STOCK PURCHASE AGREEMENT
between
CASE, POMEROY & COMPANY, INC., as Seller
and
HOMESTAKE MINING COMPANY, as Purchaser
Dated as of June 28, 2000
<PAGE>
TABLE OF CONTENTS
Page
1. Sale and Purchase 1
1.1 Sale and Purchase of the Shares 1
1.2 Closing 1
1.3 Purchase Price Adjustment 2
1.4 Post-Effective Date Distributions and Payments 3
1.5 Certain Pre-Closing Actions 5
2. Representations and Warranties of the Seller 6
2.1 Corporate Status and Authority 6
2.2 No Conflicts; Consents and Approvals, etc. 7
2.3 Corporate Status of the Company 7
2.4 The Shares 8
2.5 Financial Statements 8
2.6 Absence of Undisclosed Liabilities 8
2.7 Real Property; Assets 9
2.8 Contracts 9
2.9 Employees and Benefits 10
2.10 Violations of Law 11
2.11 Litigation 11
2.12 Taxes 11
2.13 Absence of Changes 12
2.14 Environmental Compliance 13
2.15 Intellectual Property 14
2.16 Affiliate Transactions 14
2.17 Brokers 14
2.18 Insurance 14
2.19 Accounts; Safe Deposit Boxes; Powers of Attorney;
Officers and Directors 14
2.20 Private Offering 15
3. Representations and Warranties of the Purchaser 15
3.1 Corporate Status and Authority 15
<PAGE>
3.2 No Conflicts; Consents and Approvals, etc. 15
3.3 Financial Ability to Perform 16
3.4 Litigation 16
3.5 Purchase for Investment 16
3.6 Brokers 16
3.7 SEC Documents 16
3.8 Private Offering 17
4. Covenants 17
4.1 Satisfaction of Closing Conditions 17
4.2 Conduct of Business, etc. 17
4.3 Access and Information 19
4.4 Tax Matters 19
4.5 Supplements to Disclosures 25
4.6 Certain Securities Laws Matters 26
4.7 Publicity 29
4.8 Intercompany Accounts 29
4.9 Confidentiality 30
4.10 Resignations 30
4.11 Other Transactions 30
4.12 Notice 31
4.13 Gold Loan and Credit Facility 31
4.14 Section 16(b) 31
4.15 Guarantees and Letter of Credit 31
4.16 Post-Closing Cooperation 32
4.17 Records 32
4.18 Confidentiality Agreements 33
4.19 Insurance Claims 33
5. Conditions Precedent 33
5.1 General 33
5.2 Conditions to Obligations of Both Parties 33
5.2.1 HSR Act 33
5.2.2 Consents 33
<PAGE>
5.2.3 No Injunction 34
5.3 Conditions to Obligations of the Seller 34
5.3.1 Representations and Warranties of the
Purchaser 34
5.3.2 Officer's Certificate 34
5.3.3 Opinion of Counsel 34
5.3.4 Shareholder Agreement 34
5.4 Conditions to Obligations of the Purchaser 34
5.4.1 Representations and Warranties of the
Seller 34
5.4.2 Officer's Certificate 35
5.4.3 Opinion of Counsel 35
5.4.4 Resignations 35
5.4.5 Material Adverse Change 35
5.4.6 FIRPTA Certificate 35
5.4.7 Section 1.5 35
5.4.8 Right of First Refusal 35
6. Indemnification 35
6.1 Survival of Representations and Warranties 35
6.2 Indemnification 36
6.2.1 By the Seller 36
6.2.2 By the Purchaser 37
6.2.3 Indemnification Procedures 38
6.2.4 Tax Treatment of Indemnity Payment 39
6.2.5 Exclusivity of Indemnification Provision 39
7. General Provisions 40
7.1 Modification; Waiver 40
7.2 Entire Agreement 40
7.3 Certain Limitations 40
7.4 Termination 41
7.5 Expenses 42
7.6 Further Actions 42
7.7 Post-Closing Access 42
7.8 Notices 42
<PAGE>
7.9 Assignment 43
7.10 No Third Party Beneficiaries 44
7.11 Counterparts 44
7.12 Interpretation 44
7.13 Severability 44
7.14 Governing Law 44
7.15 Consent to Jurisdiction, etc. 44
7.16 Waiver of Punitive and Other Damages and Jury
Trial 45
SCHEDULES
Schedule 1.3 Methodology
Schedule 4.15 Guarantees and Letter of Credit
Schedule 5.2.2 Consents
EXHIBITS
Exhibit A Form of Common Operation Balance Sheet
Exhibit B Opinion of Cravath, Swaine & Moore, counsel
for the Purchaser
Exhibit C Opinion of Debevoise & Plimpton, counsel for
the Seller
<PAGE>
STOCK PURCHASE AGREEMENT, dated as of June 28, 2000,
between Case, Pomeroy & Company, Inc., a Delaware corporation
(the "SELLER"), and Homestake Mining Company, a Delaware
corporation (the "PURCHASER"), for the purchase and sale of all
of the shares of outstanding capital stock of Bargold
Corporation, a Delaware corporation ("BARGOLD" or the "COMPANY").
WHEREAS, the Seller owns all of the outstanding capital
stock (the "SHARES") of the Company; and
WHEREAS, the Seller wishes to sell the Shares to the
Purchaser and the Purchaser wishes to purchase the Shares.
NOW, THEREFORE, the parties hereto agree as follows:
1. Sale and Purchase.
1.1 Sale and Purchase of the Shares. Subject to the
terms and conditions of this Agreement, at the Closing (as
defined in Section 1.2), the Seller will sell, and the Purchaser
will purchase, the Shares for a total purchase price of
$42,899,250 (the "PURCHASE PRICE"), payable as set forth below in
Section 1.2 and subject to adjustment as provided in Section 1.3.
1.2 Closing. The closing of the sale and purchase of
the Shares (the "CLOSING") will take place at the offices of
Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022
at 10:00 A.M., New York time, on the date on or after July 1,
2000 that is two business days after the date on which all of the
conditions set forth in Section 5 have been satisfied (or to the
extent permitted, waived by the party entitled to the benefit),
or at such other date, place and time as the parties shall have
agreed to in writing. The date on which the Closing shall occur
is hereinafter referred to as the "CLOSING DATE." At the
Closing:
(a) the Seller will deliver to the Purchaser stock
certificates representing the Shares, endorsed or
accompanied by stock powers in favor of the Purchaser, and
accompanied by all requisite stock transfer stamps; and
(b) the Purchaser will deliver to the Seller: (i) a
certificate or
<PAGE>
certificates evidencing 2,600,000 shares of Common Stock
of the Purchaser, par value $1.00 per share (the
"PURCHASER COMMON STOCK"), subject to adjustment in the
event that, between the date hereof and the Closing Date,
there is any stock split or reverse stock split with respect
to the Purchaser Common Stock (the "COMMON STOCK
CONSIDERATION"), registered in the name of the Seller; and
(ii) by wire transfer of immediately available funds to a
previously designated account of the Seller an amount in
cash equal to the sum of (x) (A) the Purchase Price less
(B) the cash value of the Common Stock Consideration
(calculated using the average of the closing prices per
share of Purchaser Common Stock, as reported on the New York
Stock Exchange Composite Tape, for the five trading days
ending with the second trading day prior to (but excluding)
the Closing Date) (the "CASH CONSIDERATION") plus (y) six
percent simple interest on the Cash Consideration from and
including the Effective Date (as defined in Section 1.4) to
but excluding the Closing Date.
1.3 Purchase Price Adjustment. (a) Prior to the
Closing, the parties jointly will request, pursuant to
Section 8.01(s) of the Operating Agreement (as defined in
Section 1.3(d)), that Round Mountain Gold Corporation (the
"OPERATOR") (i) prepare an unaudited consolidated balance sheet
with accompanying cost ledger trial balance for the Common
Operation (as defined in Section 1.3(d)) as of the close of
business on June 30, 2000 (the "JUNE 30 BALANCE SHEET") using the
same accounting principles consistently applied in the
preparation of previous Common Operation balance sheets (as
evidenced by the unaudited consolidated balance sheet and
accompanying cost ledger trial balance, in each case as of March
31, 2000, attached hereto as Exhibit A), and (ii) deliver to the
parties the June 30 Balance Sheet as promptly as practicable
thereafter. The June 30 Balance Sheet shall form the basis for
the calculation by the Seller, subject to review and agreement by
the Purchaser, of Adjusted Working Capital (as defined in
Section 1.3(d)) in accordance with the methodology set forth in
Schedule 1.3.
(b) Within 10 days after the later of (i) the date of
delivery of the June 30 Balance Sheet and (ii) the Closing Date,
a final adjustment to the Purchase Price will be made as follows:
If the total Adjusted Working Capital exceeds $3,647,107 then the
Purchaser will pay the Seller the amount of such excess plus six
percent simple interest, from and including the Effective Date to
<PAGE>
but excluding the date of payment, by wire transfer of
immediately available funds to the account or accounts designated
by the Seller. If the total Adjusted Working Capital is less
than $3,647,107, then the Seller will pay the Purchaser the
amount of such deficit plus six percent simple interest, from and
including the Effective Date to but excluding the date of
payment, by wire transfer of immediately available funds to the
account or accounts designated by the Purchaser.
(c) Notwithstanding anything in this Agreement to the
contrary, any matter which is the subject of an adjustment, or
claimed adjustment, to the purchase price pursuant to this
Section 1.3 may not be asserted by the Purchaser as an alleged
misrepresentation or breach of any warranty or covenant in this
Agreement.
(d) In this Agreement:
"ADJUSTED WORKING CAPITAL" means 25% of the difference
(positive or negative) between the current assets and the current
liabilities of the Common Operation, as shown on the June 30
Balance Sheet as adjusted as provided in Section 1.3.
"COMMON OPERATION" means the properties and assets of
whatever kind and nature, real or personal, tangible or
intangible (including good will), owned, leased, licensed or
held, and the business and operations conducted, by the Operator
or any predecessor operator on behalf of the Operator, the
Company and HNC, as tenants in common (the "PARTICIPANTS"), or
any of them in trust for the three of them, or any of their
predecessors, under the Operating Agreement, including, without
limitation, the properties, assets, business and operations of
the Round Mountain Mine, the Manhattan Mine, the Area of Mutual
Interest under the Operating Agreement and the towns or
subdivisions of Hadley, Manhattan and Round Mountain.
"HNC" means Homestake Nevada Corporation.
"OPERATING AGREEMENT" means the Operating Agreement,
dated March 13, 1975, by and between the Operator, as
successor to Smoky Valley Mining Company, HNC, as successor
to Felmont Oil Corporation, and the Company, as successor to
Essex Royalty Corporation, as amended from time to
<PAGE>
time.
1.4 Post-Effective Date Distributions and Payments.
(a) On the date of the execution and delivery of this Agreement
(the "EXECUTION DATE"), the Seller will cause the Company to
notify and direct the Operator that, on or after the Effective
Date, all Common Operation Distributions (as defined in Section
1.4(e)) shall be distributed, paid or made to the order of the
Purchaser and shall not be distributed, paid or made to the
Company, provided, however, that notwithstanding the foregoing,
(x) if any distribution from the Operator that is required to be
distributed, paid or made to the Company prior to the Effective
Date is not for any reason distributed, paid or made to the
Company on the date on which it should have been distributed,
paid or made, such distribution shall be distributed, paid or
made to the Seller promptly upon receipt thereof and the
Purchaser shall have no right, title or interest therein, and (y)
if any Common Operation Distribution that is required to be
distributed, paid or made by the Operator to the Purchaser on or
after the Effective Date is instead distributed, paid or made to
the Company or the Seller, such Common Operation Distribution
shall be distributed, paid or made by the Company or the Seller
to the Purchaser promptly upon receipt thereof and neither the
Seller nor the Company shall have any right, title or interest
therein.
(b) Except as provided in Section 1.4(c), the
Purchaser will pay (on behalf of the Company) to the Operator the
Company's share of all cash calls made by the Operator to the
Participants on or after the Effective Date, including all cash
calls payable pursuant to any "Weekly Cash Request" delivered to
the Company by the Operator on or after the Effective Date (the
"CASH CALLS").
(c) Any amount payable to the Company by the
Operator pursuant to the month-end cash reconciliation billing
for the month ended June 30, 2000 (the "JUNE INVOICE") (i) on
or after the Effective Date and prior to the Closing Date,
shall be returned by the Operator to the Company and
distributed by the Company to the Seller pursuant to Section
1.5(a)(i) and (ii) after the Closing Date, shall be paid by
the Company to the Seller promptly upon receipt thereof. Any
amount owed to the Operator by the Company
<PAGE>
(x) pursuant to the June Invoice, (y) in respect of any Nevada
Net Proceeds Tax (as defined in Section 2.12(a)(iii)) for the
six-month period ended June 30, 2000 or (z) in respect of the
Ordrich Royalty on Gold Receivables (as each is defined below)
distributed to the Company during the three-month period ended
June 30, 2000 or distributed to the Seller pursuant to Section
1.4(a)(x) shall be paid to the Operator by the Seller and
neither the Purchaser nor the Company shall have any obligation
in respect thereof.
(d) In the event that this Agreement is terminated
pursuant to Section 7.4, either the Purchaser shall pay to the
Company the excess of (i) the Common Operation Distributions
received by the Purchaser over (ii) the Cash Calls paid by the
Purchaser, or the Seller shall pay or shall cause the Company to
pay to the Purchaser the excess of (x) the Cash Calls paid by the
Purchaser over (y) the Common Operation Distributions received by
the Purchaser, in each case received or paid pursuant to this
Section 1.4 (the "TERMINATION PAYMENT"). In calculating the
amount of Common Operation Distributions received by the
Purchaser that are comprised of Gold Receivables, the value of
such Gold Receivables shall be equal to the amount of the
proceeds of the sale of such Gold Receivables in accordance with
the following sentence. The Termination Payment shall be made on
the Termination Date (as defined in Section 7.4(b)), provided,
however, that if any Gold Receivables constituting part of the
Common Operation Distributions received by the Purchaser have not
yet been sold by the Termination Date, the Purchaser shall cause
such Gold Receivables to be sold in a manner consistent with the
sales procedures used by the Purchaser prior to the Termination
Date and the Termination Payment shall be calculated and made no
later than the 14th day following the delivery to the refiner of
the last lot of gold bullion for refining.
(e) As used in this Agreement:
"COMMON OPERATION DISTRIBUTIONS" means the Company's
share of all distributions payable by the Operator to the
Participants in respect of the Common Operation on or after the
Effective Date, including all distributions of Gold Receivables.
"EFFECTIVE DATE" means July 1, 2000.
"GOLD RECEIVABLES" means the Company's proportionate
share of
<PAGE>
all gold bullion bars (bars containing gold and silver dore)
produced by the Common Operation, including gold bullion
bars shipped or held for shipment to a refinery, gold bullion
bars delivered to a refinery, outturned gold and silver held for
the benefit of the Company at a refinery, and the proceeds from
the sale of all such gold and silver, including any payment by a
refinery for the purchase of silver in excess of the cost of
refining.
"ORDRICH ROYALTY" means the royalty payable pursuant to
the Deed Reserving Net Smelter Return Royalty, dated and
effective as of October 1, 1986, between Ordrich Gold Reserves,
as grantor, and the Operator, the Company as successor to the
Seller and HNC, as grantees.
1.5 Certain Pre-Closing Actions. (a) Immediately
prior to the Closing:
(i) the Seller will cause the Company to transfer to
the Seller (v) all of the properties and assets of whatever
kind and nature of the Company and its affiliates and their
predecessors whether real or personal, tangible or
intangible, owned, leased, licensed or held, including,
without limitation, (w) all cash and cash equivalents of the
Company, (x) all Gold Receivables allocated to the Company
prior to the Effective Date, (y) the agreement set forth in
Item 7 in Section 2.8 of the Seller's Disclosure Letter (as
defined in Section 2) and (z) the Excepted Records (as
defined in Section 4.17) other than (A) the Common Operation
Assets (as defined in Section 1.5(b)), (B) the Company's
interest in this Agreement and in all of the agreements set
forth in Section 2.8 of the Seller's Disclosure Letter other
than Items 7, 10, 11, 12, 13 and 14 and (C) the Transferred
Records (as defined in Section 4.17) (the assets to be
transferred pursuant to this clause (i), collectively, the
"EXCLUDED ASSETS");
(ii) the Seller will cause all liabilities and
obligations of the Company to the Seller or any of its
affiliates, and all liabilities and obligations of the
Seller or any of its affiliates to the Company, to be
canceled (in accordance with Section 4.8 or 4.13 or
otherwise) and will cause all the agreements set forth
in Items 10 through 14 of Section 2.8
<PAGE>
and in Items 1, 2 and 3 of Section 2.16 of the Seller's
Disclosure Letter to be terminated (the "TERMINATED
LIABILITIES");
(iii) the Seller will cause all bank accounts listed
in Section 2.19 of the Seller's Disclosure Letter to be
closed; and
(iv) the Seller will assume all liabilities (including
environmental liabilities), obligations or commitments of
the Company and its affiliates and their respective
predecessors, whether direct or indirect, express or
implied, primary or secondary, liquidated, absolute,
accrued, contingent or otherwise, or known or unknown, and
based upon, arising out of or resulting from any fact,
circumstance, occurrence, condition, act or omission
existing on or occurring on or prior to the Closing Date and
any liability, obligation or commitment arising out of
compliance by the Seller with this Section 1.5, other than
(x) liabilities for Taxes (as defined in Section 2.12(a),
which will be allocated between the Seller and the Purchaser
in accordance with Section 4.4), and (y) the Common
Operation Liabilities (as defined in Section 1.5(b)) (the
liabilities to be assumed pursuant to this clause (iv),
collectively, the "EXCLUDED LIABILITIES").
(b) As used in this Agreement:
"COMMON OPERATION ASSETS" means all of the Company's
right, title and interest in the Common Operation and all rights
of the Company under or with reference to the Operating
Agreement.
"COMMON OPERATION LIABILITIES" means all of the
liabilities, obligations and commitments of the Company (a) under
or with reference to the Operating Agreement, (b) arising out of
or relating to the Common Operation Assets and (c) arising out of
or relating to the conduct of the Operator or any predecessor
operator in connection with the Common Operation, provided,
however, that in no event shall Common Operation Liabilities
include any liabilities, obligations and commitments of the
Company with respect to the refining, sale and distribution of
Gold Receivables.
2. Representations and Warranties of the Seller. The
Seller represents and warrants to the Purchaser as follows,
except as set forth in the
<PAGE>
Disclosure Letter delivered by the Seller to the Purchaser on or
prior to the date of execution of this Agreement (the "SELLER'S
DISCLOSURE LETTER"):
2.1 Corporate Status and Authority. The Seller is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the
corporate power and authority to execute and deliver this
Agreement and perform its obligations hereunder. The execution
and delivery of this Agreement by the Seller and the performance
of the Seller's obligations hereunder have been duly authorized
by the Seller's board of directors, which constitutes all
necessary corporate action on the part of the Seller for such
authorization. No approval of the Seller's stockholders is
necessary to authorize the execution and delivery of this
Agreement by the Seller or the performance of the Seller's
obligations hereunder. This Agreement has been duly executed and
delivered by the Seller and constitutes the valid and binding
obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as limited by laws affecting
the enforcement of creditors' rights generally or by general
equitable principles.
2.2 No Conflicts; Consents and Approvals, etc. (a)
The execution and delivery of this Agreement by the Seller and
the performance of its obligations hereunder will not result in
(i) any conflict with the certificate of incorporation or by-laws
of the Seller or the Company, (ii) subject to obtaining the
consents referred to in Section 2.2(b), any breach or violation
of or default under any law, statute, regulation, judgment,
order, decree, license, permit or other governmental
authorization or any mortgage, lease, agreement, deed of trust,
indenture or any other instrument to which the Seller or the
Company is a party or by which either of them or their respective
properties or assets are bound, or (iii) the creation or
imposition of any liens, mortgages, security interests, adverse
claims, charges or encumbrances ("LIENS") on the Shares or any
properties or assets of the Company, other than Liens created by
or resulting from the actions of the Purchaser or any of its
affiliates, except, in the case of clauses (ii) and (iii) above,
for such breaches, violations or defaults and such Liens which
arise from the Common Operation.
(b) Except as set forth in Section 2.2 of the Seller's
Disclosure
<PAGE>
Letter, and except for any consents, approvals, authorizations or
filings required in connection with the Common Operation, no
consent, approval or authorization of or filing with any third
party or any governmental authority is required on the part of
the Seller or the Company in connection with the execution and
delivery of this Agreement or the consummation of the
transactions contemplated hereby, except filings required with
respect to the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR ACT").
2.3 Corporate Status of the Company. The Company is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. The Company
has all requisite corporate power and authority to conduct its
business and to own or lease its properties, as now conducted,
owned or leased. The Company is duly qualified to do business in
each jurisdiction listed in Section 2.3 of the Seller's
Disclosure Letter, which are all the jurisdictions in which the
failure to be so qualified would reasonably be expected to have a
material adverse effect on the business, assets, results of
operations or condition (financial or otherwise) of the Company
(a "MATERIAL ADVERSE EFFECT").
2.4 The Shares. The authorized capital stock of the
Company consists of 100 shares of common stock, par value $1.00
per share, all of which shares are issued and outstanding and
owned by the Seller, free and clear of all Liens. The Shares
have been duly authorized and validly issued and are fully paid
and non-assessable. There are no outstanding options, warrants,
conversion or other rights or agreements of any kind (other than
this Agreement) for the purchase or acquisition from, or the sale
or issuance by, the Seller or the Company of any shares of
capital stock or other securities of the Company, and no
authorization therefor has been given. Assuming the Purchaser
has the requisite power and authority to be the lawful owner of
the Shares, upon delivery to the Purchaser at the Closing of
certificates representing the Shares, duly endorsed by the Seller
for transfer to the Purchaser, and upon the Seller's receipt of
the Purchase Price, good and valid title to the Shares will pass
to the Purchaser, free and clear of any Liens, other than those
arising from acts of the Purchaser or its affiliates.
2.5 Financial Statements. (a) The Seller has made
available to the Purchaser complete and correct copies of the
audited balance sheets and related statements of operations and
retained earnings and cash flows of the
<PAGE>
Company for the fiscal years ending June 30, 1998 and 1999 and
the unaudited balance sheets and related statements of
operations and retained earnings and cash flows of the Company
as of, and for the nine months ending March 31, 2000
(collectively, the "BARGOLD FINANCIAL STATEMENTS"). Except as
set forth in Section 2.5 of the Seller's Disclosure Letter,
the Bargold Financial Statements present fairly in all
material respects the financial position and results of
operations of the Company as of the dates and for the
periods indicated, and have been prepared in accordance with
United States generally accepted accounting principles, as in
effect at the time of the relevant determination ("GAAP"), except
in the case of the interim Bargold Financial Statements for the
absence of footnotes and normal year-end adjustments.
(b) The Purchaser acknowledges that it has received
from the Operator of the Common Operation, true and complete
copies of the audited special-purpose balance sheets and related
special-purpose statements of production costs, Participants'
equity and cash flows of the Common Operation for the fiscal
years ending December 29, 1995, December 27, 1996, December 26,
1997, December 25, 1998 and December 31, 1999 (collectively, the
"COMMON OPERATION FINANCIAL STATEMENTS" and, together with the
Bargold Financial Statements, the "FINANCIAL STATEMENTS").
2.6 Absence of Undisclosed Liabilities. Except for
liabilities or obligations (a) reflected or reserved against in
the Financial Statements, (b) disclosed in the Seller's
Disclosure Letter, or (c) constituting Common Operation
Liabilities, the Company does not have any liabilities or
obligations.
2.7 Real Property; Assets. (a) The Company does not
have any interest in any item of real property, except (i) net
smelter return royalties (the "NET SMELTER RETURN ROYALTIES") set
forth as Items 1 and 2 of Section 2.7(A) of the Seller's
Disclosure Letter, and (ii) its interests as a tenant in common
in real property forming a part of the Common Operation (the
"COMMON OPERATION REAL PROPERTY"). The Company holds a direct or
beneficial 25% undivided interest as a tenant in common in the
Common Operation Real Property, free and clear of all Liens
except for Permitted Liens (as defined below), and, as of the
date of this Agreement, owns the Net Smelter Return Royalties.
Except as set forth in Section 2.7 of the Seller's Disclosure
Letter, the Company has not sold, transferred, assigned, conveyed
or otherwise disposed of or encumbered title to the Common
Operation Real Property, except for (A) Permitted Liens and
(B) sales or other transfers of Common Operation Real Property
made by all of the Participants in the Common Operation or by the
Operator on behalf of the Common Operation.
(b) Except as set forth in Section 2.7(B) of the
Seller's Disclosure Letter, and except for the Common Operation
Assets, the Company does not own, and has never owned, any
shares, partnership interests, limited liability company
interests or other securities of or interests in any corporation,
company, partnership, limited liability company, trust, joint
venture or other person.
(c) "PERMITTED LIENS" shall mean (i) Liens reflected
in Section 2.7 of the Seller's Disclosure Letter, (ii) Liens for
taxes and other governmental charges and assessments which are
not yet due and payable, (iii) Liens reflected in the Financial
Statements, (iv) Liens arising in connection with the Common
Operation otherwise than solely from actions of the Company or
the Seller and (v) Liens under the Operating Agreement.
(d) Except as set forth in Section 2.7 of the Seller's
Disclosure Letter, the Company holds a direct or beneficial 25%
undivided interest as a tenant in common in the tangible personal
property and assets forming part of the Common Operation, free
and clear of all Liens except for Permitted Liens. Except as set
forth in Section 2.7 of the Seller's Disclosure Schedule, the
Company has not sold, transferred, assigned, conveyed or
otherwise disposed of or encumbered title to such interest,
except for (i) Permitted Liens and (ii) sales or other transfers
of Common Operation tangible personal property and assets made by
all of the Participants in the Common Operation or by the
Operator on behalf of the Common Operation.
2.8 Contracts. Section 2.8 of the Seller's Disclosure
Letter lists all orders, leases, instruments, agreements,
contracts and commitments (collectively, "CONTRACTS") of the
following types to which the Company is a party or by which the
Company or any of its properties is bound, except for contracts
forming part of the Common Operation;
(a) agreements, contracts or other instruments under
which the
<PAGE>
Company has borrowed any money from, or issued any note,
bond, debenture or other evidence of indebtedness to,
any person (other than the Company);
(b) agreements, contracts or other instruments
(including so-called take-or-pay or keepwell agreements)
under which (A) any person has directly or indirectly
guaranteed indebtedness, liabilities or obligations of the
Company or (B) the Company has directly or indirectly
guaranteed indebtedness, liabilities or obligations of any
person (in each case other than endorsements for the purpose
of collection in the ordinary course of business consistent
with past practice);
(c) agreements, contracts or other instruments under
which the Company has, directly or indirectly, made any
advance, loan, extension of credit or capital contribution
to, or other investment in, any person (other than the
Company);
(d) mortgages, pledges, security agreements, deeds of
trust or other instruments granting a Lien upon any Company
property;
(e) joint venture, operating, partnership, management
or development agreements;
(f) consulting agreements, service agreements,
purchase orders, leases or other agreements, contracts,
licenses, commitments or instruments; and
(g) any currency exchange, interest rate exchange,
commodity exchange, hedging, derivative or similar
agreements.
The Seller has furnished or made available to the Purchaser
copies of all of the Contracts listed in Section 2.8 of the
Seller's Disclosure Letter (collectively, the "MATERIAL
CONTRACTS"). Except as set forth in Section 2.8 of the Seller's
Disclosure Letter, (i) each Material Contract is valid, binding
and in full force and effect, (ii) neither the Company nor, to
the knowledge of the Seller, any other
<PAGE>
party is in breach or default in any material respect under any
Material Contract, (iii) the Company is not in violation in any
respect under the Operating Agreement and (iv) the Company has
not received any notice from any other party to any Material
Contract asserting any such breach by the Company.
2.9 Employees and Benefits. Except as set forth in
Section 2.9 of the Seller's Disclosure Letter, (a) the Company
does not have and has never had any employees, and (b) the
Company is not and has never been the sponsor of, or a
participant in, any employee benefit plan.
2.10 Violations of Law. Except as otherwise set forth
in Section 2.10 of the Seller's Disclosure Letter and except for
any information provided in writing by the Operator to all of the
Participants of the Common Operation, neither the Seller nor the
Company has received any notice from any governmental authority
or other person of any alleged violation of any law, statute,
rule, regulation, judgment, order, decree, permit, concession,
franchise or other governmental authorization or approval
applicable to the Company, the Common Operation or to any of its
properties. This Section 2.10 does not relate to tax matters
which are instead the subject of Section 2.12 or environmental
matters which are instead the subject of Section 2.14.
2.11 Litigation. Except as otherwise set forth in
Section 2.11 of the Seller's Disclosure Letter and except for
matters pending or threatened against the Operator or the Common
Operation, there are no judicial or administrative actions,
proceedings or investigations pending or, to the knowledge of the
Seller, threatened against the Seller or the Company which could
reasonably be expected to impose any liability on the Company or
which question the validity of this Agreement or any action taken
or to be taken by the Seller or the Company in connection
herewith.
2.12 Taxes. (a) For purposes of this Agreement:
(i) "POST-CLOSING TAX PERIOD" shall mean any taxable
period (or portion thereof) beginning after the Closing
Date;
(ii) "PRE-CLOSING TAX PERIOD" shall mean any taxable
period (or portion thereof) ending on or before the Closing
Date; and
<PAGE>
(iii) "TAXES" shall mean all income taxes, franchise
taxes, gross receipts taxes, net proceeds taxes (including
without limitation Nevada gross yield and net proceeds taxes
pursuant to Title 32, Chapter 362 of the Nevada Revised
Statutes (the "NEVADA NET PROCEEDS TAX")), withholding
taxes, unemployment insurance taxes, social security taxes,
sales and use taxes, excise taxes, real, personal and
intangible property taxes, stamp taxes, transfer taxes,
workers' compensation taxes, and other similar taxes or
governmental charges, together with all additions, interest
and penalties payable with respect thereto.
(b) Except as set forth in Section 2.12 of the
Seller's Disclosure Letter:
(i) all material federal, state, local and foreign Tax
returns, reports and declarations ("TAX RETURNS") required
to be filed by the Company on or prior to the Closing Date
have been filed (or by the Closing Date will have been
filed);
(ii) all Taxes shown as due thereon have been paid (or
by the Closing Date will have been paid);
(iii) as of the date hereof, no Tax Return of the
Company has been examined by the Internal Revenue Service
(other than any such examination that has been closed);
(iv) as of the date hereof, no material Tax Returns of
the Company or any affiliated group of which the Company is
or has ever been a member are under audit or examination by
any taxing authority, and no written notice of such an audit
or examination has been received by the Company or such
group;
(v) each material deficiency resulting from any audit
or examination relating to Taxes imposed on the Company by
any taxing authority has been timely paid;
<PAGE>
(vi) as of the date hereof, there are no outstanding
agreements or waivers extending, or having the effect of
extending, the statutory period of limitations applicable to
any material Tax Returns required to be filed by the
Company. Except as set forth in Section 2.12 of the
Seller's Disclosure Letter, as of the date hereof, the
relevant statute of limitations is closed with respect to
the Federal, foreign, and material state and local Tax
Returns of the Company and any affiliated group of which the
Company is or has ever been a part for all years through the
Closing Date. No powers of attorney with respect to any
Taxes have been executed or filed with any taxing authority
by or on behalf of the Company; and
(vii) there are no tax allocation, tax sharing or tax
indemnification agreements to which the Company is a party
or under which the Company may have any liability that will
continue in force after the Closing.
2.13 Absence of Changes. Except as set forth in
Section 2.13 of the Seller's Disclosure Letter and except for the
marketing and sale of the Company's 25% share of the gold
recovered from the Common Operation, the activities conducted as
a participant in the Common Operation, and the ownership of the
Net Smelter Return Royalties, the Company has never conducted,
and does not now conduct, any business activities. Since June
30, 1999, (a) other than in connection with the transactions
contemplated by this Agreement or reflected in Section 2.13 of
the Seller's Disclosure Letter, the Company has conducted its
business in the ordinary course, in substantially the same manner
in which it has been previously conducted and (b) the Company has
not taken any action that, if taken after the date of this
Agreement, would constitute a breach of any of the covenants set
forth in Section 4.2, provided, however, that no provision of
this Agreement shall restrict the ability of the Company to
distribute to its shareholder the Excluded Assets.
2.14 Environmental Compliance. Except (a) as set forth
in Section 2.14 of the Seller's Disclosure Letter, (b) in
connection with remedial action which may be required in
connection with Common Operation reclamation obligations as set
forth in Section 4.15, (c) for any information provided in
writing by the Operator to all of the Participants in the Common
Operation and (d) in connection with Common Operation
Liabilities, (i) neither the Seller nor the Company has received
any notice (written or oral) or other communication that
<PAGE>
the Seller or the Company is or may be a potentially responsible
party or otherwise liable in connection with any waste disposal
site allegedly containing, or other location used for the
disposal of, any Hazardous Materials, or in connection with any
other corrective action, response costs, penalties or other
obligations under any applicable Environmental Law, (ii) to the
best knowledge of the Seller, the Company is and has been in
compliance with all applicable Environmental Laws and (iii) the
Company has obtained all permits, licenses and authorizations
required under Environmental Laws for the conduct of their
operations as currently conducted.
As used in this Agreement, "ENVIRONMENTAL LAWS" means
all former, current and future federal, state, local and foreign
laws (including common law), regulations, rules, ordinances,
codes, decrees, judgments, directives, orders (including consent
orders), in each case, relating to pollution, protection of the
environment, natural resources or human health and safety,
including laws relating to the presence, release of, or exposure
to, Hazardous Materials.
"HAZARDOUS MATERIALS" means (A) any petroleum or
petroleum products, radioactive materials or wastes, asbestos,
urea formaldehyde or polychlorinated biphenyls; and (B) any
chemical, material, substance or waste that is regulated by any
Environmental Law.
"RELEASE" means any actual or threatened release,
spill, emission, leaking, dumping, injection, pouring, deposit,
disposal, discharge, dispersal, leaching or migration into the
environment (including ambient air, surface water, groundwater,
land surface or subsurface strata) or within any building,
structure, facility or fixture.
2.15 Intellectual Property. The Company does not own
any material trademarks, copyrights, trade names, service marks,
patents or similar intangible rights, or any applications
therefor. Neither the Seller nor the Company has received any
notice or claim that it is infringing on or otherwise acting
adversely to the intellectual property rights of any person and
neither the Seller nor the Company has any knowledge of any
infringement by any person.
<PAGE>
2.16 Affiliate Transactions. Except as set forth in
Section 2.16 of the Seller's Disclosure Letter, (a) the Company
is not a party to any agreement with the Seller or any of its
affiliates (other than the Company) and (b) since June 30, 1999,
the Company has not been a party to any transaction with the
Seller or any of its affiliates (other than the Company), except
for cash distributions. Section 2.16 of the Seller's Disclosure
Letter sets forth a list of all material services provided by the
Seller or any of its affiliates (other than the Company) to the
Company.
2.17 Brokers. All negotiations relating to this
Agreement and the transactions contemplated hereby have been
carried out without the intervention of any person acting on
behalf of the Seller or the Company in such manner as to give
rise to any valid claim against the Purchaser, the Seller or the
Company for any brokerage or finder's commission, fee or similar
compensation, except for J.P. Morgan Securities Inc., whose fees
in respect hereof shall be paid by the Seller.
2.18 Insurance. The Company maintains no insurance
policies separate from the Seller's affiliated group. The
insurance policies maintained by the Seller or any affiliate or
subsidiary of the Seller with respect to the Company and its
respective assets and properties are set forth in Section 2.18 of
the Seller's Disclosure Letter. All such policies are in full
force and effect, all premiums due and payable thereon have been
paid, and no notice of cancellation or termination has been
received with respect to any such policy which has not been
replaced on substantially similar terms prior to the date of such
cancellation.
2.19 Accounts; Safe Deposit Boxes; Powers of Attorney;
Officers and Directors. Section 2.19 of the Seller's Disclosure
Letter sets forth (a) a true and correct list of all bank and
savings accounts, certificates of deposit and safe deposit boxes
of the Company and those persons authorized to sign thereon,
(b) true and correct copies of all corporate borrowing,
depository and transfer resolutions and those persons entitled to
act thereunder, (c) a true and correct list of all powers of
attorney granted by the Company and those persons authorized to
act thereunder and (d) a true and correct list of all officers
and directors of the Company.
<PAGE>
2.20 Private Offering. None of the Seller, the
Company, their affiliates and their representatives has issued,
sold or offered the Shares or any part thereof or any similar
securities of the Company to, or has solicited any offer to
acquire any of the same from, any person under circumstances that
would cause the sale of the Shares, as contemplated by this
Agreement, to be subject to the registration requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT").
Assuming the representations of Purchaser contained in
Section 3.5 are true and correct, the sale and delivery of the
Shares hereunder are exempt from the registration and prospectus
delivery requirements of the Securities Act.
3. Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to the Seller as follows:
3.1 Corporate Status and Authority. The Purchaser is
a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the
corporate power and authority to execute and deliver this
Agreement and perform its obligations hereunder. The execution
and delivery of this Agreement by the Purchaser and the
performance of the Purchaser's obligations hereunder have been
duly authorized by the Purchaser's board of directors, which
constitutes all necessary corporate action on the part of the
Purchaser for such authorization. No approval of the Purchaser's
stockholders is necessary to authorize the execution and delivery
of this Agreement by the Purchaser or the performance of the
Purchaser's obligations hereunder. This Agreement has been duly
executed and delivered by the Purchaser and constitutes the valid
and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as limited by laws
affecting the enforcement of creditors' rights generally or by
general equitable principles.
3.2 No Conflicts; Consents and Approvals, etc.
(a) The execution, delivery and performance of this Agreement by
the Purchaser will not result in (i) any conflict with the
certificate of incorporation or by-laws of the Purchaser,
(ii) any breach or violation of or default under any law,
statute, regulation, judgment, order, decree, license, permit or
other governmental
<PAGE>
authorization or any mortgage, lease, agreement, deed of trust,
indenture or any other instrument to which the Purchaser is a
party or by which the Purchaser or any of its properties or
assets are bound, or (iii) the creation or imposition of any
Lien on the Purchaser Common Stock or, with respect to any
other properties or assets of the Purchaser, any Lien other
than those that would not be material to the business,
properties or assets of the Purchaser.
(b) No consent, approval or authorization of or filing
with any third party or governmental authority is required on the
part of the Purchaser in connection with the execution and
delivery of this Agreement or the consummation of the
transactions contemplated hereby, except filings required with
respect to the HSR Act and filings required in connection with
Section 4.6.
(c) The Common Stock Consideration, when issued
pursuant to this Agreement, will be validly issued, fully paid
and non-assessable.
3.3 Financial Ability to Perform. The Purchaser has
currently available cash funds sufficient to consummate the
transactions contemplated by this Agreement.
3.4 Litigation. There are no judicial or
administrative actions, proceedings or investigations pending or,
to the knowledge of the Purchaser, threatened, which question the
validity of this Agreement or any action taken or to be taken by
the Purchaser in connection herewith.
3.5 Purchase for Investment. The Purchaser is
acquiring the Shares for investment and not with a view toward
any resale or distribution thereof except in compliance with the
Securities Act.
3.6 Brokers. All negotiations relating to this
Agreement and the transactions contemplated hereby have been
carried out without the intervention of any person acting on
behalf of the Purchaser in such manner as to give rise to any
valid claim against the Purchaser, the Seller or the Company for
any brokerage or finder's commission, fee or similar
compensation.
3.7 SEC Documents. The Purchaser (a) has filed all
reports, schedules, forms, statements and other documents
required to be filed by the Purchaser with the Securities and
Exchange Commission (the "SEC") since
<PAGE>
December 31, 1999, including, without limitation, the
Purchaser's Annual Report on Form 10-K for the year ended
December 31, 1999 (the "EXCHANGE ACT DOCUMENTS") and (b)
intends to file the Registration Statement with the SEC as
provided in Section 4.6(f) on the Closing Date (such
Registration Statement, including any prospectus contained
therein, the "SECURITIES ACT DOCUMENTS" and, together with the
Exchange Act Documents, the "PURCHASER SEC DOCUMENTS"). As of
its respective date, each Exchange Act Document complied, and
each Securities Act Document will comply, in all material
respects with the requirements of the Exchange Act or the
Securities Act, as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable thereto, and each
Exchange Act Document did not, and each Securities Act Document
will not, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Except to the extent that information contained in any Purchaser
SEC Document has been revised or superseded by a later filed
Purchaser SEC Document, as of the date hereof, none of the
Exchange Act Documents contains and, as of the Closing Date, none
of the Purchaser SEC Documents will contain, any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
3.8 Private Offering. None of the Purchaser, its
affiliates and their representatives has issued, sold or offered
the Common Stock Consideration or any part thereof or any similar
securities of the Purchaser to, or has solicited any offer to
acquire any of the same from, any person under circumstances that
would cause the delivery of the Common Stock Consideration to the
Seller, as contemplated by this Agreement, to be subject to the
registration requirements of the Securities Act. The delivery of
the Common Stock Consideration hereunder is exempt from the
registration requirements of the Securities Act.
4. Covenants.
4.1 Satisfaction of Closing Conditions. The parties
shall use their reasonable efforts to bring about the
satisfaction as soon as possible of all the conditions contained
in Section 5. Without limiting the generality of the foregoing,
the parties shall apply for and diligently prosecute all
applications for, and shall use their reasonable efforts promptly
to obtain, such consents, authorizations and approvals from such
third parties and governmental authorities as shall be necessary
to permit the consummation of the transactions contemplated by
this Agreement including, without limitation, making the
requisite filings with the Federal Trade Commission and the
Antitrust Division of the Department of Justice pursuant to the
HSR Act, provided that, except for customary filing fees and
routine expenditures, in no event shall any party be required to
expend material funds or incur material obligations to obtain a
third party or governmental consent, authorization or approval.
4.2 Conduct of Business, etc. (a) From the date
hereof until and through the end of the Closing Date, except for
entering into and performing under this Agreement and except for
the matters referred to in Section 4.2 of the Seller's Disclosure
Letter and the effect of the consummation of the transactions
contemplated hereby or as otherwise consented to by the Purchaser
in writing, which consent, in the case of all matters relating to
the Excluded Assets and the Excluded Liabilities, shall not be
unreasonably withheld, the Seller shall cause the Company (i) to
conduct its business in the ordinary course in substantially the
same manner in which it previously has been conducted and
(ii) not to take, or omit from taking, any action that would, or
that could reasonably be expected to, cause the business of the
Common Operation not to be conducted in the ordinary course in
substantially the same manner in which it previously has been
conducted. The Seller shall not, and shall not permit the
Company to, take any action that would, or that could reasonably
be expected to, result in any of the conditions to the purchase
and sale of the Shares set forth in Section 5 not being
satisfied.
(b) Except as set forth in Section 4.2 of the Seller's
Disclosure Letter or as otherwise expressly permitted or required
by the terms of this Agreement, the Seller shall not permit the
Company to do any of the following without the prior written
consent of the Purchaser, which consent, in the case of all
matters relating to the Excluded Assets and the Excluded
Liabilities, shall not be unreasonably withheld:
<PAGE>
(i) amend its Certificate of Incorporation or By-Laws;
(ii) redeem or otherwise acquire any shares of its
capital stock or issue any capital stock or any option,
warrant or right relating thereto or any securities
convertible into or exchangeable for any shares of capital
stock;
(iii) incur or assume any liabilities, obligations or
indebtedness for borrowed money or guarantee any such
liabilities, obligations or indebtedness, other than as may
arise from actions of the Operator in connection with the
Common Operation;
(iv) permit, allow or suffer any of its assets to
become subjected to any Lien, except for Permitted Liens;
(v) cancel any material indebtedness or waive any
claims or rights of substantial value, except (A) in the
ordinary course of business consistent with past practice or
(B) as may arise from actions of the Operator in connection
with the Common Operation;
(vi) make any change in any method of accounting or
accounting practice or policy of the Company other than
those required by GAAP;
(vii) sell, lease or otherwise dispose of any of its
material assets, other than (A) with respect to the Excluded
Assets, in the ordinary course of business consistent with
past practice or (B) as may arise from actions of the
Operator in connection with the Common Operation;
(viii) waive any right under the Operating Agreement
or give any consent thereunder;
(ix) enter into any currency exchange, interest rate
exchange, commodity exchange, hedging, derivative or other
similar agreements; or
(x) agree, whether in writing or otherwise, to any of
the foregoing.
<PAGE>
4.3 Access and Information. Prior to the Closing, the
Seller shall cause the Company to give to the Purchaser and its
representatives reasonable access at all reasonable times to the
properties, books and records of the Company. The Purchaser
acknowledges that HNC, its wholly-owned subsidiary, is a
participant in the Common Operation and, accordingly, the
Purchaser and HNC have such access to the properties, books and
records of the Operator relating to the Common Operation as they
deem reasonably necessary and appropriate independently of the
Seller and the Company. The information and documents obtained
by the Purchaser from the Seller or the Company, relating to the
Seller or the Company (excluding all documents and information
relating to the Common Operation) and designated as confidential
shall not be disclosed by the Purchaser or by any of its
officers, directors, employees, representatives or agents
(collectively, with respect to any person, its
"REPRESENTATIVES"), except as required by law or administrative
process, and as may be required or advisable in connection with
the assertion or defense of any claim under this Agreement or any
agreement entered into in connection with the transactions
contemplated hereby, and except for information and/or documents
that (i) become generally available to the public other than as a
result of a disclosure by the Purchaser or its Representatives in
violation of this Agreement, (ii) were available to the Purchaser
on a non-confidential basis prior to their disclosure by the
Seller, the Company or their Representatives, or (iii) become
available to the Purchaser from a source other than the Seller,
the Company or their Representatives, when such source is
entitled, to the best of the Purchaser's knowledge, to make such
disclosure.
4.4 Tax Matters.
(a) Indemnification by the Seller. From and after the
Closing Date, the Seller agrees to indemnify and hold harmless
the Purchaser, its affiliates (including the Company) and each of
their respective directors, officers and stockholders from any
and all (i) Covered Taxes imposed on or with respect to the
Company for any Pre-Closing Tax Period (including without
limitation as a result of any 338(h)(10) election or the Net
Smelter Return Royalties) and (ii) any other federal, state,
local and foreign Taxes imposed on or with respect to the Company
(A) solely as a result of the several liability of the Company
pursuant to Treas. Reg. 1.1502-6 (or any analogous state, local
or foreign law or regulation) in respect of the Seller Group (or
any other consolidated, combined
<PAGE>
or unitary group that includes or has included the Seller or its
affiliates (other than the Company)) or (B) with respect to, or
arising as a result of, any activity or asset of the Company
unrelated to the Common Operation for any Pre-Closing Tax
Period. "COVERED TAXES" means the followings types of taxes
imposed on the Company (w) Nevada Net Proceeds Tax, (x) U.S.
federal income taxes, (y) the New York State Franchise Tax on
Business Corporations (or the MTA Surcharge) and (z) the New York
City General Corporation Tax.
(b) Indemnification by the Purchaser. From and after
the Closing Date, the Purchaser agrees to indemnify and hold
harmless the Seller, its affiliates and each of their respective
directors, officers and stockholders from all Taxes imposed on or
with respect to the Company which are not described in Section
4.4(a)(i) or (ii).
(c) U.S. Consolidated Tax Return. Except as provided
in Section 4.4(n), the Seller shall prepare and file all U.S.
federal consolidated income Tax Returns of the affiliated group
of corporations of which the Seller is the parent (the "SELLER
GROUP") and the Company is a member.
(d) Other Tax Returns for non-Straddle Periods. The
Seller shall prepare any Tax Return required to be filed by the
Company for any taxable period ending on or prior to the Closing
Date. The Seller shall prepare in a timely manner all necessary
documents and statements (including the Certificate of Surrender
of Authority) and all required tax returns and pay necessary fees
and taxes in connection with the cessation of the Company's
business activities in New York. The Seller shall deliver to the
Purchaser the original of each such Tax Return together with the
amount of Tax shown as due thereon at least five business days
prior to the due date for the filing of such Tax Return and upon
receipt thereof the Purchaser shall cause the Company to file
timely such Tax Return (as prepared by the Seller) and pay the
Tax shown as due thereon. Any Tax Return described in this
Section 4.4(d) shall be prepared in a manner consistent with
practices followed in prior years with respect to similar Tax
Returns, except as required by changes in law.
(e) Allocations for Straddle Periods. In the case of
any period that
<PAGE>
includes (but does not end on) the Closing Date (a "STRADDLE
PERIOD"): (i) in the case of any real, personal, intangible
property and other similar Taxes of the Company, the portion of
such Taxes for the Pre-Closing Tax Period shall equal
the amount of such Taxes for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of
days during the Straddle Period that are in the Pre-Closing Tax
Period and the denominator of which is the number of days in the
Straddle Period, and (ii) in the case of any other Taxes, the
portion of such Taxes for the Pre-Closing Tax Period shall be
computed as if such taxable period ended as of the close of
business on the Closing Date.
(f) Tax Returns for Straddle Periods. In the case of
any Straddle Period Tax Return, the Purchaser shall prepare and
timely file such Tax Return and timely pay all Taxes due with
respect to the taxable period covered by such Tax Return. The
Purchaser shall determine the portion of the Taxes covered by
such Tax Return for the Pre-Closing Tax Period (the "SELLER'S
PORTION"). Not later than 15 days after the receipt by the
Seller from the Purchaser of notice thereof (or, if later, 10
business days after the completion of the Pre-Filing Review
Procedure (as defined in Section 4.4(g)) with respect thereto),
the Seller shall pay to the Purchaser an amount equal to the
excess, if any, of (i) the Seller's Portion of the Taxes reported
on any such Tax Return, over (ii) any estimated Taxes paid prior
to the Closing with respect to the Taxes reportable on such
return. If the amount determined in clause (ii) of the preceding
sentence exceeds the amount determined in clause (i), the
Purchaser shall pay to the Seller the amount of such excess not
later than five days after the filing of such return. Any Tax
Return described in this Section 4.4(f) shall be prepared in a
manner consistent with practices followed in prior years with
respect to similar Tax Returns, except as required by changes in
law.
(g) Pre-Filing Review Procedure. All Tax Returns for
Straddle Periods ("STRADDLE PERIOD TAX RETURNS") shall be subject
to pre-filing review by the Seller. Unless otherwise agreed to
by the parties, Tax Returns subject to such pre-filing review,
plus a statement, in reasonable detail, showing the calculation
supporting the Purchaser's determination with regard to the
allocation of any Taxes reportable on any such Tax Return, shall
be submitted by the Purchaser to the Seller at least 45 days
prior to the due date (including extensions) of such Tax Return
and the Seller shall either complete its review or provide
written comments on such Tax Return or determination within 15
days of receipt of such Tax Return. In the event of any
disagreement between the
<PAGE>
Purchaser and the Seller, such disagreement shall be resolved
by the New York office of one of the "big-five" accounting
firms (which firm shall be jointly selected and retained by
the Seller and the Purchaser) (the "THIRD PARTY ACCOUNTANTS"),
and any such determination by the Third Party Accountants shall
be final. The fees and expenses of the Third Party Accountants
shall be borne by the Purchaser and the Seller in inverse
proportion as they may prevail on matters resolved by the Third
Party Accountants, which proportionate allocations shall be
determined by the Third Party Accountants at the time the
determination of the Third Party Accountants is rendered on the
merits of the matters submitted. If the Third Party
Accountants do not resolve any differences between the Seller
and the Purchaser with respect to such Tax Return at least
5 days prior to the due date therefor, such Tax Return shall be
filed as prepared by Purchaser and amended to reflect the Third
Party Accountant's resolution. The procedure described in this
Section 4.4(f) shall be referred to herein as the "PRE-FILING
REVIEW PROCEDURE".
(h) Right of Access Granted to Purchaser. The Seller
shall grant to the Purchaser (or its designees) access at all
reasonable times to all of the information, books and records
relating exclusively to the Company within the possession of the
Seller (including workpapers and correspondence with taxing
authorities), shall afford the Purchaser (or its designees) the
right (at the Purchaser's expense) to take extracts therefrom and
to make copies thereof, and shall provide the Purchaser
reasonable access to their employees who are knowledgeable
regarding the relevant Tax matters to the extent reasonably
necessary to permit the Purchaser (or its designees) to prepare
Tax Returns and to conduct negotiations with taxing authorities,
provided, however that the Purchaser shall have no rights under
this Section 4.4(h) to any information, books or records relating
to the Seller or any of its affiliates (other than the Company).
(i) Right of Access Granted to Seller. The Purchaser
and its affiliates shall grant, or cause the Company to grant, to
the Seller (or its designees) access at all reasonable times to
all of the information, books and records relating to the Company
within the possession of the Purchaser or the Company (including
workpapers and correspondence with taxing authorities),
<PAGE>
shall afford the Seller (or its designees) the right (at the Seller's
expense) to take extracts therefrom and to make copies thereof,
and shall provide the Seller reasonable access to their employees
who are knowledgeable regarding the relevant Tax matters to the
extent reasonably necessary to permit the Seller (or its
designees) to prepare Tax Returns and to conduct negotiations
with taxing authorities. The Purchaser shall, or shall cause the
Company to, accurately complete on a timely basis any reasonable
or customary tax information package or questionnaire submitted
to it by the Seller for the purpose of enabling the Seller to
complete any Tax Return that the Seller is required to prepare
pursuant to this Agreement.
(j) Refunds and Credits. Any refund or credit of Taxes
of the Company for any Pre-Closing Tax Period that is described
as being the responsibility of the Seller pursuant to Section
4.4(a) shall be for the account of the Seller. Notwithstanding
the foregoing, any such refund or credit shall be for the account
of the Purchaser to the extent that such refund or credit is
attributable to the carryback from a taxable period beginning
after the Closing Date of any items of loss, deductions, or other
Tax items of the Company, any subsidiary, or any of their
respective affiliates, including the Purchaser. A refund or
credit shall be attributable to a tax item carried back from a
tax period beginning after the Closing Date to the extent that
the amount of tax payable by the Company for the Pre-Closing Tax
Period taking into account such tax item is less than the amount
for the Pre-Closing Tax Period without taking into account such
tax item. Any refund or credit of Taxes of the Company for any
Post-Closing Tax Period or for any Pre-Closing Tax Period that is
described as being the responsibility of the Purchaser pursuant
to Section 4.4(b) shall be for the account of Purchaser. Any
refund or credit of Taxes of the Company for any Straddle Period
shall be equitably apportioned between Seller and Purchaser in
accordance with the principles set forth in Section 4.4(e).
(k) Cooperation in Claiming Refunds. The Seller, the
Company, and the Purchaser shall reasonably cooperate, and shall
cause their respective affiliates, officers, employees, agents,
auditors and representatives to cooperate, in preparing and
filing all Tax Returns, including maintaining and making
available to each other all records necessary in connection with
Taxes and in resolving all disputes and audits with respect to
all taxable periods relating to Taxes. In addition, the Seller,
the Company, and the Purchaser shall cooperate, and the Purchaser
agrees to cause the Company to cooperate with the Seller,
<PAGE>
with respect to claiming any refund of Taxes payable by or with
respect to the Company.
(l) Audits and Assessments. Each of the Purchaser and
the Seller shall promptly notify the other in writing within 10
days from its (or its affiliates') receipt of notice of any
pending or threatened federal, state, local or foreign Tax audits
or assessments of, or with respect to any Tax Item of the Company
for which the Seller is responsible under this Agreement. In
the case of any tax audit or administrative or court proceeding
for any taxable period ending on or prior to the Closing Date
that relates to any Tax of the Company for which the Seller is
responsible under this Section 4.4, the Seller shall have the
right to control the conduct and disposition of such audit or
proceeding and to employ counsel of its choice at its expense and
the Purchaser shall have the right to consult with the Seller
during such audit or proceeding at its own expense; provided that
the Seller shall not dispose of any such audit or proceeding in a
manner that would purport to bind the Company for taxable periods
ending after the Closing Date without the prior written consent
of the Purchaser, which consent shall not be unreasonably
withheld. In the case of any tax audit or administrative or
court proceeding for any taxable period beginning before the
Closing Date and ending after the Closing Date that relates to
any Tax for which the Seller is responsible under this Section
4.4, the Purchaser shall have the right to control such audit or
proceeding, provided that the Purchaser shall (x) afford the
Seller and its tax advisors a reasonable opportunity to
participate in the conduct of such audit or proceeding,
including, without limitation, the right to participate in
conferences with taxing authorities and to submit pertinent
material in support of the Seller's position, and (y) shall not
accept any proposed adjustment or enter into any settlement or
agreement in compromise which would result in a claim for
indemnification against the Seller pursuant to this agreement
without the prior written consent of the Seller, which consent
shall not be unreasonably withheld. The Purchaser shall
cooperate fully, and cause the Company to cooperate fully, with
the Seller and its counsel in the defense against or compromise
of any claim in any proceeding controlled by the Seller pursuant
to this Section 4.4(l).
(m) Transfer Taxes, etc. The Purchaser and the Seller
shall each
<PAGE>
be responsible for the payment of one-half of all state and local
transfer, sales, use or other similar Taxes resulting from the
transactions contemplated by this Agreement.
(n) Section 338(h)(10) Election. The Purchaser and
the Seller shall make and shall cause their respective affiliates
to make a joint election pursuant to
Section 338(h)(10) of the Internal Revenue Code of 1986 (and any
corresponding provision of state or local law) with respect to
the purchase and sale of the Company (the "SECTION 338(H)(10)
ELECTIONS") in the manner described in this Section 4.4(n):
(i) Except as otherwise provided in Section
4.4(n)(iii), the Purchaser shall be responsible for the
preparation of the Section 338 Forms. The "SECTION 338
FORMS" shall mean all forms and schedules required to be
filed in connection with the Section 338(h)(10) Elections,
including, without limitation, IRS Form 8023 and all
attachments required to be filed therewith pursuant to the
applicable Treasury Regulations.
(ii) At least 90 days prior to the latest date for the
filing of each Section 338 Form, the Purchaser shall furnish
the Seller with a draft of such Section 338 Form. The
Seller shall notify the Purchaser of any objection the
Seller may have to such draft Section 338 Form within 30
days after the receipt thereof from the Purchaser. At least
30 days prior to the latest date for the filing of each
Section 338 Form, the Purchaser and the Seller shall agree
upon the final form and content of such Section 338 Form,
the Purchaser shall deliver to the Seller three copies of
such agreed upon Section 338 Form, and each party shall
execute such Form. If the Purchaser and the Seller are
unable so to agree, any matter of disagreement shall be
resolved prior to two days before the due date of such
Section 338 Forms by the Third Party Accountants. Purchaser
shall file the agreed upon Section 338 Forms with the
applicable taxing authority on or before the due date
thereof.
(iii) In connection with the Section 338(h)(10)
Elections, the Purchaser and the Seller will cooperate in
good faith in determining the allocation of the "modified
aggregate deemed sales price" for the deemed sale of assets
resulting from the making of the Section 338(h)(10)
<PAGE>
Elections. On or before the last day of the fourth month
beginning after the month that includes the Closing Date,
the Purchaser shall provide to the Seller a proposed
allocation of the "modified aggregate deemed sales price"
for the deemed sale of assets resulting from the making of
the Section 338(h)(10) Elections. Such proposal shall be
based on an appraisal conducted by an independent appraisal
firm jointly selected and retained by the Purchaser and the
Seller. The Seller and the Purchaser shall each be
responsible for the payment of one-half of the expenses of
the appraisal. The Purchaser and the Seller shall have the
opportunity to review and comment on a draft of the
appraisal prior to its completion. If the Seller does not
object within 10 business days after their receipt of the
Purchaser's proposed allocation, such allocation shall be
treated as the agreed final allocation. If the Seller
objects in writing to the Purchaser's proposed allocation
within 10 business days after the receipt thereof, the
Seller and the Purchaser shall use their best efforts to
agree on an allocation. If the parties cannot, within 5
business days, agree to an allocation, such disagreement
shall be resolved by the Third Party Accountants. Following
the resolution of any such dispute, such allocation shall be
the final agreed allocation.
(iv) The Purchaser and the Seller agree that neither
of them shall take any action to modify the Section 338
Forms following the execution thereof, or to modify or
revoke the Section 338(h)(10) Elections following the filing
of the Section 338 Forms, without the written consent of the
Seller or Purchaser, as the case may be.
(v) The Purchaser and the Seller shall file all Tax
Returns in a manner consistent with the information
contained in the Section 338 Forms as filed and the final
allocation.
(o) Amendment of Tax Returns; Etc. Without the
express written consent of the Seller, which consent shall not be
unreasonably withheld, the Purchaser shall not, and shall not
permit the Company to, amend any Tax Return of the Company for
any Pre-Closing Tax Period. Except as otherwise required by law
or as otherwise expressly permitted by this Agreement, at or
after the Closing, the Purchaser will not make or rescind (or
permit to be made or rescinded) any express or deemed election,
or take any other action, relating to Taxes of the Company, that
will increase the liability of the Seller under Section
<PAGE>
4.4(a).
(p) Miscellaneous. For purposes of applying this
Section 4.4 (and the definitions used herein) with respect to the
Nevada Net Proceeds Tax, the Closing Date shall be deemed to be
the Effective Date. The Seller and the Purchaser shall, and
shall cause their affiliates to, treat the Closing Date as the
date of the sale and purchase of the Shares for federal income
tax purposes (including without limitation in preparing the
Section 338 Forms).
4.5 Supplements to Disclosures. From time to time
prior to the Closing Date, the Seller may amend or supplement the
Seller's Disclosure Letter and the schedules attached to this
Agreement with respect to any matter hereafter arising or, in the
case of any representation and warranty qualified as to
knowledge, discovered that, if existing or occurring at or prior
to this Agreement, would have been required to be set forth or
described therein or that is necessary to complete or correct any
information in any representation or warranty contained in
Section 2. For purposes of determining the fulfillment of the
condition precedent set forth in Section 5.4.1, no such amendment
or supplement shall be given effect; for all other purposes,
including, without limitation, Section 6.2.1, each such amendment
and supplement shall be given effect.
4.6 Certain Securities Laws Matters. (a) The Seller
understands that it may be deemed to be an "affiliate" of the
Purchaser as such term is (i) defined for purposes of Rule 144 of
the general rules and regulations (the "RULES AND REGULATIONS")
of the SEC under the Securities Act, or (ii) used in and for
purposes of Accounting Series Releases 130 and 135, as amended,
of the SEC. The Seller also understands that the Common Stock
Consideration is being issued to the Seller in an unregistered
transaction in reliance on Section 4(2) of the Securities Act.
(b) The Seller will (i) comply with all trading
restrictions imposed by the Purchaser on its directors generally
and (ii) will sign any customary "affiliate letter" or "Rule 145
letter" requested by the Purchaser to facilitate any business
combination transaction approved by the Purchaser's Board of
Directors. This
<PAGE>
Section 4.6(b) shall terminate if Robert H. Clark, Jr. ceases
being a member of the Purchaser's Board of Directors.
(c) The Seller may not offer to sell, transfer or
otherwise dispose of the Common Stock Consideration unless
(i) such offer, sale, transfer or other disposition has been
registered under the Securities Act or is made in conformity with
Rule 144 under the Securities Act, or (ii) in the opinion of
counsel reasonably acceptable to the Purchaser, or pursuant to a
"no-action" letter obtained by the Seller from the staff of the
SEC, such sale, transfer or other disposition is otherwise exempt
from registration under the Securities Act.
(d) The Seller understands that the Purchaser will
give stop transfer instructions to the Purchaser's transfer agent
with respect to the Common Stock Consideration, that the Common
Stock Consideration will all be in certified form and that the
certificates therefor, or any substitutions thereof, will bear a
legend substantially to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
SECURITIES HAVE NOT BEEN ACQUIRED BY THE HOLDER WITH A VIEW
TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION
THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933."
(e) It is understood and agreed that the legends set
forth in Section 4.6(d) shall be removed by delivery of
substitute certificates without such legend if such legend is not
required for purposes of the Securities Act. It is understood
and agreed that, unless the Seller is an affiliate of the
Purchaser at such time, or has been such during the three months
preceding such time, such legends and the stop orders referred to
above will be removed if two years shall have elapsed from the
Closing Date.
(f) The Purchaser hereby agrees to register pursuant
to the Securities Act all of the Common Stock Consideration by
filing with the
<PAGE>
Commission a registration statement covering the Common Stock
Consideration sought to be registered (the "REGISTRATION
STATEMENT"). In connection with such registration, the
Purchaser shall be obligated to:
(i) as soon as practicable after the date hereof
prepare the Registration Statement and cause it to be filed
with the Commission on the Closing Date;
(ii) use its reasonable best efforts to cause the
Registration Statement to become effective as soon as
practicable after the Closing and to keep the Registration
Statement continuously effective for a period of either (A)
not less than 90 days, or (B) such shorter period as is
required for the disposition of all of the Common Stock
Consideration covered by the Registration Statement in
accordance with the methods of disposition set forth in the
Registration Statement (but in any event not before the
expiration of any longer period of effectiveness required
under the Securities Act);
(iii) use its reasonable best efforts to prepare and
file with the Commission such amendments and supplements to
the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep the
Registration Statement effective for the period set forth in
subsection (ii) of this Section 4.6(f);
(iv) comply with the provisions of the Securities Act
with respect to the disposition of all Common Stock
Consideration covered by the Registration Statement until
such time as all of such securities have been disposed of in
accordance with the methods of disposition set forth in the
Registration Statement;
(v) furnish to the Seller such number of conformed
copies of the Registration Statement and of each such
amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained
in the Registration Statement (including each preliminary
prospectus and any summary prospectus) and any other
<PAGE>
prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and
such other documents incorporated by reference in the
Registration Statement or prospectus, as the Seller may
reasonably request to facilitate the disposition of the
Common Stock Consideration covered by the Registration
Statement, but only during such time as the Purchaser shall
be required under the provisions hereof to cause the
Registration Statement to remain current;
(vi) notify the Seller, at any time when a prospectus
relating to the Common Stock Consideration is required to be
delivered under the Securities Act, upon discovery that, or
upon the discovery of the happening of any event as a result
of which, the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances under which they were made, and at the request
of the Seller promptly prepare and furnish to the Seller a
reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of the Common Stock
Consideration, such prospectus shall not include an untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances under which they were made, but only during
such time as the Purchaser shall be required under the
provisions hereof to cause the Registration Statement to
remain effective;
(vii) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC,
and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering a
period of at least twelve months beginning after the
effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act;
(viii) use its reasonable best efforts to cause all of
the Common
<PAGE>
Stock Consideration covered by the Registration
Statement to be listed on the New York Stock Exchange (if
such Common Stock Consideration is not already so listed);
(ix) pay all registration expenses incident to the
registration contemplated by this Section 4.6(f) (not
including underwriting discounts or commission or similar
fees, or counsel fees of the Seller); and
(x) do all other things reasonable and customary in
connection with the registration contemplated by this
Section 4.6(f).
A registration pursuant to this Section 4.6(f) shall not be
deemed to be effected unless the Registration Statement becomes
effective under the Securities Act and remains effective for a
period of at least 90 days (or such shorter period when all the
Common Stock Consideration covered by the Registration Statement
has been sold pursuant thereto) plus the sum of the number of
days of any delay or suspension initiated pursuant to this
paragraph and the number of days during which the Purchaser has
imposed trading restrictions on the Seller pursuant to Section
4.6(b). A registration pursuant to this Section 4.6(f) may be
delayed or suspended, upon giving notice to the Seller, for up to
90 days from the date of such notice if the Purchaser is engaged
in negotiations with respect to, or there otherwise is pending,
any merger, acquisition, other form of business combination
(each, a "BUSINESS COMBINATION"), financing or other similar
transaction, or there is an event or state of facts relating to
the Purchaser, in each case which is material to the Purchaser (a
Business Combination or any of the foregoing being referred to
herein as a "MATERIAL ACTIVITY"), and (i) (x) such Material
Activity would, in the opinion of counsel for the Purchaser,
require disclosure so as to permit the Common Stock Consideration
to be sold in compliance with law, and (y) such disclosure would,
in the reasonable judgment of the Purchaser, be adverse to its
interests, or (ii) in the case of a Business Combination, such
registration would, in the reasonable judgment of the Purchaser,
based on the advice of the independent public accountants
retained by the Purchaser, be reasonably likely to prevent the
Purchaser from accounting for such Business Combination as a
pooling of interest, provided that the Purchaser may not utilize
this right more than once. This Section 4.6(f) shall remain in
effect for a period of one year following the Closing Date.
4.7 Publicity. No press release or public
announcement related to this Agreement, or the transactions
contemplated hereby, shall be issued or made without the joint
approval of the Seller and the Purchaser, unless required by law,
rule or regulation (in the reasonable opinion of counsel) in
which case the Seller and the Purchaser shall
<PAGE>
to the extent practicable have the right to review such press
release or announcement prior to publication.
4.8 Intercompany Accounts. All intercompany accounts
between the Company, on the one hand, and the Seller and any of
its subsidiaries (other than the Company), on the other hand,
shall be canceled prior to the Closing in accordance with
Section 1.5. The accounts shall be settled as follows: (a) to
the extent that the Company is indebted to the Seller, such debt
shall be canceled and the amount of the debt so canceled shall be
deemed a capital contribution by the Seller to the Company, and
(b) to the extent that the Seller is indebted to the Company such
debt shall be canceled and the amount of the debt so canceled
shall be deemed a dividend from the Company to the Seller.
4.9 Confidentiality. From and after the Closing Date,
the Seller shall keep confidential, and cause its affiliates and
its and their officers, directors, employees and advisors to keep
confidential, all information relating to the Common Operation,
except as required by law or administrative process, except as
may be required or advisable in connection with the assertion or
defense of any claim under this Agreement or any agreement
entered into in connection with the transactions contemplated
hereby, and except for information which is available to the
public on the Closing Date, or thereafter becomes available to
the public other than as a result of a breach of this Section
4.9.
4.10 Resignations. On the Closing Date, the Seller
shall cause to be delivered to the Purchaser duly signed
resignations, effective upon the Closing, of all directors and
officers of the Company and shall take such other action as is
necessary to accomplish the foregoing.
4.11 Other Transactions. (a) From the date of this
Agreement to the Closing, neither the Seller, nor the Company nor
any affiliate of either of them shall, nor shall they permit any
of their respective officers, directors, stockholders or other
representatives to, directly or indirectly, encourage, solicit,
initiate or participate in discussions or negotiations with, or
provide any information or assistance to, any person or group
(other than the Purchaser and its representatives) concerning any
merger, sale of securities, sale of substantial assets or similar
transaction involving the Company or the Seller's indirect
interest in the Common Operation. In the event that any of them
receives a proposal relating to any such transaction, the Seller
shall promptly notify the Purchaser
<PAGE>
of such proposal.
(b) Immediately following execution of this Agreement,
the Seller will:
(i) cease, and will cause the Company and its
affiliates and its and their respective officers,
directors, stockholders and other representatives to
cease, all discussions and negotiations with any person
(other than the Purchaser) with respect to any merger,
sale of securities, sale of substantial assets or
similar transaction involving the Company or the
Seller's indirect interest in the Common Operation and
advise each such person of the cessation of such
discussions and negotiations; and
(ii) request that each person who has received
any confidential information from the Seller or the
Company in contemplation of any such transaction (other
than the Purchaser and one other person with whom the
Seller has agreed that its general counsel may keep one
copy of all due diligence documents received by such
person) return or destroy such information.
4.12 Notice. Each party shall promptly, upon becoming
aware of the occurrence of any event or condition or the
existence of any fact that would cause any of the conditions to
the other party's obligation to consummate the purchase and sale
of the Shares not to be fulfilled, notify such other party
thereof, and furnish such other party any information it may
reasonably request with respect thereto.
4.13 Gold Loan and Credit Facility. Prior to the
Closing, the Seller will pay or otherwise discharge or cause to
be discharged, paid or released all obligations of the Company
under the Gold Overdraft Agreement and the Credit and Guaranty
Agreement, each dated as of January 22, 1988, as amended, among
the Seller, the Company and Morgan Guaranty Trust Company of New
York.
4.14 Section 16(b). Prior to the Closing, the
Purchaser shall take all actions necessary to approve the direct
or indirect acquisition by the Seller or any affiliated person
from the Purchaser of the Common Stock Consideration (the
<PAGE>
"ACQUISITION") for purposes of securing exemption of the
Acquisition from Section 16(b) of the Securities Exchange Act of
1934, as amended, under Rule 16b-3(d)(1), including, without
limitation, causing the Purchaser's Board of Directors or a
committee thereof comprised of two or more Non-Employee Directors
(as such term is defined in Rule 16b-3(b)(3)) to approve the
Acquisition. The resolutions or any other applicable document
approving the Acquisition (a) shall be adopted by the Purchaser's
Board of Directors or committee thereof only with the prior
review and approval by the Seller of a preliminary draft of such
resolutions or other document, and (b) shall include all
information required to be included therein, and shall state that
the approval is granted for the purpose of exempting the
Acquisition under Rule 16b-3.
4.15 Guarantees and Letter of Credit. The Purchaser
acknowledges that the Company has (a) issued certain corporate
guarantees as described on Schedule 4.15 (the "GUARANTEES"), and
(b) obtained a letter of credit and entered into a related
reimbursement agreement with the issuer thereof as described on
Schedule 4.15 (together, the "LETTER OF CREDIT"), in each case,
with respect to the Company's share of the required bond amount
for the Common Operation's surface reclamation obligations at the
Round Mountain Mine and the Manhattan Mine. The Purchaser shall
cause the Company, or one of its affiliates, to maintain the
Guarantees in full force and effect, from and after the Closing,
or issue, in lieu of the Guarantees, a replacement guarantee or
guarantees or other form of security acceptable to the U.S.
Bureau of Land Management (the "BLM") and the State of Nevada
Department of Conservation and Natural Resources, Division of
Environmental Protection (the "NDEP"). The Purchaser shall
further cause the Company to (i) (x) have the Letter of Credit
amended for purposes of omitting all references therein to the
Seller and its affiliates (other than the Company) and
(y) furnish such security for the benefit of the issuer of the
Letter of Credit, and enter into such agreements and take such
other actions as the issuer of the Letter of Credit may require
in connection with the continuation of the Letter of Credit
following the Closing, or (ii) obtain, in lieu of the Letter of
Credit, a replacement letter of credit or other form of security
acceptable to, and prior to the Closing, approved by, the BLM and
the NDEP.
4.16 Post-Closing Cooperation. The Seller and the
Purchaser will cooperate with each other, and shall cause their
affiliates and their officers, employees, agents, auditors and
representatives to cooperate with each other, for a period of 180
days after the Closing to ensure the orderly transition of the
Company from the Seller to the Purchaser and to minimize any
disruption to the Company that might result from the transactions
contemplated hereby.
<PAGE>
4.17 Records. On the Closing Date, the Seller will
deliver or cause to be delivered to the Purchaser all agreements,
documents, books, records and files, including records and files
stored on computer disks or tapes or any other storage medium
(collectively, "RECORDS"), if any, in the possession of the
Seller relating to the business and operations of the Company,
subject to the following exceptions (the "EXCEPTED RECORDS"; such
Records other than the Excepted Records, the "TRANSFERRED
RECORDS"):
(i) the Purchaser recognizes that certain Records may
contain incidental information relating to the Company or
may relate primarily to subsidiaries, divisions or
businesses of the Seller other than the Company, and that
the Seller may retain such Records and shall provide copies
of the relevant portions thereof to Purchaser;
(ii) the Seller may retain all Records prepared in
connection with the sale of the Shares, including, without
limitation, bids received from other parties, analyses
relating to the Company and a copy of all confidentiality
agreements entered into by the Seller with bidders;
(iii) the Seller may retain all Records relating to
the Common Operation provided by the Operator to all
Participants in the Common Operation;
(iv) the Seller may retain all Records relating to
consolidated financial information of the Seller and its
subsidiaries, including, without limitation, the Company;
(v) the Seller may retain all Records relating to any
federal income taxes of the Company and any Tax affiliated
group which includes the Seller or any of its affiliates;
and
(vi) the Seller may retain all other Records which the
Purchaser has agreed may be retained by the Seller.
4.18 Confidentiality Agreements. At the Closing, the
Seller will assign
<PAGE>
to the Purchaser all of the rights of the Seller under all
confidentiality agreements entered into by the Seller, the
Company or any person acting on their behalf in connection
with the sale of the Shares.
4.19 Insurance Claims. For a period of three years
following the Closing Date, the Purchaser will promptly notify
the Seller in writing of any insurance claims based on events
occurring prior to the Closing to be made on behalf of the
Company that the Purchaser reasonably believes come within
coverage provided by the insurance policies maintained on the
date hereof by the Seller or any affiliate or subsidiary of the
Seller with respect to the Company and its respective assets and
properties. After receiving any such notice, the Seller shall
use commercially reasonable efforts to cooperate with the
Purchaser in recovering, on behalf of the Purchaser and the
Company, the insurance proceeds due under such policies with
respect to any such claims, and shall pay to the Purchaser the
amount of any such proceeds less the costs and expenses incurred
by the Seller in making any such recovery.
5. Conditions Precedent.
5.1 General. The respective obligations set forth
herein of the Seller and the Purchaser to consummate the sale and
purchase of the Shares at the Closing shall be subject to the
fulfillment, on or before the Closing Date, in the case of the
Seller, of the conditions set forth in Sections 5.2 and 5.3, and
in the case of the Purchaser, of the conditions set forth in
Sections 5.2 and 5.4.
5.2 Conditions to Obligations of Both Parties.
5.2.1 HSR Act. The waiting period under the HSR
Act shall have been terminated or expired.
5.2.2 Consents. All governmental consents and all
third party consents listed on Schedule 5.2.2 shall have been
obtained.
5.2.3 No Injunction. There shall not be in effect
any injunction or other order issued by a court of competent
jurisdiction restraining or prohibiting the consummation of the
transactions contemplated by this Agreement.
5.3 Conditions to Obligations of the Seller.
<PAGE>
5.3.1 Representations and Warranties of the
Purchaser. The representations and warranties in Section 3 shall
be true and correct when made and at and as of the Closing with
the same effect as though made at and as of such time, with such
exceptions, in the case of any representation or warranty in
Section 3 not qualified by materiality or Material Adverse
Effect, as are not in the aggregate material. The Purchaser
shall have duly performed and complied in all material respects
with all agreements contained herein required to be performed or
complied with by it at or before the Closing.
5.3.2 Officer's Certificate. The Purchaser shall
have delivered to the Seller a certificate, dated the Closing
Date and signed by an authorized senior officer of the Purchaser,
as to the fulfillment of the conditions set forth in
Section 5.3.1.
5.3.3 Opinion of Counsel. The Seller shall have
received from Cravath, Swaine & Moore, counsel for the Purchaser,
an opinion in substantially the form of Exhibit B hereto.
5.3.4 Shareholder Agreement. The Shareholder
Agreement, dated as of January 1, 1989, among the Purchaser, the
Seller and Hadley Case, as amended by Amendment, dated as of
March 27, 1992, shall be terminated and the Seller and Hadley
Case shall have been released from all obligations thereunder.
5.4 Conditions to Obligations of the Purchaser.
5.4.1 Representations and Warranties of the Seller.
(a) The representations and warranties in Section 2 shall be
true and correct when made and at and as of the Closing with the
same effect as though made at and as of such time, with such
exceptions, in the case of any representation or warranty in
Section 2 not qualified by materiality or Material Adverse
Effect, as are not in the aggregate material.
(b) The Seller shall have (i) duly performed and
complied with all its obligations under Section 1.5 and (ii) duly
performed and complied in all material respects with all other
agreements contained herein required to be performed or complied
<PAGE>
with by it at or before the Closing.
5.4.2 Officer's Certificate. The Seller shall have
delivered to the Purchaser a certificate, dated the Closing Date
and signed by an authorized senior officer of the Seller, as to
the fulfillment of the conditions set forth in Section 5.4.1.
5.4.3 Opinion of Counsel. The Purchaser shall have
received from Debevoise & Plimpton, counsel for the Seller, an
opinion in substantially the form of Exhibit C hereto.
5.4.4 Resignations. The directors and officers of
the Company shall have submitted their resignations from their
positions and from the Board of Directors of the Company,
effective as of the Closing.
5.4.5 Material Adverse Change. Since the date of
the Agreement, there shall have been no material adverse change
in the business or financial condition of the Company or the
Common Operation, other than those arising out of changes in the
financial condition of the Participants in the Common Operation
other than the Company and those relating to or as may be a
result of (i) the transactions contemplated by this Agreement or
(ii) general economic, financial, industry or market conditions
or conditions affecting the gold mining industry in general (as
opposed to the Company or the Common Operation in particular).
5.4.6 FIRPTA Certificate. The Seller shall have
delivered on the Closing Date to the Purchaser a certificate, as
contemplated under and meeting the requirements of section 1.1445-
2(b)(2)(i) of the Treasury Regulations, to the effect that the
Seller is not a foreign person within the meaning of the Code and
applicable Treasury Regulations.
5.4.7 Section 1.5. The Seller shall have delivered
to the Purchaser such instruments of transfer, termination,
release or assumption as it may reasonably request to evidence
compliance by the Seller with Section 1.5.
5.4.8 Right of First Refusal. None of the Seller,
the Company and the Purchaser shall have received evidence that
the Operator has rescinded or withdrawn its acknowledgment that
it has no rights under Section 6.02(b) of the Operating Agreement
in respect of the sale of all of the stock of the Company.
<PAGE>
6. Indemnification.
6.1 Survival of Representations and Warranties.
(a) Except for the representations and warranties in Section
2.12, which shall not survive the Closing, the representations
and warranties made by the Seller and the Purchaser pursuant to
this Agreement or any certificate to be delivered in connection
with the Closing hereunder shall survive the Closing and
(i) in the case of Sections 2.4, 2.7, 2.16 and 3.2(c),
shall not expire;
(ii) in the case of Sections 2.1, 2.2, 2.3, 2.17,
2.20, 3.1, 3.2, 3.3, 3.5 and 3.6, shall expire six years
after the Closing Date; and
(iii) in all other cases, shall expire 18 months after
the Closing Date.
For clarity, it is understood that the obligations set forth in
Section 4.4 shall survive the Closing and shall not expire.
(b) Any claim for indemnification under this Section 6
with respect to such representations and warranties must be
brought in accordance with Section 6.2.3 prior to the expiration
of the applicable representation and warranty pursuant to Section
6.1(a).
6.2 Indemnification.
6.2.1 By the Seller. From and after the Closing,
the Seller agrees to indemnify and hold harmless the Purchaser,
its affiliates (including the Company) and each of their
respective directors, officers and stockholders (collectively,
the "PURCHASER INDEMNITEES") from and against any loss,
liability, damage or cost, including reasonable attorneys' fees
and other costs and expenses, but exclusive of any punitive,
exemplary, consequential or similar damages, except as otherwise
provided in Section 7.16 hereof (collectively, "DAMAGES"),
incurred or sustained by such Purchaser Indemnitee arising from
or relating to:
<PAGE>
(i) the breach by the Seller of any covenant set forth
in this Agreement;
(iiA subject to Section 6.1, any breach by the Seller
of any representation or warranty of the Seller set forth in
this Agreement or made in any certificate delivered pursuant
hereto in connection with the Closing; and
(iii) the Excluded Assets or the Excluded Liabilities;
provided that there shall not be any duplicative payments or
indemnities by the Seller and provided, further, that Section 4.4
shall be the exclusive remedy of the Purchaser with respect to
the matters covered therein.
The rights of the Purchaser to indemnification under
Section 6.2.1(i) and (ii) above and the rights of the Seller to
indemnification under Section 6.2.2(i) and (ii) below shall be
limited as follows:
(a) The Purchaser shall not be entitled to receive
Damages in respect of any claim to the extent the Purchaser
shall have been compensated therefor in connection with the
purchase price adjustment pursuant to Section 1.3.
(b) The amount of any Damages incurred by the Purchaser
Indemnitees shall be reduced by the net amount the Purchaser
Indemnitees recover (after deducting all attorneys' fees,
expenses and other costs of recovery) from any insurer or
other party liable for such Damages, and the Purchaser, on
behalf of the Purchaser Indemnitees, shall use reasonable
efforts to effect any such recovery.
(c) Neither the Seller nor the Purchaser shall be
entitled to indemnification under this Section 6 with
respect to a breach of a representation and warranty or a
covenant (other than any covenants contained in Sections 1.4
and 1.5) to be performed on or prior to the Closing unless
and until the aggregate amount of all Damages (reduced as
provided in paragraphs (a) and (b) above) in respect of such
claims exceeds $150,000, in which event the Seller or the
Purchaser, as the case may be, shall only be liable for the
amount of such excess, and in no event will the Purchaser or
the Seller, as the case may be, be entitled to indemnifica
tion in excess of the amount of the Purchase Price in the
aggregate.
<PAGE>
6.2.2 By the Purchaser. From and after the
Closing, the Purchaser agrees to indemnify and hold harmless the
Seller, its affiliates and each of their respective directors,
officers and stockholders (collectively, the "SELLER
INDEMNITEES") from and against any Damages incurred or sustained
by such Seller Indemnitee arising from or relating to:
(i) the breach by the Purchaser of any covenant set
forth in this Agreement;
(ii) subject to Section 6.1, the breach by the
Purchaser of any representation or warranty set forth in
this Agreement or made in any certificate delivered pursuant
hereto in connection with the Closing; and
(iii) any liability or obligation of the Seller or any
of its affiliates (other than the Company) and their
respective predecessors for any obligation or liability
(including, without limitation, closure and reclamation
obligations or liabilities under Environmental Laws) of
whatever kind or nature, primary or secondary, direct or
indirect, absolute or contingent, known or unknown, whether
or not accrued, whether arising before, on or after the
Closing Date, of the Company, provided that the foregoing
shall not apply to the Seller in respect of any liability or
obligation arising from or relating to the Excluded Assets
and the Excluded Liabilities and any other items that the
Seller has expressly agreed to pay or perform or any Damages
to the extent the Purchaser is entitled to indemnification
therefor pursuant to Section 6.2.1, provided, further, that
there shall not be any duplicative payments or indemnities
by the Purchaser.
6.2.3 Indemnification Procedures. A party entitled
to indemnification hereunder shall herein be referred to as an
"INDEMNITEE." A party obligated to indemnify an Indemnitee
hereunder shall herein be referred to as an "INDEMNITOR."
(i) Third Party Claims. Within 20 business days after
an Indemnitee receives notice of any third party claim or
the commencement of any action by any third party, such
Indemnitee shall, if a claim in respect thereof is to be
made against an Indemnitor under Section 6, notify such
Indemnitor in writing specifically referring to this Section
6.2.3(i) and in reasonable detail of such claim or action
and include with such notice copies of all notices and
documents (including court papers) served on or received by
the Indemnitee from such third
<PAGE>
party. The failure by any Indemnitee so to notify the
Indemnitor shall not relieve the Indemnitor from any
liability which it may have to such Indemnitee under
Section 6.2.1 or 6.2.2 except to the extent that the
Indemnitor demonstrates that it has been materially
prejudiced by such failure. Upon receipt of such notice,
the Indemnitor shall be entitled to participate in such
claim or action, to assume the defense thereof with counsel
reasonably satisfactory to the Indemnitee, and to settle or
compromise such claim or action, provided that if the
Indemnitee has elected to be represented by separate counsel
pursuant to the proviso to the following sentence, such
settlement or compromise shall be effected only with the
consent of the Indemnitee, which consent shall not be
unreasonably withheld or delayed. After notice to the
Indemnitee of the Indemnitor's election to assume the
defense of such claim or action, the Indemnitor shall not be
liable to the Indemnitee under Section 6 for any legal or
other expenses subsequently incurred by the Indemnitee in
connection with the defense thereof other than reasonable
costs of investigation, provided that the Indemnitee shall
have the right to employ counsel to represent it if the
Indemnitee may have available to it one or more defenses or
counterclaims which are inconsistent with one or more
defenses or counterclaims which may be alleged by the
Indemnitor, and in any such event the fees and expenses of
such separate counsel shall be paid by the Indemnitee. If
the Indemnitor does not elect to assume the defense of such
claim or action within 45 days of the Indemnitee's delivery
of notice of such a claim or action, the Indemnitee shall be
entitled to assume the defense thereof. If the Indemnitor
assumes such defense, the Indemnitee shall have the right to
participate in the defense thereof and to employ counsel
(not reasonably objected to by the Indemnitor), at its own
expense, separate from the counsel employed by the
Indemnitor, it being understood that the Indemnitor shall
control such defense. The Indemnitor shall be liable for
the fees and expenses of counsel employed by the Indemnitee
for any period during which the Indemnitor has failed to
assume the defense thereof (other than during the period
prior to the time the Indemnitee shall have given notice of
the third party claim as provided above). Unless it has
been conclusively determined through a final judicial
determination (or settlement tantamount thereto) that the
Indemnitor is not liable to the Indemnitee under this
Section 6.2.3., the Indemnitee shall act reasonably and in
accordance with its good faith business judgment with
respect to such defense, and shall not settle or
<PAGE>
compromise any such claim or action without the consent of the
Indemnitor, which consent shall not be unreasonably withheld
or delayed. The parties hereto agree to render to each
other such assistance as may reasonably be requested in
order to insure the proper and adequate defense of any such
claim or action, including making employees available on a
mutually convenient basis to provide additional information
and explanation of any relevant materials or to testify at
any proceedings relating to such claim or action.
(ii) Other Claims. In the event an Indemnitee
sustains any Damages not involving a third party claim or
action which such Indemnitee reasonably believes may give
rise to a claim for indemnification from an Indemnitor
hereunder, such Indemnitee shall deliver notice of such
claim to the Indemnitor, which notice of claim shall
specifically refer to this Section 6.2.3(ii) and shall
specify with reasonable detail the basis on which
indemnification is being asserted and the amount of such
Damages. The failure by any Indemnitee so to notify the
Indemnitor shall not relieve the Indemnitor from any
liability which it may have to such Indemnitee under Section
6.2.1 or 6.2.2 except to the extent that the Indemnitor
demonstrates that it has been materially prejudiced by such
failure.
6.2.4 Tax Treatment of Indemnity Payment. The
Seller and the Purchaser agree to treat any indemnity payment
made pursuant to Section 6.2 as an adjustment to the Purchase
Price for all Tax purposes unless otherwise required by law.
6.2.5 Exclusivity of Indemnification Provision.
The indemnity provided for in this Section 6 and in Section 4.4
with respect to the matters covered therein shall be the sole and
exclusive monetary remedy of the Purchaser and the Seller after
the Closing for any inaccuracy of any representation or warranty
of the other party or any failure or breach of any covenant,
obligation, condition or agreement to be performed or fulfilled
by the other party (other than claims of, or causes of action
arising from, fraud or for the right to obtain specific
performance of covenants required to be fulfilled after the
Closing). In furtherance of the foregoing, the parties hereto
hereby waive, from and after the Closing, to the fullest extent
permitted under applicable law, any and all rights, claims and
causes of action (other than claims of, or causes of action
arising from, fraud or for the right to obtain non-monetary
remedies) it may have against the other party or its
<PAGE>
affiliates relating to the subject matter of this Agreement
arising under or based upon any Federal, state or local law,
ordinance, rule or regulation or otherwise (except pursuant
to the indemnification provisions set forth in this Agreement).
7. General Provisions.
7.1 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.
7.2 Entire Agreement. This Agreement, including the
schedules hereto and the Seller's Disclosure Letter (which are
hereby incorporated by reference and made a part hereof) is the
entire agreement of the parties with respect to the subject
matter hereof and supersedes all other prior agreements,
understandings, documents, projections, financial data,
statements, representations and warranties, oral or written,
express or implied, between the parties hereto and their
respective affiliates, representatives and agents in respect of
the subject matter hereof.
7.3 Certain Limitations. It is the explicit intent
and understanding of each of the parties hereto that neither
party nor any of its affiliates, representatives or agents is
making any representation or warranty whatsoever, oral or
written, express or implied, other than those set forth in
Sections 2 and 3 and neither party is relying on any statement,
representation or warranty, oral or written, express or implied,
made by the other party or such other party's affiliates,
representatives or agents, including, without limitation, any
such statement, representation or warranty contained in any
offering or descriptive memorandum or any information, document
or material made available to the Purchaser or the Seller in
certain "data rooms", management presentations or any other form
in expectation of the transactions contemplated hereby, except
for the representations and warranties set forth in such
Sections 2 and 3. EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN
THIS AGREEMENT, THE PARTIES EXPRESSLY DISCLAIM ANY IMPLIED
WARRANTY OR REPRESENTATION AS TO CONDITION, MERCHANTABILITY OR
SUITABILITY AS TO ANY OF THE ASSETS OF THE BUSINESS OF THE
COMPANY OR OF THE PURCHASER AND, EXCEPT AS OTHERWISE SPECIFICALLY
SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD THAT THE PURCHASER
TAKES THE ASSETS OF THE BUSINESS "AS IS" AND "WHERE IS" AND THAT
THE SELLER TAKES THE
<PAGE>
COMMON STOCK CONSIDERATION WITHOUT ADDITIONAL REPRESENTATIONS
AND WARRANTIES. The parties agree that this is an arm's length
transaction in which the parties' undertakings and obligations
are limited to the performance of their obligations under this
Agreement. The Seller and the Purchaser each acknowledges that
it or its affiliate is a participant in the Common Operation
and that it is a sophisticated investor, and the Purchaser
acknowledges that it has undertaken a full investigation of the
business of the Company, and that it has only a contractual
relationship with the Seller, based solely on the terms of this
Agreement, and that there is no special relationship of trust or
reliance between the Purchaser and the Seller.
7.4 Termination. (a) This Agreement may be
terminated: (i) at any time prior to the Closing Date by mutual
consent of the Purchaser and the Seller, or (ii) by the Purchaser
or the Seller, if the Closing shall not have taken place on or
before September 30, 2000 or such later date as the parties may
have agreed to in writing, or (iii) by either the Purchaser or
the Seller by written notice to the other party if any event,
fact or condition shall occur or exist that otherwise shall have
made it impossible to satisfy a condition precedent to the
terminating party's obligations to consummate the transactions
contemplated by this Agreement, and such event, fact or condition
shall not have been cured or waived by the non-terminating party
within 30 days, unless the occurrence or existence of such event,
fact or condition shall be due to the failure of the terminating
party to perform or comply with any of the agreements or
covenants hereof to be performed or complied with by such party
prior to the Closing, provided that with respect to any
termination pursuant to the foregoing clauses (ii) and (iii), the
non-occurrence of the Closing is not attributable to a breach of
the terms hereof by the party seeking termination.
(b) In the event of termination by the Seller or the
Purchaser pursuant to this Section 7.4, written notice thereof
shall forthwith be given to the other party and the transactions
contemplated by this Agreement shall be terminated without
further action by either party (the date of such termination, the
"TERMINATION DATE"). If the transactions contemplated by this
Agreement are terminated as provided herein: (i) the Purchaser
shall return to the Seller all documents and other materials
received from the Seller, its affiliates or its agents (including
all copies of or materials developed from any such documents or
other materials) relating to the transactions contemplated hereby,
<PAGE>
whether obtained before or after the execution hereof, (ii) all
confidential information received by the Purchaser with
respect to the Seller and its affiliates shall be treated in
accordance with Section 4.3, which, with respect to the
obligations of the Purchaser, shall remain in full force and
effect notwithstanding the termination of this Agreement and
(iii) the Seller or the Purchaser shall make the payment provided
for in Section 1.4(d).
(c) If this Agreement is terminated as provided in
this Section 7.4, this Agreement shall become null and void and
of no further force or effect, except for Section 4.7 relating to
publicity and Section 7.5 relating to certain expenses. Nothing
in this Section 7.4 shall be deemed to release either party from
any liability for any breach by such party of the terms and
provisions of this Agreement or to impair the right of either
party to compel specific performance by the other party of its
obligations under this Agreement.
7.5 Expenses. Except as expressly provided herein,
whether or not the transactions contemplated herein shall be
consummated, each party shall pay its own expenses (including,
without limitation, fees incident to any filing pursuant to the
HSR Act made by such party) incident to the preparation and
performance of this Agreement.
7.6 Further Actions. Each party 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.
7.7 Post-Closing Access. In connection with any
matter relating to any period prior to, or any period ending on,
the Closing, the Purchaser shall, upon the request of the Seller,
permit the Seller and its representatives, at the Seller's
expense, full access at all reasonable times to the books,
records and personnel of the Company, and the Purchaser shall
execute (and shall cause the Company to execute), at the Seller's
expense, such documents as the Seller may reasonably request to
enable the Seller to file any required reports or tax returns
relating to the Company, to defend any litigation involving the
Seller or any affiliate or otherwise for a valid business
purpose. The Purchaser shall not dispose of such books and
records during the seven-year period beginning with the Closing
Date without the Seller's consent, which shall not be
unreasonably withheld. Following the expiration of such seven-
year period, the Purchaser may dispose of such books and records
at any time upon giving 60 days' prior written notice to the
Seller, unless the Seller agrees to take possession of such books
and records within 60 days at no expense to the Purchaser.
<PAGE>
7.8 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed
to have been duly given or made as follows: (a) if sent by
registered or certified mail in the United States return receipt
requested, upon receipt; (b) if sent by reputable overnight air
courier (such as DHL or Federal Express), two business days after
delivery to the courier; (c) if sent by facsimile transmission,
with a copy delivered on the same day in the manner provided in
(a) or (b) above, when transmitted and receipt is confirmed by
telephone; or (d) if otherwise actually personally delivered,
when delivered and shall be delivered as follows:
if to the Seller:
Case, Pomeroy & Company, Inc.
529 Fifth Avenue
New York, New York 10017
Fax Number: (212) 867-4302
Attention: Adele R. Wailand, Esq.
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Fax Number: (212) 909-6836
Attention: Deborah F. Stiles, Esq.
if to the Purchaser:
Homestake Mining Company
1600 Riviera Avenue
Suite 200
Walnut Creek, California 94596
Attention: Wayne Kirk, Esq.
with a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
<PAGE>
New York, New York 10019
Attention: Richard Hall, Esq.
or to such other address or to such other person as either party
hereto shall have last designated by notice to the other party.
7.9 Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, provided that any
assignment by either party hereto shall require the prior written
consent of the other party and any purported assignment without
such consent shall be void and unenforceable. Notwithstanding
the foregoing, Purchaser may assign its right to purchase the
Shares to a wholly owned subsidiary of Purchaser without the
prior written consent of any other party; provided, however, that
no assignment shall limit or affect the assignor's obligations
hereunder.
7.10 No Third Party Beneficiaries. Nothing in this
Agreement, except for Article VI, shall confer any rights upon
any person or entity which is not a party or a successor or
permitted assignee of a party to this Agreement.
7.11 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all
of which taken together shall constitute one and the same
instrument.
7.12 Interpretation. The section headings in this
Agreement and titles given to schedules hereto and in the
Seller's Disclosure Letter are for convenience of reference only
and shall not be deemed to alter or affect the meaning or
interpretation of any provision hereof. The disclosure of any
matter in the schedules hereto and in the Seller's Disclosure
Letter shall be deemed to be a disclosure for all purposes of
this Agreement to which such matter could reasonably be likely to
be pertinent, but shall expressly not be deemed to constitute an
admission by the Seller or the Purchaser, or to otherwise imply,
that any such matter is material for the purposes of this
Agreement.
7.13 Severability. 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.
7.14 Governing Law. This Agreement shall be construed,
performed
<PAGE>
and enforced in accordance with the laws of the State
of New York, without regard to the conflicts of law principles of
such state.
7.15 Consent to Jurisdiction, etc. (a) Each of the
parties hereto hereby irrevocably and unconditionally submits,
for itself and its property, to the non-exclusive jurisdiction of
any New York State court or Federal court of the United States of
America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or
relating to this Agreement or the transactions contemplated
hereby or for recognition or enforcement of any judgment relating
thereto, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York
State court or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law.
(b) Each of the parties hereto hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the transactions
contemplated hereby in any New York State or Federal court. Each
of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents
to service of process in the manner provided for notices in
Section 7.8. Nothing in this Agreement will affect the right of
any party to this Agreement to serve process in any other manner
permitted by law.
7.16 Waiver of Punitive and Other Damages and Jury
Trial. (a) THE PARTIES TO THIS AGREEMENT EXPRESSLY WAIVE AND
FOREGO ANY RIGHT TO RECOVER PUNITIVE, EXEMPLARY, LOST PROFITS,
CONSEQUENTIAL OR SIMILAR DAMAGES IN ANY ARBITRATION, LAWSUIT,
LITIGATION OR PROCEEDING ARISING OUT OF OR RESULTING FROM ANY
CONTROVERSY OR CLAIM ARISING OUT OF OR
<PAGE>
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY; PROVIDED, HOWEVER, THAT NEITHER PARTY HERETO WAIVES THE
RIGHT TO RECOVER ANY SUCH DAMAGES BY WAY OF THE INDEMNIFICATION
PROVISIONS SET FORTH HEREIN IF THE INDEMNIFIED PARTY IS REQUIRED
TO PAY SUCH DAMAGES AS A RESULT OF A THIRD PARTY CLAIM.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTRO
VERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(c) EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF THE
FOREGOING WAIVERS, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS
VOLUNTARILY, AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.16.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
CASE, POMEROY & COMPANY, INC.
By
Name: Robert H. Clark, Jr.
Title: President and Chief
Executive Officer
HOMESTAKE MINING COMPANY
By
Name:
Title:
<PAGE>
Schedule 1.3
"Adjusted Working Capital" Methodology
For purposes of this Agreement, working capital (the difference
between current assets and current liabilities) as per the Smoky
Valley Common Operation June 30, 2000 Balance Sheet (prepared in
a manner consistent with the Smoky Valley Common Operation March
31, 2000 Balance Sheet attached to the Agreement as Exhibit A)
shall be increased by the amounts accrued in such balance sheet
in respect of the Ordrich Royalty (a/c 4292101) and the Nevada
Net Proceeds Tax (a/c 4263001). (See Smoky Valley Common
Operation Working Capital Summary at March 31, 2000 attached to
this Schedule 1.3 for an example of the calculation of "ADJUSTED
WORKING CAPITAL").
In addition, if any distributions from the Operator required to
be distributed to the Company prior to July 1, 2000 are for any
reason not distributed prior to such date, and such distributions
are subsequently made to the Seller pursuant to Section 1.4, then
such distributions shall be subtracted from working capital if
otherwise included therein.
<PAGE>
Schedule 4.15
Guarantees and Letter of Credit
1. Reclamation Corporate Guarantee Contract, providing coverage
in the amount of $7,819,264.50 with respect to the Company's
annual bond maintenance requirements for the Round Mountain
Mine, submitted by the Company to the State of Nevada
Department of Conservation and Natural Resources, Division
of Environmental Protection (the "NDEP") on August 25, 1999
for acceptance thereby, and accepted by the NDEP,
effective August 30, 1999, by Decision dated May 9, 2000.
2. Reclamation Corporate Guarantee Contract, providing coverage
in the amount of $303,937.50 with respect to the Company's
annual bond maintenance requirements for the Manhattan Mine,
submitted by the Company to the NDEP on August 25, 1999 for
acceptance thereby, and accepted by the NDEP, effective
August 30, 1999, by Decision dated May 9, 2000.
3. Irrevocable Letter of Credit, dated May 27, 1992, issued by
Morgan Guaranty Trust Company of New York ("Morgan") for the
account of the Company and in favor of the U.S. Bureau of
Land Management, providing credit (with respect to the
Company's annual bond maintenance requirements for the Round
Mountain Mine and the Manhattan Mine) in the amount of
$2,707,734, and currently expiring May 29, 2001, as amended
by Letter Agreements, dated June 1, 1992, September 24,
1993, July 11, 1995, July 20, 1995, February 16, 1996, June
18, 1996, March 13, 1997, August 3, 1998, April 7, 1999,
April 27, 1999 and May 3, 2000, respectively.
4. Reimbursement Agreement, dated May 27, 1992, between Morgan
and the Company, in connection with the Irrevocable Letter
of Credit.
<PAGE>
Schedule 5.2.2
Consents
None
<PAGE>
