SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): July 7, 1995
COEUR D'ALENE MINES CORPORATION
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(Exact name of Registrant as specified in its charter)
Idaho 1-8641 82-0109423
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
400 Coeur d'Alene Mines Bldg.
505 Front Avenue
Coeur d'Alene, Idaho 83814
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (208) 667-3511
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On July 7, 1995, Coeur d'Alene Mines Corporation (the "Company"),
through its wholly-owned subsidiary, Coeur Alaska, Inc. ("Coeur Alaska"),
acquired the undivided 50% ownership interest in the Kensington Venture from
Echo Bay Alaska, Inc. and Echo Bay Exploration, Inc. (collectively, the
"Sellers"), which are wholly-owned subsidiaries of Echo Bay Mines Ltd. ("Echo
Bay"), as a result of which the Company assumed full ownership and operating
control of the Venture, which is developing the Kensington gold mining property
located in Juneau, Alaska. The transaction was effected pursuant to the Venture
Termination and Asset Purchase Agreement among Coeur Alaska and the Sellers,
dated as of June 30, 1995 (the "Agreement"), a copy of which is filed as an
exhibit to this report and is incorporated herein by reference.
Pursuant to the Agreement, Coeur Alaska paid to the Sellers a total of
$32.5 million and, pursuant to the Royalty Deed set forth as Exhibit C to the
Agreement, Coeur Alaska agreed to pay Echo Bay Exploration, Inc. a scaled net
returns royalty on one million ounces of future gold production after Coeur
Alaska recoups the $32.5 million purchase price and its construction
expenditures incurred after July 7, 1995, in connection with placing the
property into commercial production.
Performance by Coeur Alaska of its obligations under the Agreement is
guaranteed by the Company and performance of the obligations of the Sellers
under the Agreement is guaranteed by Echo Bay.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(c) Exhibits. The following exhibit is filed herewith:
10 Venture Termination and Asset Purchase Agreement, dated as
of June 30, 1995, among Coeur Alaska, Inc., Echo Bay Alaska,
Inc. and Echo Bay Exploration, Inc.
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SIGNATURES
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.
COEUR D'ALENE MINES CORPORATION
(Registrant)
Dated: July 12, 1995 By:/s/DENNIS E. WHEELER
-----------------------
Dennis E. Wheeler
Chairman, President and
Chief Executive Officer
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VENTURE TERMINATION
AND
ASSET PURCHASE AGREEMENT
Among
COEUR ALASKA, INC.,
ECHO BAY ALASKA INC.
and
ECHO BAY EXPLORATION INC.
dated as of June 30, 1995
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TABLE OF CONTENTS
ARTICLE AND
SECTION NUMBERS TITLE PAGE
- --------------- ----- ----
ARTICLE I - DEFINITIONS.......................................................2
1.1 "Action.....................................................2
1.2 "Purchase Agreement"........................................2
1.3 "Appeal"....................................................2
1.4 "Assets"....................................................2
1.5 "Assignment Instruments"....................................2
1.6 "Assumed Obligations and Liabilities".......................2
1.7 "Balance Sheet".............................................2
1.8 "Balance Sheet Date"........................................3
1.9 "Closing"...................................................3
1.10 "Closing Date"..............................................3
1.11 "Contracts".....................................................3
1.12 "Environmental Laws"........................................3
1.13 "Financial Statements"..........................................3
1.14 "Government Authority"......................................3
1.15 "GAAP"......................................................3
1.16 "Hazardous Substances"..........................................3
1.17 "HSR Act"...................................................3
1.18 "Indemnitee"................................................3
1.19 "Indemnitor"....................................................3
1.20 "Judgment"..................................................3
1.21 "Kensington Project"........................................3
1.22 "Kensington Venture"........................................3
1.23 "Laws"......................................................3
1.24 "Leases"....................................................4
1.25 "Liens".........................................................4
1.26 "Loss"......................................................4
1.27 "Material"..................................................4
1.28 "Operator"..................................................4
1.29 "Participants"..............................................4
1.30 "Participating Interest"....................................4
1.31 "Permits".......................................................4
1.32 "Permitted Liens"...........................................5
1.33 "Personal Property".........................................5
1.34 "Products"..................................................5
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ARTICLE AND
SECTION NUMBERS TITLE PAGE
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1.35 "Purchase Price"................................................5
1.36 "Real Property".................................................5
1.37 "Representatives"...........................................5
1.38 "Sellers' Interest in the Assets"...........................5
1.39 "Taxes".....................................................5
ARTICLE II - THE TRANSACTION..................................................6
2.1 Purchase and Sale of Sellers' Interest in the Assets....... 6
2.2 Assumed Obligations and Liabilities.........................6
2.3 Termination of Venture Agreement............................7
2.4 Purchase Price and Payment..................................8
2.5 HSR Act ....................................................8
2.6 Bulk Sales..................................................8
2.7 Transfer Taxes..............................................8
2.8 Closing.....................................................8
2.9 Assignment Instruments......................................8
2.10 Net Returns Royalty.........................................9
2.11 Mutual General Release......................................9
ARTICLE III - REPRESENTATIONS AND WARRANTIES BY THE BUYER AND
SELLERS.............................................................10
3.1 Capacity of the Buyer and Sellers..........................10
ARTICLE IV - REPRESENTATIONS AND WARRANTIES BY THE SELLERS...................10
4.1 Title to Sellers' Interest in the Assets...................10
4.2 Financial Statements.......................................11
4.3 Compliance with Laws Other than Environmental Laws.........12
4.4 Compliance with Environmental Laws.........................12
4.5 No Known Undisclosed Liabilities...........................13
4.6 No Adverse Changes.........................................13
4.7 Taxes......................................................13
4.8 Leases and Contracts.......................................14
4.9 Consents...................................................14
4.10 No Pending Litigation or Proceedings.......................14
ARTICLE V - CERTAIN RIGHTS AND OBLIGATIONS OF THE PARTIES....................15
5.1 Conduct of Operations Pending Closing......................15
5.2 No Adverse Practices or Communications.....................15
5.3 Access, Information and Documents..........................16
5.4 Employee Matters...........................................17
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ARTICLE AND
SECTION NUMBERS TITLE PAGE
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5.5 Expenses...................................................18
5.6 Buyer Payment of Cash Contributions........................18
5.7 Prorations.................................................18
5.8 Final Net Cash Adjustment..................................18
5.9 Socioeconomic Impact Mitigation............................19
5.10 Purchase of Certain Assets by the Sellers..................19
ARTICLE VI - CONDITIONS TO CLOSING...........................................20
6.1 Conditions Precedent to Obligations of the Buyer...........20
6.2 Conditions Precedent to the Obligations of the
Sellers....................................................21
6.3 Termination................................................22
ARTICLE VII - INDEMNIFICATION................................................24
7.1 Indemnification by the Sellers.............................24
7.2 Indemnification by the Buyer...............................24
7.3 Representation, Cooperation and Settlement.................26
7.4 Determination of Indemnification Amounts and Related
Matters....................................................27
ARTICLE VIII - COVENANTS OF THE PARTIES AFTER THE CLOSING....................27
8.1 Further Assurances.........................................27
8.2 Delivery of Payments and Documents.........................27
ARTICLE IX - MISCELLANEOUS...................................................28
9.1 Publicity..................................................28
9.2 Notices....................................................28
9.3 Successors and Assigns.....................................30
9.4 Governing Law..............................................30
9.5 Pre-closing Casualty Loss..................................30
9.6 Removal of Indicia.........................................30
9.7 Counterparts...............................................31
9.8 Amendment..................................................31
9.9 Severability...............................................31
9.10 Entire Agreement...........................................31
EXHIBIT A - DEED.............................................................34
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ARTICLE AND
SECTION NUMBERS TITLE PAGE
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EXHIBIT B - BILL OF SALE.....................................................37
EXHIBIT C - ROYALTY DEED.....................................................39
EXHIBIT D - MUTUAL GENERAL RELEASE AGREEMENT.................................50
EXHIBIT E - SUBSTITUTION OF PARTY AND COUNSEL IN APPEAL......................56
EXHIBIT F - MEMORANDUM.......................................................57
SCHEDULE 4.2 A. BALANCE SHEET.........................................4.2-1
B. STATEMENT OF OPERATIONS
SCHEDULE 4.8 LEASES, CONTRACTS, AGREEMENTS.................................4.8
SCHEDULE 5.7 COEUR ALASKA, INC. CASH CALLS NOT FUNDED......................5.7
SCHEDULE 5.10 A. COMMON ASSET VALUATION...............................5.10-1
B. COMMON ASSET INVENTORY...............................5.10-2
C. BILL OF SALE.........................................5.10-6
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VENTURE TERMINATION
AND
ASSET PURCHASE AGREEMENT
THIS VENTURE TERMINATION AND ASSET PURCHASE AGREEMENT (this "Purchase
Agreement") dated as of June 30, 1995 among Coeur Alaska, Inc., herein the
"Buyer," a Delaware corporation with executive offices at 505 Front Avenue, Post
Office Box I, Coeur d'Alene, Idaho 83814; and Echo Bay Alaska Inc., herein "Echo
Bay Alaska", and Echo Bay Exploration Inc., herein "Echo Bay Exploration," those
two collectively herein the "Sellers," each a Delaware corporation with
executive offices at 370 17th Street, Suite 4050, Denver, Colorado 80202.
RECITALS
WHEREAS, there exists the Kensington Venture pursuant to an Amended Venture
Agreement dated November 1, 1990, a memorandum of which was recorded May 26,
1992 in Book 359 at Pages 776-805 of the records of the Juneau Recording
District, State of Alaska, between Buyer and Echo Bay Exploration (the "Venture
Agreement"), pursuant to which each party thereto owns a 50% Participating
Interest therein (defined in Section 1.18 of the Venture Agreement and in
Section 1.30 of this Purchase Agreement), representing an undivided 50%
ownership interest in the Assets (defined in Section 1.5 of the Venture
Agreement and in Section 1.4 of this Purchase Agreement) as tenants in common;
and
WHEREAS, Echo Bay Alaska has succeeded to certain interests of Echo Bay
Exploration in the Kensington Venture and the Venture Agreement, including the
position and functions of Operator of the Kensington Venture under the Venture
Agreement, pursuant to an Agreement and Transfer between them dated January 31,
1991, approved by Seller on August 19, 1991; and
WHEREAS, the Kensington Venture is engaged in the exploration, evaluation,
and development of mineral resources within the Real Property (defined in
Section 1.36 of this Purchase Agreement and described in Attachment I of Exhibit
A to this Purchase Agreement) in the City and Borough of Juneau, Alaska; and
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WHEREAS, the parties wish to voluntarily terminate the Kensington Venture
pursuant to Section 12.1 of the Venture Agreement, and to resolve all
controversies and claims between them, asserted or unasserted, all subject to
the provisions of this Purchase Agreement; and
WHEREAS, in implementation thereof the Buyer desires to purchase from the
Sellers, and the Sellers desire to sell to the Buyer, the Sellers' Interest in
the Assets on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, the Buyer and the Sellers agree as follows.
ARTICLE I
DEFINITIONS
1.1 "Action" has the meaning set forth in Section 7.3(b).
1.2 "Purchase Agreement" means this Venture Termination and Asset Purchase
Agreement, including all amendments and modifications hereof, and all attached
schedules and exhibits which are incorporated herein by reference.
1.3 "Appeal" has the meaning set forth in Section 5.2.
1.4 "Assets" means the Real Property and Personal Property (and partial
interests in Personal Property) owned by or for the Participants in the
Kensington Venture pursuant to the Venture Agreement.
1.5 "Assignment Instruments" has the meaning set forth in Section 2.9.
1.6 "Assumed Obligations and Liabilities" has the meaning set forth in
Section 2.2.
1.7 "Balance Sheet" has the meaning set forth in Section 4.2.
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1.8 "Balance Sheet Date" has the meaning set forth in Section 4.2.
1.9 "Closing" has the meaning set forth in Section 2.8.
1.10 "Closing Date" has the meaning set forth in Section 2.8.
1.11 "Contracts" has the meaning set forth in Section 4.8.
1.12 "Environmental Laws" has the meaning set forth in Section 7.2(b)
1.13 "Financial Statements" has the meaning set forth in Section 4.2.
1.14 "Government Authority" has the meaning set forth in Section 4.3.
1.15 "GAAP" means generally accepted accounting principles for metallic
mining ventures within the United States applied on a consistent basis.
1.16 "Hazardous Substances" has the meaning set forth in Section 4.4.
1.17 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
1.18 "Indemnitee" has the meaning set forth in Section 7.3(a).
1.19 "Indemnitor" has the meaning set forth in Section 7.3(a).
1.20 "Judgment" means any judgment, writ, order, injunction, award, or
decree of any court, judge, justice, or magistrate.
1.21 "Kensington Project" has the meaning set forth in Section 5.2a.
1.22 "Kensington Venture" means the business arrangement of the
Participants under the Venture Agreement.
1.23 "Laws" has the meaning set forth in Section 4.3,
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exclusive of Environmental Laws.
1.24 "Leases" has the meaning set forth in Section 4.8.
1.25 "Liens" means any liens, charges, encumbrances, and security interests
upon property.
1.26 "Loss" means liability and expense (including reasonable attorneys'
fees and costs of defense) attributable to or which results from any claim,
action, suit, proceeding, , investigation, hearing, or other activity or
proceeding that could or does result in a Judgment.
1.27 "Material", depending upon the context of its use, means:
(a) Having a substantial effect upon the title, condition, status or
value of the Assets, or upon the use or operation thereof as used or operated by
or for the Kensington Venture in the ordinary course of business on the date of
this Purchase Agreement; or
(b) Having a necessary or substantial function or providing a
necessary or substantial component of or for the effective use or operation of
the Assets, as used or operated by or for the Kensington Venture in the ordinary
course of business on the date of this Purchase Agreement; or
(c) As used in Sections 6.3, 7.1(a)and 7.2(a) having the meaning
defined in Section 6.3(c).
1.28 "Operator" means the person or entity appointed under Article 8 of the
Venture Agreement to manage the activities carried out under the Venture
Agreement.
1.29 "Participants" means the Buyer and the Sellers who are the entities
that have Participating Interests in the Kensington Venture.
1.30 "Participating Interest" means the percentage interest representing
the ownership interest of a Participant in the Assets, and all other rights and
obligations arising under the Venture Agreement, as provided in Section 1.18 of
the Venture Agreement.
1.31 "Permits" has the meaning set forth in Section 2.9.
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1.32 "Permitted Liens" means (i) liens arising from or imposed by the
conduct of the business of the Kensington Venture including, inchoate
materialmen's, mechanics', workmen's, repairmen's or other like liens; (ii)
liens for Taxes not yet delinquent; (iii) rights reserved by any Government
Authority to regulate the affected property; and (iv) as to Real Property, any
Liens that do not in any material respect, individually or in the aggregate,
adversely affect or impair the value or use thereof as it is currently being
used for the Kensington Venture in the ordinary course of business.
1.33 "Personal Property" means all tangible and intangible personal
property included in the Assets owned by the Participants under the Venture
Agreement, including Products and mine and office equipment and fixtures.
1.34 "Products" means all ores and minerals (including processed
concentrates) produced from the Real Property.
1.35 "Purchase Price" has the meaning set forth in Section 2.4.
1.36 "Real Property" means all real property of the Kensington Venture
included in the Assets owned by the Participants under the Venture Agreement,
including surface estates, mineral estates and combined surface and mineral
estates, and including patented and unpatented mining claims, mill site claims,
accretions to land, rights of way and easements.
1.37 "Representatives" has the meaning set forth in Section 5.3 hereof.
1.38 "Sellers' Interest in the Assets" means all of the Sellers' rights,
title and interests in the Kensington Venture and, as a Participant therein, in
the Assets (as the holder of a 50% Participating Interest as tenant in common),
and an undivided 50% ownership in the rights and obligations of the Participants
under the Venture Agreement.
1.39 "Taxes" has the meaning set forth in Section 4.7.
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ARTICLE II
THE TRANSACTION
2.1 Purchase and Sale of Sellers' Interest in the Assets. At the Closing,
the Buyer shall purchase from the Sellers and the Sellers shall sell to the
Buyer, the Sellers' Interest in the Assets.
2.2 Assumed Obligations and Liabilities.
(a) As of the Closing, the Buyer covenants to assume and shall be
deemed to have assumed and become exclusively responsible for performance,
satisfaction and payment of all duties, obligations, liabilities and penalties
related to the condition, use, care, maintenance and reclamation of the Real
Property, including exclusive responsibility for (i) obtaining and compliance
with all issued or required Permits applicable thereto, including operating,
reclamation and mitigation plans approved by Government Authority, and (ii)
compliance with all Environmental Laws. Such assumption shall encompass
exclusive responsibility for all prior use, disturbance, occupancy, development
and operation of the Real Property, specifically including, without limitation,
exclusive responsibility for reclamation and restoration of the Real Property
upon cessation of operations or closure of facilities, and exclusive
responsibility for satisfaction of all requirements of the federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 USC ss.ss.
9601 et seq., Alaska Statutes Sec. 46.03.822, and any other Environmental Law.
There is excepted from all the foregoing assumptions of liabilities any fines or
monetary civil penalties which may be assessed before or after Closing by any
Government Authority for any infraction of any applicable Permit or
Environmental Law which infraction existed prior to Closing, such exception
being limited to that portion of such fines or penalties allocable to the period
prior to Closing and it is inapplicable to expenses incurred subsequent to
Closing for remediation of the infraction. Any such fines and penalties shall be
treated as unsatisfied liabilities of the Kensington Venture upon termination of
it, and borne proportionately by the parties to this Purchase Agreement pursuant
to Section 2.3 hereof. It is the intent of the parties that, subject to the
exception stated above, Buyer assume and relieve Sellers of all obligations,
liabilities and responsibilities for the condition, use, care, maintenance and
reclamation of the Real Property, whether such responsibilities arise from or
are attributable to conditions,
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circumstances and events occurring before or after Closing, before or after
ownership by any of the parties, or before, during or after the ownership by the
Kensington Venture.
(b) In addition to the assumptions specified in Section 2.2(a), as of
the Closing, the Buyer covenants to assume and shall be deemed to have assumed
and become exclusively responsible for all other payments, and the discharge and
performance of all other duties, obligations, liabilities, and penalties which
arise subsequent to Closing with respect to the Assets or are attributable to
ownership, use, operation, status and condition of the Assets subsequent to
Closing, including, without limitation, all such obligations pursuant to Permits
by Government Authority, Leases, Contracts, Laws, Taxes which become due after
Closing (subject to Section 5.7), bonds, guarantees, sureties, and all
undertakings and commitments by the Kensington Venture or its Participants made
prior to or after Closing which pertain or are applicable to the Assets.
(c) The covenants and assumptions in Sections 2.2(a) and 2.2(b) are
herein the "Assumed Obligations and Liabilities". Pursuant to Section 7.2, Buyer
shall indemnify, defend , and hold harmless Sellers from and against all Loss
attributable to the Assumed Obligations and Liabilities. The Assumed Obligations
and Liabilities do not include accrued liabilities of the Kensington Venture
which shall be satisfied, released or otherwise resolved upon dissolution and
wind-up of the Venture as prescribed in Section 2.3.
2.3 Termination of Venture Agreement. Upon Closing, the purchase of
Sellers' Interest in the Assets, and the assumption of the Assumed Obligations
and Liabilities by the Buyer, the Sellers shall cease to be the Operator, the
Venture Agreement shall terminate, and the Kensington Venture shall be
dissolved, without further action by the Parties except those necessary for
wind-up of the affairs of the Kensington Venture by Echo Bay Alaska as Operator,
pursuant to Section 12.4 of the Venture Agreement; provided, however, that the
provisions in the Venture Agreement for distributions to the Participants and
satisfaction, release or other resolution of all debts, obligations or
liabilities owed to the Participants shall be deemed to be modified by the
provisions of this Purchase Agreement as necessary to implement this Purchase
Agreement. In accordance with Sections 6.5 and 12.3 of the Venture
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Agreement, the Sellers and the Buyer each shall remain liable for its share of
any liability of the Kensington Venture to third parties, including contractors
and vendors, which shall have accrued prior to the Closing Date, except as
otherwise expressly provided in Section 2.2(a).
2.4 Purchase Price and Payment. At the Closing, the Buyer shall pay to the
Sellers, in partial consideration for the Sellers' Interest in the Assets, a
total of $32,500,000 (the "Purchase Price"), in immediately available funds.
2.5 HSR Act It has been determined by Buyer and Sellers, and confirmed by
the Federal Trade Commission, that this transaction is exempt from filing
premerger notification and report forms and related affidavits in compliance
with the HSR Act, and that this transaction is not subject to that Law.
2.6 Bulk Sales. The Buyer and the Sellers each waives compliance by the
other with bulk sales legal requirements applicable to the transaction
contemplated hereby.
2.7 Transfer Taxes. All sales, use, transfer, and similar Taxes arising
from or payable by reason of the transaction contemplated by this Purchase
Agreement shall be the liability of the Buyer, and the Buyer shall indemnify,
defend, and hold harmless Sellers from and against all Losses arising therefrom.
2.8 Closing. The Closing under this Purchase Agreement (the "Closing")
shall take place at 10:00 a.m., local time, on June 30, 1995 at the offices of
Coeur d'Alene Mines Corporation, 505 Front Avenue, Coeur d'Alene, Idaho, or at
such other time, date or place to which the parties shall mutually agree. The
date on which the Closing occurs is referred to herein as the "Closing Date."
2.9 Assignment Instruments.
(a) At the Closing, the Sellers shall deliver to the Buyer (i) a deed
(in the form attached as Exhibit A hereto) to the Sellers' Interest in the
Assets that are Real Property ; (ii) a bill of sale (in the form attached as
Exhibit B hereto) to the Sellers' Interest in those items of Personal Property
within the Assets which are to be conveyed to Buyer (listed in Attachment I to
Exhibit B); and (iii) (subject to the provisions of Section
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2.9(b) for Permits) such endorsements, assignments and other good and sufficient
instruments of conveyance and transfer, reasonably satisfactory in form and
substance to the Buyer and its counsel, as shall be effective to vest in the
Buyer, as of the Closing Date, all of the Sellers' rights, title and interests
in and to the Sellers' Interest in the Assets, free and clear of all Liens,
interests and claims of third parties created or claimed by, through or under
Sellers other than Permitted Liens. All of such documents referred to above in
this Section 2.9 collectively are referred to herein as the "Assignment
Instruments."
(b) Commencing immediately upon Closing, the parties shall
cooperatively undertake and use their best efforts (i) to transfer to the Buyer
any permits, approvals, consents or authorizations ("Permits") previously issued
by any Government Authority to Sellers as the Operator, and pending applications
for Permits, (ii) to obtain any necessary consents, authorizations, and
approvals to the assignment of such Permits and release the Sellers from all
Permit obligations, and (iii) to have the Buyer replace the Sellers thereunder.
The Sellers do not guarantee the transfer of permits, nor does it agree to
guarantee compliance with them by the Buyer.
2.10 Net Returns Royalty. As further consideration for purchase of the
Sellers' Interest in the Assets, at the Closing the Buyer shall execute and
deliver to the Sellers a Royalty Deed in the form of Exhibit C attached hereto,
granting to the Sellers a Net Returns Royalty in all gold Products produced from
the Real Property and sold or deemed sold by the Buyer, to a maximum of
1,000,000 troy ounces of gold, on the terms and conditions set forth therein.
2.11 Mutual General Release. At the Closing, the Buyer and the Sellers
shall execute and deliver in counterparts a Mutual General Release Agreement in
the form of Exhibit D attached hereto, which, among other things, will require
the Sellers to dismiss with prejudice the Complaint for Declaratory Judgment and
Injunctive Relief in the complaint entitled Echo Bay Alaska, Inc., v. Coeur
Alaska, Inc. (Case No. IJU-95-831) filed by the Sellers in the Superior Court
for the State of Alaska, First Judicial District at Juneau.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES BY THE BUYER AND SELLERS
3.1 Capacity of the Buyer and Sellers. Each of the Buyer and the Sellers
represents and warrants as follows:
(a) That it is a corporation duly incorporated and in good standing in
its state of incorporation and that it is qualified to do business and is in
good standing in those states where necessary in order to carry out the purposes
of this Purchase Agreement;
(b) That it has the capacity to enter into and perform this Purchase
Agreement and all transactions contemplated herein and that all corporate and
other actions required to authorize it to enter into and perform this Purchase
Agreement have been properly taken; and
(c) That it will not breach any other agreement or arrangement by
entering into or performing this Purchase Agreement and that this Purchase
Agreement has been duly executed and delivered by it and is valid and binding
upon it and enforceable against it in accordance with its terms, except as may
be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES BY THE SELLERS
The Sellers hereby represent and warrant to the Buyer as follows:
4.1 Title to Sellers' Interest in the Assets. Upon the Sellers' delivery at
the Closing of the Assignment Instruments, the Buyer shall acquire all title to
the Sellers' Interest in the Assets free and clear of all Liens, interests and
claims of third parties created or claimed by, through or under Sellers other
than Permitted Liens. The Sellers do not make and Sellers disclaim any and all
warranties, express or implied, with respect to the condition or serviceability
of the Assets, including but not
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limited to validity or status of the patented and unpatented mining and millsite
claims, state claims, and agreements constituting the Real Property, and to
implied warranties of merchantability and fitness for a particular purpose, and
Sellers will deliver the Assets to the Buyer and transfer the Sellers' Interests
in the Assets as of the Closing where is, as is, with all defects, deficiencies
and faults. Some of the personal property is in fair to poor condition and
inoperable, and some defective conditions exist in facilities on real property.
The Buyer acknowledges and agrees that the Sellers shall not be liable for or
bound in any manner by, and the Buyer has not relied upon, any express or
implied, oral or written, information, warranty, guaranty, promise, statement,
inducement or representation by Sellers pertaining to the Assets or the
Kensington Venture, except as expressly set forth in this Purchase Agreement.
The Buyer has conducted its own inspection and investigation of the Assets to
its satisfaction and has independently investigated, analyzed and appraised the
condition, value, prospects and profitability thereof. The Buyer acknowledges
receipt before execution of this Purchase Agreement of a written report dated
May 31, 1995, entitled Kensington-Equipment & Facility Audit, prepared for
Sellers by Allan Laird. All matters disclosed therein are excluded from all
representations and warranties by Sellers in this Purchase Agreement. Buyer
shall hold that report in strictest confidence and shall disclose its contents
to no one without consent of Sellers or unless required by any Law or Judgement.
4.2 Financial Statements. Set forth in Schedule 4.2 is the unaudited
statement of operations of the Kensington Venture for the five-month period
ended May 26, 1995, and the unaudited balance sheet of the Kensington Venture as
of such date (the "Balance Sheet"), prepared in accordance with GAAP as modified
by historic accounting practice for the Kensington Venture. That date is
referred to hereinafter as the "Balance Sheet Date" and such statement of
operations and Balance Sheet collectively are referred to hereinafter as the
"Financial Statements." The books of account and related records of the
Kensington Venture fully and fairly reflect in reasonable detail the Assets,
liabilities and transactions of the Kensington Venture. The Financial Statements
(i) are materially correct and complete and in accordance with the books and
records of the Kensington Venture; and (ii) fully and fairly present the
financial condition, Assets and liabilities of the Kensington Venture as of the
Balance Sheet Date and the
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results of operations for the period covered thereby.
4.3 Compliance with Laws Other than Environmental Laws. To Sellers' best
knowledge and belief, and subject to the qualification stated in the final
sentence of this Section 4.3, the Kensington Venture has substantially complied
and is in substantial compliance with all material laws, statutes, rules,
regulations, codes and ordinances ("Laws") of any federal, state or local
government authority (a "Government Authority") applicable to the operation of
the Real Property, including without limitation those relating to occupational
safety and health and equal employment practices. To Sellers' best knowledge and
belief, no notice, citation, summons or order has been issued, no complaint has
been filed, no unpaid penalty has been assessed and no investigation or review
is pending or threatened by any Government Authority or other entity which has
had or could have a material adverse effect upon the Real Property with respect
to any alleged violation of any such Law by the Sellers or the Kensington
Venture. The representations and warranties of this Section 4.3 do not apply to
Environmental Laws.
4.4 Compliance with Environmental Laws.
(a) To Sellers' best knowledge and belief, the Real Property is not
subject to any notice, citation, summons or order pursuant to any Environmental
Law, and no complaint has been filed, no unpaid penalty has been assessed, and
no investigation is pending or threatened by any Government Authority or other
entity pursuant to any Environmental Law. Further to Sellers' best knowledge and
belief, none of the Real Property is the subject of any "Superfund" evaluation
or investigation, or any other investigation or proceeding of any Government
Authority evaluating whether any remedial action is necessary to respond to any
release of Hazardous Substances on or in connection with the Real Property.
"Hazardous Substances" has the meaning given in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C.A. ss.ss.9601 et
seq.), as amended, and Alaska Statutes Sec. 46.03.822 and the rules and
regulations promulgated thereunder.
(b) To Sellers' best knowledge and belief, no underground storage
tanks are located in or on the Real Property, except as described in the report
identified in Section 4.4(c).
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(c) The Buyer acknowledges receipt before execution of this Purchase
Agreement of a written report dated June 14, 1995, entitled Kensington Venture
Underground Gold Project, Juneau, Alaska, Investigation-Environmental
Liabilities and Permits Status, prepared for Sellers by S.M. Stoller
Corporation. All matters disclosed therein are excluded from all representations
and warranties by Sellers in this Purchase Agreement, and responsibilities
therefore are assumed by Buyer pursuant to Section 2.2(a). Buyer shall hold that
report in strictest confidence and shall disclose its contents to no one without
the consent of Sellers or unless required by any Law, Environmental Law or
Judgment.
4.5 No Known Undisclosed Liabilities. To Sellers' best knowledge and
belief, neither the Kensington Venture nor the Sellers as Operator have any
material liability or obligation of any nature, whether due or to become due,
absolute, contingent, or otherwise, including without limitation liability for
or in respect of Taxes (as hereinafter defined in Section 4.7 and except as
noted there) or any interest or penalties relating thereto, except for
liabilities that (i) are fully reflected in the Balance Sheet; or (ii) have been
incurred in the ordinary course of business since the Balance Sheet Date and are
fully reflected as liabilities on the books of account of the Kensington
Venture, none of which, individually or in the aggregate, are materially
adverse.
4.6 No Adverse Changes. To Sellers' best knowledge and belief, since the
Balance Sheet Date, (i) there has been no material adverse change in the Assets
or the financial condition or operations of the Kensington Venture; (ii) the
Assets and the financial condition and operations of the Kensington Venture have
not been materially and adversely affected as a result of any fire, explosion,
accident, casualty, labor trouble, flood, drought, riot, storm, condemnation, or
act of nature or public force or otherwise; and (iii) the Sellers as Operator
have not made any sale, assignment, lease or other transfer of any of the
Assets, other than in the normal course of business.
4.7 Taxes. The Sellers as Operator have caused the Kensington Venture to
(i) timely file any returns and reports required to be filed by it with respect
to all federal, state or local income, payroll withholding, excise, sale, use,
personal property, occupancy, business, real estate, or other tax (all the
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foregoing taxes, including interest and penalties thereon and estimated taxes,
are herein collectively referred to as "Taxes"), (ii) paid any Taxes shown to
have become due pursuant to such returns and reports and (iii) paid any other
Taxes due, except 1994 ad valorum taxes on the Real Property, including without
limitation, Taxes for which a notice of or assessment or demand for payment may
have been received. Ad valorem Taxes on Real Property for 1994 and 1995 will be
pro-rated as part of wind-up of the Kensington Venture.
4.8 Leases and Contracts. Schedule 4.8 hereto sets forth a list of any
material Leases and Contracts or comparable arrangements used by or related to
the Kensington Venture with respect to which the Kensington Venture or the
Sellers and the Buyer is the lessee or a contracting party (collectively, the
"Leases and Contracts"). All of such Leases and Contracts are in full force and
in effect, with no default or event of default or event or condition which,
after the giving of notice, the lapse of time or the happening of any other
event or condition, would constitute a material default or a material event of
default thereunder by the Kensington Venture or Sellers, or to the Sellers'
actual knowledge, by any other party thereto.
4.9 Consents. No consent, approval or authorization of, or registration or
filing with, any person or entity, including any Government Authority, is
required in connection with the execution and delivery of this Purchase
Agreement or the consummation of the transaction contemplated hereby. However,
the foregoing representations and warranties are not applicable to government
Permits and Permit applications by or on behalf of the Kensington Venture for
which assignments will be made and consents will be sought subsequent to
Closing.
4.10 No Pending Litigation or Proceedings. Except as described in Sections
2.11 and 5.2(b) hereof, there are no actions, suits, investigations or
proceedings pending, or to Sellers' best knowledge and belief, threatened (other
than informal threats by public interest groups to challenge future Permits)
against the Sellers or the Kensington Venture affecting the Sellers' Interest in
the Assets, the Kensington Venture's right to develop the Real Property, at law
or in equity, by or before any judicial or Government Authority. There are
presently no outstanding Judgments against the Sellers or the Kensington Venture
or affecting the Sellers' Interest in the Assets or the
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Sellers' rights and obligations under the Venture Agreement.
ARTICLE V
CERTAIN RIGHTS AND OBLIGATIONS OF THE PARTIES
5.1 Conduct of Operations Pending Closing. From and after the date hereof
and prior to the Closing, and unless the Buyer shall otherwise agree in writing,
the Sellers covenant that the Kensington Venture shall continue to be operated
in the normal course of business in accordance with the provisions of Article 8
of the Venture Agreement.
5.2 No Adverse Practices or Communications.
(a) Upon Closing, the Buyer will become the exclusive owner of the
Assets which, for purposes of this Purchase Agreement, may be known thereafter
as the "Kensington Project". Sellers are the exclusive owners of the AJ Project,
another mineral development property in the City and Borough of Juneau, Alaska.
The parties hereto, for themselves, their affiliated, subsidiary and parent
companies, and their respective directors, officers, employees and other
representatives, covenant henceforth not to engage in any practices or issue any
communications to third parties, oral or written, formal or informal, public or
private, with or without cover of confidentiality or intent of disclosure to
others which, (i) by practices or communications by Sellers are critical of,
derogatory or reflect adversely upon the Kensington Project or Buyer and its
representatives, or (ii) by practices or communications by Buyer are critical
of, derogatory or reflect adversely upon the AJ Project or Sellers and their
representatives. Such prohibitions include comments or discussions upon (i)
plans for development or operation, (ii) quality or viability of the respective
projects, (iii) the environmental, technological, legal, or operational
feasibility of them, (iv) managerial or administrative practices, and (v)
competence or capability of a party. Each party covenants not to engage in any
practices or issue any communications which will be detrimental to the
maintaining or obtaining by the other party of Permits or agreements for the
development or operation by the other party of its project, or detrimental to
the other party's relationships with representatives or agencies of Government
Authorities, contractors, vendors, consultants, investors, or the public and
community groups.
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(b) Buyer covenants for itself, its affiliated companies, and their
directors, officers, employees and other representatives, to raise no objection,
and to take no action, public or private, direct or indirect, based upon events,
conduct or circumstances which may have occurred prior to the Closing, which
would bar, preclude or interfere with Sellers' engagement and unrestricted use
of legal counsel of its choice, including counsel who formerly represented the
Kensington Venture, on any matters pertaining to the AJ Project or any other of
Sellers' projects or affairs in Alaska or elsewhere, including representation of
Sellers in the consolidated appeal (the "Appeal") before the Alaska Supreme
Court of Alaskans for Juneau et al v. City and Borough of Juneau, S-6330 and
Thane Neighborhood Association et al v. City and Borough of Juneau, S-6710.
Immediately upon Closing, Sellers shall withdraw as a party and Mr. James F.
Clark and the law firm of Robertson, Monagle and Eastaugh shall withdraw as
counsel from the Appeal insofar as it includes Alaskans for Juneau et al v. City
and Borough of Juneau, S-6330, substituting therefor Buyer and its selected
counsel, respectively, utilizing the forms contained in Exhibit E attached
hereto. Such withdrawal and substitution shall not affect participation by
Sellers or Mr. Clark and Robertson, Monagle and Eastaugh in that consolidated
Appeal for the companion case (S- 6710).
5.3 Access, Information and Documents.
(a) Prior to the Closing, the Sellers shall give to the Buyer and the
Buyer's counsel, accountants and other representatives (collectively, the
"Representatives") full access during normal business hours to all of the Real
and Personal Property, and the Kensington Venture's Contracts, Leases, books,
files, and records, and Sellers shall furnish to the Buyer at Buyer's cost
copies of all such documents which the Buyer may reasonably request. In lieu of
providing such access, the Sellers may elect to provide the Buyer with copies of
such materials relating to the Kensington Venture as the Buyer may reasonably
request. The Sellers shall have the right to redact from the books and records
or copies so provided any information relating to business, properties or assets
other than the Assets and business of the Kensington Venture. The Sellers may
retain copies at Buyer's cost of all books and records which it may deliver to
Buyer which relate to the Kensington Venture. The Sellers may use any data
produced in connection with the Kensington Venture in connection with the
Sellers' AJ Project,
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provided such use is not adverse to the Kensington Project.
(b) The Sellers shall preserve the books, records and files of the
Kensington Venture retained by Sellers, and all supporting vendors' invoices,
and other records and materials relating to the Assets, for not less than six
years after the Closing Date. The Buyer shall preserve and keep all books,
records and files which pertain to the Assets and which may be delivered by
Sellers to Buyer for not less than six years after the Closing Date. Before any
of such books, records and files are disposed of by the Sellers or the Buyer,
notice to such effect shall be given to the other party who shall have an
opportunity, at its own cost and expense, to remove, within 30 days after the
date of such notice, and to retain all or any such books, records and files.
During the period such books, records and files are so required to be preserved
and kept, duly authorized representatives of either party shall, on reasonable
prior notice to the other party, have access thereto during normal business
hours to examine, inspect, and copy such books, records and files.
(c) The Buyer agrees that prior to Closing it shall hold in strict
confidence, and cause its Representatives to hold in strict confidence, all
information obtained from the Sellers under this Section 5.3 and shall not
disclose, and shall not permit its Representatives to disclose, any portion of
such information to any third party except for (i) information which, at the
time of disclosure or thereafter, became or becomes generally known to the
public through no act or omission of the Buyer; (ii) information that is already
in possession of the Buyer free of any obligation of confidence to the Sellers
or any other third party; (iii) information that became or becomes available to
the Buyer from a third party who did not acquire such information under an
obligation of confidentiality, either directly or indirectly; or (iv)
information that was or becomes required to be disclosed by law, provided that
the Buyer shall give prior written notice of such disclosure to the Sellers, use
its best efforts to limit such disclosure and make such disclosure only to the
extent so required.
5.4 Employee Matters.
(a) For a period of 30 days after the Closing Date, Sellers shall use
reasonable efforts to make available to Buyer at its request those employees of
Sellers (not to exceed 4) who have been assigned to work exclusively or
primarily upon activities of
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the Kensington Venture, to provide assistance to Buyer after the Closing Date in
the transition of administration, management and permitting of the Assets. Buyer
shall reimburse Sellers for the cost of such employees' services which may be
requested from time to time by Buyer, on a per diem (or allocated portion)
basis, determined by (i) the particular employee's salary, (ii) Sellers'
expenses of holiday, vacation, illness and disability benefits, and other
customary allowances applicable to the salary or wages of the employee, and
(iii) Sellers' expense for group life and medical insurance and other
employer-paid benefits for the employee.
5.5 Expenses. Each party hereto shall bear its respective expenses incurred
in connection with the preparation, execution and performance of this Purchase
Agreement and the transactions contemplated hereby, including, without
limitation, all fees and expenses of agents, representatives, counsel and
accountants.
5.6 Buyer Payment of Cash Contributions. Prior to or at the Closing, the
Buyer shall pay in full, without challenge or dispute, to the Sellers as
Operator for the Joint Account of the Kensington Venture, all unpaid cash
contributions for which there shall have been a call by Operator to Buyer
pursuant to Section 5.2 of the Venture Agreement. Such cash contributions shall
be credited to the Joint Account and applied or distributed in the wind-up of
the Kensington Venture including, to the extent necessary, reimbursement of the
Sellers for obligations of the Kensington Venture paid by the Sellers on behalf
of the Buyer. To the extent that cash remains in the Kensington Venture Joint
Account after such reimbursement and the final accounting for the Kensington
Venture, the cash will be paid in equal amounts to the Sellers and the Buyer
pursuant to Section 5.8 hereof.
5.7 Prorations. Accrued but unpaid liabilities of the Kensington Venture,
including ad valorem taxes, shall be prorated as of the Closing Date. Taxes for
the current tax year shall be based upon the next prior year's taxes, without
regard to change in assessment or levy, prorated to the Closing Date.
5.8 Final Net Cash Adjustment. Final distribution of the Joint Account of
the Kensington Venture may not be completed on or before the Closing, pending
receipt of outstanding invoices, receipts and final accounting of the Joint
Account. Within 45 days
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after Closing, Sellers will provide a statement of all final invoices paid on
behalf of the Kensington Venture in accordance with GAAP modified by historic
accounting practice for the Kensington Venture. If necessary, additional cash
calls will be made to the parties. Any cash balance in the Joint Account,
together with any remaining monetary assets net of any remaining monetary
liabilities, after the final net cash adjustment, shall not be included in the
Assets for purposes of this Purchase Agreement, and shall be distributed
proportionately to Sellers and to Buyer.
5.9 Socioeconomic Impact Mitigation. The Mitigation Agreement between the
Kensington Venture and the City and Borough of Juneau, entered into in
conjunction with the issuance by the City and Borough of Juneau of a Large Mine
Conditional Use Permit for the Kensington Venture (a subject of the Appeal)
provided for consideration of revenues from the AJ Project to mitigate
socioeconomic impacts of the Kensington Venture. The parties shall cooperatively
endeavor to obtain agreement with the City and Borough of Juneau to treat each
project individually and independently in consideration of revenues to mitigate
socioeconomic impacts. Buyer shall indemnify, defend , and hold harmless Sellers
from any Loss attributable to consideration by the City and Borough of Juneau of
revenues from the AJ Project to mitigate or offset the socioeconomic impacts of
the Kensington Project as described in the Socioeconomic Impact Mitigation
Agreement for the Kensington Venture and supported by Findings 23 and 24 of the
Kensington Large Mine Conditional Use Permit issued by the City and Borough of
Juneau.
5.10 Purchase of Certain Assets by the Sellers. Attached as Schedule 5.10
is an inventory of equipment commonly owned in undivided interests by Sellers
independently of the Kensington Venture and by the Kensington Venture,
respectively. The depreciated book value of the interest therein of the
Kensington Venture as shown on the books of the Kensington Venture, and the 50%
share of that value attributed to Buyer as a Participant also are shown on
Schedule 5.10. The interest of the Kensington Venture in that equipment shall be
acquired by Echo Bay Alaska Inc. upon termination of the Kensington Venture by
payment by Sellers to Buyer of an amount equal to Buyer's 50% share of the value
of Kensington Venture's interest. Buyer at Closing shall execute a bill of sale
for the interest conveyed by it, in the form attached in Schedule 5.10 at 5.10-6
without representation or
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warranty of title, except against those claiming or to claim by, through or
under Buyer.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions Precedent to Obligations of the Buyer. The obligation of the
Buyer to proceed with the Closing is subject to the fulfillment on or prior to
the Closing Date of the following conditions (any one or more of which may be
waived in whole or in part by the Buyer at the Buyer's option):
(a) Representations and Warranties. The representations and warranties
of the Sellers contained in this Purchase Agreement shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
such date, and the Buyer shall have received a certificate to such effect signed
by the President of the Sellers;
(b) Performance and Compliance. The Sellers shall have materially
performed all of the covenants and complied with all of the provisions required
by this Purchase Agreement to be performed or complied with by it on or before
the Closing Date, and the Buyer shall have received a certificate to such effect
signed by the President of the Sellers;
(c) Opinion of Counsel. The Buyer shall have received from Terry N.
Fiske, Vice President and General Counsel (USA) for the Sellers, an opinion
dated the Closing Date in form and substance reasonably satisfactory to the
Buyer, with respect to the matters set forth in Sections 3.1, 4.9 and 4.10 and
with respect to such other matters as the Buyer may reasonably request;
(d) Satisfactory Instruments. Any instruments and documents required
on the Sellers' part to effectuate and consummate the transactions contemplated
hereby shall be delivered to the Buyer and shall be in form and substance
reasonably satisfactory to the Buyer's counsel;
(e) Consents. Any consents necessary to prevent a material default
from occurring under any Contracts or Leases
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shall have been obtained by the Sellers;
(f) Litigation. No Judgment shall be in effect which restrains or
prohibits the transactions contemplated hereby or which would limit or adversely
effect the Buyer's ownership or control of the Sellers' Interest in the Assets,
except for the Appeal, and other than informal threats by public interest groups
to challenge future permits, there shall not be pending or threatened, by or
before any judicial or Government Authority, any action or proceeding
challenging any of the transactions contemplated by this Purchase Agreement or
which might affect the Buyer's right to own the Sellers' Interest in the Assets,
or to operate the Real Property after the Closing Date;
(g) Approval of Boards of Directors. This Purchase Agreement and all
transactions contemplated hereby shall have been duly approved by all required
corporate action on the part of the Boards of Directors of the Buyer and the
Sellers;
(h) No Material Adverse Change. There shall have been no material
adverse change since the Balance Sheet Date in the operations, Assets, prospects
or condition (financial or otherwise) of the Kensington Venture; and
(i) Assignment Instruments. The Sellers shall have executed and
delivered to the Buyer the Assignment Instruments, except the Consents for
assignment of Permits for which provision is made in Section 2.9 for
post-Closing acquisition.
6.2 Conditions Precedent to the Obligations of the Sellers. The obligation
of the Sellers to proceed with the Closing is subject to the fulfillment on or
prior to the Closing Date of the following conditions (any one or more of which
may be waived in whole or in part by the Sellers at the Sellers' option):
(a) Representations and Warranties. The representations and warranties
of the Buyer contained in this Purchase Agreement shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
such date, and the Buyer shall have delivered to the Sellers a certificate of
the President of the Buyer to such effect;
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(b) Performance and Compliance. The Buyer shall have materially
performed all of the covenants and complied with all the provisions required by
this Purchase Agreement to be performed or complied with by it on or before the
Closing Date, and the Buyer shall have delivered to the Sellers a certificate of
the President of the Buyer to such effect;
(c) Opinion of Counsel for Buyer. The Sellers shall have received from
Freedman, Levy, Kroll & Simonds, counsel for the Buyer, an opinion dated the
Closing Date in form and substance reasonably satisfactory to the Sellers with
respect to the matters set forth in Section 3.1 and with respect to such other
matters as the Sellers may reasonably request;
(d) Satisfactory Instruments. All instruments and documents required
on the part of the Buyer to effectuate and consummate the transactions
contemplated hereby shall be delivered to the Sellers and shall be in form and
substance reasonably satisfactory to the Sellers' counsel;
(e) Litigation. No Judgment shall be in effect which restrains or
prohibits the transactions contemplated hereby and there shall not be pending or
threatened, by or before any judicial or Government Authority, any action or
proceeding challenging any of the transactions contemplated by this Purchase
Agreement.
(f) Approval of Board of Directors. This Purchase Agreement and all
transactions contemplated hereby shall have been duly approved by all required
corporate action on the part of the Boards of Directors of the Buyer and the
Sellers; and
(g) Buyer Payment of Cash Contributions. Prior to or at the Closing,
the Buyer shall have paid the cash contribution calls as provided in Section
5.6.
6.3 Termination.
(a) When Agreement May Be Terminated. This Purchase Agreement may be
terminated at any time prior to the Closing:
(i) by mutual consent of the Buyer and the Sellers; or
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(ii) by the Buyer if there has been a material misrepresentation
by the Sellers hereunder or a material breach by the Sellers of any of their
representations and warranties set forth herein, or if any of the conditions
specified in Section 6.1 hereof shall not have been satisfied; or
(iii) by the Sellers if there has been a material
misrepresentation by the Buyer hereunder or a material breach by the Buyer of
any of its warranties or representations set forth herein or if any of the
conditions specified in section 6.2 hereof shall not have been satisfied; or
(iv) by the Buyer or the Sellers if the Closing shall not have
occurred prior to August 1, 1995, unless such date is extended by mutual consent
of the Buyer and the Sellers.
(b) Effect of Termination. In the event of the termination of this
Purchase Agreement by either the Sellers or the Buyer as provided above, this
Purchase Agreement shall forthwith terminate, except for the obligations set
forth in Sections 5.3, 5.5, 5.6, 9.4 and the confidentiality provisions of
Sections 5.3(c), 4.1 and 4.4(c), and there shall be no liability on the part of
either the Sellers or the Buyer, except for liabilities arising from a material
misrepresentation or material breach as specified in Section 6.3(a).
(c) Materiality. The materiality of an alleged breach or an alleged
misrepresentation proffered by one of the parties as justification for
termination of this Purchase Agreement pursuant to Section 6.3(a) shall be
determined based on an objective, reasonable person standard, such that an
alleged breach or alleged misrepresentation shall not be considered "material"
unless a reasonable person in the position of prudence and business judgment
such as is exercised by similarly situated business persons, would not have
entered into this Purchase Agreement with knowledge of the occurrence of the
act, omission or representation alleged to constitute a material breach or
material misrepresentation justifying termination.
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ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by the Sellers. The Sellers hereby agree to indemnify,
defend and hold harmless the Buyer from and against:
(a) any Loss, liability, claim, obligation, damage, cost, penalty or
deficiency of or to the Buyer arising out of or resulting from (i) any material
misrepresentation or material breach of warranty on the part of the Sellers
contained in this Purchase Agreement, or (ii) any material breach by Sellers in
the performance of their covenants, agreements, or obligations in this Purchase
Agreement; and
(b) any actions, Judgments, and expenses (including without limitation
reasonable attorneys' fees and all other expenses incurred in investigating,
preparing or defending any litigation, proceeding or investigation, commenced or
threatened) incident to any of the foregoing or the enforcement of this Section
7.1, except as otherwise provided in Section 2.2(a) or elsewhere in this
Purchase Agreement.
7.2 Indemnification by the Buyer. The Buyer hereby agrees to indemnify,
defend and hold harmless the Sellers from and against any of the following:
(a) Any Loss, liability, claim, obligation, damage, cost, penalty, or
deficiency of or to the Sellers arising out of or resulting from (i) any
material misrepresentation or material breach of warranty on the part of the
Buyer contained in this Purchase Agreement; (ii) any material breach or default
by the Buyer in the performance of its covenants, agreements or obligations in
this Purchase Agreement; (iii) the Assumed Obligations and Liabilities, (iv)
activities on and conditions of the Real Property after the Closing Date, (v)
reclamation of the Real Property.
(b) Except for the exclusion set forth at the end of this Section
7.2(b), any Loss, liability, claim, obligation, damage, cost, or penalty
(including, without limitation, reasonable attorneys' fees, experts' fees and
other expenses
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incurred in defending against litigation or administrative enforcement action,
either pending or threatened) arising out of or relating to any claim or cause
of action which (1) arises in whole or part pursuant to any of the following:
(i) Water Pollution Control Act (Clean Water Act), 33 USC
ss.ss. 1251 et seq.;
(ii) Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), 42 USC ss.ss. 9601 et seq.;
(iii) Alaska Statutes Sec. 46.03.822 (Strict Liability for
Release of Hazardous Substances);
(iv) Resource Conservation and Recovery Act (RCRA), 42 USC
ss.ss. 6901 et seq.;
(v) Clean Air Act, 42 USCss.ss.7401 et seq.;
(vi) Endangered Species Act, 16 USCss.ss.1531 et seq.;
(vii) General Mining Law, 30 USC Chaps. 2,11,12,12A,15,16 and
ss.ss. 151 and 162; and
any other federal, state or local law (including without limitation state or
federal common law) concerning hazardous, toxic or waste materials or
substances, protection or reclamation of land, water, air or the environment, or
land management, now existing or hereafter enacted or created, any amendment to
or reauthorization thereof, and all administrative rules, orders and regulations
promulgated pursuant thereto (collectively "Environmental Laws"), and (2) is
based on activities conducted or occurring on or in relation to the Real
Property before or after the Closing Date. Buyer hereby releases any cause of
action or claim against Sellers which it now has or may hereafter acquire under
any Environmental Laws (including, without limitation, any such cause of action
or claim for contribution or cost recovery under CERCLA) arising out of or
relating to activities conducted or occurring on or in relation to the Real
Property before or after the Closing Date. This indemnification excludes any
fines
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or monetary civil penalties which are excepted from application of Section 2.2;
and
(c) Any actions, Judgments, and expenses (including reasonable
attorneys fees and all other expenses incurred in investigating, preparing or
defending any litigation or proceeding, commenced or threatened) incident to any
of the foregoing or the enforcement of this Section 7.2.
7.3 Representation, Cooperation and Settlement.
(a) A party seeking indemnification pursuant to this Article VII (an
"Indemnitee") shall give prompt written notice to the party from whom
indemnification is sought (an "Indemnitor") of any claim asserted against such
Indemnitee which might give rise to a claim by such Indemnitee against such
Indemnitor based on these indemnity provisions, stating the nature and basis of
the claim and the amount (or a good faith estimate) thereof.
(b) An Indemnitor shall have full responsibility and authority with
respect to the disposition of any action, suit or proceeding brought against an
Indemnitee with respect to which such Indemnitor may have liability under these
indemnity provisions (an "Action"); provided that if such Indemnitor shall fail
or refuse to exercise such responsibility and authority within a reasonable time
after receiving notice from the Indemnitee of such Action, then such Indemnitee
may do so at such Indemnitor's expense. If any Action is brought against an
Indemnitee which is defended by an Indemnitor, such Indemnitee shall have the
right, at its own expense, to be represented by counsel of its own choosing and
with whom counsel for such Indemnitor shall confer in connection with the
defense of any such Action. If an Action is brought by a third party, each of
the Indemnitee and Indemnitor shall make available to the counsel and
accountants of the other all of its books and records relating to such Action,
and the parties agree to render to each other such assistance as may reasonably
be requested in order to insure the proper and adequate defense of any such
Action. With regard to litigation of third parties for which the Buyer or the
Sellers is entitled to indemnification, such indemnification shall be paid by
the indemnifying party upon: (i) the entry of a Judgment against the Indemnitee
and the expiration of any applicable appeal period; (ii) the entry of an
unappealable Judgment or final appellate Judgment against the Indemnitee; or
(iii) a settlement with the
26
<PAGE>
consent of the Indemnitor, which consent shall not be unreasonably withheld,
provided that no such consent need be obtained if the Indemnitor fails or
refuses to respond to the notice, as provided above.
7.4 Determination of Indemnification Amounts and Related Matters.
(a) The respective liability of either Buyer or Sellers under this
Article VII shall be limited to Losses exceeding in the aggregate $100,000 (the
"Deductible"), and the Indemnitor shall have no liability under this Article VII
for Losses constituting the Deductible.
(b) Losses indemnified under this Article VII shall not include
consequential damages.
(c) In calculating amounts payable to an Indemnitee hereunder, the
amount of the indemnified Losses shall be reduced by the amount of any insurance
proceeds paid to the Indemnitee for such Losses.
ARTICLE VIII
COVENANTS OF THE PARTIES AFTER THE CLOSING
8.1 Further Assurances. From time to time after the Closing Date, upon the
request of the Buyer, the Sellers shall (i) make available to the Buyer any
records, documents or other information relating to the Assets and retained by
the Sellers and (ii) execute, deliver and acknowledge all such further
instruments of transfer and conveyance and take all such other actions as the
Buyer may reasonably require to more effectively transfer the Sellers' Interest
in the Assets to the Buyer. The parties further agree to execute, deliver and
acknowledge all other documents which are necessary or reasonable to fully
consummate this Purchase Agreement and the purposes of the parties hereunder.
8.2 Delivery of Payments and Documents. From and after the Closing, the
Sellers, as promptly as practicable after receipt thereof, shall, properly
endorse (if necessary) and deliver to the Buyer any payments or documents
received by the Sellers on account of any item constituting a part of the Assets
or otherwise
27
<PAGE>
relating to the Kensington Venture.
ARTICLE IX
MISCELLANEOUS
9.1 Publicity.
(a) This Purchase Agreement shall not be recorded, and except as
provided in Section 9.1(b), its provisions shall not be disclosed by any party,
or by its directors, officers, or representatives, without the consent of the
other party, except for enforcement by judicial process. However, the Sellers
and the Buyer shall consult and cooperate with each other with respect to the
content and timing of any press releases and other public announcements, and any
oral or written statements to the Sellers' or the Buyer's employees or
stockholders concerning this Purchase Agreement and the transactions
contemplated hereby. Neither the Sellers nor the Buyer shall make any such
release, announcement, or statements without the prior written consent of the
other, which shall not be unreasonably withheld or delayed; provided, however,
that the Sellers and the Buyer may at any time make any announcement required by
any Law or Environmental Law so long as such party, promptly upon learning of
such requirement, notifies the other of such requirement and consults with the
other in good faith with respect to the wording of such announcement.
(b) The parties at Closing shall execute a Memorandum of this Purchase
Agreement in the form of Exhibit F attached hereto, which shall be forthwith
recorded by Buyer in the records of the City and Borough of Juneau, Alaska, and
a photo copy of the recorded form shall be provided to Sellers. Photocopies of
that Memorandum may be delivered by either of the parties to such other parties
as Buyer or Sellers may choose.
9.2 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given and
received upon receipt on a business day, and on the next business day if
delivered on other than a business day, prepaid in all cases other than telefax,
addressed to the other party at the following addresses, or telefax numbers in
the case of a telefax (or at such other address or telefax number as shall be
given in writing by any party to the others):
28
<PAGE>
If to the Buyer, to:
Coeur Alaska, Inc.
505 Front Avenue
Post Office I
Coeur d'Alene, Idaho 83814
Telephone (208) 667-3511
Telefax (208) 667-2213
Attn: Dennis E. Wheeler
Chairman, President and
Chief Executive Officer
With a copy to:
William F. Boyd, Esq.
Coeur d'Alene Mine Corporation
505 Front Avenue
Post Office I
Coeur d'Alene, Idaho 83814
Telephone (208) 667-0613
Telefax (208) 765-2943
and
Walter Freedman, Esq.
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W.
Suite 825
Washington, D.C. 20036
Telephone (202) 457-5101
Telefax (202) 457-5151
If to the Sellers, to:
Echo Bay Mines
370 Seventeenth Street (Suite 4050)
Denver, Colorado 80202
Telephone (303) 592-8055
Telefax (303) 892-5615
Attn: Richard C. Kraus
President and
Chief Executive Officer
29
<PAGE>
with a copy to:
Echo Bay Mines
370 17th Street (Suite 4050)
Denver, Colorado 80202
Telephone (303) 592-8000
Telefax (303) 592-8070
Attn: Vice President and Controller
and
Echo Bay Alaska Inc.
3100 Channel Drive, Suite #2
Juneau, Alaska 99801
Telephone (907)586-4161
Telefax (907) 463-5740
Attn: General Manager
9.3 Successors and Assigns. This Purchase Agreement and all rights and
powers granted hereby shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns.
9.4 Governing Law. This Purchase Agreement shall be governed by and
interpreted in accordance with the internal laws but not the conflicts of laws
rules of the State of Alaska.
9.5 Pre-closing Casualty Loss. If there occurs Loss or damage to any of the
Personal Property in which the Sellers' Interest in Assets is to be sold to
Buyer hereunder, or to any of the surface facilities upon the Real Property,
resulting from fire, theft, earthquake, flood, storm, explosion or other
casualty subsequent to the date of this Purchase Agreement and prior to Closing,
the Purchase Price for the Sellers' Interest in the Assets shall be reduced by
50% of the amount of loss of value of those Assets caused by such casualty. If
the parties are unable to agree upon that loss of value they shall select an
independent appraiser to designate it, and the costs of the appraisal shall be
borne equally by them.
9.6 Removal of Indicia. As soon as practicable, but not later than 45 days
after the Closing, the Buyer will remove,
30
<PAGE>
obliterate or destroy and no longer use any of the Sellers' identification or
trademarks, signs or emblems of any kind and character, located at the
facilities or offices of the Kensington Project or elsewhere, or on the Assets
or used in the sale of Products of the Real Property.
9.7 Counterparts. This Purchase Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
9.8 Amendment. To be effective, any amendment or waiver to this Purchase
Agreement must be in writing and signed by the party against whom enforcement of
the same is sought.
9.9 Severability. If any portion of this Purchase Agreement shall for any
reason be held by a court of competent jurisdiction to be invalid and
unenforceable, the valid and enforceable provisions will continue to be given
effect and bind the parties hereto.
9.10 Entire Agreement. This Purchase Agreement and the Exhibits and
Schedules hereto, each of which is hereby incorporated herein, set forth all of
the promises, covenants, agreements, conditions and undertakings between the
parties hereto with respect to the subject matter hereof, and supersede all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written.
This Venture Termination and Asset Purchase Agreement executed as of the
date first stated above.
Attest: COEUR ALASKA, INC.
/s/William F. Boyd By:/s/Dennis E. Wheeler
- ------------------ -----------------------
William F. Boyd Dennis E. Wheeler
Secretary Chairman, President and
Chief Executive Officer
31
<PAGE>
Attest: ECHO BAY ALASKA INC.
/s/Terry N. Fiske By: /s/Peter H. Cheesbrough
- ----------------- ---------------------------
Asst. Secretary
Peter H. Cheesbrough
Senior Vice President and
Chief Financial Officer
Attest: ECHO BAY EXPLORATION INC.
/s/Terry N. Fiske By: /s/Peter H. Cheesbrough
- ------------------ ---------------------------
Asst. Secretary
Peter H. Cheesbrough
Senior Vice President and
Chief Financial Officer
Full performance and satisfaction by Buyer of all obligations representations,
warranties, covenants, and indemnifications pursuant to the foregoing Purchase
Agreement is unconditionally guaranteed by Coeur D'Alene Mines Corporation.
Attest: COEUR D'ALENE MINES CORPORATION
/s/William F. Boyd By:/s/Dennis E. Wheeler
- ------------------ -----------------------
William F. Boyd Dennis E. Wheeler
Secretary Chairman, President and
Chief Executive Officer
32
<PAGE>
Full performance and satisfaction by Sellers of all obligations representations,
warranties, covenants, and indemnifications pursuant to the foregoing Purchase
Agreement is unconditionally guaranteed by Echo Bay Mines Ltd.
Attest: ECHO BAY EXPLORATION INC.
/s/Terry N. Fiske By: /s/Peter H. Cheesbrough
- ------------------ ---------------------------
Asst. Secretary
Peter H. Cheesbrough
Senior Vice President and
Chief Financial Officer
33
<PAGE>
EXHIBIT A
TO
VENTURE TERMINATION
AND
ASSET PURCHASE AGREEMENT
DEED
This Deed dated and effective ________________, 1995 from Echo Bay
Exploration Inc. and Echo Bay Alaska Inc. (collectively the "Sellers"), each a
Delaware corporation qualified to do business in the State of Alaska, with
offices at 3100 Channel Drive, Juneau, Alaska 99801, to Coeur Alaska, Inc.
("Buyer"), a Delaware corporation qualified to do business in the State of
Alaska, with offices at 505 Front Avenue, Coeur d'Alene, Idaho 83814.
For $100.00 and other good and valuable consideration, the receipt and
adequacy of which are acknowledged, Sellers grant, transfer and convey to Buyer
all of Sellers' right, title and interest (being an undivided 50%) in and to
those real properties in the Juneau Recording District, State of Alaska
described in Attachment I (the "Properties"), to have and to hold to Buyer, its
successors and assigns.
This Deed is granted pursuant to a Venture Termination and Asset Purchase
Agreement between Buyer and Sellers dated as of June 30, 1995, ("Purchase
Agreement"), a memorandum of which is to be recorded in the records of the
Juneau Recording District, State of Alaska. Pursuant to the Purchase Agreement,
Sellers represent that the interest conveyed hereby is free and clear of all
liens, interests and claims of third parties created or claimed by, through or
under Sellers other than the following:
a. Liens arising from or imposed by the conduct of the business of the
Kensington Venture, including without limitation, inchoate
materialmen's, mechanic's, workmen's, repairmen's or other like liens;
b. Liens for taxes not yet delinquent;
c. Rights reserved by any government authority to regulate the affected
Properties;
34
<PAGE>
d. Interests of lessors of leased Properties and liens, security
interests, or other encumbrances affecting their interests; and
e. Any liens that do not in any material respect, individually or in the
aggregate, adversely affect or impair the value or use of the
Properties as currently being used for the Kensington Venture in the
ordinary course of its business.
Sellers do not make and Sellers disclaim any and all warranties, express or
implied, with respect to the validity or status of the patented and unpatented
mining and millsite claims, state claims, and agreements (for which no
representation or warranty of assignability is given), their condition,
serviceability or fitness for a particular purpose. Sellers give no other
representations or warranties, but Buyer shall have full substitution and
subrogation in and to all rights and actions in warranty which Sellers may have
as to the Properties.
Sellers agree to execute and deliver any additional document or do any
other act as may be necessary to carry out the intent of this Deed and the
Purchase Agreement, including, without limitation, execution of a corrective
Deed if errors in the descriptions are disclosed for any of the Properties.
Executed and delivered as of the date first stated above.
Attest: ECHO BAY ALASKA INC.
- --------------------- By:---------------------------
Asst. Secretary Richard C. Kraus
President and Chief Executive
Officer
35
<PAGE>
Attest: ECHO BAY EXPLORATION INC.
- --------------------- By:----------------------------
Asst. Secretary Richard C. Kraus
President and Chief Executive
Officer
ACKNOWLEDGMENTS
STATE OF COLORADO )
CITY AND ) ss:
COUNTY OF DENVER )
On this ______ day of __________,1995, before me, personally appeared Richard C.
Kraus, who acknowledged himself to be President and Chief Executive Officer of
Echo Bay Alaska Inc., a Delaware corporation, and that he, as such President and
Chief Executive Officer being authorized to do so executed the foregoing
instrument for the purpose therein contained, by signing the name of the
corporation.
- ---------------------------
Notary Public
Commission Expires:--------------
STATE OF COLORADO )
CITY AND ) ss:
COUNTY OF DENVER )
On this ______ day of __________,1995, before me, personally appeared Richard C.
Kraus, who acknowledged himself to be President and Chief Executive Officer of
Echo Bay Exploration Inc., a Delaware corporation, and that he, as such
President and Chief Executive Officer being authorized to do so executed the
foregoing instrument for the purpose therein contained, by signing the name of
the corporation.
- ---------------------------
Notary Public
Commission Expires:--------------
36
<PAGE>
EXHIBIT B
TO
VENTURE TERMINATION
AND
ASSET PURCHASE AGREEMENT
BILL OF SALE
In consideration of $100.00 and other valuable consideration, the receipt
and adequacy of which are acknowledged, ECHO BAY EXPLORATION INC. and ECHO BAY
ALASKA INC., herein referred to as Sellers, hereby sell and deliver to COEUR
ALASKA, INC., herein referred to as Buyer, all of Sellers' right, title and
interest in that personal property described in Attachment I hereto, located at
the Kensington Mine site [general map location U.S.G.S. Quadrangle Juneau (D-4),
Alaska], except as otherwise indicated on Attachment I, which was heretofore
owned by or held for the use of the Kensington Venture, in which Buyer and
Sellers were participants. The Kensington Venture has been terminated and this
Bill of Sale is made pursuant to a Venture Termination and Asset Purchase
Agreement dated June 30, 1995 among Buyer and Sellers.
This Bill of Sale is without warranty of title except that the personal
property is free and clear of all liens, interests and claims of third parties
created or claimed by, through or under Sellers other than Permitted Liens as
defined in the Venture Termination and Asset Purchase Agreement. The Sellers do
not make and Sellers disclaim any and all warranties, express or implied, with
respect to the condition or serviceability of the personal property or its
fitness for a particular purpose, and Sellers convey and deliver the personal
property to the Buyer where is, as is, with all defects, deficiencies and
faults. Some of the personal property is in fair to poor condition and
inoperable.
37
<PAGE>
IN WITNESS WHEREOF, Echo Bay Exploration Inc., and Echo Bay Alaska Inc. have
executed this Bill of Sale on July _____, 1995.
ECHO BAY EXPLORATION INC.
ECHO BAY ALASKA INC.
By:-------------------------
Title:----------------------
STATE OF COLORADO )
CITY AND ) ss:
COUNTY OF DENVER )
THIS IS TO CERTIFY that on this _____ day of July, 1995, before me the
undersigned, a Notary Public in and for the State of Colorado, duly commissioned
and sworn, personally appeared ______________________,
___________________________ of Echo Bay Exploration Inc. and Echo Bay Alaska
Inc., to me known and known to me to be the identical individual described in
and who executed the within BILL OF SALE and acknowledged that he signed the
same as his free and voluntary act and deed, for the uses and purposes therein
mentioned.
WITNESS my hand and official seal the day, month, and year last above
written.
--------------------------------
Notary Public, State of Colorado
My Commission Expires:___________
38
<PAGE>
EXHIBIT C
TO
VENTURE TERMINATION
AND
ASSET PURCHASE AGREEMENT
ROYALTY DEED
This Royalty Deed, effective _________, 1995 (the "Effective Date"),
by Coeur Alaska, Inc., a Delaware corporation with executive offices at 505
Front Avenue, Coeur d'Alene, Idaho 83814 ("Coeur") to Echo Bay Exploration Inc.,
a Delaware corporation with executive offices at Suite 4050, 370 17th Street,
Denver, Colorado 80202 ("Echo Bay").
Recitals
Coeur and Echo Bay are parties to a Venture Termination and Asset
Purchase Agreement, dated as of June 30, 1995 (the "Purchase Agreement"),
pursuant to which Echo Bay and its affiliate Echo Bay Alaska Inc. have sold and
Coeur has purchased Echo Bay's and Echo Bay Alaska Inc.'s combined undivided 50%
interest in certain real properties in Juneau, Alaska, formerly constituting
assets of the Kensington Venture between those parties, which properties are
described in Attachment I to this Royalty Deed (the "Properties"). Pursuant to
the Purchase Agreement, and as part of the consideration for that sale of
interests to Coeur, Coeur agreed to convey to Echo Bay a Net Returns Royalty
interest in 100% of gold produced from the Properties to a maximum of 1,000,000
troy ounces of gold.
Royalty
For valuable consideration, the receipt and sufficiency of which are
acknowledged, Coeur hereby grants and covenants to Echo Bay as follows:
39
<PAGE>
1. Grant of Royalty Interest. Coeur hereby grants and conveys to Echo Bay,
its successors and assigns, a Net Returns Royalty in gold produced from the
Properties, payable on the terms and conditions herein specified. The Net
Returns Royalty payable to Echo Bay shall be equal to the Effective Rate
(defined in Section 3) of Net Returns (defined in Section 4) from the sale or
deemed sale of all gold and gold-bearing substances in any form, including dore,
other concentrates, smelted or refined product or bullion produced from the
Properties ("Gold Minerals").
2. Commencement of Royalty Payments and Termination of Royalty. Payments of
the Net Returns Royalty shall commence when Coeur shall have received Proceeds
equal to the sum of Thirty Two Million Five Hundred Thousand (U.S.) Dollars
($32,500,000) plus Coeur's Construction Investment (the two amounts collectively
referred to as "Recoupment"). The Net Returns Royalty shall terminate when Echo
Bay shall have received payments of Net Returns Royalty on sale of one million
troy ounces of gold or contained gold in Gold Minerals produced from the
Properties. As used in this Royalty Deed, "Proceeds" means (i) the total of Net
Returns (as defined in Section 4) received by Coeur, and its successors and
assigns as owners of the Properties, from the sale or deemed sale of Gold
Minerals from the Properties , (ii) any revenue from sale of capital assets,
equipment and machinery the cost or amortized cost or depreciation of which
shall have been included in Coeur's Construction Investment, and (iii) any
insurance proceeds for which the premium was included in Coeur's Construction
Investment.
Proceeds shall be a credit for Recoupment whether received by Coeur before or
after Commencement of Commercial Production.
As used in this Royalty Deed, "Coeur's Construction Investment" means the
following expenditures determined in accordance with generally accepted
accounting principles for metallic mining ventures within the United States
applied on a consistent basis (hereinafter "GAAP"), which are incurred by Coeur
after the Effective Date:
(a) Direct capital costs for the construction of a mine and processing
facility on the Properties, incurred prior
40
<PAGE>
to the Commencement of Commercial Production (defined below) including:
(i) construction of a mine and mill, beneficiation facility,
or processing plant to produce and mill, treat or process
Gold Minerals produced from the Properties;
(ii) mining and milling or other processing equipment and
machinery for the facilities referred to in subsection
2.(a)(i); and
(iii) construction of ancillary works such as roads, utilities,
tailings disposal facilities, and camp facilities to serve
the Properties.
(b) The following operating costs incurred by Coeur after the
Commencement of Commercial Production and prior to Recoupment:
(i) Mining Costs. Costs incurred by Coeur in exploring for,
mining, extracting, removing and transporting to a mill
Gold Minerals produced from the Properties. Such costs
shall include, without limitation, those incurred for
labor, machinery operation, fuel, explosives and other
materials, exploration drilling, developmental or ore
delineation drilling, allowance for depreciation and
amortization of mining equipment and machinery acquired
after the Commencement of Commercial Production, payment
of other royalties burdening the Properties on the
Effective Date, and an allowance for future costs,
(pro-rata based upon recoverable ounces of gold in proven
and probable reserves as determined by the feasibility
study) anticipated to be incurred by Coeur in reclaiming
the Properties in accordance with applicable laws and
regulations. Mining costs shall not include depletion or
income taxes.
(ii) Milling and Processing Costs. Costs incurred in milling or
processing Gold Minerals produced from the Properties at
Coeur's mill or
41
<PAGE>
produced from the Properties at Coeur's mill or central
processing facility utilized by Coeur to process Gold
Minerals produced from the Properties, if any,
(hereinafter referred to as the "Mill").
(iii) General and Administrative Costs. Costs properly allocable
to the administration of the Properties, and the
production of Gold Minerals therefrom, but not including
any general and administrative costs incurred with respect
to operations of Coeur or its affiliates not directly
related to the administration of the Properties or the
production of Gold Minerals therefrom.
(iv) Selling Costs. Costs incurred in connection with the
marketing of Gold Minerals produced from the Properties
other than any costs deducted pursuant to subsection 4(b).
(v) Taxes. All taxes levied against Coeur's operation of the
Properties, excluding income taxes and any taxes
deductible under subsection 4(b)(iii) but including mining
and property
(c) Exploration and Development Costs. Costs incurred by Coeur after
the Effective Date hereof and prior to Commencement of Commercial Production
with respect to exploring and developing the Properties and all matters
connected therewith including, but not limited to, costs relating to geological,
geochemical and geophysical studies, exploration and developmental drilling,
sampling and assaying, mine design and development, acquisition of mining or
processing equipment or machinery, direct expenses of making application for and
obtaining environmental and regulatory permits from government agencies
(including reasonable attorney's fees, but excluding expenses of negotiations or
obligations attributable to agreements or concessions to private parties or
non-governmental organizations other than for bona fide services or materials
for exploration or development of the Properties), and any other
42
<PAGE>
costs which would be included within mining costs and/or milling and processing
costs if such costs were incurred after the Commencement of Commercial
Production.
If any of the costs otherwise includible in Coeur's Construction Investment are
incurred partly for the benefit of any other properties or interests of Coeur,
only the portion of such costs reasonably attributable to development and
operation of the Properties in accordance with GAAP shall be included in Coeur's
Construction Investment.
As used in this Royalty Deed, "Commencement of Commercial Production" means the
earliest to occur of:
(1) the first day of the calendar quarter following the
quarter in which from the Properties or Gold Minerals
produced therefrom are produced for a period of thirty
consecutive days at a production rate of at least 90% of
the design capacity of the Production Facility, or
(2) the date when Coeur declares Commencement of Commercial
Production for its accounting, corporate reporting, or
announcement purposes.
By the 30th day after each calendar quarter, commencing the third quarter of
1995, until Commencement of Commercial Production, Coeur shall provide to Echo
Bay a detailed account, certified by Coeur's chief financial officer, of all
costs included in the accrual of Coeur's Construction Investment during that
quarter. Coeur shall notify Echo Bay of the date on which the Commencement of
Commercial Production occurs within 30 days after of such occurrence, and Coeur
shall provide to Echo Bay with such notice (i) a statement of the total amount
of Coeur's Construction Investment and (ii) a detailed account certified by its
chief financial officer, of all costs included in Coeur's Construction
Investment, which may include by incorporation the prior quarterly reports.
After Commencement of Commercial Production and before commencement of payments
upon the Net Returns Royalty, Coeur will provide to Echo Bay detailed quarterly
accounts by the 30th day following each calendar quarter, certified by Coeur's
chief financial officer, showing the amounts and basis of credits toward
Recoupment until
43
<PAGE>
Recoupment is achieved. All accounts and records of Coeur from which
calculations of Coeur's Construction Investment and Recoupment are or may be
made or verified shall be kept in accordance with GAAP, and they shall be
retained for not less than one year after Recoupment has been achieved. All such
accounts and records shall be available upon reasonable notice and at reasonable
times for audit by Echo Bay or on its behalf.
3. Royalty Rate. The rate of Net Returns Royalty payable to Echo Bay (the
"Effective Rate") shall vary with the Monthly Average Gold Price for the
calendar month in which the royalty accrues, as follows:
Monthly Average Effective Rate
Gold Price
--------------- ---------------
Less than $400 0%
$400 - $424.99 1.0%
$425 - $449.99 1.5%
$450 - $474.99 2.0%
$475 and greater 2.5%
As used in this Royalty Deed, "Monthly Average Gold Price" shall mean the
average London Bullion Market Association P.M. Gold Fix, calculated by dividing
the sum of all such prices reported for the calendar month by the number of days
for which such prices were reported. If the London Bullion Market Association
P.M. Gold Fix ceases to be published, all such references shall be replaced with
references to prices of gold for immediate delivery in the most nearly
comparable established market as such prices are published in Metals Week or a
similar publication.
4. Determination of Net Returns Royalty Payments. The amount of the Net
Returns Royalty payable to Echo Bay shall be equal to the Effective Rate of Net
Returns. As used in this Royalty Deed, "Net Returns" means the Gross Returns
less Allowable Deductions.
a) As used in this Royalty Deed, "Gross Returns" means:
(i) If Coeur causes refined gold (meeting the specifications
of the London Bullion Market
44
<PAGE>
Association) to be produced from ores mined from the
Properties, the refined gold shall be deemed to have been
sold at the Monthly Average Gold Price for the month in
which it was produced, and the Gross Returns shall be
determined by multiplying Gold Production during the
calendar month by the Monthly Average Gold Price. As used
herein, "Gold Production" shall mean the quantity of
refined gold outturned to Coeur's account by an
independent third-party refinery for gold produced from
the Properties during the calendar month on either a
provisional or final settlement basis.
(ii) If Coeur sells other Gold Minerals such as ores, dore or
concentrates produced from ores mined from the Properties
to an unaffiliated third party, the Gross Returns shall be
equal to the gross amount of the proceeds actually
received by Coeur from the sale of such ore, dore or
concentrate.
(iii) If Coeur sells other Gold Minerals such as ores, dore or
concentrates produced from ores mined from the Properties
to an affiliated party, the Gross Returns shall be
determined as provided in Subsections 4(a)(i) based on the
quantity of gold, contained in such ores, dore or
concentrates actually received by Coeur from the sale of
such ore, dore, or concentrates.
If outturn of refined gold is made by an independent third party refinery
on a provisional basis, the Gross Returns shall be based upon the amount of such
provisional settlement, but shall be adjusted in subsequent statements to
account for the amount of refined gold established by final settlement by such
refinery.
(b) As used in this Royalty Deed, "Allowable Deductions" means the
following costs, charges and expenses paid or incurred by Coeur with respect to
produced Gold Minerals after such Gold Minerals leave the Properties:
(i) third-party charges for treatment in
45
<PAGE>
milling, smelting or refining processes including
sampling, assaying and representation costs, penalties,
and other processor deductions;
(ii) actual costs of transportation of Gold Minerals from the
Properties to the place of treatment and then to the place
of sale; and
(iii) sales, use, severance, net proceeds of mine, and any other
tax on or measured by production of Gold Minerals (but
excluding any tax on net income).
5. Trading Activities. Coeur shall have the right to engage in forward
sales, future trading or commodity options trading, and other price hedging,
price protection, and speculative arrangements ("Trading Activities") which may
involve the possible delivery of gold, produced from the Properties. Echo Bay
shall not be entitled to participate in the proceeds or be obligated to share in
any losses generated by Coeur's Trading Activities.
6. Payment of Royalty. The Net Returns Royalty shall become due and payable
quarterly on the last day of the calendar month next following the last day of
the calendar quarter in which the same accrues. Net Returns Royalty payments
shall be accompanied by a statement showing in reasonable detail the quantities
and grades of the Gold Minerals produced and sold or deemed sold by Coeur in the
preceding calendar quarter; the average monthly price determined as herein
provided for refined gold on which Net Returns Royalty is due; Allowable
Deductions; and other pertinent information in sufficient detail to explain the
calculation of the Net Returns Royalty payment.
7. Royalty on Stockpiled Dore. Each quarterly royalty statement shall also
list the quantity and quality of any gold dore which has been retained as
inventory for more than 60 days. Echo Bay shall have 15 days after receipt of
the statement to either:
(a) request that the dore be deemed sold as provided in Subsection
4(a) above as of such fifteenth day utilizing the mine weights and assays for
such dore and utilizing a deemed charge for Allowable Deductions, which shall be
based upon the
46
<PAGE>
most recent charges to Coeur for such services by an unaffiliated third party;
or
(b) elect to wait until the time that refined gold from such dore is
actually outturned to Coeur or such dore is sooner sold by Coeur.
The failure of Echo Bay to respond within such time shall be deemed to be an
election under Subsection 7(b) above. No Net Returns Royalty shall be due with
respect to stockpiles of ores or concentrates unless and until such ores or
concentrates are actually sold.
8. Audit, Challenge and Finality of Royalty Payments. All books and records
used by Coeur to calculate the Net Returns Royalty shall be kept in accordance
with GAAP. Echo Bay shall have the right, upon reasonable notice and at
reasonable times, to have conducted an audit of Coeur's accounts and records
relating to the calculation of the Net Returns Royalty, by an independent firm
of certified public accountants reasonably acceptable to Coeur. If such
independent audit determines that there has been a deficiency or an excess in
the payment made to Echo Bay such deficiency or excess shall be resolved by
adjusting the next quarterly Net Returns Royalty payment due hereunder. Echo Bay
shall pay all costs of such audit unless a deficiency of ten percent or more of
the amount due is determined to exist. Coeur shall pay the costs of such audit
if a deficiency of ten percent or more of the amount due is determined to exist.
All Net Return Royalty payments shall be considered final and in full
satisfaction of all obligations of Coeur with respect thereto unless Echo Bay
gives Coeur written notice describing and setting forth a specific objection to
the calculation thereof within one year after receipt by Echo Bay of the
quarterly statement. Failure on the part of Echo Bay to make claim on Coeur for
adjustment in the one-year period specified in this section shall establish the
correctness of such statement and preclude the filing of exceptions thereto or
making of claims for adjustment thereon.
9. Operations. Coeur, by the grant of this Net Returns Royalty or
otherwise, shall not be deemed subject to any duty to diligently explore for or
produce Gold Minerals from the Properties, and the timing, manner, method and
amounts of such
47
<PAGE>
exploration and production shall be in the sole discretion of Coeur.
10. Commingling of Production. Upon advance notice to Echo Bay, Coeur shall
have the right to commingle any Gold Minerals or from the Properties with , like
Gold Minerals and produced from other properties, provided that such commingling
is accomplished after such ores, Gold Minerals or have been weighed or measured
and sampled in accordance with sound mining and metallurgical practices. Any Net
Returns Royalty due hereunder shall be determined by equitable allocation
between Gold Minerals and from the Properties and like Gold Minerals and from
other properties in accordance with sound accounting and metallurgical
practices. The practices and procedures to be utilized for commingling and
allocation shall be approved in advance by Echo Bay which approval shall not be
unreasonably withheld. Echo Bay shall be afforded reasonable opportunity to
observe and verify those processes and practices in operation.
11. Notices. All notices required or permitted to be given hereunder shall
be given in writing and shall be sent by the parties by registered or certified
mail, telex, facsimile transmission or by express delivery service to the
address set forth below or to such other address as either party may later
designate by like notice to the other:
Coeur:
Coeur Alaska, Inc.
505 Front Avenue
Coeur d'Alene, Idaho 83814
Attn: President
Echo Bay:
Echo Bay Exploration Inc
Suite 4050, 370 17th Street
Denver, Colorado 80202
Attn: President
All notices required or permitted to be given hereunder shall be deemed to have
been given on the date of receipt if received on a business day or on the next
business day following receipt if received on other than a business day.
48
<PAGE>
12. Assignment. Echo Bay may freely assign or encumber its Net Returns
Royalty and its rights under this Royalty Deed.
13. Governing Law. This Royalty Deed and the rights and obligations of the
parties hereunder shall be governed by the laws of the State of Alaska, except
its rules pertaining to conflict of laws.
IN WITNESS WHEREOF, Coeur has executed this Royalty Deed on ________, 1995, but
effective as of the Effective Date.
COEUR ALASKA, INC.
By:
-----------------------
Dennis E. Wheeler
Chairman, President and
Chief Executive Officer
Attest:
- ------------------
William F. Boyd
Secretary
STATE OF ___________ )
) ss.
COUNTY OF __________ )
The foregoing Royalty Deed was acknowledged before me this day of June,
1995, by Dennis E. Wheeler, the Chairman, President, and Chief Executive
Officer, and William F. Boyd, the Secretary, respectively, of Coeur Alaska Inc.
Witness my hand and official seal.
My commission expires:--------------
-------------------------
Notary Public
49
<PAGE>
EXHIBIT D
TO
VENTURE TERMINATION
AND
ASSET PURCHASE AGREEMENT
MUTUAL GENERAL RELEASE AGREEMENT
THIS MUTUAL GENERAL RELEASE AGREEMENT, dated as of ______, 1995 among the
following parties:
Coeur Alaska, Inc. ("Coeur Alaska"), a Delaware corporation, and Coeur
d'Alene Mines Corporation, an Idaho corporation, those two herein collectively
"Coeur," with executive offices at 505 Front Street, Post Office Box I, Coeur
d'Alene, Idaho 83814;
-and-
Echo Bay Alaska Inc. ("Echo Bay Alaska") and Echo Bay Exploration Inc.
("Echo Bay Exploration"), each a Delaware corporation with executive offices at
370 17th Street, Suite 4050, Denver, Colorado 80202; and Echo Bay Mines Ltd., a
Canada corporation with offices at 1210 Manulife Place, 10180 - 101 Street,
Edmonton, Alberta T5J3S4, those three herein collectively "Echo Bay."
Recitals
Echo Bay Alaska, Echo Bay Exploration and Coeur Alaska are parties to a
Venture Termination and Asset Purchase Agreement, dated as of June 30, 1995,
(the "Purchase Agreement") relating to the sale by Echo Bay to Coeur of certain
undivided property interests held by Echo Bay as tenant in common with Coeur
pursuant to an Amended Venture Agreement, dated as of November 1, 1990 between
Coeur Alaska, Echo Bay Alaska, and Echo Bay Exploration (the "Venture
Agreement").
The venture formed pursuant to the Venture Agreement (the
50
<PAGE>
"Kensington Venture") engaged in the exploration, evaluation, and development of
mineral resources on lands within the City and Borough of Juneau, Alaska.
Certain controversies and claims exist between Coeur and Echo Bay
concerning their respective performances pursuant to the Venture Agreement, and
on April 18, 1995, Echo Bay commenced an action for Declaratory Judgment and
Injunction Relief in the Superior Court for the State of Alaska, First Judicial
District at Juneau, Case No. IJU-95-831, captioned: Echo Bay Alaska, Inc., v.
Coeur Alaska, Inc.
Echo Bay and Coeur desire to settle Case No. IJU-95-831 and all other
claims and controversies between them both asserted and unasserted, including
without limitation all claims arising or which could arise out of and related to
the Venture Agreement, the Kensington Venture and the properties of the
Kensington Venture.
Pursuant to Section 2.11 of the Purchase Agreement, Echo Bay and Coeur
desire to execute this Mutual General Release Agreement.
Now, therefore, in consideration of the covenants set forth in the Purchase
Agreement, the transactions consummated pursuant thereto, and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged by
the parties, Echo Bay and Coeur agree as follows:
Agreement
1. Release by Echo Bay. Echo Bay, for itself, its successors, assigns,
subsidiaries, parent companies, affiliated companies, officers, directors,
employees, and agents, releases and discharges Coeur and its successors,
assigns, subsidiaries, parent companies, affiliated companies, officers,
directors, employees and agents, whether present or past, from and against any
and all causes of action, judgments, claims, rights, damages, charges,
liabilities, and demands of any nature whatsoever, whether known or unknown,
asserted or unasserted arising out of or related to the subject matter of Case
No. IJU-95-831, the Venture Agreement, the Kensington Venture, or the status,
condition or operation of the properties of the Kensington Venture, except and
only to the extent otherwise
51
<PAGE>
created, preserved or provided by the Purchase Agreement.
2. Release by Coeur. Coeur, for itself, its successors, assigns, subsidiaries,
parent companies, affiliated companies, officers, directors, employees, and
agents releases and discharges Echo Bay and its successors, assigns,
subsidiaries, parent companies, affiliated companies, officers, directors,
employees and agents, whether present or past from and against any and all
causes of action, judgments, claims, rights, damages, charges, liabilities, and
demands of any nature whatsoever, whether known or unknown, asserted or
unasserted arising out of or relating to the subject matter of Case No.
IJU-95-831, the Venture Agreement or the Kensington Venture, or the status,
condition or operation of the properties of the Kensington Venture, except and
only to the extent created, preserved or provided by the Purchase Agreement.
3. Motion to Dismiss. Simultaneously with the execution of this Mutual General
Release Agreement, Echo Bay Alaska and Coeur Alaska shall execute a Stipulation
of Dismissal with prejudice for filing in Case No. IJU-95-831, in the form of
Attachment I to this Mutual General Release Agreement. Echo Bay and Coeur shall
file the Motion and Stipulation for Dismissal With Prejudice with the court no
later than the third day on which the court is open for business following the
date of execution of this Mutual General Release Agreement.
4. No Admission of Liability. Neither the Purchase Agreement nor this Mutual
General Release Agreement shall be deemed an admission by either party of any
wrongdoing or liability of any nature.
5. Confidentiality. The terms of this Mutual General Release Agreement will be
maintained in confidence and will not be disclosed to third parties, except to
the extent that such disclosure is authorized by the Purchase Agreement,
submitted to judicial process, or ordered by a court of law in litigation or
specifically required by applicable statute, government rule, regulation.
6. Governing Law. This Mutual General Release Agreement and the rights and
obligations of the parties hereunder shall be governed by the laws of the State
of Alaska.
52
<PAGE>
7. Binding Effect. This Mutual General Release Agreement shall be binding upon
and inure to the benefit of the parties and their successors, assigns,
subsidiaries, parent companies, affiliated companies, officers, directors,
employees and agents.
8. Entire Agreement. This Mutual General Release Agreement and the Purchase
Agreement represent and express the entire agreement of the parties hereto with
respect to the subject matter of this Mutual General Release Agreement and may
be modified or changed only by a written instrument signed on behalf of all
parties. No waiver by either party, whether express or implied, of any of the
provisions of this Mutual General Release Agreement or of any breach or default
of either party, shall constitute a continuing waiver or a waiver of any other
provision of this Mutual General Release Agreement, and no such waiver by either
party shall prevent such party from enforcing any and all provisions of this
Mutual General Release Agreement or from acting upon the same or any subsequent
breach or default of the other party.
9. Parties. All singular references herein to either Coeur or Echo Bay shall be
to all parties included in the designation of that identification set forth in
the introductory paragraph of this Mutual General Release Agreement. Coeur
d'Alene Mines Corporation and Echo Bay Mines Ltd are not parties to the Purchase
Agreement nor to the Venture Agreement, but they are guarantors of the
performance of the Purchase Agreement by Coeur Alaska, Inc., and by Echo Bay
Exploration Inc. and Echo Bay Alaska Inc., respectively, and they join in this
Mutual General Release Agreement because of their status as respective parent
companies of the other parties hereto and to extinguish any basis of controversy
or claim which might be asserted against them also.
10. Additional Assurances. The parties authorize and instruct their attorneys of
record to file all documents necessary for the entry of an order of dismissal
with prejudice of Case No. IJU-95-831. The parties agree to take all additional
actions and execute any additional documents reasonably necessary to achieve
such dismissal or the intent and purposes of this Mutual General Release
Agreement.
53
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Mutual General
Release Agreement on the date first above stated.
Attest: ECHO BAY ALASKA INC.
- --------------------- By:---------------------------
Asst. Secretary Richard C. Kraus
President and Chief Executive
Officer
Attest: ECHO BAY EXPLORATION INC.
- --------------------- By:----------------------------
Asst. Secretary Richard C. Kraus
President and Chief Executive
Officer
Attest: ECHO BAY MINES LTD.
- --------------------- By:----------------------------
Asst. Secretary Richard C. Kraus
President and Chief Executive
Officer
Attest: COEUR ALASKA, INC.
- ------------------ By:----------------------------
Secretary Dennis E. Wheeler, Chairman
President and Chief
Executive Officer
54
<PAGE>
Attest: COEUR D'ALENE MINES CORPORATION
- ------------------ By:----------------------------
Secretary Dennis E. Wheeler, Chairman
President and Chief
Executive Officer
55
<PAGE>
EXHIBIT E
TO
VENTURE TERMINATION
AND
ASSET PURCHASE AGREEMENT
SUBSTITUTION OF PARTY AND COUNSEL IN APPEAL
56
<PAGE>
IN THE SUPREME COURT OF THE STATE OF ALASKA
ALASKANS FOR JUNEAU, HAINES ANB )
AND ANS CHAPTER 5, JUNEAU AUDUBON )
SOCIETY, LYNN CANAL CONSERVATION )
SOCIETY, INC., AND SOUTHEAST )
ALASKA CONSERVATION COUNCIL, INC., )
)
Appellants, )
)
v. )
)
CITY AND BOROUGH OF JUNEAU AND ) Supreme Court No. S-6330
THE KENSINGTON VENTURE, )
) Superior Court No.
Appellees. ) IJU-93-669-CI
- -------------------------------------
STIPULATION FOR SUBSTITUTION OF COUNSEL
Pursuant to Alaska R. App. P. 517(b), the parties formerly comprising
the Kensington Venture (Echo Bay Alaska Inc. and Coeur Alaska, Inc.), and their
respective counsel, hereby stipulate that Mr. David Crosby of Wickwire, Greene,
Crosby, Brewer & Seward, P.C., (who hereby enters his appearance in this matter)
is substituted as counsel for appellee, the now non- existent Kensington
Venture, the assets of which have been transferred to Coeur Alaska, Inc., which
Mr. Crosby represents.
Effective June 30, 1995, the venture agreement pursuant to which Echo
Bay Alaska Inc. and Coeur Alaska, Inc. constituted the Kensington Venture
business arrangement was terminated and Echo Bay Alaska Inc.'s interest therein
transferred to Coeur Alaska, Inc. The Kensington mine project, therefore, is now
E-1
<PAGE>
wholly owned by Coeur Alaska, Inc. Accordingly, as is required under Alaska R.
App. P. 517(a), a motion to substitute parties has been filed in the superior
court. When a certified copy of an order substituting Coeur Alaska, Inc., for
the Kensington Venture has been obtained from the superior court, counsel for
Coeur Alaska, Inc. will file it in this Court, along with a proper motion
seeking substitution of Coeur Alaska, Inc. for the Kensington Venture as a party
appellee.
Neither this stipulation nor the motion to be filed to substitute
parties has any bearing whatever on the consolidated appeal (Supreme Court No.
S-6710) concerning the AJ mine project. The parties to that appeal, as well as
their counsel, remain the same.
Dated this ----- day of July, 1995
ECHO BAY ALASKA INC. COEUR ALASKA, INC.
By: By:
- --------------------------- ------------------------
Peter H. Cheesbrough James A. Sabala
Senior Vice President and Senior Vice President and
Chief Financial Officer Chief Financial Officer
- --------------------------- ------------------------
James F. Clark David C. Crosby
Of Attorneys for Echo Bay Of Attorneys for
Alaska Inc. Coeur Alaska, Inc.
IT IS SO ORDERED.
Dated ------------------------ -------------------------
Supreme Court Justice
E-2
<PAGE>
IN THE SUPERIOR COURT OF THE STATE OF ALASKA
FIRST JUDICIAL DISTRICT AT JUNEAU
ALASKANS FOR JUNEAU, HAINES ANB )
AND ANS CHAPTER 5, JUNEAU AUDUBON )
SOCIETY, LYNN CANAL CONSERVATION )
SOCIETY, INC., AND SOUTHEAST )
ALASKA CONSERVATION COUNCIL, INC., )
)
Appellants, )
)
v. )
)
CITY AND BOROUGH OF JUNEAU AND ) Supreme Court No. S-6330
THE KENSINGTON VENTURE, )
) Superior Court No.
Appellees. ) IJU-93-669-CI
- -------------------------------------
MOTION TO SUBSTITUTE PARTIES
COMES NOW, Echo Bay Alaska Inc., formerly a 50% owner of the
Kensington Venture project, by and through counsel, and pursuant to Alaska R.
Civ. P. 77, and in accordance with Alaska R. App. P. 517(a), moves the superior
court to substitute Coeur Alaska, Inc., for the Kensington Venture as a party
appellee, and to issue an order to that effect, for transmittal to the Supreme
Court, where appellants' appeal of the superior court's decision in this matter
is now pending (Supreme Court No. S-6330). This substitution of parties is
necessary because the Kensington Venture business arrangement has been
terminated and Coeur
E-3
<PAGE>
Alaska, Inc., is now the sole owner of the Kensington mine project.
This motion is supported by the attached memorandum of points and
authorities with affidavit, and is accompanied by a proposed order.
Respectfully submitted, this ----- day of July, 1995.
ROBERTSON, MONAGLE & EASTAUGH, P.C.
By:-------------------------------
James F. Clark
Of Attorneys for
Echo Bay Alaska Inc.
E-4
<PAGE>
IN THE SUPERIOR COURT OF THE STATE OF ALASKA
FIRST JUDICIAL DISTRICT AT JUNEAU
ALASKANS FOR JUNEAU, HAINES ANB )
AND ANS CHAPTER 5, JUNEAU AUDUBON )
SOCIETY, LYNN CANAL CONSERVATION )
SOCIETY, INC., AND SOUTHEAST )
ALASKA CONSERVATION COUNCIL, INC., )
)
Appellants, )
)
v. )
)
CITY AND BOROUGH OF JUNEAU AND ) Supreme Court No.
THE KENSINGTON VENTURE, )
) Superior Court No.
Appellees. ) IJU-93-669-CI
- -------------------------------------
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO SUBSTITUTE PARTIES
This matter is now pending before the Alaska Supreme Court (Supreme
Court No. S-6330). Substitution of parties is necessary because the Kensington
Venture, which is listed as a party appellee, has ceased to exist. Alaska Rules
of Appellate Procedure rule 517(a) provide as follows:
Whenever a substitution of parties to a pending appeal is necessary
other than by reason of death, it shall be made by proper proceedings
instituted for the purpose in the trial court. On proper motion and
the filing of a certified copy of the order of substitution made by
the trial court, a like order of substitution shall be made in the
appellate court.
Thus, an order substituting parties must be obtained from the
E-5
<PAGE>
trial court before the Supreme Court will enter an order substituting parties.
Although the superior court heard this matter in its role as an appellate
reviewer of administrative decisions, there is no other forum involved that can
be likened to a trial court. The City and Borough of Juneau (CBJ) Assembly heard
the matter as an administrative appeal of the CBJ Planning Commission's permit
decision, and the commission is not a quasi-judicial tribunal. Moreover, the CBJ
appeals procedure code does not provide a procedural mechanism for substitution
of parties. See CBJ 01.50.010 et seq. Echo Bay Alaska Inc., therefore,
respectfully requests that the superior court order substitution of Coeur
Alaska, Inc., for the Kensington Venture. Coeur Alaska, Inc. consents to this
substitution. See Affidavit of Terry N. Fiske [Fiske Aff.] at 3.
Effective June 30, 1995, the venture agreement pursuant to which the Kensington
Venture business arrangement existed was terminated and Echo Bay Alaska Inc.'s
interest therein transferred to Coeur Alaska, Inc. Fiske Aff. at 2. The
Kensington mine project, therefore, is now wholly owned by Coeur Alaska, Inc.
Fiske Aff. at 2. Echo Bay Alaska Inc., formerly a 50% owner of the Kensington
mine project, no longer has an ownership interest in the mine, nor will it be a
party to the CBJ large mine permit, the conditional use review process for which
is the subject of this appeal. Fiske Aff. At 2.
Echo Bay Alaska Inc. is no longer operator of the Kensington Venture.
Fiske Aff. at 2. Echo Bay Alaska Inc.'s counsel, who represented Echo Bay Alaska
Inc. as operator for the venture in this appeal, will not be representing Coeur
Alaska, Inc. A
E-6
<PAGE>
stipulation to that effect, substituting Coeur Alaska, Inc.'s own
counsel for Echo Bay Alaska Inc.'s has been filed in the Supreme Court.
For the foregoing reasons, Echo Bay Alaska Inc. respectfully requests
that the Court order substitution of Coeur Alaska, Inc., for the Kensington
Venture as a party appellant.
Respectfully submitted, this ------- Day of July, 1995.
ROBERTSON, MONAGLE & EASTAUGH, P.C.
By:-------------------------------
James F. Clark
Of Attorneys for
Echo Bay Alaska Inc.
E-7
<PAGE>
IN THE SUPERIOR COURT OF THE STATE OF ALASKA
FIRST JUDICIAL DISTRICT AT JUNEAU
ALASKANS FOR JUNEAU, HAINES ANB )
AND ANS CHAPTER 5, JUNEAU AUDUBON )
SOCIETY, LYNN CANAL CONSERVATION )
SOCIETY, INC., AND SOUTHEAST )
ALASKA CONSERVATION COUNCIL, INC., )
)
Appellants, )
)
v. )
)
CITY AND BOROUGH OF JUNEAU AND ) Supreme Court No.
THE KENSINGTON VENTURE, )
) Superior Court No.
Appellees. ) IJU-93-669-CI
- -------------------------------------
AFFIDAVIT OF TERRY N. FISKE
STATE OF ALASKA )
) ss.
FIRST JUDICIAL DISTRICT )
I, TERRY N. FISKE, being first duly sworn, on oath state as follows:
1. I am Vice President and General Counsel (USA) of Echo Bay Alaska
Inc.
2. Echo Bay Alaska Inc. formerly owned a 50% interest in the
Kensington mine project, as a co-venturer with Coeur Alaska, Inc., pursuant to
an amended venture agreement. That amended venture agreement terminated
effective June 30, 1995, when Echo Bay Alaska Inc's 50% interest in the assets
held by the
E-8
<PAGE>
Kensington Venture business arrangement were transferred to Coeur Alaska, Inc.
Coeur Alaska, Inc. now owns 100% of the Kensington mine project. As a result,
Echo Bay Alaska Inc. is no longer the operator for the Kensington Venture or the
mine project and has no interest in, nor will it be a party to, the conditional
use permit from the City and Borough of Juneau for the Kensington mine project.
3. Coeur Alaska, Inc. has consented in the asset purchase agreement to
substitution of Coeur Alaska, Inc., as a party appellee in this appeal, in the
place of the Kensington Venture.
FURTHER YOUR AFFIANT SAYETH NAUGHT.
DATED this ----- Day of July, 1995.
--------------------
Terry N. Fiske
SUBSCRIBED AND SWORN to before me this ----- Day of July, 1995.
---------------------
Notary Public for Colorado
My Commission Expires: ------------
E-9
<PAGE>
IN THE SUPERIOR COURT OF THE STATE OF ALASKA
FIRST JUDICIAL DISTRICT AT JUNEAU
ALASKANS FOR JUNEAU, HAINES ANB )
AND ANS CHAPTER 5, JUNEAU AUDUBON )
SOCIETY, LYNN CANAL CONSERVATION )
SOCIETY, INC., AND SOUTHEAST )
ALASKA CONSERVATION COUNCIL, INC., )
)
Appellants, )
)
v. )
)
CITY AND BOROUGH OF JUNEAU AND ) Supreme Court No.
THE KENSINGTON VENTURE, )
) Superior Court No.
Appellees. ) IJU-93-669-CI
- -------------------------------------
ORDER TO SUBSTITUTE PARTIES
Echo Bay Alaska Inc. having moved the Court to substitute Coeur Alaska,
Inc., for the Kensington Venture as a party appellee, Coeur Alaska, Inc., having
consented to the substitution, and no opposition to the substitution having been
entered by appellants,
IT IS ORDERED that Coeur Alaska, Inc., is substituted for the Kensington
Venture as an appellee, and that henceforth the appellees in this matter consist
solely of the City and Borough of Juneau and Coeur Alaska, Inc.
-------------------
Michael A. Thompson
Superior Court Judge
E-10
<PAGE>
EXHIBIT F
TO
VENTURE TERMINATION
AND
ASSET PURCHASE AGREEMENT
MEMORANDUM
This Memorandum dated _____, 1995 by Coeur Alaska, Inc., herein the
"Buyer," a Delaware corporation with executive offices at 505 Front Avenue, Post
Office Box I, Coeur d'Alene, Idaho 83814; and Echo Bay Alaska Inc., herein "Echo
Bay Alaska", and Echo Bay Exploration Inc., herein "Echo Bay Exploration," those
two collectively herein the "Sellers," each a Delaware corporation with
executive offices at 370 17th Street, Suite 4050, Denver, Colorado 80202, and
operating offices at 3100 Channel Drive, Juneau, Alaska 99801.
RECITALS
WHEREAS, there has existed the Kensington Venture pursuant to an Amended
Venture Agreement dated November 1, 1990, a memorandum of which was recorded May
26, 1992 in Book 359 at Pages 776-805 of the records of the Juneau Recording
District, State of Alaska, between Buyer and Echo Bay Exploration (the "Venture
Agreement"), pursuant to which each party thereto owned a 50% Participating
Interest therein (defined in Section 1.18 of the Venture Agreement),
representing an undivided 50% ownership interest in the Assets (defined in
Section 1.5 of the Venture Agreement)as tenants in common; and
WHEREAS, Echo Bay Alaska succeeded to certain interests of Echo Bay
Exploration in the Kensington Venture and the Venture Agreement, including the
position and functions of Operator of the Kensington Venture under the Venture
Agreement, pursuant to an Agreement and Transfer between them dated January 31,
1991, approved by Seller on August 19, 1991; and
WHEREAS, the Kensington Venture engaged in the exploration, evaluation, and
development of mineral resources within the real property in the Juneau
Recording District, State of Alaska, described in Attachment I to this
Memorandum; and
57
<PAGE>
Whereas, Buyer and Sellers have terminated the Kensington Venture and the
Venture Agreement, and wish to give public notice thereof as follows:
Notice
A. Effective _______, 1995 the Kensington Venture was terminated pursuant
to a Venture Termination and Asset Purchase Agreement dated June 30, 1995
between Buyer and Sellers (The "Purchase Agreement").
B. Pursuant to the Purchase Agreement, the interests of the Sellers in the
real property owned by the Kensington Venture described in Attachment I were
conveyed to Buyer, together with the personal property of the Kensington Venture
except for miscellaneous items of office equipment, furniture, computers and
accessories, and certain automobiles maintained in Juneau, Alaska in which the
interests of Buyer were conveyed to Sellers.
C. Sellers no longer have any interest in the assets or business of the
former Kensington Venture, as operator or otherwise, except pursuant to a
royalty deed from Buyer to Echo Bay Exploration Inc. dated the date of this
Memorandum.
D. All operational and financial responsibilities for the conduct
henceforth of activities upon or for the assets or business of the former
Kensington Venture have been assumed by the Buyer as the sole owner thereof.
E. This Memorandum is for the sole purpose of public notice of the
termination of the Kensington Venture, and it shall have no effect upon the
respective rights, obligations, liabilities, and interests of Buyer and Sellers
pursuant to the Purchase Agreement, the provisions of which take priority over
any interpretation or application of this Memorandum as between Buyer and
Sellers.
58
<PAGE>
Executed as of the date first stated above.
Attest: COEUR ALASKA, INC.
- ------------------ By:----------------------------
Secretary Dennis E. Wheeler, Chairman
President and Chief
Executive Officer
Attest: ECHO BAY ALASKA INC.
- --------------------- By:---------------------------
Asst. Secretary Richard C. Kraus
President and Chief Executive
Officer
Attest: ECHO BAY EXPLORATION INC.
- --------------------- By:----------------------------
Asst. Secretary Richard C. Kraus
President and Chief Executive
Officer
ACKNOWLEDGMENTS
STATE OF )
) ss:
COUNTY OF )
On this ______ day of __________,1995, before me, personally appeared Dennis E.
Wheeler, who acknowledged himself to be President, Chairman and Chief Executive
Officer of Coeur Alaska, Inc, a Delaware corporation, and that he, as such
Chairman, President and Chief Executive Officer, being authorized to do so
executed the foregoing instrument for the purpose therein contained, by signing
the name of the corporation.
59
<PAGE>
STATE OF )
) ss:
COUNTY OF )
On this ______ day of __________,1995, before me, personally appeared Richard C.
Kraus, who acknowledged himself to be President and Chief Executive Officer of
Echo Bay Alaska Inc., a Delaware corporation, and that he, as such President and
Chief Executive Officer being authorized to do so executed the foregoing
instrument for the purpose therein contained, by signing the name of the
corporation.
STATE OF )
) ss:
COUNTY OF )
On this ______ day of __________,1995, before me, personally appeared Richard C.
Kraus, who acknowledged himself to be President and Chief Executive Officer of
Echo Bay Exploration Inc., a Delaware corporation, and that he, as such
President and Chief Executive Officer being authorized to do so executed the
foregoing instrument for the purpose therein contained, by signing the name of
the corporation.
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