<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): September 25, 1997
CANYON RESOURCES CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 0-14329 84-0800747
- --------------------------------------------------------------------------------
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
14142 Denver West Parkway, Suite 250
Golden, CO 80401
- --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (303) 278-8464
------------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 2 Acquisition or Disposition of Assets
On September 25, 1997, Canyon Resources Corporation (Canyon), together with
its wholly owned subsidiary CR Montana Corporation (CR Montana), purchased a
72.25% participating interest and underlying assets in the Seven-Up Pete Venture
(Venture) from CR Montana's partner in the Venture, Phelps Dodge Corporation
(Phelps Dodge). Canyon and its wholly owned subsidiary now own 100% of the
Venture. The Venture includes the McDonald Gold Project near Lincoln, Montana,
which is currently in the permitting stage.
Canyon has made an initial payment of $5 million from its existing cash
balance as part of a total purchase price which will be no less than $100
million and no more than $150 million, assuming all applicable permits for the
McDonald Gold Project are obtained. At present, Canyon is pursuing various
options with respect to the remaining purchase price obligation which may
include, amongst others, sale of equity, mergers, or joint venture
participation. A discretionary payment of $20 million can be made toward the
total purchase price. Subject to Canyon making the discretionary payment within
one year of the closing, a further payment of at least $75 million but no more
than $125 million will be made once all permits for the McDonald Gold Project
have been obtained or construction is underway, based on a price of $20 per
mineable reserve ounce attributable to the former Phelps Dodge ownership as
determined by a final feasibility study. Should Canyon not make the
discretionary payment and permits are obtained or construction commences on or
before the second anniversary of the closing, a further payment of at least $95
million plus the product of $1,666,666 and the number of months between the
first anniversary date of the closing and the month in which permits are
obtained or construction commences but no more than $145 million will instead be
made, based on a price of $20 per mineable reserve ounce attributable to the
former Phelps Dodge ownership plus the product of $0.833 times the number of
months between the first anniversary date of the closing and the earlier to
occur of a) the month when the discretionary or other payments reach $20
million, and b) the month in which permits are obtained or construction
commences. Should Canyon not make the discretionary payment and permits are
obtained or construction commences after the second anniversary of the closing,
a further payment of at least $115 million but no more than $145 million will
instead be made, based on a price of $30 per mineable reserve ounce attributable
to the former Phelps Dodge ownership. If the aggregate payments have then not
exceeded $150 million, a varying production payment will be made each quarter
based on 72.25% of the ounces produced on a sliding scale commensurate with the
then gold price as follows: 1) $0 per ounce if the gold price is less than
$350.00 per ounce; 2) $3 per ounce if the gold price is greater than $350.00
but less than or equal to $375.00 per ounce; 3) $5 per ounce if the gold price
is greater than $375.00 but less than or equal to $400.00 per ounce; 4) $7 per
ounce if the gold price is greater than $400.00 but less than or equal to
$425.00 per ounce; and 5) $10 per ounce if the gold price is greater than
$425.00 per ounce. Production payments will cease when the aggregate of all
payments reach $150 million.
The purchase payments are secured only by the 72.25% participating
interest and underlying assets in the Venture transferred from Phelps Dodge to
Canyon and CR Montana in this transaction, and the 50% co-tenancy interest in
certain real property also transferred to Canyon and CR Montana.
The 8.2 million ounce McDonald gold deposit includes more than 7 million
ounces in mineable reserves. A Plan of Operations for development of the
project was submitted to the regulatory agencies in November, 1994. A draft
Environmental Impact Statement is expected to be published mid-year, 1998.
<PAGE> 3
Item 7 Financial Statements and Exhibits
(c) Exhibits
--------
2. Purchase Agreement between Phelps Dodge
Corporation, acting through its division
Phelps Dodge Mining Company, as Seller, and
CR Montana Corporation and Canyon Resources
Corporation, as Buyers.
The following Schedules and Exhibits are
being omitted from the aforementioned
Purchase Agreement pursuant to Regulation
S-K, Item 601(b)(2). The Registrant will
furnish supplementally a copy of the omitted
schedules and exhibits to the Commission
upon request.
<TABLE>
<S> <C>
SCHEDULES
Schedule A Co-Tenancy Property
Schedule 2.2(f) Permits Related to Construction
Schedule 2.3 Allocation of Purchase Price
Schedule 5.3 Required Consents
Schedule 5.4 Certain Agreements
Schedule 5.7(a) Environmental Permits
Schedule 5.7(b) Environmental Matters
Schedule 5.7(c) Environmental Notices
Schedule 7.6 Bonds
Schedule 12.1 Partnership Agreement
Schedule 12.1.1 Partnership Real Property
Schedule 12.1.2 Keep Cool Property
Schedule 12.1.3 Seven-Up Pete Property
EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Special Warranty Deed
Exhibit C Form of Promissory Note
Exhibit D Form of Deed of Trust and Security Agreement
Exhibit E Form of Partnership Agreement Amendment
</TABLE>
<PAGE> 4
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 hereunto duly authorized.
CANYON RESOURCES CORPORATION
Date: October 9, 1997 By: \s\ Richard H. De Voto
----------------------------------
Richard H. De Voto, President
<PAGE> 5
Exhibits Index
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
2. Purchase Agreement between Phelps Dodge Corporation, acting through
its division Phelps Dodge Mining Company, as Seller, and CR Montana
Corporation and Canyon Resources Corporation, as Buyers.
</TABLE>
<PAGE> 1
EXHIBIT 2
================================================================================
PURCHASE AGREEMENT
between
PHELPS DODGE CORPORATION,
acting through its division
Phelps Dodge Mining Company,
as Seller,
and
CR MONTANA CORPORATION
and
CANYON RESOURCES CORPORATION,
as Buyers
Dated as of September 25, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
1. Sale and Purchase of Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. Assumption of Purchased Assets Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. Representations and Warranties of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Organization, Standing and Authority of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Authorization of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3 No Conflicts; Consents of Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.4 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.5 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.6 Litigation; Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.7 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.8 Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.9 Manager's Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.10 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6. Representations and Warranties of Buyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.1 Buyers' Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.2 Authorization of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3 No Conflicts; Consents of Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.5 Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7. Further Agreements of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.2 Other Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.3 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.4 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
7.5 Releases by Buyers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.6 Release of Guarantees, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.7 New Feasibility Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.8 Waiver of Rights Under Co-Tenancy Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.9 Production Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.10 Conduct of the Business Pending the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.11 Obtaining Certain Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.12 Certain Actions Related to the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.13 Sieben Ranch Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.14 Certain Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.15 Reporting of Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8. Conditions of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.1 Conditions Precedent to Obligations of Buyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2 Conditions Precedent to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9. Documents to be Delivered at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.1 Documents to be Delivered by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.2 Documents to be Delivered by Buyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10. Indemnification and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.2.1 By Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.2.2 By Buyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.3 Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.4 Exclusive Rights; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
11. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12.1 Definitions and Certain Interpretive Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12.1.1 Terms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12.1.2 Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12.1.3 Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.3 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.4 Modification; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.6 Schedules; Tables of Contents and Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
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<TABLE>
<S> <C>
12.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.8 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12.9 Binding Effect; Assignment; Preemptive Right of Buyers . . . . . . . . . . . . . . . . . . . . . . . . 30
12.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.11 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.12 Post-Closing Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.14 No Other Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.15 Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.16 Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.17 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
iii
<PAGE> 5
SCHEDULES
<TABLE>
<S> <C>
Schedule A Co-Tenancy Property
Schedule 2.2(f) Permits Related to Construction
Schedule 2.3 Allocation of Purchase Price
Schedule 5.3 Required Consents
Schedule 5.4 Certain Agreements
Schedule 5.7(a) Environmental Permits
Schedule 5.7(b) Environmental Matters
Schedule 5.7(c) Environmental Notices
Schedule 7.6 Bonds
Schedule 12.1 Partnership Agreement
Schedule 12.1.1 Partnership Real Property
Schedule 12.1.2 Keep Cool Property
Schedule 12.1.3 Seven-Up Pete Property
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Special Warranty Deed
Exhibit C Form of Note
Exhibit D Form of Deed of Trust and Security Agreement
Exhibit E Form of Partnership Agreement Amendment
</TABLE>
iv
<PAGE> 6
PURCHASE AGREEMENT
Purchase Agreement (this "Agreement"), dated as of September
25, 1997, by and between Phelps Dodge Corporation, a New York corporation
("Seller"), acting through its division, Phelps Dodge Mining Company, and CR
Montana Corporation, a Colorado corporation ("CR Montana"), and Canyon
Resources Corporation, a Delaware corporation ("Canyon Resources" and, together
with CR Montana, "Buyers" and each individually a "Buyer").
RECITALS
A. Seller holds a 72.25% participating interest (the
"Partnership Interest") in Seven-Up Pete Venture, an Arizona general
partnership doing business as Seven-Up Pete Joint Venture (the "Partnership").
CR Montana holds a 27.75% participating interest in the Partnership.
B. Seller holds an undivided 50% interest as a tenant in
common (the "Co-Tenancy Interest") in certain real property identified as
co-tenancy property in Schedule A (the "Co-Tenancy Property"). CR Montana owns
the other undivided 50% interest as a tenant in common in the Co-Tenancy
Property.
C. Seller wishes to sell, and Buyers wish to purchase, on the
terms of this Agreement, the Partnership Interest and the Co-Tenancy Interest.
It is therefore agreed as follows:
1. Sale and Purchase of Purchased Assets. Subject to the
terms and conditions of this Agreement, at the closing referred to in Section 3
(the "Closing"), Seller shall sell, transfer and assign to CR Montana and to
Canyon Resources all of Seller's right, title and interest, whether held
directly or indirectly, in the Partnership Interest and the Co-Tenancy Interest
(collectively, the "Purchased Assets"). Seller shall sell, transfer and assign
the Purchased Assets to Buyers (as tenants in common as to the real property
interests) in the undivided proportions of 50% for CR Montana and 50% for
Canyon Resources or in such other proportions as Buyers may jointly advise
Seller by notice as provided herein not later than five days prior to the
Closing.
<PAGE> 7
2. Purchase Price.
2.1 Purchase Price. The aggregate purchase price for the
Purchased Assets shall be an amount equal to the sum of (i) $5,000,000, (ii)
the aggregate amount of all Second Contingent Payments (as defined in Section
12.1.2), if any, (iii) the amount of the Discretionary Payment (as defined in
Section 2.2(e)), if any, (iv) the aggregate amount of all Change of Ownership
Payments (as defined in Section 2.2(h)), if any, (v) the amount of the
Feasibility Study Payment (as defined in Section 12.1.2), if any and (vi) the
aggregate amount of all Production Payments (as defined in Section 7.8), if any
(the "Purchase Price").
2.2 Payment of Purchase Price. (a) At the Closing, Buyers
shall pay $5,000,000 to Seller by certified check or wire transfer of
immediately available funds to the account designated by Seller.
(b) At the Closing, Buyers shall duly execute and deliver to
Seller the Note, which shall have an aggregate principal amount equal to the
sum of (i) all Second Contingent Payments, if any, (ii) all Change of Ownership
Payments, if any, (iii) the Feasibility Study Payment, if any, and (iv) all
Production Payments, if any.
(c) If (i) any Person acquires, obtains or otherwise
receives, or enters into a contract or other agreement of any kind to acquire,
obtain or otherwise receive, directly or indirectly (whether through an
Affiliate or otherwise), (A) any equity interest in Canyon Resources, CR
Montana, the Partnership, any of the Partnership's assets or any portion of the
Co-Tenancy Property or (B) any debt security or loan repayment obligation of
Canyon Resources, CR Montana or the Partnership and (ii) any proceeds from any
such transaction (or transactions) in excess of the amount (the "Board Amount")
that the board of directors of Canyon Resources determines in good faith to be
necessary to enable the Partnership to conduct the New Feasibility Study,
obtain the Permits, obtain easements and rights of way necessary for the
McDonald Gold Project and conduct related administrative activities, are used
by either Buyer, the Partnership or any of their Affiliates for the direct or
indirect benefit of the McDonald Gold Project or the general administrative
expenses of CR Montana or the Partnership, Buyers shall pay an amount equal to
the lesser of (x) the amount of such excess proceeds and (y) $20,000,000 to
Seller by wire transfer of immediately available funds to the account
designated by Seller. Such payment shall be made promptly, and in any event
not more than 30 days after, the occurrence of any event described in the
preceding sentence.
2
<PAGE> 8
(d) If any Person acquires, obtains or otherwise receives,
in any transaction, any portion of the assets (including real property and
mining claims) associated with the Keep Cool Property, the McDonald Gold
Project or the Seven-Up Pete Property, Buyers shall pay $20,000,000 to Seller
by wire transfer of immediately available funds, provided that if 100% of the
proceeds from such transaction are used by either Buyer, the Partnership or any
of their Affiliates for the direct benefit of the McDonald Gold Project and the
amount of such proceeds exceeds the Board Amount, Buyers shall pay an amount
equal to the lesser of (x) the amount by which such proceeds exceed the Board
Amount and (y) $20,000,000 to Seller by wire transfer of immediately available
funds to the account designated by Seller (any such payment, together with any
payment contemplated in the preceding Section 2.2(c), is a "Second Contingent
Payment"). Such payment shall be made promptly, and in any event not more than
30 days after the occurrence of any event described in the preceding sentence.
(e) Buyers may, in their sole and exclusive discretion, pay
Seller an amount equal to the difference between the amounts paid to Seller
under Sections 2.2(c) and (d) and $20,000,000 (the "Discretionary Payment").
Such payment shall be made by wire transfer of immediately available funds to
the account designated by Seller.
(f) Promptly, and in no event later than 60 days, after the
earlier to occur of (i) the commencement of construction of the McDonald Gold
Project and (ii) issuance of the Permits listed in Schedule 2.2(f) and the
resolution of all administrative and judicial appeals of and challenges to
those Permits, if any, or the passing of the time to file such appeals and
challenges or a determination by the applicable Governmental Authority that
such Permits are unnecessary for the construction and/or operation of the
McDonald Gold Project (the "FSP Date"), Buyers shall pay to Seller by wire
transfer of immediately available funds to the account designated by Seller an
amount equal to the Feasibility Study Payment. Performance of any activity
permitted by any Consent related to the McDonald Gold Project and in force on
the date hereof shall not be deemed to constitute "the commencement of
construction of the McDonald Gold Project" for purposes of clause (i) above.
Notwithstanding the foregoing,
(i) if the FSP Date occurs on or before the first anniversary
of the Closing Date, the amount of the Feasibility Study Payment,
together with the sum of all Second Contingent Payments and
Discretionary Payments made to Seller prior to the FSP Date, shall be
at least $95,000,000 but not more than $145,000,000;
3
<PAGE> 9
(ii) if the aggregate amount of all Second Contingent
Payments and Discretionary Payments made to Seller equals $20,000,000
on or before the first anniversary of the Closing Date, the amount of
the Feasibility Study Payment shall be at least $75,000,000 but not
more than $125,000,000;
(iii) if the aggregate amount of all Second Contingent
Payments and Discretionary Payments made to Seller equals $20,000,000
after such first anniversary but on or before the second anniversary
of the Closing Date, the amount of the Feasibility Study Payment shall
be at least an amount equal to $75,000,000 plus the product of (1)
$1,666,000 and (2) the number of months between the calendar month in
which the first anniversary of the Closing Date occurs and the
calendar month in which such aggregate amount reached $20,000,000, but
not more than $125,000,000;
(iv) if the FSP Date occurs after the first anniversary of the
Closing Date but on or before the second anniversary of the Closing
Date and the aggregate amounts of all Second Contingent Payments and
Discretionary Payments made to Seller on or before the first
anniversary of the Closing Date did not equal $20,000,000, the amount
of the Feasibility Study Payment, together with the sum of all Second
Contingent Payments and Discretionary Payments made to Seller prior to
the FSP Date, shall be at least an amount equal to $95,000,000 plus
the product of (1) $1,666,000 and (2) the number of months between the
calendar month in which the first anniversary of the Closing Date
occurs and the calendar month in which the FSP Date occurs, but not
more than $145,000,000;
(v) if the aggregate amount of all Second Contingent Payments
and Discretionary Payments made to Seller does not equal $20,000,000
until after the second anniversary of the Closing Date, the amount of
the Feasibility Study Payment shall be at least $95,000,000 but not
more than $125,000,000; and
(vi) if the FSP Date occurs after the second anniversary of
the Closing Date and neither the condition set forth in clause (ii)
nor that in clause (iii) above has occurred, the amount of the
Feasibility Study Payment, together with the sum of all Second
Contingent Payments and Discretionary Payments made to Buyer prior to
the FSP Date, shall be at least $115,000,000 but not more than
$145,000,000.
(g) If (i) any Person acquires, obtains or otherwise
receives, directly or indirectly in a single transaction or a series of related
transactions, (A) a significant portion of, or any undivided interest in, the
assets (including real property and mining
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claims) associated with the McDonald Gold Project, the Keep Cool Property or
the Seven-Up Pete Property or (B) an agreement or any other commitment of any
kind from Canyon Resources, CR Montana, the Partnership or any of their
Affiliates that the McDonald Gold Project will not be developed and (ii) such
Person does not deliver to Seller a pro rata assumption of Buyers' obligations
under Sections 2.2(f), 2.2(h) and 7.11 of this Agreement in form and substance
reasonably satisfactory to Seller, Buyers shall, upon the consummation or
occurrence of any such transaction, pay to Seller by wire transfer of
immediately available funds, an amount equal to the product of (1) the proceeds
or other consideration of such transaction and (2) 0.7225, less an amount equal
to Buyers' reasonable expenses incurred in connection with the development of
the McDonald Gold Project from the day after the Closing Date until the day
before the date of such transaction occurred and any amounts previously paid to
Seller under Sections 2.2(a), (c), (d), (e) and (f) (the "Change of Ownership
Payment").
(h) If, upon commencement of production of gold at the
McDonald Gold Project, the aggregate amount of the Purchase Price paid to
Seller does not equal $150,000,000, Buyers shall promptly, and in no event more
than 30 days after the end of each calendar quarter, pay to Seller by wire
transfer of immediately available funds an amount equal to the Production
Payment for such quarter. Buyers' obligation to make such Production Payment
shall cease and terminate when the aggregate Purchase Price reaches
$150,000,000.
2.3 Allocation of Purchase Price. The aggregate amount of
the Purchase Price and the Purchased Assets Liabilities shall be allocated
among the Purchased Assets as provided in Schedule 2.3. Seller, Buyers and
their respective Affiliates shall prepare all Tax returns in a manner that is
consistent with such allocation, to the extent permitted by applicable Law.
3. Closing. The Closing of the sale and purchase of the
Purchased Assets provided for in Section 1 shall take place at the offices of
Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022, effective as
of 6:00 a.m. Phoenix, Arizona time on September 25, 1997, or if all of the
conditions to each Party's obligations hereunder have not been satisfied or
waived by such date, as soon after all such conditions have been satisfied or
waived as is reasonably practicable (the "Closing Date").
4. Assumption of Purchased Assets Liabilities. Subject to
completion of the Closing, Buyers will assume, and thereafter pay, fully
satisfy and perform when due, the Purchased Assets Liabilities.
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<PAGE> 11
5. Representations and Warranties of Seller. Seller
represents and warrants to Buyers as follows:
5.1 Organization, Standing and Authority of Seller. Seller
is a corporation duly organized, validly existing and in good standing under
the laws of the State of New York, and has full corporate power and authority
to enter into and perform this Agreement.
5.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement by Seller has been duly authorized by all
necessary actions of Seller, and this Agreement constitutes the valid and
binding obligation of Seller enforceable against Seller in accordance with its
terms, except to the extent enforceability may be limited by (a) the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors generally and (b) general principles of equity, whether such
enforceability is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be brought.
5.3 No Conflicts; Consents of Third Parties. Except as set
forth in Schedule 5.3, the execution, delivery and performance of this
Agreement by Seller will not violate, conflict with or constitute a default
under (a) the certificate of incorporation or by-laws of Seller; (b) any note,
bond, mortgage, indenture, lease, license, contract, agreement, or other
instrument or obligation to which Seller is a party; or (c) any order, writ,
injunction, decree, statute, rule or regulation applicable to the Purchased
Assets, except, in the case of clauses (b and (c), for violations, breaches,
defaults, or other occurrences that would not prevent consummation of the
transactions contemplated hereby and would not, in the aggregate, have a
material adverse effect on the Purchased Assets. No Consent of any
Governmental Authority is required on the part of Seller in connection with the
execution, delivery and performance of this Agreement, except for any Consent
referred to in Schedule 5.3.
5.4 Material Contracts. There are no orders, leases,
commitments, agreements and instruments to which the Partnership is a party or
by which it or its properties are bound that require payments by the
Partnership of more than $100,000 or which are not cancelable by the
Partnership on notice of 180 or fewer days, other than any agreements listed on
Schedule 5.4. All agreements listed on Schedule 5.4 are in full force and
effect in accordance with their terms and are free of material default by the
Partnership and, to Seller's knowledge, other Persons parties thereto. All
fire, liability and other insurance with respect to the Partnership or the
Business will terminate at the Closing.
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5.5 Employees. Since its formation, the Partnership has not
had any employees.
5.6 Litigation; Compliance with Laws. (a) There is no
judicial or administrative action or proceeding, arbitration or governmental
investigation (each an "Action") pending, or to Seller's knowledge, threatened
against Seller, the Partnership, or the Purchased Assets (i) with respect to
any action taken or to be taken by Seller in connection with this Agreement, or
(ii) as a general partner of the Partnership or Manager, or by reason of
Seller's status as such a general partner or Manager, (iii) with respect to the
quality or extent of Seller's title to or interest in the Purchased Assets, or
(iv) with respect to the Partnership only, in connection with any violation or
alleged violation of any Law.
(b) To Seller's knowledge, there is no Action threatened
against Seller, the Partnership or the Purchased Assets that individually or in
the aggregate could reasonably be expected to have a material adverse effect on
the Partnership.
(c) Except with respect to environmental matters, which are
exclusively dealt with in Section 5.7, the Partnership has complied in all
material respects with all Laws applicable to the Partnership, and Seller has
complied in all material respects with all Laws applicable to its Co-Tenancy
Interest, in each case, except for such violations that individually and in the
aggregate could not reasonably be expected to have a material adverse effect on
Seller or the Partnership.
5.7 Environmental Matters. (a) The Partnership has obtained
each of the permits listed on Schedule 5.7(a) (the "Environmental Permits").
To Seller's knowledge, the Environmental Permits are in effect on the date
hereof free of material default by the Partnership, Seller or any other Person
party thereto.
(b) To Seller's knowledge, (i) the Partnership has not
received any written notice from any Governmental Authority that the
Partnership is not in compliance with any Environmental Law and (ii) neither
the Partnership nor the Manager has received any other form of notification
from a Governmental Authority or any other Person to such effect since such
date. Except with respect to the matters listed in Schedule 5.7(b), to
Seller's knowledge, the Partnership is not in violation of any Environmental
Law and will not incur any Environmental Liabilities and Costs, or be required
to take any Remedial Action, with respect to past activities of the Partnership
or arising out of or relating to the Purchased Assets as they currently exist,
except for such violations, Environmental Liabilities and Costs or Remedial
Actions
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that individually and in the aggregate could not reasonably be expected to have
a material adverse effect on Seller or the Partnership.
(c) Except as disclosed in Schedule 5.7(c), neither Seller
nor, to Seller's knowledge, the Partnership has received any notice from a
Governmental Authority having jurisdiction or other Person that Seller, the
Partnership, or any of its predecessors in ownership of the Partnership Real
Property or Co-Tenancy Property, may be or is a responsible person for purposes
of Remedial Action, other corrective action, response costs, penalties or other
obligations under CERCLA or any other Environmental Law, except for Remedial
Action in connection with matters identified in Schedule 5.7(b). To Seller's
knowledge, no Hazardous Material has been utilized on the Partnership Real
Property by Seller, the Partnership, or any agent, representative or contractor
acting for, or partner of, the Partnership, except in compliance with
Environmental Laws.
5.8 Finders. Seller has not employed or utilized the
services of any financial advisor, broker or finder in connection with this
Agreement or the transactions contemplated by it.
5.9 Manager's Standard of Care. The Manager has not breached
the standard of care set forth under section 8.3 of the Partnership Agreement
in connection with its conduct of the Operations (as defined in the Partnership
Agreement) of the Partnership.
5.10 Permits. To Seller's knowledge, items one through
eighteen of Schedule 2.2(f) constitute a complete and accurate list of all
Consents necessary to operate the McDonald Gold Project in the manner
contemplated in the Plan of Operations to Support an Application for a Hard
Rock Mining Permit, filed by the Partnership with the Montana Department of
State Lands on November 21, 1994.
6. Representations and Warranties of Buyers. Buyers
represent and warrant to Seller, as follows:
6.1 Buyers' Organization. CR Montana is a corporation duly
organized, validly existing and in good standing under the laws of Colorado.
Canyon Resources is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. Each Buyer has the full corporate power
and authority to enter into and to perform this Agreement.
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6.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement by each Buyer has been duly authorized by all
necessary corporate action, and this Agreement constitutes the valid and
binding obligation of each Buyer enforceable against each Buyer in accordance
with its terms, except to the extent enforceability may be limited by (a) the
effect of bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights and
remedies of creditors generally and (b) general principles of equity, whether
such enforceability is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be brought.
6.3 No Conflicts; Consents of Third Parties. The execution,
delivery and performance of this Agreement by Buyers will not violate, conflict
with or constitute a default under (a) the certificate of incorporation or
by-laws of either Buyer; (b) any note, bond, mortgage, indenture, lease,
license, contract, agreement, or other instrument or obligation to which either
Buyer is a party or by which either Buyer or its respective properties are
bound; or (c) any order, writ, injunction, decree, statute, rule or regulation
applicable to either Buyer except, in the case of clauses (b) and (c), for
violations, breaches, defaults or other occurrences that would not prevent
consummation of the transactions contemplated hereby. No Consent of any
Governmental Authority is required on the part of either Buyer in connection
with the execution, delivery and performance of this Agreement.
6.4 Litigation. There is no action pending or, to the
knowledge of either Buyer, threatened, that (a) seeks to enjoin any action
taken or to be taken by either Buyer, in connection with this Agreement or (b)
could have a material adverse effect upon either Buyer's ability to perform its
obligations under this Agreement.
6.5 Finders. Neither Buyer has employed or utilized the
services of any financial advisor, broker or finder in connection with this
Agreement or the transactions contemplated by it.
7. Further Agreements of the Parties.
7.1 Access to Information. (a) Prior to the Closing, Buyers
may make such investigation of the Business and properties of the Partnership
and the Purchased Assets as Buyers may desire, and upon reasonable notice
Seller shall give to Buyers and their counsel, accountants and other
representatives reasonable access, during normal business hours throughout the
period prior to the Closing, to the property, books, commitments, agreements,
technical data, records and files of the Partnership and of
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the Seller pertaining to the Partnership, the Business and the Purchased
Assets. Seller shall furnish to Buyers during that period all copies of
documents and information concerning the Partnership and its Business as Buyers
may reasonably request, subject to applicable Law. Seller will make
commercially reasonable efforts to make reasonably available for consultation
with Buyers, its employees and, at Buyers' expense, employees of consultants
who are familiar with the Partnership, the Business and the Purchased Assets.
(b) Each Buyer shall hold, and shall cause its counsel,
accountants and other agents and representatives to hold, all such information
and documents in strict confidence. Each Buyer shall not, and shall cause its
counsel, accountants and other agents and representatives not to, disclose any
such information or documents to any Person or the public without the prior
written consent of Seller.
7.2 Other Action. Each of the Parties shall use best efforts
(i) to cause the fulfillment at or prior to the Closing Date of all of the
conditions to their respective obligations to consummate the sale and purchase
of the Purchased Assets under this Agreement and (ii) to effect the
consummation of the transactions contemplated by this Agreement.
7.3 Publicity. Prior to the Closing, all press releases,
filings and other disclosures concerning the transactions contemplated hereby
made by any Party will be provided to each other Party for review and comment,
and except for such filings and disclosures as are required by Law to be made,
will be subject to the approval of each other Party hereto, which approval will
not be unreasonably withheld.
7.4 Tax Matters. (a) All sales, transfer and other similar
Taxes and recording and other similar fees and charges payable in connection
with the transactions contemplated by this Agreement shall be paid by Buyers.
(b) Seller shall prepare all tax returns required to be filed
by the Partnership for all periods ending on or prior to the Closing Date.
Buyers shall prepare or cause to be prepared all other tax returns required to
be filed by the Partnership for all periods that include the Closing Date and
forward the drafts of such returns to Seller for its review at least 30 days
prior to the due date for filing (including any applicable extension). Seller
and Buyers shall in good faith cooperate with each other in connection with the
preparation and filing of all tax returns required to be filed by the
Partnership for all periods or portions thereof ending on or prior to or
including the Closing Date and in connection with the conduct of tax audit or
other proceedings and the administration of other tax matters relating to such
tax returns or periods.
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(c) Buyers' obligation to pay the Purchase Price (other than
$5,000,000 payable at the Closing pursuant to Section 2.2(a)) shall constitute
indebtedness of Buyers for federal income tax purposes. The fair value of such
indebtedness to Seller as of the Closing Date shall be the amount reasonably
determined, and notified to Buyers, by Seller no later than the due date for
filing of the federal income tax return of Seller for the taxable year
including the Closing Date. Such indebtedness shall constitute a "contingent
payment debt instrument" within the meaning of section 1.1275-4(a) of the
Treasury Regulations with its issue price equal to zero pursuant to section
1.1274-2(g) of the Treasury Regulations. Seller and Buyers shall not take any
position inconsistent with such agreed treatment in connection with the
preparation and filing of tax returns or the administration of other tax
matters.
(d) All amounts payable by Buyers under this Agreement shall
be made without any deduction or withholding for or on account of any Tax. If
any such deduction or withholding is required, Buyers will pay to Seller such
additional amount as is necessary to ensure that the net amount actually
received by Seller (free and clear of Taxes, whether assessed against Buyers or
Seller) will equal the full amount Seller would have received had no such
deduction or withholding been required.
7.5 Releases by Buyers. As of the Closing, Buyers will
release and forever discharge Seller from any and all of (a) Buyers' rights to
seek reimbursement for or to make any claim against Seller in respect of
Environmental Liabilities and Costs arising under any Environmental Law,
including without limitation CERCLA and (b) obligations Seller may have to
Buyers arising out of or resulting from Purchased Assets Liabilities, the
Partnership Agreement, including without limitation Seller's services as
Manager, the Co-Tenancy Agreement and the Sieben Ranch Agreement; provided,
however, that during the survival period contemplated in Section 10.1, the
foregoing release and discharge shall not apply to any matters or conditions
that constitute a breach of Seller's representations and warranties under
Section 5 of this Agreement.
7.6 Release of Guarantees, etc. Seller, in its capacity as
Manager, has obtained certain bonds identified on Schedule 7.6 on behalf of the
Partnership and, in its individual capacity, has certain indemnification
obligations with respect to such bonds. Buyers shall use commercially
reasonable efforts to obtain a complete and unconditional release of Seller as
soon as practical after the Closing with respect to such bonds (whether by
replacement of such bonds, by the complete and unconditional release of Seller
thereunder or otherwise) and of other Purchased Asset Liabilities specified by
Seller.
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7.7 New Feasibility Study. (a) Buyers shall engage an
internationally recognized engineering firm mutually acceptable to Buyers and
Seller (the "Engineering Firm") to prepare a study (the "New Feasibility
Study") and any amendments thereto that will, among other things, set forth the
aggregate number of troy ounces of minable reserves of gold in the McDonald
Gold Project using as the price of a troy ounce of gold a base case and related
price sensitivities determined by the Engineering Firm in its best judgment.
(b) The New Feasibility Study shall be a comprehensive study
and report on the existing ore bodies as currently defined or as may be
expanded by further analysis and any additional orebodies which may be
discovered as the result of further studies in, on or under any sector of the
McDonald Gold Project and of the possibility and advisability of bringing the
same into commercial production and thereafter operating the same on a
commercial basis. The New Feasibility Study shall be sufficient to demonstrate
whether or not a deposit of minerals exists within such Project in such
quantity and of such quality so that products produced from such deposit will
yield sufficient revenue to pay for, or service debt incurred to pay for, the
costs of developing the mine, constructing the treatment facilities, producing
products, paying the Feasibility Study Payment and any Production Payments,
reclaiming such Project affected by such operations and to provide a reasonable
rate of return on the necessary equity investment. The New Feasibility Study
shall be prepared in a manner consistent with internationally accepted
standards of engineering and operating practices and shall be of a quality
normally reviewed by international lending institutions for evaluation of
project financing and shall include: (i) recommendations as to the nature,
extent and timing of the development of the same with a view to bringing the
same into commercial production; mining and/or milling methods; nature and
capacity of the mine, mill or ancillary facilities relating thereto; waste
disposal; and marketing arrangements; (ii) details as to the geological and
mineable ore reserves by category, grade and with dilution factors indicated;
transportation factors; overburden and stripping ratios; bulk sampling with ore
assay comparisons; environmental requirements; and costs and cash flow
estimates and analyses relating thereto; (iii) a mine construction plan and
construction budget; (iv) such other factual information, if any, as might
reasonably be expected to be required in the normal course by a senior mining
company to enable it to authorize a development program; (v) a proposed project
area of sufficient size to permit development of the mineralized resource
identified and to accommodate all the necessary infrastructure. Buyers shall
cause the New Feasibility Study to be completed by the FSP Date. Buyers shall
pay the cost of preparing such study and any amendments thereto.
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(c) Within 10 days of the FSP Date, Buyers shall cause
the Engineering Firm to deliver to Seller an amendment to the Feasibility Study
that sets forth the aggregate number of troy ounces of minable reserves of gold
on all properties in the McDonald Gold Project using as the price of a troy
ounce of gold the price equal to the average spot price of a troy ounce of gold
determined by the daily afternoon fix on the London Bullion Market for the 30
business days immediately prior to the FSP Date (the "Minable Ounces").
7.8 Waiver of Rights Under Co-Tenancy Agreement. CR Montana
hereby waives its right of first refusal under the Co-Tenancy Agreement.
7.9 Production Payments. (a) Buyers shall pay Seller
quarterly for each calendar quarter (or partial calendar quarter) of production
from the McDonald Gold Project after the Closing an amount in dollars equal to
the product of (i) 0.7225 and (ii) the product of (1) the number of troy ounces
of gold in any form sold or otherwise transferred by the Partnership or any
successor entity of any kind in such quarter (or partial quarter) and (2) (A)
$0.00, if the Gold Price is less than or equal to $350.00, (B) $3.00, if the
Gold Price is greater than $350.00 but less than or equal to $375.00, (C)
$5.00, if the Gold Price is greater than $375.00 but less than or equal to
$400.00, (D) $7.00, if the Gold Price is greater than $400.00 but less than or
equal to $425.00 and (E) $10.00, if the Gold Price is greater than $425.00
(each such payment being a "Production Payment"); provided that Buyer's
obligation to make such payments to Seller shall cease when the aggregate
amount of such payments plus the amount of all other payments made to Seller
pursuant to Sections 2.2(a),(c),(d), (e), (f) and (g) equals $150,000,000. For
purposes of this Section, "Gold Price" shall mean, for any calendar quarter (or
partial calendar quarter), the average spot price of a troy ounce of gold,
determined by the daily afternoon fix on the London Bullion Market, for such
quarter (or partial quarter).
(b) Buyers will make the payment contemplated in Section
7.10(a) within 30 days of the end of each calendar quarter. Such payment shall
be accompanied by a certificate of Buyers setting forth (x) the number of troy
ounces of gold in any form sold or otherwise transferred by the Partnership or
any successor entity of any kind in such quarter (or partial quarter), if any,
(y) the Gold Price for such quarter (or partial quarter) and (z) the
methodology and data used to calculate such number and such Gold Price. If
Seller questions any aspect of such certificate as provided in the foregoing
sentence and such questions are not resolved to Seller's satisfaction within 30
days of delivery of such questions to Buyers, Seller shall be entitled to
request an audit by an independent accountant reasonably satisfactory to it and
Buyers to determine such number and such Gold Price. A determination by such
independent accountant shall be
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final and binding on the parties, absent manifest error. Buyers will make any
necessary payment adjusting any applicable Production Payment within 10 days of
the earlier of satisfactory resolution of Seller's questions or a determination
by such independent accountant. Seller will bear the cost of such audit if the
audit reveals no variance in the number of troy ounces of gold sold or the Gold
Price set forth in the certificate. Buyers will bear the cost of such audit if
it reveals any such variance.
(c) In the event Buyers are required to make any Production
Payments, Buyers and Seller will agree on a mutually acceptable method of
securing such payment obligations.
(d) In the event Buyers enter into negotiations regarding
definitive agreements with a lender or lenders to provide project financing for
development and operation of the McDonald Gold Project, Seller shall agree with
Buyers to subordinate, on commercially reasonable terms, Seller's right to
receive Production Payments to the rights of such lender or lenders to receive
periodic repayments of interest on and principal of loans related to such
financing, but only to the extent that the proceeds of such financing are
actually expended on or for the benefit of the McDonald Gold Project.
7.10 Conduct of the Business Pending the Closing. Until the
Closing, Seller shall comply with, and shall cause the Partnership to comply
with, the provisions set forth below:
(a) the Partnership shall operate the Business in the
ordinary course in accordance with the Current Program and Budget;
(b) the Partnership shall not make any distributions of any
kind to its general partners;
(c) except as required by this Agreement or with the consent
of all Parties, neither the Partnership Agreement nor the Current
Program and Budget shall be amended or terminated;
(d) the Partnership shall use reasonable efforts to maintain
and preserve its Business intact, and to maintain its relationships
with suppliers and others so that those relationships will be
preserved after the Closing; and
(e) the Partnership shall not sell, assign, voluntarily
encumber, grant a security interest in or license with respect to,
release or otherwise dispose of,
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any of its assets or properties, tangible or intangible, or incur any
material liabilities, except for sales and dispositions made or
liabilities incurred in the ordinary course of business in accordance
with the Current Program and Budget.
7.11 Obtaining Certain Permits. Buyers shall take all action
necessary to cause the Partnership to work diligently and in good faith to
obtain each of the Permits as soon as reasonably possible.
7.12 Certain Actions Related to the Partnership. At the
Closing, the Parties shall execute and deliver the Partnership Agreement
Amendment.
7.13 Sieben Ranch Agreement. Buyers shall, at their
expense, use commercially reasonable efforts to obtain a release of Seller's
obligations (as a general partner in the Partnership) under the Sieben Ranch
Agreement from Sieben Ranch Company in form and substance reasonably
satisfactory to Seller.
7.14 Certain Transfers. Without the prior written consent of
Seller, which shall not be unreasonably withheld, and receipt of written notice
from Seller that Seller has received a pro rata assumption of Buyers'
obligations under Sections 2.2(f) and (g) and 7.11 in form and substance
reasonably satisfactory to Seller, Buyers shall not enter into any transaction
or series of related transactions pursuant to which any Person acquires,
obtains or otherwise receives, directly or indirectly, (A) a greater than 50%
equity interest in Canyon Resources, CR Montana or the Partnership, (B) a
significant portion of, or any undivided interest in, the assets (including
real property and mining claims) associated with the McDonald Gold Project or
(C) an agreement or commitment of any kind from Canyon Resources, CR Montana,
the Partnership or any of their Affiliates, that the McDonald Gold Project will
not be developed.
7.15 Reporting of Certain Transactions. Not later than the
date on which any Person acquires, obtains or otherwise receives, or enters
into a contract or other agreement of any kind to acquire, obtain or otherwise
receive, directly or indirectly in any transaction (whether through an
Affiliate or otherwise), (i) any equity interest in Canyon Resources, CR
Montana, the Partnership, any of the Partnership's assets or any portion of the
Co-Tenancy Property, (ii) any debt security or loan repayment obligation of
Canyon Resources, CR Montana or the Partnership, (iii) any portion of, or
undivided interest in, the assets (including real property and mining claims)
associated with the Keep Cool Property, the McDonald Gold Project or the
Seven-Up Pete Property or (iv) B) an agreement or any other commitment of any
kind from Canyon Resources, CR Montana, the Partnership or any of their
Affiliates that the McDonald Gold Project will not be developed, Buyers will
deliver a written notice
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to Seller describing in reasonable detail the terms of such transaction,
including the aggregate proceeds or other consideration received from such
transaction. Buyers shall use best efforts to provide Seller with such notice
at least three business days prior to the consummation of any such transaction.
Notwithstanding the foregoing, Buyers shall not be obligated to deliver any
such notice to Sellers with respect to any single transaction or series of
related transactions involving proceeds of less than $2,000,000 if (A) such
transaction or series of related transactions is entered into in the ordinary
course of business and (B) the incurrence of such transaction would not, in
conjunction with other applicable conditions, trigger a payment obligation to
Seller under Sections 2.2(c), (d), (f) or (g).
8. Conditions of Closing.
8.1 Conditions Precedent to Obligations of Buyers. The
obligations of Buyers to consummate the purchase of the Purchased Assets under
this Agreement are subject to the fulfillment, prior to or at the Closing, of
each of the following conditions (any or all of which may be waived by Buyers):
(a) all representations and warranties of Seller in Section 5
shall be true and correct in all material respects when made and at
and as of the time of the Closing with the same effect as though made
again at and as of that time;
(b) Seller shall have performed and complied in all material
respects with all material obligations and covenants required by this
Agreement to be performed or complied with by Seller prior to or at
the Closing;
(c) Buyers shall have been furnished with a certificate from
Seller (dated the Closing Date) executed by an authorized officer of
Seller certifying to the fulfillment of the conditions specified in
Sections 8.1(a) and 8.1(b); and
(d) no injunction or order of any court or administrative
agency of competent jurisdiction that restrains or prohibits the sale
and purchase of the Partnership Interest shall be in effect.
8.2 Conditions Precedent to Obligations of Seller. The
obligation of Seller to consummate the sale of the Purchased Assets under this
Agreement is subject to the fulfillment, prior to or at the Closing, of each of
the following conditions (any or all of which may be waived by Seller):
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(a) all representations and warranties of Buyers in Section 6
shall be true and correct in all material respects when made and at
and as of the time of the Closing with the same effect as though made
again at and as of that time;
(b) Buyers shall have performed and complied in all material
respects with all material obligations and covenants required by this
Agreement to be performed or complied with prior to or at the Closing;
(c) Seller shall have been furnished with a certificate from
each Buyer (dated the Closing Date) executed by an authorized officer
of each Buyer certifying to the fulfillment with respect to Buyers of
the conditions specified in Sections 8.2(a) and 8.2(b); and
(d) no injunction or order of any court or administrative
agency of competent jurisdiction that restrains or prohibits the sale
and purchase of the Partnership Interest shall be in effect.
9. Documents to be Delivered at the Closing.
9.1 Documents to be Delivered by Seller. At the Closing,
Seller shall deliver, or cause to be delivered, to Buyers the following:
(a) a special warranty deed, dated as of the Closing Date,
conveying to Buyers an undivided interest in Seller's interest in all
parcels of the Co-Tenancy Property in the proportions provided in
Section 1, which special warranty deed shall be substantially in the
form of Exhibit B, together with all necessary transfer declarations;
(b) an executed Assignment and Assumption Agreement, dated as
of the Closing Date;
(c) an executed Partnership Agreement Amendment, dated as of
the Closing Date;
(d) the certificate referred to in Section 8.1(c); and
(e) all other certificates, records, and documents required
by the terms of this Agreement to be delivered by Seller.
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9.2 Documents to be Delivered by Buyers. At the Closing,
Buyers shall deliver, or cause to be delivered, to Seller the following:
(a) $5,000,000 by certified check or wire transfer of
immediately available funds;
(b) an executed Assignment and Assumption Agreement, dated as
of the Closing Date;
(c) an executed Partnership Agreement Amendment, dated as of
the Closing Date;
(d) an executed Note, dated the Closing Date;
(e) an executed Deed of Trust and Security Agreement, dated
the Closing Date;
(f) an executed Application or Applications for Registration
of Amended Certificate of Assumed Business Name in the State of
Montana, in form and substance satisfactory to Seller;
(g) the certificate referred to in Section 8.2(c); and
(h) all other certificates, records, and documents required
by the terms of this Agreement to be delivered by Buyers.
10. Indemnification and Related Matters.
10.1 Survival of Representations and Warranties. The
representations and warranties contained in Sections 5 and 6 shall survive for
a period of one year after the Closing Date and expire on the first anniversary
thereof. No arbitration, lawsuit, action or proceeding may be brought with
respect to such respective representations and warranties after that one year
period.
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10.2 Indemnification.
10.2.1 By Seller. From and after the Closing, Seller will
indemnify and hold harmless each Buyer from and against any Losses incurred or
sustained by Buyers arising out of or resulting from any breach by Seller of
any covenant made by Seller in this Agreement. Buyers' rights to be
indemnified and held harmless under this Section 10.2.1 (referred to in Section
10.3 as "indemnification") shall be limited as follows: the amount of any
Losses incurred by either Buyer shall be reduced by the net amount either Buyer
recovers (after deducting all attorneys' fees, expenses and other costs of
recovery) from any insurer or other party in respect of such Losses and the
amount of Tax benefits realized by either Buyer in respect of such Losses, and
Buyers shall use reasonable efforts to effect any such recovery that may be
available to it.
10.2.2 By Buyers. From and after the Closing, Buyers will
jointly and severally indemnify and hold harmless Seller from and against any
Losses incurred or sustained by Seller arising out of or resulting from (a) any
breach by either Buyer of any covenant or other obligation of Buyers in this
Agreement, (b) any failure by either Buyer to pay, discharge or perform any of
the Purchased Assets Liabilities and (c) the Sieben Ranch Agreement. Seller's
rights to be indemnified and held harmless under this Section 10.2.2 (referred
to in Section 10.3 as "indemnification") shall be limited as follows: (i) the
amount of any Losses incurred by Seller shall be reduced by the net amount
Seller recovers (after deducting all attorneys' fees, expenses and other costs
of recovery) from any insurer or other party in respect of such Losses and the
amount of Tax benefits realized by Seller in respect of such Losses, and Seller
shall use reasonable efforts to effect any such recovery that may be available
to it and (ii) Buyers' obligations with respect to payment of the Purchase
Price shall be non-recourse and secured only by the Deed of Trust and Security
Agreement.
10.3 Indemnification Procedures. Promptly after discovery of
any facts which an Indemnitee believes may give rise to a claim for
indemnification from an Indemnitor hereunder, such Indemnitee shall, if a claim
in respect of such facts is to be made against an Indemnitor, notify such
Indemnitor in writing in reasonable detail of such facts, provided, however,
that the failure to give such notice shall not affect such indemnity claim
unless the Indemnitor has been materially prejudiced thereby. If a claim or
action that may involve a claim for indemnification hereunder is asserted or
brought against an Indemnitee by a third Person, such Indemnitee shall notify
the Indemnitor of such claim or action, and the Indemnitor shall be entitled to
participate in such claim or action, to assume the defense of such claim or
action with counsel reasonably satisfactory to the Indemnitee, and to settle or
compromise such claim or action. After notice to the Indemnitee of the
Indemnitor's election to assume the
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defense of such claim or action, the Indemnitor shall not be liable to the
Indemnitee for any legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense of such claim other than reasonable
costs of investigation. If the Indemnitor does not elect to assume the defense
of such claim or action, the Indemnitee shall act reasonably and in accordance
with its good faith business judgment with respect thereto, and may settle or
compromise any such claim or action without the consent of the Indemnitor
unless the Indemnitor acknowledges full responsibility for such claim or action
and demonstrates to the reasonable satisfaction of the Indemnitee its financial
ability to pay such claim or action in full. The Parties shall render to each
other such assistance as may reasonably be requested in order to insure the
proper and adequate defense of any such claim or proceeding.
10.4 Exclusive Rights; etc. (a) For any breach of any
obligation under or claim with respect to any representation, warranty,
covenant or obligation contained in this Agreement, the sole recourse of the
injured Party after the Closing shall be under the provisions of this Section
10.
(b) Buyers acknowledge that except as included in this
Agreement neither Seller nor any other Person has made any representation or
warranty, express or implied, as to the accuracy or completeness of any
information regarding the Partnership or the Purchased Assets or the Business,
and neither Seller nor any other Person shall be subject to any liability to
Buyers or any other Person resulting from the distribution or availability to
Buyers, or Buyers' use, of any such information (including without limitation
the Feasibility Study, the Application for a Hard Rock Mining Operating Permit
and the Plan of Operations to Support an Application for a Hard Rock Mining
Operating Permit filed with the Montana Department of State Lands on November
21, 1994 (collectively, as each is amended, modified or supplemented through
the date hereof, the "Plan of Operations"), and all supporting and related
studies, and any other brochure, publication or information distributed or made
available to Buyer). Buyers acknowledge that Buyers and their representatives
have the experience and knowledge to evaluate the financial condition, assets
and liabilities of the Partnership; that Buyers and their representatives have
had access to such of the information and documents and to such of the real
property, fixtures and tangible personal property of the Partnership as Buyers
and their representatives shall have requested to see and/or review; that
Buyers and their representatives have had a full opportunity to meet with
appropriate employees of Seller and others to discuss the financial condition,
assets and liabilities of the Partnership; and that, in determining to acquire
the Purchased Assets and, therefore, the underlying assets of the Partnership
(including the real property, fixtures and the tangible personal property),
Buyers have made their own investigation into, and based thereon Buyers have
formed an
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independent judgment concerning, the Purchased Assets and the underlying assets
of the Partnership (including the real property, fixtures and the tangible
personal property). IT IS THEREFORE EXPRESSLY UNDERSTOOD AND AGREED THAT
BUYERS ACCEPT THE PURCHASED ASSETS WITHOUT ANY REPRESENTATION, WARRANTY OR
GUARANTEE, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR OTHERWISE AS TO THE CONDITION, SIZE, EXTENT, QUANTITY, TYPE OR VALUE
OF SUCH PROPERTY OR THE MINERALIZATION CONTAINED THEREIN EXCEPT AS EXPRESSLY
PROVIDED HEREIN.
11. Arbitration. (a) Any dispute, controversy or claim
arising out of, relating to, or in connection with, this Agreement, or the
breach, termination or validity thereof, shall be finally settled by
arbitration. The arbitration shall be conducted in accordance with the
commercial rules of the American Arbitration Association in effect at the time
of the arbitration, except as they may be modified herein or by mutual
agreement of the parties. The seat of the arbitration shall be Phoenix,
Arizona. Notwithstanding Section 12.14, the arbitration and this clause shall
be governed by the Federal Arbitration Act, 9 U.S.C. Sections 1 et seq.
(b) The arbitration shall be conducted by three arbitrators.
The party initiating arbitration (the "Claimant") shall appoint its arbitrator
in its request for arbitration (the "Request"). The other party ("the
Respondent") shall appoint its arbitrator within 15 days of receipt of the
Request and shall notify the Claimant of such appointment in writing. If the
Respondent fails to appoint an arbitrator within such 15 day period, the
arbitrator named in the Request shall decide the controversy or claim as a sole
arbitrator. Otherwise, the two arbitrators appointed by the parties shall
appoint a third arbitrator within 15 days after the Respondent has notified
Claimant of the appointment of the Respondent's arbitrator. When the
arbitrators appointed by the Claimant and Respondent have appointed a third
arbitrator and the third arbitrator has accepted the appointment, the two
arbitrators shall promptly notify the parties of the appointment of the third
arbitrator. If the two arbitrators appointed by the parties fail or are unable
so to appoint a third arbitrator or so to notify the parties, then the
appointment of the third arbitrator shall be made by the American Arbitration
Association, which shall promptly notify the parties of the appointment of the
third arbitrator. The third arbitrator shall act as Chair of the panel.
(c) The arbitral award shall be in writing and shall be final
and binding on the parties. The award may include an award of costs, including
reasonable attorneys' fees and disbursements. Judgment upon the award may be
entered by any court having jurisdiction thereof or having jurisdiction over
the parties or their assets.
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12. Miscellaneous.
12.1 Definitions and Certain Interpretive Matters.
12.1.1 Terms Generally. The words "hereby", "herein",
"hereof", "hereunder" and words of similar import refer to this Agreement as a
whole (including the Exhibits and Schedules hereto) and not merely to the
specific section, paragraph or clause in which such word appears. All
references herein to Sections, Exhibits and Schedules shall be deemed
references to Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise require. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
The definitions given for terms in this Section 12.1 and elsewhere in this
Agreement shall apply equally to both the singular and plural forms of the
terms defined. All references to "dollars" or "$" shall be deemed references
to the lawful money of the United States of America.
12.1.2 Certain Terms. Whenever used in this Agreement
(including in the Exhibits and Schedules), the following terms shall have the
respective meanings given to them below or in the Sections indicated below:
Action: as defined in Section 5.6.
Affiliate: of a Person means a Person that directly or
indirectly through one or more intermediaries controls, is controlled
by, or is under common control with, the first Person. "Control"
(including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of a Person, whether
through the ownership of voting securities, by contract or credit
arrangement, as trustee or executor, or otherwise.
Agreement: this Purchase Agreement, including the Exhibits
and Schedules hereto.
Assignment and Assumption Agreement: an assignment and
assumption agreement in the form of Exhibit A.
Board Amount: as defined in Section 2.2(c).
Business: all of the businesses and operations conducted by
the Partnership.
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Buyers: as defined in the first paragraph of this Agreement.
Canyon Resources: as defined in the first paragraph of this
Agreement.
CERCLA: the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601 et
seq.
Change of Ownership Payment: as defined in Section 2.2(g).
Claimant: as defined in Section 11(b).
Closing: as defined in Section 1.
Closing Date: as defined in Section 3.
Code: the Internal Revenue Code of 1986, as amended.
Consent: any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license, certificate,
exemption, order, registration, declaration, filing, report or notice
of, with or to any Person.
Co-Tenancy Agreement: Co-Tenancy Agreement dated February 4,
1992 between Phelps Dodge Mining Company and CR Montana Corporation.
Co-Tenancy Interest: as defined in Recital B.
Co-Tenancy Property: as defined in Recital B.
CR Montana: as defined in the first paragraph of this
Agreement.
Current Program and Budget: the program and budget duly
adopted by Seller and CR Montana that is currently in effect for the
Business of the Partnership, as the same may be modified in practice
by the terms of the Partnership Agreement.
Deed of Trust and Security Agreement: a deed of trust and
security agreement in the form of Exhibit D.
Discretionary Payment: as defined in Section 2.2(e).
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Engineering Firm: as defined in Section 7.7.
Environmental Laws: all Laws relating to the protection of
the environment, to human health and safety, to reclamation or to any
emission, discharge, generation, processing, storage, holding,
abatement, existence, Release, threatened Release or transportation of
any Hazardous Materials including, without limitation, (a) CERCLA, the
Resource Conservation and Recovery Act, the Clean Air Act, as amended,
the Clean Water Act, as amended, the Endangered Species Act, the Toxic
Substance Control Act, as amended, the Historic Preservation Act and
the Occupational Safety and Health Act of 1970, as amended, (b) all
other requirements pertaining to reporting, licensing, permitting,
investigation or remediation of emissions, discharges, releases or
threatened releases of Hazardous Materials into the air, surface
water, groundwater or land, or relating to the manufacture,
processing, distribution, use, sale, treatment, receipt, storage,
disposal, recycling, transport or handling of Hazardous Materials.
Environmental Liabilities and Costs: all Losses, whether
direct or indirect, known or unknown, current or potential, past,
present or future, imposed by, under or pursuant to Environmental
Laws, including, without limitation, all Losses related to Remedial
Actions, and all fees, capital costs, disbursements and expenses of
counsel, experts, contractors, personnel and consultants based on,
arising out of or otherwise in respect of: (i) the Business or any
property (including any Partnership Real Property) owned, leased or
used by the Partnership or its predecessors, or the Co-Tenancy
Property; (ii) the conditions existing on, under, above, or about any
such property and (iii) expenditures necessary to cause such property
or any aspect of the Business to be in compliance with any and all
requirements of Environmental Laws.
Environmental Permits: as defined in Section 5.7(a).
Feasibility Study: the McDonald Gold Project Feasibility
Study, dated September 1993, prepared by Davy International.
Feasibility Study Payment: subject to Section 2.2(f), the
amount in dollars equal to the product of (i)
(A) $20, if the aggregate amount of all Second Contingent
Payments and Discretionary Payments, if any, made to Seller
equals $20,000,000,
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or the FSP Date occurs, on or before the first anniversary of
the Closing Date; or
(B) an amount equal to the lesser of (i) $30 and (ii) $20
plus the product of (A) $0.8333 and (B) the number of months
between the calendar month in which the first anniversary of
the Closing Date occurs and the earlier to occur of (1) the
calendar month in which the aggregate amount of all Second
Contingent Payments and Discretionary Payments equals
$20,000,000 and (2) the calendar month in which the FSP Date
occurs, if the aggregate amount of all Second Contingent
Payments and Discretionary Payments, if any, made to Seller
equals $20,000,000, or the FSP Date occurs, after the first
anniversary of the Closing Date,
and (ii) the product of (x) the number of Minable Ounces and
(y) 0.7225.
FSP Date: as defined in Section 2.2(f).
General Agreement of Indemnity: the General Agreement of
Indemnity, dated February 22, 1993, between Phelps Dodge Corporation
and Continental Casualty Company, American Casualty Company of
Reading, Pennsylvania and National Fire Insurance Company of Hartford,
as amended from time to time.
Gold Price as defined in Section 7.9.
Governmental Approval: any Consent of, with or to any
Governmental Authority.
Governmental Authority: any nation or government, any state
or other political subdivision thereof; any entity, authority or body
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including,
without limitation, any government authority, agency, department,
board, commission or instrumentality of the United States, any State
of the United States or any political subdivision thereof; any court,
tribunal or arbitrator; and any self-regulatory organization.
Hazardous Materials: any substance that: (a) requires
investigation, removal or remediation under any Environmental Law or
(b) is defined, listed or identified as a "hazardous waste" or
"hazardous substance" thereunder.
Indemnitee: a Person entitled to indemnification under this
Agreement.
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Indemnitor: a party obligated to indemnify an Indemnitee.
Keep Cool Property: the real and other property described in
Schedule 12.1.2.
Law: all applicable provisions of all (a) constitutions,
treaties, statutes, laws (including the common law), codes, rules,
regulations, ordinances or orders of any Governmental Authority, (b)
Governmental Approvals and (c) orders, decisions, injunctions,
judgments, awards and decrees of or agreements with any Governmental
Authority.
Losses: any and all claims, demands, liabilities,
obligations, losses, fines, costs, expenses, royalties, deficiencies
or damages (whether absolute, accrued, conditional or otherwise and
whether or not resulting from third party claims), including interest
and penalties with respect thereto and out-of-pocket expenses and
reasonable attorneys' and accountants' fees and expenses incurred in
the investigation or defense of any of the same or in asserting,
preserving or enforcing any right to indemnification with respect
thereto.
Manager: Seller as the Manager under the Partnership
Agreement.
material: as defined in Section 12.1.3.
McDonald Gold Project: the real property and mining claims
within the boundaries of the plat included in the Plan of Operations.
Minable Ounces: as defined in Section 7.7.
New Feasibility Study: as defined in Section 7.7.
Note: a promissory note of CR Montana, in the form of Exhibit
C.
Participating Interest: as defined in the Partnership
Agreement.
Partnership: as defined in Recital A.
Partnership Agreement: the agreements relating to the
organization of the Partnership and all amendments thereto, which are
listed on Schedule 12.1.
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Partnership Agreement Amendment: an amendment to the
Partnership Agreement substantially in the form of Exhibit E.
Partnership Interest: as defined in Recital A.
Partnership Real Property: the real and other property
described in Schedule 12.1.1.
Party or Parties: one or more of Seller or Buyers, as the
context requires.
Permits: the Consents listed on Schedule 2.2(f).
Person: any natural person, firm, partnership, association,
corporation, company, trust, business trust, Governmental Authority or
other entity.
Plan of Operations: as defined in Section 10.4(b).
Production Payment: as defined in Section 7.9.
Purchase Price: as defined in Section 2.1.
Purchased Assets: as defined in Section 1.
Purchased Assets Liabilities: all liabilities and obligations
of any nature, whether known or unknown, primary or secondary, direct
or indirect, or absolute, accrued, contingent or otherwise and whether
now existing or hereafter arising under, arising out of or relating to
the Purchased Assets, including, without limitation, (i) all
liabilities and obligations under, arising out of or relating to the
actions of any Party as a general partner in the Partnership or as
Manager of the Partnership, the orders, leases, commitments,
agreements and instruments to which the Partnership was, is or becomes
a party, including without limitation, the Sieben Ranch Agreement, the
General Agreement of Indemnity with respect to the bonds of the
Partnership existing on the date hereof listed on Schedule 7.6, and
(ii) Environmental Liabilities and Costs, but excluding Buyers'
obligation to pay the Purchase Price.
Release: as defined in CERCLA or the Resource Conservation
and Recovery Act without limiting application to violation or alleged
violations of those statutes.
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Remedial Action: all actions on or with respect or adjacent
to the Partnership Real Property or Co- Tenancy Property required to
(i) clean up, remove, treat or in any other way remediate any
Hazardous Materials; (ii) prevent the release of Hazardous Materials
so that they do not migrate or endanger or threaten to endanger public
health or welfare or the environment, (iii) comply with Environmental
Law or (iv) perform studies, investigations and care related to any
such matters.
Request: as defined in Section 11(a).
Respondent: as defined in Section 11(b).
Second Contingent Payment: as defined in Section 2.2(d).
Seller: as defined in the introductory paragraph of this
Agreement.
Seven-Up Pete Property: the real and other property described
in Schedule 12.1.3.
Sieben Ranch Agreement: Sieben Ranch Purchase and Sale Option
Agreement, dated May 12, 1997, between Sieben Ranch Company and the
Partnership, including without limitation the Environmental Indemnity
Agreement contemplated thereunder.
Tax: all taxes, imposts, levies, fees, duties and similar
charges (including interest and penalties thereon and additions
thereto, but excluding income taxes imposed by the United States or
any political subdivision thereof) imposed by any government or taxing
authority.
to Seller's knowledge: actual knowledge possessed by an
executive officer of Seller and Michael Schern, Project Manager of
Seller.
to the knowledge of either Buyer: actual knowledge possessed
by an executive officer of either Buyer.
12.1.3 Materiality. For the purposes of this Agreement,
whenever considering materiality in the context of Seller, the Partnership
Interest or the Partnership, whether or not any item or amount is "material"
shall be considered in the context of the value, taken as a whole, of Seller,
the Partnership Interest or the Partnership (including its assets), as the case
may be, provided, however, that any item or matter
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which involves a Loss to the Partnership or Buyers of $500,000 or more shall be
material for the purpose of all provisions of this Agreement.
12.2 Further Assurances. From time to time, each Party
hereto shall execute and deliver such certificates and other documents and take
such other actions as may reasonably be requested by the other Party in order
to consummate or implement the transactions contemplated hereby.
12.3 Termination. This Agreement may be terminated at any
time prior to the Closing by written agreement executed by Seller and Buyers.
Upon such termination no Party shall have any liability or
further obligation arising out of this Agreement, except for any liability
resulting from its breach of this Agreement prior to termination. Section
7.1(b) and Section 12.11 shall survive the termination of this Agreement.
12.4 Modification; Waiver. This Agreement may be modified
only by a written instrument executed by the parties hereto. Any of the terms
and conditions of this Agreement may be waived in writing at any time on or
prior to the Closing Date by the party entitled to the benefits thereof.
12.5 Entire Agreement. This Agreement, including the
Schedules and Exhibits hereto (which are hereby incorporated by reference and
made a part hereof), supersedes all other prior agreements, understandings,
representations and warranties, oral or written, between the parties hereto in
respect of the subject matter hereof.
12.6 Schedules; Tables of Contents and Headings. (a) Any
matter disclosed on any Schedule to this Agreement shall be deemed to have been
disclosed on all other Schedules to this Agreement to the extent that it should
have been disclosed on such other Schedules. The inclusion of any matter on
any Schedule to this Agreement will not be deemed an admission by Seller that
such listed matter is either material to the Partnership or its assets or
Business or could reasonably be expected to have a material adverse effect on
the Business taken as a whole.
(b) The table of contents and section headings of this
Agreement and titles given to Schedules and Exhibits to this Agreement are for
reference purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
12.7 Notices. All notices and other communications under
this Agreement shall be in writing and shall be deemed given when (i) delivered
personally,
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(ii) sent by overnight courier, postage prepaid, or (iii) sent by facsimile
transmission (with telephone confirmation of receipt), to the parties at the
following addresses (or to such address as a party may have specified by
written notice given to the other party pursuant to this provision):
If to Seller to:
Phelps Dodge Corporation
2600 N. Central Avenue
Phoenix, Arizona 85004
Attention: President, Phelps Dodge Mining Company
Telephone: 602-234-8100
Telecopier: 602-234-8095
If to CR Montana or Canyon Resources to:
CR Montana Corporation
14142 Denver West Parkway
Suite 250
Golden, Colorado 80401
Attention: President
Telephone: 303-278-8464
Telecopier: 303-279-3772
with a copy to
CR Montana Corporation
14142 Denver West Parkway
Suite 250
Golden, Colorado 80401
Attention: Land Department
Telephone: 303-278-8464
Telecopier: 303-279-3772
12.8 Separability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement which shall remain in full force and
effect.
12.9 Binding Effect; Assignment; Preemptive Right of Buyers.
(a) This Agreement shall be binding upon and inure to the benefit of the
parties and their
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respective successors and permitted assigns. Nothing in this Agreement shall
create or be deemed to create any third party beneficiary rights in any Person
or entity not a Party to this Agreement. No assignment of this Agreement or of
any rights hereunder (except to an Affiliate of the assignor) may be made by
any Party (by operation of Law or otherwise) without the prior written consent
of all of the other Parties, which, subject to Section 7.14, shall not be
unreasonably withheld, and any attempted assignment without the required
consent shall be void. If a Party assigns this Agreement or any rights
hereunder to an Affiliate, such Affiliate shall assume in writing the
obligations of the assignor hereunder, signed copies of which assumption shall
be furnished to the other Parties, but the assigning Party shall not be
relieved of or released from any such obligations.
(b) If Seller intends to transfer all or any part of its
rights to Production Payments, it promptly shall notify Buyers of those
intentions. The notice shall specify a cash price and payment terms of the
intended transfer. Either or both of Buyers shall have 15 days from the date
of its receipt of the notice in which to notify Seller whether either or both
of them elect to purchase the offered interest at the price and on the terms
and conditions as set forth in the notice. If either of them so elects, their
acquisition shall be consummated within 30 days after delivery of the notice of
election. If neither Buyer so elects, Seller shall have 30 days following the
expiration of the 15 day period to consummate the transaction with a third
party at a price and on terms and conditions no less favorable than those
offered to Buyers. If Seller fails to consummate the transfer to a third party
within that 30 day period, Buyers' preemptive right in the offered interest
shall be revived. Any subsequent proposal by Seller to transfer that interest
shall be conducted in accordance with the procedures set forth in this Section
12.9(b).
12.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
12.11 Expenses. Whether or not the transactions contemplated
herein shall be consummated, each Party shall bear its own expenses incident to
the preparation and performance of this Agreement except as provided in Section
10.2.
12.12 Post-Closing Access. In connection with any matter
relating to any period prior to, or any period ending on, the Closing, Buyers
shall, upon the request of Seller, permit Seller and its representatives full
access at all reasonable times to the books and records of the Partnership, and
Buyers shall execute (and shall cause
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the Partnership to execute) such documents as Seller may reasonably request to
enable Seller to file any required reports or Tax returns relating to the
Partnership.
12.13 Governing Law. This Agreement shall be construed,
performed and enforced in accordance with the laws of the State of Arizona,
without giving effect to the provisions thereof governing conflict of law
principles.
12.14 No Other Representations. Except as specifically set
forth in this Agreement, neither Buyers nor Seller is making any representation
or warranty, express or implied, of any nature whatsoever.
12.15 Punitive Damages. The Parties waive any right any of
them may have to punitive damages in connection with the transactions
contemplated by this Agreement.
12.16 Joint and Several Liability. All obligations of Buyers
under this Agreement, including all obligations to make the payments
contemplated in Section 2 hereof, are joint and several obligations.
12.17 Employee Matters. Neither Buyer shall have any
obligation to continue the employment of, or pay any salaries, termination or
severance pay or any other benefits to, employees of Seller involved in
Operations (as defined in the Partnership Agreement) of the Partnership.
32
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above.
PHELPS DODGE CORPORATION,
acting through its
division, PHELPS DODGE
MINING COMPANY
By /s/ J. Steven Whisler
--------------------------------------
Name: J. Steven Whisler
Title: President of Phelps Dodge
Mining Company and
Senior Vice President
of Phelps Dodge Corporation
CR MONTANA CORPORATION
By /s/ Richard H. De Voto
--------------------------------------
Name: Richard H. De Voto
Title: President
CANYON RESOURCES CORPORATION
By /s/ Richard H. De Voto
--------------------------------------
Name: Richard H. De Voto
Title: President
33
