from the other party under the
provisions of this Section XII (hereinafter, "Claim"), the
party seeking indemnification (the "Indemnitee") shall
promptly cause written notice of the assertion of any such
Claim of which it has knowledge and which is covered by this
indemnity to be forwarded to the other party (the
"Indemnitor"), which notice must be received by the
Indemnitor prior to the expiration of twenty-seven (27)
months after the Closing Date (except for indemnification
sought pursuant to Section XII(A)(3), Section XII(A)(4),
Section XII(A)(5) or Section XII(B)3). Any such notice shall
state specifically the provision of this Agreement with
respect to which the Claim is made, the facts giving rise to
such Claim, and the amount of the liability asserted against
the Indemnitor by reason of the Claim.
D. INDEMNIFICATION PROCEDURE FOR THIRD-PARTY CLAIMS.
In the event of the initiation of any legal proceeding
against an Indemnitee by a third party, the Indemnitor shall
have the absolute right after the receipt of notice, at its
option and at its own expense, to engage counsel of its
choice and to defend against, negotiate, settle, (but not
without the prior consent of Indemnitee which consent shall
not be unreasonably withheld) or otherwise deal with any
proceeding, claim, or demand which relates to any loss,
liability, or damage indemnified against hereunder, and the
Indemnitee shall cooperate fully with the Indemnitor.
E. EXCLUSIVE REMEDY.
Except as is otherwise specifically set forth in this
Agreement, the exclusive remedy available to a party hereto
in respect of a breach by the other party of its obligations
under this Agreement shall be to proceed in the manner set
forth in this Section XII and subject to the limitations set
forth herein. Notwithstanding anything else in this
Agreement to the contrary, the limitations of Section
XII(A)(1) and the provisions of this Section XII(E) shall not
apply to any breach of Seller's warranties set forth in the
Warranty Deeds referred to in Section I(D)b.
F. RESPONSIBILITY UNDER CERTAIN ENVIRONMENTAL LAWS.
No provision of this Agreement shall limit or otherwise
restrict any liability or responsibility of either party to
the other or in any manner under or in connection with the
Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 USC 9601, et seq., the Resource
Conservation and Recovery Act of 1976, as amended, 42 USC
6901, et seq., and Parts 111 and 303 of the Michigan Natural
Resources and Environmental Protection Act.
G. ARBITRATION.
Each party agrees that to the extent any dispute arising in
connection with this Agreement is not resolved by voluntary
agreement of the parties, such dispute shall be finally and
exclusively settled by arbitration in accordance with the
provisions of this Section XII(G). If any such dispute
arises, either party may at any time deliver written notice
that it intends to submit such dispute to arbitration. If
such a notice is delivered to the other party, then the party
that delivered such notice shall be entitled to direct
submission of the dispute to arbitration. The party
directing a submission to arbitration shall promptly deliver
written notice to the other party. Notwithstanding this
Section XII(G), each party shall have the right to seek from
any court of competent jurisdiction pending the establishment
of the arbitral tribunal interim relief in aid of arbitration
or to protect the rights of such party in respect of this
Agreement. Any request for such interim relief by a party
shall not be deemed incompatible with, or a waiver of, this
agreement to arbitrate. Such arbitration shall be held in
Detroit, Michigan (which shall be the exclusive location of
such arbitration unless otherwise agreed by the parties) in
accordance with the commercial arbitration rules and
regulations of the American Arbitration Association, with
pre-hearing discovery rights in accordance with the Federal
Rules of Civil Procedure. The determination of the
arbitrators shall be conclusive and binding upon the parties,
and any determination by the arbitrators of an award may be
filed with the clerk of a court of competent jurisdiction as
a final adjudication of the claim involved, where application
may be made to such court for a judicial acceptance of the
award and an order of enforcement, as the case may be. The
expenses of each party, including legal and accounting fees,
if any, with respect to the arbitration, shall be borne by
such party, except to the extent otherwise directed by the
arbitrators. The arbitrators shall designate the parties to
bear the expenses of the arbitrators of the respective
amounts of such expense to be borne by each party.
XIII. TERMINATION: RIGHT TO DAMAGES
If this Agreement is terminated pursuant to its terms,
neither party hereto shall have any claim against the other
except if the circumstances giving rise to such termination
were caused by the other party's willful breach of any
covenant or agreement in this Agreement, by a representation
known by such other party to be false when made, or by a
closing document delivered by such other party being
knowingly incorrect when delivered; in which events such
termination shall be in violation of this Agreement and shall
not be deemed or construed as limiting or denying any legal
or equitable right or remedy of said party.
XIV. MISCELLANEOUS
A. LAW GOVERNING AGREEMENT.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan.
B. NOTICES.
All notices, requests, demands and other communications
hereunder shalt be deemed to have been duly given, if
delivered by hand or mailed, by registered mail with postage
prepaid:
1. To Seller.
If to Seller, to:
Mr. Paul R. Saueracker
President
Speciality Minerals Inc.
405 Lexington Avenue
New York, New York 10174-1901
with a copy to:
S. Garrett Gray
General Counsel
Minerals Technologies Inc.
405 Lexington Avenue
New York, New York 10174-1901
or to such other person or address as Seller shall furnish to
Buyer in writing.
2. To Buyer.
If to Buyer, to:
Oglebay Norton Company
1100 Superior Avenue
Cleveland, Ohio 44114
Attention: Jeffrey S. Gray
Vice President-Corporate Development and Legal Affairs
with a copy to:
Christopher C. McCracken, Esq.
Ulmer & Berne LLP
Bond Court Building
1300 East Ninth Street, Suite 900
Cleveland, Ohio 44114
or to such other person or address as Buyer shall furnish to
Seller in writing.
C. EXPENSES.
Except as otherwise provided herein, each of the parties
shall be responsible for the fees and expenses of its
counsel, brokers, and other agents and any other costs
incurred by it in connection with the transaction
contemplated hereby.
D. HEADINGS.
The headings in the paragraphs of this Agreement are inserted
for convenience only and shall not constitute a part hereof.
E. FURTHER COOPERATION
From and after the Closing Date, Buyer and Seller agree to
execute and deliver all other documents and to take such
other action or corporate proceedings as may be reasonably
necessary or desirable to confirm and vest title to the
Included Assets in Buyer and to carry out and give effect to
all of the terms and conditions of this Agreement. Without
limiting the generality of the foregoing, Seller, SMI and
Buyer shall cooperate with each other with respect to the
services to be provided to Buyer pursuant to the terms of the
Transition Services Agreement.
F. NO THIRD PARTY BENEFICIARIES.
Rights and duties hereunder shall inure to the benefit of the
parties hereto only and not to the benefit of any third
parties, including but not limited to, employees of Buyer or
Seller.
G. SEVERABILITY.
If any provision of this Agreement shall be deemed or
adjudged invalid or unenforceable to any extent, the
remainder of this Agreement shall not be affected thereby and
shall be enforced to the full extent permitted by law.
H. BINDING AGREEMENT AND ASSIGNABILITY.
Each term and provision of this Agreement shall be binding
upon and enforceable against any successors or assigns of
Seller or Buyer. This Agreement shall not be assignable by
either party without the consent of the other party except
that Buyer may assign this Agreement to any entity which is
controlled by Buyer without the consent of Seller.
I. COMPLETE AGREEMENT.
This document and the documents (including exhibits and
schedules) referred to herein contain the complete agreement
between the parties and supersede any and all prior
understandings, agreements or representations by or between
the parties, written or oral, which may have related to the
subject matter hereof in any way.
J. COUNTERPARTS.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
K. NON-WAIVER AND OTHER MISCELLANEOUS MATTERS.
No delay on the part of Seller or Buyer in the exercise of
any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise by Seller or Buyer
of any right, power or remedy preclude other or further
exercise thereof, or the exercise of any other right, power
or remedy. No amendment, modification, termination or waiver
at or consent with respect to, any provision of this
Agreement shall in any event be effective unless the same
shall be in writing and signed and delivered by Seller and
Buyer, and then any such amendment, modification,
termination, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which
given. Consummation of the transaction contemplated herein
shall not be deemed a waiver or a breach of any
representation, warranty or covenant or of any party's rights
and remedies with regard thereto. No specific
representation, warranty or covenant shall limit the
generality or applicability of a more general representation,
warranty or covenant. A breach of any representation,
warranty or covenant shall not be affected by the fact that a
more general representation, warranty or covenant was not
also breached.
L. PUBLICITY AND NEWS RELEASES.
Except as required by law, no publicity, release or
announcement concerning the transactions contemplated by this
Agreement shall be issued without the advance approval in
writing of the substance thereof by each of the parties
hereto and their respective legal counsel. Each party will
consult with the other as to any release or announcement
required by law prior to the making of the same.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
SELLER
SPECIALTY MINERALS (MICHIGAN) INC.
By____/s/ William A. Kromberg__________
Title__Vice President _________________
BUYER
OGLEBAY NORTON LIMESTONE COMPANY
By______/s/ Jeffrey Gray ______________
Title___Vice President_________________
EXHIBIT 15
ACCOUNTANTS' ACKNOWLEDGMENT
The Board of Directors
Minerals Technologies Inc:
Re: Registration Statement Nos: 33-59080, 33-65268 and
33-96558
With respect to the subject registration statements, we
acknowledge our awareness of the use therein of our report
dated July 31, 1998, related to our review of interim financial
information.
Pursuant to Rule 436(c) under the Securities Act of 1933,
such report is not considered a part of a registration
statement prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of
Sections 7 and 11 of the Act.
Very truly yours,
KPMG Peat Marwick LLP
New York, New York
August 6, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the condensed consolidated financial statements of Minerals
Technologies Inc., and is qualified in its entirety by reference
to such condensed consolidated financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-28-1998
<CASH> 39,716
<SECURITIES> 0
<RECEIVABLES> 109,030
<ALLOWANCES> 0
<INVENTORY> 57,997
<CURRENT-ASSETS> 217,955
<PP&E> 850,950
<DEPRECIATION> 355,285
<TOTAL-ASSETS> 735,050
<CURRENT-LIABILITIES> 91,489
<BONDS> 88,323
0
0
<COMMON> 2,550
<OTHER-SE> 581,057
<TOTAL-LIABILITY-AND-EQUITY> 735,050
<SALES> 299,854
<TOTAL-REVENUES> 299,854
<CGS> 206,529
<TOTAL-COSTS> 206,529
<OTHER-EXPENSES> 10,159
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 40,657
<INCOME-TAX> 13,248
<INCOME-CONTINUING> 27,458
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,548
<EPS-PRIMARY> 1.22<F1>
<EPS-DILUTED> 1.18
<FN>
<F1>(EPS-PRIMARY) DENOTES BASIC EPS
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the condensed consolidated financial statements of Minerals
Technologies Inc., and is qualified in its entirety by reference
to such condensed consolidated financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-29-1997
<CASH> 19,385
<SECURITIES> 0
<RECEIVABLES> 115,140
<ALLOWANCES> 0
<INVENTORY> 64,239
<CURRENT-ASSETS> 211,296
<PP&E> 831,021
<DEPRECIATION> 333,258
<TOTAL-ASSETS> 720,827
<CURRENT-LIABILITIES> 80,216
<BONDS> 102,391
0
0
<COMMON> 2,531
<OTHER-SE> 522,969
<TOTAL-LIABILITY-AND-EQUITY> 720,827
<SALES> 289,391
<TOTAL-REVENUES> 289,391
<CGS> 204,501
<TOTAL-COSTS> 204,501
<OTHER-EXPENSES> 10,224
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 34,242
<INCOME-TAX> 10,957
<INCOME-CONTINUING> 22,929
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,929
<EPS-PRIMARY> 1.02<F1>
<EPS-DILUTED> 1.00
<FN>
<F1>(EPS-PRIMARY) DENOTES BASIC EPS
</FN>
</TABLE>
