SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-17480
CROWN RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
Washington 84-1097086 (State or
other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1675 Broadway, Suite 2400, Denver, Colorado 80202 (Address of
principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 534-1030
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Shares outstanding as of July 20, 2000: 14,553,302 shares of common
stock, $0.01 par value.
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements3
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations7
PART II - OTHER INFORMATION
Item 1 Legal Proceedings12
Item 2 Changes in Securities13
Item 3 Defaults Upon Senior Securities 13
Item 4 Submission of Matters to a Vote
of Security Holders14
Item 5 Other Information14
Item 6 Exhibits and Reports on Form 8-K14
SIGNATURES15
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
<TABLE>
CROWN RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
(in thousands, except June 30, December 31,
per share amounts) 2000 1999
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 9,082 $ 5,174
Restricted cash 104 -
Short-term investments 82 87
Prepaid expenses and other 43 114
Total current assets 9,311 5,375
Mineral properties, net 15,646 16,772
Other assets:
Restricted cash 300 -
Debt issuance costs, net 119 170
Marketable equity securities 183 103
Other 118 289
720 562
$25,677 $22,709
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 154 $ 205
Other 295 289
Total current liabilities 449 494
Long term liabilities:
Convertible debentures 15,000 15,000
Minority interest in consolidated
subsidiary 3,462 1,235
Stockholders' equity:
Preferred stock, $0.01 par value - -
Common stock, $0.01 par value 146 145
Additional paid-in capital 34,827 34,803
Accumulated deficit (28,157) (28,837)
Accumulated other
comprehensive loss (50) (131)
6,766 5,980
$25,677 $22,709
</TABLE>
See Notes to Consolidated Financial Statements.
<TABLE>
CROWN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
<S> <C> <C> <C> <C>
(in thousands, except per Three months ended June 30, Six months ended June 30,
share amounts) 2000 1999 2000 1999
(restated) (restated)
Revenues:
Mineral Property Option Proceeds $ - $ - $ 100 $ 100
Royalty income 21 29 53 49
Interest income 125 98 183 189
Gain (loss) on sale of
mineral properties 5,809 - 5,809 -
5,955 127 6,145 338
Costs and expenses:
Exploration expense 270 279 688 546
Depreciation, depletion, and
amortization 11 19 27 38
General and administrative 379 377 771 802
Interest expense 242 242 485 485
Abandonment and impairment of
mining claims and leases 1,210 16 1,269 16
Other, net 6 (2) (2) 6
2,118 931 3,238 1,893
Income (Loss) before
minority interest 3,837 (804) 2,907 (1,555)
Minority interest in (income) loss
of subsidiary (2,344) 125 (2,227) 145
Net income (loss) $ 1,493 $ (679) $ 680 $(1,410)
Income (loss) per common share
and common equivalent share:
Basic and fully diluted $ 0.10 $ (0.05) $ 0.05 $ (0.10)
Weighted average number of
common and common equivalent
shares outstanding 14,553 14,533 14,552 14,533
</TABLE>
See Notes to Consolidated Financial Statements.
<TABLE>
CROWN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six months ended June 30,
(in thousands) 2000 1999
(restated)
<S> <C> <C>
Operating activities:
Net income (loss) $ 680 $(1,410)
Adjustments:
Depreciation, depletion, & amortization 78 89
Abandonment of mining claims
and leases 1,269 16
Common stock issued for services 25 24
Minority interest in gain (loss) of subsidiary 2,227 (145)
Loss (gain) on sale of assets and mineral
properties (5,809)
4
Changes in operating assets and liabilities:
Prepaid expenses and other 67 (11)
Accounts payable and other
current liabilities (45) (30)
Net cash used in operating activities (1,508) (1,463)
Investing activities:
Additions to mineral properties (143) (101)
Proceeds from asset and mineral property sales 5,605 22
Increase in other assets (46) (61)
Net cash provided by (used in)
investing activities 5,416 (140)
Net increase (decrease) in cash and cash equivalents 3,908 (1,603)
Cash and cash equivalents, beginning of period 5,174 8,136
Cash and cash equivalents, end of period $ 9,082 $ 6,533
Supplemental disclosure of cash
flow information:
Cash paid during the period for:
Interest $ 432 $
432
Noncash investing and financing activities:
Deferred tax benefit of non-qualified
stock option exercises - 68
Securities received in payment for
account receivable - 21
Restricted cash held escrow related to
property sale 400 -
</TABLE>
See Notes to Consolidated Financial Statements.
CROWN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.ACCOUNTING POLICIES
The accompanying consolidated financial statements of Crown Resources
Corporation ("Crown") for the six months ended June 30, 2000 and 1999 are
unaudited, but in the opinion of management, include all adjustments,
consisting only of normal recurring items, necessary for a fair presentation.
Interim results are not necessarily indicative of results which may be
achieved in the future.
These financial statements should be read in conjunction with the
financial statements and notes thereto which are included in Crown's Annual
Report on Form 10-K for the year ended December 31, 1999. The accounting
policies set forth in those annual financial statements are the same as the
accounting policies utilized in the preparation of these financial statements,
except as modified for appropriate interim financial statement presentation.
During the fourth quarter of 1999, Crown changed its method of accounting
for exploration costs on properties without proven and probable reserves from
capitalizing all expenditures to expensing all costs, other than acquisition
costs, prior to the establishment of proven and probable reserves. The change
was applied retroactively to January 1, 1999. This brings Crown's accounting
method in accordance with the predominant practice in the U.S. mining
industry. The $8.5 million cumulative effect of the change has been included
in the 1999 prior year loss and is reflected in retained earnings. The
balances for the 1999 second quarter interim statements have been restated to
reflect the change in accounting principle as follows (unaudited):
<TABLE>
<CAPTION>
(in thousands) Three months Six months
ended June 30, ended June 30,
1999 1999 1999 1999
previously previously
reported restated reported restated
<S> <C> <C> <C> <C>
Consolidated statement of operations:
Revenue $ 129 $ 127 $ 232 $ 338
Costs and expenses $ 1,112 $ 931 $ 1,719 $ 1,893
Net Loss $ (737) $ (679) $(1,318)
$(1,410)
Basic and diluted net loss per
common equivalent share $ (0.03) $ (0.05) $ (0.09) $(0.10)
Consolidated statement of cash flows:
Net loss n/a n/a $(1,318)
$(1,410)
Net cash used in operating activities n/a n/a $(1,017) $(1,463)
Net cash used in investing activities n/a n/a $ (586) $ (140)
</TABLE>
<TABLE>
2.COMPREHENSIVE INCOME
The following represents comprehensive loss and its components:
<CAPTION>
(in thousands) Three months Six months
ended June 30, ended June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net gain (loss) $1,493 $ (679) $ 680 $(1,410)
Unrealized income (loss) on
marketable equity
securities (120) (72) 81 (117)
Comprehensive income (loss) $1,373 $(751) $ 761 $(1,527)
</TABLE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of operations
The following discussion compares June 30, 2000 amounts to the interim
amounts for June 30, 1999 which have been restated as a result of the change
in accounting principle to expense exploration costs as discussed in note 1 to
the consolidated financial statements of this report.
Second quarter 2000 compared with the second quarter of 1999:
Crown had net income of $1,493,000 or $0.10 per share, for the second
quarter of 2000 compared with a net loss of $679,000, or $0.05 per share, for
the second quarter of 1999. During the second quarter, Solitario, Crown's 57.2
percent-owned subsidiary, recorded a gain on sale of approximately $5,809,000
on the sale of its Yanacocha property. See liquidity and capital resources.
The gain on sale was mitigated by the minority interest in Solitario's net
income of $2,344,000 and a non-cash write down of $1,210,000 during the second
quarter of 2000 on a portion of Crown's Cord Ranch property.
Total revenues for the second quarter of 2000 were $5,955,000 compared
with $127,000 for the second quarter of 1999. In addition to the gain on
sale, Lower royalty revenues from the Kettle River mine in Washington, were
offset by higher interest income during first half of 2000 compared to the
same period in the prior year.
Exploration expense in the second quarter 2000 of $270,000 was comparable
to the prior year quarter of $279,000. General and administrative expenses of
$379,000 was comparable to the prior year quarter of $377,000. Depreciation,
depletion and amortization expense was reduced to $11,000 for the second
quarter of 2000 from $19,000 in the prior year as certain assets became fully
depreciated. Interest expense of $242,000 for second quarter 2000 was the
same as in the year earlier quarter.
During the second quarter of 2000, Crown recorded an exploration property
write down of $1,210,000 on a portion of its Cord Ranch property compared to a
write down of $16,000 in the prior year quarter. The 2000 write down was the
result of continued low metals prices affecting the ability of Crown to
independently hold certain leases on the Cord Ranch property to economically
explore the property and develop a deposit on those leases.
During the second quarter of 2000, the minority interest portion of the
net income from Solitario Resources Corporation was $2,344,000, compared to a
credit for the minority interest portion of Solitario' loss in the prior year
quarter of $125,000. The change was primarily attributable to the gain on the
sale of the Yanacocha property.
Six months ended June 30, 2000 compared with six months ended June 30, 1999:
Crown had net income of $680,000 or $0.05 per share, for the six months
ended June 30, 2000 compared with a net loss of $1,410,000, or $0.10 per
share, for the first six months of 1999. The net income was primarily related
to the gain on sale of Solitario's Yanacocha property, which was mitigated by
the minority interest portion of Solitario's net income and the write down of
a portion of the Cord Ranch property in Nevada during the second quarter of
2000.
Total revenues for the first six months of 2000 were $6,145,000 compared
with $338,000 for the same period in 1999. The increase was primarily the
result of the gain on sale of the Yanacocha property. Slightly higher royalty
revenue was offset by decreased interest income during the current six month
period compared to the prior year.
Exploration expense during the first half of 2000 was $688,000 compared
to $546,000 for the same period in 1999. A significant exploration program
including drilling of the San Juan de Minas property in Mexico during the
first quarter of 2000, combined with an initial exploration program for
platinum group metals exploration targets in Brazil in the second quarter more
than offset a reduction in exploration spending in the United States and Peru
during 2000, compared with the first six months of 1999. General and
administrative expenses for the first six months of 2000 were $ 771,000
compared with $802,000 for the same period last year. The results were
comparable as certain exploration work was transferred from the United States
to Brazil and Mexico during 2000.
Liquidity and Capital Resources
During the six months ended June 30, 2000, Crown spent $143,000 for
mineral property additions compared to $101,000 in the first half of 1999.
The additions for both periods primarily relate to the Crown Jewel project, in
which Battle Mountain Gold Company is earning a 46 percent interest by
providing funding for development of a 3,000 ton-per-day mining facility.
Solitario received $118,000 in payments on the Bongara zinc project in Peru,
of which $100,000 was mineral option proceeds during the first half of 2000
and 1999.
Working capital at June 30, 2000 increased to $8,862,000 from $4,881,000
at December 31, 1999 as a result of the sale of the Yanacocha property. Cash
and cash equivalents at June 30, 2000 were $9,082,000, including $7,391,000
held in Solitario.
On April 26, 2000 Solitario completed a transaction with an affiliate of
Newmont Mining Corporation ("Newmont") and sold its interest in its Yanacocha
property for $6,000,000 and a sliding scale net smelter return royalty that
varies with the price of gold. In order to effect the transaction, Solitario
transferred all of the operating assets and liabilities, excluding its
interest in Yanacocha, of its Peru operating subsidiary, Minera Los Tapados
("Los Tapados"), to a new operating subsidiary, Minera Solitario Peru.
Newmont received all of the outstanding shares of Los Tapados for cash
consideration of $5,600,000. The balance of the $6,000,000 payment, $400,000,
is being held in a reserve by Newmont and, pending release of certain
contingent liabilities, will be paid in four annual payments of $100,000 plus
interest. As part of the agreement, Newmont will be required to deliver the
net smelter return royalty to Solitario within 120 days.
Crown expects to spend approximately $1,405,000 in 2000 on its
exploration programs, including $900,000 to be spent by Solitario. Existing
funds and projected sources of funds are believed to be sufficient to finance
planned activities for the current year. Crown will need to raise additional
capital or restructure its existing obligations to meet its required debt
repayments, including the payment of its $15,000,000 convertible debentures,
due August 2001.
On May 31, 2000 the Nasdaq Stock Market notified Crown that the common
stock had failed to maintain a minimum bid price of $1.00 for 30 consecutive
trading days as required for continued listing on the Nasdaq National Market
in accordance with the rules of the Nasdaq National Market. Crown has been
provided with a 90-day period to regain compliance with the bid price
deficiency rule. If Crown is unable to meet the minimum bid price of $1.00
for a minimum of 10 consecutive trading days before August 29, 2000, the
common stock will be delisted from the Nasdaq National Market at the opening
of business on August 31, 2000. Crown is exploring ways to increase
shareholder value to increase its minimum bid share price. Crown may appeal
the determination of the failure to meet the minimum bid price to Nasdaq prior
to August 29, 2000. If Crown does not meet the minimum bid requirement of
the Nasdaq National Market, the common shares will be automatically traded on
the Over The Counter Bulletin Board (OTCBB). Crown's current listing on the
Toronto Stock Exchange will not be affected by this notice.
Although Crown is actively exploring alternatives available to address
these issues, the long-term funding and operating results of Crown are
largely dependent on the restructuring or repayment of the debentures, the
ability of Crown to maintain its listing on the Nasdaq National Market and the
permitting and successful commencement of commercial production at the Crown
Jewel project (the "Project"). There can be no assurance that Crown will be
successful in meeting these challenges in either the short or long term
future.
Crown Jewel Project Permitting
The Project is in the permitting phase, with work currently underway to
obtain the permits necessary to construct and operate the mine. Many of the
proposed facilities at the Project are to be located on unpatented lode mining
claims and millsite claims. The validity of the claims, or obtaining some
other rights from the federal government, is a prerequisite to the
construction of the facilities.
In January 2000, the State of Washington Pollution Control Hearings Board
("PCHB") issued a ruling vacating the previously granted 401 Water Quality
Permit for the Crown Jewel Project issued by the Washington Department of
Ecology ("WDOE"). The ruling also reversed certain water rights issued by the
WDOE for the Crown Jewel Project. On March 14, 2000, Battle Mountain Gold
Company("Battle Mountain" or "BMG"), Crown's joint venture partner that is
earning a 54% interest in the project, filed an appeal in Superior Court for
the State of Washington for Okanogan County, challenging the PCHB ruling. A
hearing date has not yet been set in the appeal. Nonetheless, the PCHB ruling
creates further delay and uncertainty regarding a timetable for the
construction of the project. See Legal Proceedings elsewhere in this report.
As a result of the PCHB ruling, on February 4, 2000, Battle Mountain
announced it was writing off its entire investment in the Crown Jewel Project
as of December 31, 1999, and reclassifying the proven and probable reserves to
mineralized materials. Because Crown is the holder of 100% of the Crown
Jewel project, subject to Battle Mountain's potential earn-in, and the basis
and economics of Crown's interest is materially different than Battle
Mountain's interest, Crown engaged Mine Reserves Associates ("MRA") to conduct
an independent analysis of its Crown Jewel project reserves in February and
March 2000. Per the MRA report, Crown is reporting proven and probable
reserves of 2,556,000 tons at a grade of 0.354 for a total of 905,000
contained ounces. The MRA design would use the bulk of the waste rock
material from mine design for tailings dam construction and to backfill the
underground mining areas, in order to increase the recoverable underground
ounces.
As part of the analysis of the Crown Jewel reserves subsequent to the
January 2000 PCHB ruling, Crown retained Gochnour and Associates ("Gochnour"),
an independent mining environmental consultant, to review the required permits
for the mine design as proposed in the MRA report. Gochnour indicated the MRA
design would require conducting additional baseline studies and collecting
data for modeling to amend previously approved permits as well as to obtain
permits for activities that were not previously contemplated, for example the
underground mining effects on ground water. Gochnour indicated the
underground alternative will also require mitigation of environmental
impacts. The Gochnour report concludes the MRA mine design is legally
permittable. Although Crown and Gochnour are not aware of any laws or
regulations which would be violated by the mine design proposed by MRA, there
will continue to be uncertainty regarding the ability of Crown obtaining the
necessary permits from the regulatory authorities in a timely manner, if
ever.
There are no assurances that required permits will be issued in a timely
fashion, that Crown or Battle Mountain will prevail in current or future legal
actions or that conditions contained in permits issued by the agencies will
not be so onerous as to preclude construction or operation of the project.
Subsequent event
Solitario announced on August 4, 2000 that it had entered into an
Arrangement Agreement with Altoro Gold Corp. of Vancouver, B.C. Canada whereby
Solitario and Altoro will proceed with a Plan of Arrangement under the British
Columbia Securities Act. Under the Plan, shareholders of Altoro would
exchange their shares for Solitario shares at an exchange ratio of one share
of Solitario for every three shares of Altoro. Altoro plans to convene a
meeting of its shareholders to consider the Plan of Arrangement. If the
requisite level Altoro shareholders approval is attained, and the Supreme
Court of British Columbia issues a final order approving the Plan, Solitario
would issue approximately 6.2 million shares and would then have approximately
23 million shares outstanding. Crown's ownership percentage would be reduced
to approximately 42 percent from the current 57.2 percent. Completion of the
transaction is anticipated during the fourth quarter of 2000, subject to the
vote of Altoro shareholders, Court and regulatory approval.
Safe Harbor
The information set forth in this report includes "forward-looking" statements
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, and is subject to the safe harbor
created by those sections. Factors that could cause results to differ
materially from those projected in the forward-looking statements include, but
are not limited to, the timing of receipt of necessary governmental permits,
the market price of gold, results of current exploration activities and other
risk factors detailed in Crown's Securities and Exchange Commission filings.
Item 2. Quantitative and qualitative disclosures about market risk
Market Risk
As of June 30, 2000, there have been no material changes in the market risks
to which Crown is exposed as disclosed in the Annual Report on Form 10-K for
the year ended December 31, 1999.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In March 1997, administrative appeals of the ROD for the Final
Environmental Impact Statement ("FEIS") for the Crown Jewel Project were filed
against the United States Forest Service, ("USFS") by members of the following
parties: (i) a joint appeal by the Okanogan Highlands Alliance, Washington
Environmental Council, Colville Indian Environmental Protection Alliance,
Washington Wilderness Coalition, Rivers Council of Washington, and Sierra
Club, Cascade Chapter; (ii) Confederated Tribes of the Colville Reservation;
(iii) Columbia River Bioregional Education Project; and (iv) Kettle Range
Conservation Group; (all groups collectively the "Plaintiffs"). The appeals
were denied in May 1997.
Okanogan County Superior Court
In January of 2000, the Pollution Control Hearings Board ("PCHB") issued
a ruling vacating the previously granted 401 Water Quality Permit for the
Crown Jewel Project issued by WDOE. The ruling also reversed certain water
rights issued by the WDOE for the Crown Jewel Project. Battle Mountain filed
this action in March 2000, appealing the PCHB decision reversing Battle
Mountain's water rights and 401 certification, has been assigned to a judge
who normally sits in neighboring Chelan County and who is expected to hold a
scheduling conference in August 2000. A hearing date has not been set in the
appeal.
United States Ninth Circuit Court of Appeals
In late May 1997, members of the Plaintiffs filed an action in United
States District Court for the District of Oregon against the USFS appealing
the Forest Service's issuance of the FEIS, its decision to uphold the ROD and
the denial of administrative appeals. On December 31, 1999 the Court affirmed
the decisions of the USFS on the adequacy of the FEIS by granting all motions
for summary judgement on behalf of the USFS and Battle Mountain, while denying
all motions of the Plaintiffs. Members of the Plaintiffs appealed of the
decision to the Ninth Circuit Court of Appeals in April 1999. Briefs have
been filed in the appeal, however, no hearing date has been set in the
appeal.
United States District Court for the District of Oregon
This action, commenced in November 1999 by members of the Plaintiffs
against the Department of the Interior, et al. challenges the reinstatement of
the Crown Jewel Record of Decision and the grant of the Plan of Operations for
the project. In July 2000, Battle Mountain filed non-merits dispositive
motions. Responses and reply briefs on the motions are expected in September
2000. No court date has been scheduled for oral arguments in the case.
Thurston County Superior Court
In December of 1997, the members of the Plaintiffs filed three separate
actions against the WDOE in Superior Court of the State of Washington for
Thurston County. The actions challenge the WDOE's approval of permits issued
to Battle Mountain for water resource mitigation and solid waste permit
rulings. In April 1998, members of the Plaintiffs dismissed one of the three
actions related to the tailings and solid waste permits without prejudice. In
November 1998, the remaining two actions were consolidated. The case is
currently pending and no trial date has been set.
Department of the Interior
In May 2000, members of the Plaintiffs filed a protest of the patent
application for the grandfathered Crown Jewel lode claims. The protest was
filed in the Washington/Oregon State Bureau of Land Management office. The
Department of the Interior has invited Battle Mountain and/or Crown to submit
a response to the protest, but has not set a date for such response or a time
frame for the resolution of the protest.
The impact and timing of resolutions of these and any other appeals
related to the permitting process cannot be determined with any accuracy at
this time.
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
On June 15, 2000 Crown held its Annual Meeting of Shareholders at which
the following two matters were submitted to a vote of security holders:
a).Election of Directors. All seven directors were re-elected to serve until
the next Annual Meeting of Shareholders and until their successors are elected
and qualified:
Number of Shares
Name For Against
Mark E. Jones, III 8,696,770 252,473
Christopher E. Herald 8,705,758 243,485
J. Michael Kenyon 8,705,758 243,485
Rodney D. Knutson 8,703,268 243,975
Linder G. Mundy 8,705,718 243,525
Steven A. Webster 8,705,758 243,485
David R. Williamson 8,705,758 243,485
b).Appointment of Auditors. The appointment of Deloitte and Touche, LLP as
Crown's auditors for the fiscal year 2000 was ratified:
Number of Shares
For Against Abstain
8,682,715 208,734 57,794
Item 5. Other Information
On June 16, 2000 the Board of Directors approved and Crown entered into
Change-in-Control Agreements with the following executives; Christopher E.
Herald, Mark E. Jones, III, and James R. Maronick. The Agreements provide for
severance benefits of two and one-half of the current salary for Mr. Herald
and Jones and one and one-half of the current salary for Mr. Maronick in the
event there is a change in control of Crown as defined in the agreement. The
Board recognized that, as is the case with many public corporations, the
possibilities for a change in control exist and that it is in the
shareholders' best interest to foster the continued attention and focus of
Crown's management without distraction in the face of potentially disturbing
circumstances arising from a change in control. Other than the compensation
provided for in the event of a change in control, the Agreements do not
provide for any continuing employment or other benefits to the executives.
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits: The exhibits as indexed on page 13 of this Report are included
as a part of this Form 10-Q.
(b)Reports on Form 8-K:
None
Exhibit Number Description
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CROWN RESOURCES CORPORATION
August 10, 2000 By: /s/ James R. Maronick
Date James R. Maronick
Vice President - Finance
(Principal Financial and
Accounting Officer)
INDEX TO EXHIBITS
Exhibit
Number Description Page No.
10-21Stock Purchase Agreement dated February 2, 2000 between Newmont Peru
Limited and Solitario Resources Corporation.
10-22First Amendment to Stock Purchase Agreement, dated April 26, 2000,
between Newmont Peru Limited and Solitario Resources Corporation.
10-23Change in Control Agreement, dated June 19, 2000, between Crown Resources
Corporation and Christopher E. Herald.
10-24Change in Control Agreement, dated June 19, 2000, between Crown Resources
Corporation and Mark E. Jones, III.
10-25Change in Control Agreement, dated June 19, 2000, between Crown Resources
Corporation and James R. Maronick.
27 Financial Data Schedule 17
<PAGE>Exhibit 10.21
STOCK PURCHASE AGREEMENT
dated February 2, 2000
between
Newmont Peru Limited
and
Solitario Resources Corporation
1. Certain Definitions. 1
2. Purchase and Sale 4
2.1 Covenant of Purchase and Sale 4
2.2 Consideration 5
3. Buyer's Representations and Warranties 5
3.1 Organization of Buyer 5
3.2 Authority 5
3.3 No Conflict; Required Consents 5
3.4 Disclosure 5
4. Seller's Representations and Warranties 6
4.1 Organization and Qualification of Seller 6
4.2 Authority 6
4.3 No Conflict; Required Consents 6
4.4 Organization and Qualification of the Companies 6
4.5 Capitalization of the Companies 7
4.6 Assets; Title, Condition, and Sufficiency 7
4.7 Properties 7
4.8 Material Contracts 8
4.9 Employment Matters 9
4.10 Litigation 9
4.11 Tax Returns; Other Reports 9
4.12 Compliance with Legal Requirements 10
4.13 Financial Statements; Liabilities 10
4.14 Environmental Matters 10
4.15 Bonds 11
4.16 Recordkeeping 11
4.17 Disclosure 11
5. Covenants 11
5.1 Certain Affirmative Covenants of Seller 11
5.2 Certain Negative Covenants of Seller 12
5.3 Required Consents 13
5.4 Confidentiality 13
5.5 Responsibility for Taxes 14
5.6 Properties 14
5.7 Disposition of Certain Assets and Liabilities 14
5.8 Cooperation with Change of Entity 15
5.9 Resignation of Officers and Directors 15
5.10 Change in Transaction Structure 15
5.11 Certain Deliveries 15
5.12 Claims Litigation 15
6. Conditions Precedent 15
6.1 Conditions to Buyer's Obligations 16
6.2 Conditions to Seller's Obligations 16
7. Closing 17
7.1 Closing; Time and Place 17
7.2 Seller's Obligations 17
7.3 Buyer's Obligations 18
8. Termination and Remedies 18
8.1 Termination Events 18
8.2 Effect of Termination 20
9. Indemnification 20
9.1 Indemnification by Seller 20
9.2 Indemnification by Buyer 20
9.3 Procedure for Indemnified Third Party Claim 21
9.4 Determination of Indemnification Amounts and Related Matters 21
9.5 Survival 21
9.6 Other Indemnification 21
10. Miscellaneous Provisions 22
10.1 Expenses 22
10.2 Brokerage 22
10.3 Waivers 22
10.4 Notices 22
10.5 Entire Agreement; Amendments 23
10.6 Binding Effect; Benefits 23
10.7 Headings, Schedules, and Exhibits 24
10.8 Counterparts 24
10.9 Governing Law 24
10.10 Severability 24
10.11 Third Parties; Joint Ventures 24
10.12 Construction 24
10.13 Attorneys' Fees 24
10.14 Specific Performance 25
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into as
of February 2, 2000, by and between Newmont Peru Limited, a Delaware
corporation ("Buyer"), and Solitario Resources Corporation, a Colorado
corporation ("Seller").
Recitals
A. Minera Alborada S.A.C., a Peruvian sociedad anomina cerrada (the
"Company"), holds mineral interests in Yanacocha, Cajamarca District, Peru,
and is engaged in exploration for gold and other valuable minerals therein.
B. Minera Los Tapados S.A., a Peruvian sociedad anomina (the "Parent"),
owns all of the issued and outstanding capital stock of the Company, except
for thirty shares (the "Company Nominee Shares") held by Walter Henry Gage
Hunt (the "Company Nominee").
C. Seller owns all of the issued and outstanding capital stock of the
Parent, except for two shares (the "Parent Nominee Shares"), one of which is
held by Francis Urranaga Romero and the other of which is held by Christopher
E. Herald (collectively, the "Parent Nominees").
D. Buyer desires to purchase and Seller desires to sell, or cause to be
sold, all of the issued and outstanding capital stock of the Parent, on the
terms and conditions of this Agreement.
Agreements
In consideration of the mutual covenants and promises in this Agreement, Buyer
and Seller agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms, whether in singular or plural
forms, shall have the following meanings:
"Access Contracts" means Contracts between either of the Companies and the
owners of the surface rights to the properties affected by, or providing
access for, exploration activities with respect to the Properties.
"Affiliate" means with respect to any Person, any other Person controlling,
controlled by or under common control with such Person, with "control" for
such purposes meaning the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through direct or indirect ownership of at least twenty-five percent
of the voting securities, voting interests or other equity interest of such
Person, by contract or otherwise.
"Business Day" means any day other than Saturday, Sunday or a day on which
banking institutions in Denver, Colorado or New York, New York are required or
authorized to be closed.
"Closing" has the meaning given in Section 7.1.
"Closing Date" means the date on which Closing occurs.
"Company" has the meaning given in the Recitals.
"Company Nominee" has the meaning given in the Recitals.
"Company Nominee Shares" has the meaning given in the Recitals.
"Company Shares" means 449,970 shares of the Company's common stock, one Nuevo
Sol per share par value.
"Companies" means the Company and the Parent.
"Contract" means any written contract, mortgage, deed of trust, bond,
indenture, lease, license, note, franchise, certificate, option, warrant,
right, or other instrument, document, obligation, or agreement, and any oral
obligation, right, or agreement.
"Employee Liabilities" has the meaning given in Section 5.7.
"Encumbrance" means any security agreement, financing statement or public deed
filed with any Governmental Authority, conditional sale or other title
retention agreement, any lease, consignment or bailment given for purposes of
security, any lien, mortgage, indenture, pledge, option, encumbrance, adverse
interest, constructive trust or other trust, claim, attachment, exception to
or defect in title or other ownership interest (including but not limited to
reservations, rights of entry, possibilities of reverter, encroachments,
easement, rights-of-way, restrictive covenants leases, and licenses) of any
kind, which otherwise constitutes an interest in or claim against property,
whether arising pursuant to any Legal Requirement, Contract, or otherwise.
"Environmental Laws" means all Legal Requirements which are promulgated,
issued or enacted by any Governmental Authority having appropriate
jurisdiction that relate to (i) the prevention of pollution or environmental
damage; (ii) the containment, release, removal, clean up or remediation of
pollution or environmental damage, (iii) the protection of the environment
generally, (iv) human health and safety, or (v) the use, containment, release,
removal or clean up of any sort of chemical or hazardous substance, and
include but are not limited to the Environmental Regulation for Mining
Exploration Activities approved by Peruvian Supreme Decree No. 038-98-EM.
"Excluded Assets" has the meaning given in Section 5.7.
"Excluded Liabilities" has the meaning given in Section 5.7.
"Existing Royalty" means the percent net smelter returns royalty dated January
22, 1999, reserved by the Parent and encumbering the Properties.
"Governmental Authority" means the United States of America, Peru and any
other sovereign state, and any state, commonwealth, territory, or possession
of any of the foregoing and any political subdivision or quasi-governmental
authority of any of the same, including but not limited to courts, tribunals,
departments, commissions, boards, bureaus, agencies, counties, municipalities,
provinces, parishes, and other instrumentalities.
"Governmental Permits" means all franchises, approvals, authorizations,
permits, licenses, easements, registrations, qualifications, leases, variances
and similar rights obtained from any Governmental Authority.
"Judgment" means any judgment, writ, order, injunction, award, or decree of
any court, judge, justice, or magistrate, including any bankruptcy court or
judge, and any order of or by any Governmental Authority.
"Knowledge" of any Person of or with respect to any matter means that such
Person (if a natural person) or any of the officers, directors, and senior
managers of such Person (if not a natural Person) has actual awareness or
knowledge of such matter.
"Legal Requirements" means applicable common law and any statute, ordinance,
code or other law, rule, regulation, order, technical or other standard,
requirement, or procedure enacted, adopted, promulgated, applied, or followed
by any Governmental Authority, including Judgments.
"Litigation" means any claim, action, suit, proceeding, arbitration,
investigation, hearing, or other activity or procedure that could result in a
Judgment.
"Losses" means any claims, losses, liabilities, damages, Encumbrance,
penalties, costs, and expenses, including but not limited to interest which
may be imposed in connection therewith, expenses of investigation, reasonable
fees and disbursements of counsel and other experts, and the cost to any
Person making a claim or seeking indemnification under this Agreement with
respect to funds expended by such Person by reason of the occurrence of any
event with respect to which indemnification is sought.
"Material Contracts" has the meaning given in Section 4.8.
"Outside Closing Date" has the meaning given in Section 8.1.
"Parent" has the meaning given in the Recitals.
"Parent Nominees" has the meaning given in the Recitals.
"Parent Nominee Shares" has the meaning given in the Recitals.
"Parent Shares" means 9,998 shares of the Parent's common stock, one Nuevo Sol
per share par value, and such additional shares of such common stock as are
issued to Seller in accordance with Section 5.2(d).
"Permitted Encumbrances" means the following Encumbrances: (i) liens for
taxes, assessments and governmental charges not yet due and payable; (ii)
zoning laws and ordinances and similar Legal Requirements; (iii) rights
reserved to any Governmental Authority to regulate the affected property; (iv)
the Existing Royalty; and (v) Encumbrances for Taxes for which Buyer is
responsible under Section 5.5; (vi) Encumbrances for unpaid Derechos
deVigencia with respect to the Properties only for year 1999; and (vii) in the
case of the Properties, senior claims of Persons other than the Company that
are reflected in the Peruvian Registro Publico de Minera as being senior and
that are overlapped by the Company's claims for the Properties as originally
filed.
"Person" means any natural person, Governmental Authority, corporation,
general or limited partnership, joint venture, limited liability company,
trust, association, or unincorporated entity of any kind.
"PGAAP" means Peruvian generally accepted accounting principles.
"Properties" means the mining claims described on Schedule 4.7.
"Royalty" has the meaning given in Section 2.2
"Royalty Properties" means the Properties excluding (i) any portion of the
Properties with respect to which Buyer, any Affiliate of Buyer, or any other
Person has a superior claim as of the date of this Agreement, and (ii) Anna
Gabrielle 48 and 49 claims, unless and until there is entered a Judgment,
which either is unappealable or is not timely appealed, that such claims are
valid.
"Taxes" means all taxes, assessments, charges, duties, fees, levies or other
governmental charges (including interest, penalties or additions associated
therewith), including income, franchise, capital stock, real property,
personal property, tangible, intangible, stamp, withholding, unemployment
compensation, disability, transfer, sales, use, excise, soft drink, gross
receipts, social contribution and payroll taxes, and all other taxes of any
kind for which any Person may have any liability imposed by any Governmental
Authority.
"Tax Return" shall mean any report, return, declaration or other information
required to be supplied to a Governmental Authority in connection with Taxes.
"Transaction Documents" means all instruments and documents executed and
delivered by Buyer or Seller or any officer, director, or Affiliate of either
of them in connection with this Agreement or the transactions contemplated
hereby.
2. Purchase and Sale.
2.1 Covenant of Purchase and Sale. Subject to the terms and conditions
set forth in this Agreement, at Closing Seller shall convey, assign, and
transfer, and cause to be conveyed, assigned and transferred to Buyer, and
Buyer shall acquire from Seller, the Parent Nominee and the Company Nominee,
for the consideration described below, free and clear of all Encumbrances, the
Parent Shares, the Parent Nominee Share and the Company Nominee Share.
2.2 Consideration. As consideration for the Parent Shares, the Parent
Nominee Share and the Company Nominee Share, Buyer shall:
(a) At Closing, pay to Seller the sum of US$6 million (the "Cash Purchase
Price"), by company check or wire transfer of immediately available funds at
Closing to an account designated by Seller; and
(b) within ninety days after the Closing Date, (i) cause the Companies to
amend the terms of the Existing Royalty to conform to the terms and conditions
described on Exhibit 2.2 (as so amended, the "Royalty"), and (ii) cause the
Parent to assign its rights under the Royalty to Seller or any Affiliate of
Seller designated in writing by Seller; provided, however, that if at Closing
Seller causes the Parent to transfer to Buyer the Company Shares in accordance
with Section 7.2 (a), then within ninety days after the Closing Date Buyer
shall cause the Company, and Seller shall cause the Parent, to amend the terms
of the Existing Royalty to the Royalty.
3. Buyer's Representations and Warranties. Buyer represents and warrants
to Seller, as of the date of this Agreement and as of Closing, as follows:
3.1 Organization of Buyer. Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware, and
has all requisite power and authority to own and lease the properties and
assets it currently owns and leases and to conduct its activities as such
activities currently are conducted. Buyer is duly qualified to do business as
a foreign corporation and is in good standing in all jurisdictions in which
the ownership or leasing of the properties and assets owned or leased by it or
the nature of its activities make such qualification necessary.
3.2 Authority. Buyer has all requisite power and authority to execute,
deliver, and perform this Agreement and consummate the transactions
contemplated hereby. The execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated hereby by
Buyer have been duly and validly authorized by all necessary action on the
part of Buyer. This Agreement has been duly and validly executed and
delivered by Buyer, and is the valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
3.3 No Conflict; Required Consents. The execution, delivery, and
performance by Buyer of this Agreement do not and will not: (i) conflict with
or violate any provision of the charter or bylaws of Buyer; (ii) violate any
provision of any Legal Requirements; or (iii) require any consent, approval,
or authorization of, or filing of any certificate, notice, application,
report, or other document with, any Governmental Authority or other Person.
3.4 Disclosure. No representation or warranty by Buyer in this Agreement
or in any Schedule or Exhibit of this Agreement, or any statement, list or
certificate furnished or to be furnished by Buyer pursuant to this Agreement,
taken or viewed in the aggregate, contains or will contain any untrue
statement of material fact, or omits or will omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading in light of the circumstances in which made.
4. Seller's Representations and Warranties. Seller represents and
warrants to Buyer, as of the date of this Agreement and as of Closing, as
follows:
4.1 Organization and Qualification of Seller. Seller is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Colorado, and has all requisite power and authority to own and lease
the properties and assets it currently owns and leases and to conduct its
activities as such activities are currently conducted. Seller is duly
qualified to do business as a foreign corporation and is in good standing in
all jurisdictions in which the ownership or leasing of the properties and
assets owned or leased by it or the nature of its activities make such
qualification necessary.
4.2 Authority. Seller has all requisite power and authority to execute,
deliver, and perform this Agreement and consummate the transactions
contemplated by this Agreement. The execution, delivery, and performance of
this Agreement and the consummation of the transactions contemplated by this
Agreement on the part of Seller have been duly and validly authorized by all
necessary action on the part of Seller. This Agreement has been duly and
validly executed and delivered by Seller, and is the valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
4.3 No Conflict; Required Consents. The execution, delivery, and
performance by Seller of this Agreement do not and will not: (i) conflict
with or violate any provision of the charter or bylaws of Seller or of either
of the Companies; (ii) violate any provision of any Legal Requirements; (iii)
conflict with, violate, result in a breach of, constitute a default under
(without regard to requirements of notice, lapse of time, or elections of
other Persons, or any combination thereof), accelerate, or permit the
acceleration of the performance required by, any Contract or Encumbrance to
which Seller or either of the Companies is a party or by which Seller or
either of the Companies or the assets or properties owned or leased by any of
them are bound or affected; (iv) result in the creation or imposition of any
Encumbrance against or upon any of the assets or properties of either of the
Companies, other than Permitted Encumbrances; or (v) except only for the
approval of the Toronto Stock Exchange, require any consent, approval or
authorization of, or filing of any certificate, notice, application, report,
or other document with, any Governmental Authority or other Person.
4.4 Organization and Qualification of the Companies. The Company is a
sociedad anomina cerrada, duly organized and validly existing under the laws
of the Republic of Peru. The Parent is a sociedad anomina duly organized and
validly existing under the laws of the Republic of Peru. Each of the
Companies has all requisite power and authority to own and lease the
properties and assets it currently owns and leases and to conduct its
activities as such activities currently are conducted. Each of the Companies
is duly qualified in all jurisdictions in which the ownership or leasing of
the Properties and assets owned or leased by it or the nature of its
activities make such qualification necessary.
4.5 Capitalization of the Companies.
(a) The authorized capital stock of the Company consists solely of
450,000 shares of common stock, one Nuevo Sol per share par value, all of
which are issued and outstanding. All of the Company Shares are owned
beneficially and of record, free and clear of Encumbrances, by the Parent, and
the Company Nominee Shares are held, beneficially and of record, free and
clear of Encumbrances, by the Company Nominee. The issued and outstanding
shares of the Company's common stock have been duly authorized and are validly
issued and outstanding, free of preemptive rights and nonassessable. There
are no authorized or outstanding subscriptions, options, convertible
securities, warrants, puts, calls or other rights of any kind issued or
granted by, or binding upon, the Company or Parent to sell or otherwise issue
or to purchase or otherwise acquire any security of or equity interest in the
Company. Except as contemplated by this Agreement, there are not any
shareholder agreements, voting trusts or other agreements or understandings to
which the Company, the Parent, Seller or the Company Nominee is a party or to
which any such Person is bound relating in any way to any shares of the
Company's capital stock.
(b) The authorized capital stock of the Parent consists solely of 10,000
shares of common stock one Nuevo Sol per share par value, all of which are
issued and outstanding. All of the Parent Shares are owned beneficially and
of record, free and clear of Encumbrances, by Seller, and the Parent Nominee
Shares are held, beneficially and of record, free and clear of Encumbrances,
by the Parent Nominees. The issued and outstanding shares of the Parent's
common stock have been duly authorized and are validly issued and outstanding,
free of preemptive rights and nonassessable. There are no authorized or
outstanding subscriptions, options, convertible securities, warrants, puts,
calls or other rights of any kind issued or granted by, or binding upon, the
Parent or Seller to sell or otherwise issue or to purchase or otherwise
acquire any security of or equity interest in the Parent. Except as
contemplated by this Agreement, there are not any shareholder agreements,
voting trusts or other agreements or understandings to which the Parent, the
Seller or either of the Company Nominees is a party or to which any such
Person is bound relating in any way to any shares of the Parent's capital
stock.
(c) The Company does not have any direct or indirect subsidiaries, or
equity interests in any Person, and except for the Company or as described on
Schedule 4.5 the Parent does not have any direct or indirect subsidiaries, or
equity interests in any Person.
4.6 Assets; Title, Condition, and Sufficiency. Each of the Companies has
exclusive, good and marketable title to its assets and properties (other than
Properties, as to which the representations and warranties in Section 4.7
apply), free and clear of all Encumbrances of any kind or nature, except (i)
Permitted Encumbrances, (ii) restrictions stated in the Governmental Permits,
and (iii) Encumbrances disclosed on Schedule 4.6 which will be removed and
released at or prior to Closing. All the tangible assets of the Companies are
in good operating condition and repair, ordinary wear and tear excepted, and
are suitable and adequate for continued use in the manner in which currently
used.
4.7 Properties
(a) Except only for the Properties, the Company does not have or hold
any interest in any real property or minerals. The Company holds good and
marketable title to the Properties free and clear of all Encumbrances except
the Encumbrances disclosed on Schedule 4.6, which will be removed prior to
Closing, and Permitted Encumbrances. Except for the Permitted Encumbrances,
none of the Properties is subject to any royalty or similar obligation, nor
does any Person other than the Company have any other right, title or interest
therein. The Parent is the sole owner of the Existing Royalty free and clear
of all Encumbrances other than Permitted Encumbrances, and has not conveyed or
granted any Person any rights or interests therein.
(b) Except as described on Schedule 4.7, each of the Properties was
duly and validly issued in accordance with applicable Legal Requirements. The
Company has complied with the terms and conditions of each of the mining
claims included in the Properties and has made all necessary payments
(including but not limited to Derechos de Vigencia), required to maintain such
mining claims in full force and effect, except only that the Company failed to
pay Derechos de Vigencia for 1999. Except as described on Schedule 4.7, (i)
none of such mining claims has been, or is deemed to have been, abandoned,
(ii) Seller has no Knowledge of the existence of any facts or circumstances
which could result in any such mining claim being revoked, adversely modified,
suspended or terminated, and (iii) there is no Litigation pending or to Seller's
Knowledge threatened, by any Governmental Authority with respect to any such
mining claims.
4.8 Material Contracts.
(a) Except for the Contracts described on Schedule 4.8, neither of the
Companies nor any of the Properties is bound or affected by any of the
following that (except as otherwise provided below) currently are in effect
("Material Contracts"): (i) leases of real or personal property (whether as
lessor or lessee); (ii) Contracts for royalties or similar obligations; (iii)
Contracts relating to bonds or other surety arrangements; (iv) Contracts
granting any Person an Encumbrance (including any Permitted Encumbrance) on or
against any of its assets or Properties; (v) Contracts with consultants or
independent contractors; (vi) Contracts pertaining to the use of any
intellectual property or proprietary information of any other Person; (vii)
Contracts other than those described in any other clause of this paragraph
which are material to it; (viii) Access Contracts; or (ix) joint venture,
partnership, joint operating, earn in or similar Contracts with any Person
(regardless of whether or when expired or terminated).
(b) Except as described in Schedule 4.8: (i) to Seller's Knowledge each
of the Material Contracts is valid, in full force and effect, and enforceable
in accordance with its terms against the parties thereto other than the Parent
or the Company, as the case may be, and (ii) there has not occurred any
default (without regard to requirements of lapse of time or the giving of
notice), by Parent or the Company, as the case may be, nor, to the Knowledge
of Seller has there occurred any default (without regard to requirements of
lapse of time or the giving of notice) by any Person other than the Parent or
the Company under any of the Material Contracts.
4.9 Employment Matters. The Company does not have any employees, and has
no liabilities or obligations of any kind (contingent or otherwise) to any
individuals previously employed by it.
4.10 Litigation. Except as stated on Schedule 4.10, there is no
Litigation pending or, to Seller's Knowledge, threatened, or any Judgment
outstanding, involving or affecting either of the Companies, the Properties or
the Applications.
4.11 Tax Returns; Other Reports.
(a) (i) All Tax Returns with respect to the Companies which are due have
been duly filed; (ii) all Taxes, deposits or other payments for which either
of the Companies may have any liability have been paid in full or are accrued
as liabilities for Taxes on the books and records of either of the Companies
in accordance with PGAAP; (iii) there are not any extensions of time in effect
with respect to the dates in which any Tax Returns were or are due to be
filed; (iv) all deficiencies asserted as a result of any examination of any
return or report of Taxes have been paid in full, accrued on the books of the
Companies in accordance with PGAAP, or finally settled, and no issue has been
raised in any such examination which, by application of the same or similar
principles, reasonably could be expected to result in a proposed deficiency
for any other period not so examined; (v) with respect to the Tax Returns no
claims have been asserted, no proposals or deficiencies for any Taxes are
being asserted or, to Seller's Knowledge, proposed or threatened, and no audit
or investigation is currently underway or pending or, to Seller's Knowledge,
threatened; (vi) the Tax bases for all depreciable assets held by the
Companies have been determined in accordance with law and are true, complete
and accurate in all material respects; (vii) no Tax Returns relating to
taxable periods ending on or after December 31, 1994 have been examined or
audited by any Governmental Authority; (viii) there are no outstanding waivers
or agreements by Seller or either of the Companies for the extension of time
for the assessment of any Taxes or deficiency thereof, nor are there any
requests for rulings, outstanding subpoenas or requests for information,
notice of proposed reassessment of any property owned or leased by either of
the Companies or any other similar matters pending between either of the
Companies and any taxing authority; and (ix) there are no liens for Taxes not
yet due, nor are there any such liens which are pending or, to Seller's
Knowledge, threatened.
(b) Neither of the Companies owns any "United States real property
interests" as defined in Section 897(c)(1)(A) of the United States Internal
Revenue Code of 1986, as amended.
4.12 Compliance with Legal Requirements.
(a) The ownership, leasing and use by the Companies of their assets
and properties and the Companies' activities do not violate and have not
violated any Legal Requirement, including but not limited to the United State
Foreign Corrupt Practices Act and any Governmental Permits currently or at any
time held by the Companies. Neither Seller nor either of the Companies has
received any notice claiming a violation by either of the Companies of any
Legal Requirement or any Governmental Permits, and to Seller's Knowledge there
is no basis for any claim that such a violation exists.
(b) Schedule 4.12 describes all Governmental Permits held by the
Companies (the "Company Permits"). The Company Permits constitute all
Governmental Permits required under applicable Legal Requirements for the
activities of the Companies as currently conducted. The Company Permits are
currently in full force and effect, are not in default, and are valid under
all applicable Legal Requirements according to their terms. There is no legal
action, governmental proceeding or investigation, pending or threatened, to
terminate suspend or modify any Company Permit, and the Companies have at all
times been and are in compliance with the terms and conditions of all the
Company Permits and with other applicable requirements of all Governmental
Authorities relating to the Company Permits, including all requirements for
notification, filing, reporting, posting and maintenance of logs and records.
4.13 Financial Statements; Liabilities.
(a) Attached as Schedule 4.13 is the balance sheet of the Parent as
at December 31, 1999. Such balance sheet was prepared in accordance with
PGAAP and fairly and accurately state the assets and liabilities of the Parent
as of the date thereof. Except as reflected on such balance sheet, as of the
date of this Agreement the Parent has incurred no other liabilities,
contingent or otherwise, to any Person, except liabilities incurred in the
ordinary course of business since the date of such balance sheet.
(b) The Company has no liabilities, contingent or otherwise, to any
Person, other than liabilities for unpaid Derechos de Vigencia with respect to
the Properties only for year 1999.
4.14 Environmental Matters. The activities of the Companies with respect
to the Properties, and of any Person with which either of the Companies has
had any joint venture, partnership or other relationship with respect to the
Properties, have consisted only of limited exploration activities (the
"Exploration Activities"). Neither the Companies nor, to Seller's Knowledge,
any such other Person has abandoned any facilities or equipment, including but
not limited to underground storage tanks. The Companies have complied with
and performed without default all obligations under each of the Access
Contracts, including but not limited to the payment of all amounts payable
thereunder, and there are no pending or, to Seller's Knowledge, threatened
disputes under or with respect to any Access Contracts or Exploration
Activities, nor to Seller's Knowledge does any basis therefor exist. To
Seller's Knowledge, the Exploration Activities have not caused or resulted in
any condition or occurrence that could give rise to (i) any Losses incurred by
any other Person, (ii) any remediation, reclamation, reporting or other
obligations under Environmental Laws or Governmental Permits, or (iii) any
sanctions imposed by any Governmental Authority.
4.15 Bonds. Neither of the Companies has or maintains or is required to
have or maintain any performance, reclamation or other bonds or surety
instruments.
4.16 Recordkeeping. Each of the Companies maintains and has maintained
its books and records and accounts in accordance with the Legal Requirements
of the Republic of Peru and other applicable Legal Requirements.
4.17 Disclosure. No representation or warranty by Seller in this
Agreement or in any Schedule or Exhibit of this Agreement, or any statement,
list or certificate furnished or to be furnished by Seller pursuant to this
Agreement, taken or viewed in the aggregate, contains or will contain any
untrue statement of material fact, or omits or will omit to state a material
fact required to be stated therein or necessary to make the statements
contained therein not misleading in light of the circumstances in which
made.
5. Covenants.
5.1 Certain Affirmative Covenants of Seller. Except as Buyer may
otherwise consent in writing, or as contemplated by this Agreement, between
the date of this Agreement and Closing Seller shall cause each of the
Companies to:
(a) With respect to the Properties, operate only in the usual, regular,
and ordinary course and in accordance with past practices;
(b) maintain in full force and effect its existing policies of insurance
with respect to its assets, properties and activities.
(c) (i) duly comply with all applicable Legal Requirements; (ii) perform
all of its obligations under all of the Material Contracts and Governmental
Permits without default; (iii) take all actions (including but not limited to
the payment of Derechos de Vigencia with respect to the Properties) necessary
to maintain in effect the mining claims included in the Properties; (iv)
diligently and vigorously contest any Litigation seeking to establish the
abandonment of any such mining claims, or otherwise seeking to revoke,
adversely modify, suspend or terminate any such mining claims; and (v)
maintain its books, records, and accounts in the usual, regular, and ordinary
manner on a basis consistent with past practices, and in accordance with all
Legal Requirements;
(d) (i) give to Buyer, and its counsel, accountants, and other
representatives, full access during normal business hours to the premises of
the Companies and the Properties; (ii) permit Buyer to contact Persons with
which Seller or either of the Companies has entered into any joint venture,
partnership, joint exploration, earn-in or similar arrangement with respect to
the Properties, and facilitate such contacts, and (iii) furnish to Buyer and
such representatives all such additional documents (certified by an officer of
Seller, if requested), financial information, and other information with
respect to the Companies and the Properties as Buyer may from time to time
reasonably request; provided that no investigation by Buyer or its
representatives shall affect or limit the scope of any of the representations
and warranties of Seller in the Agreement or in any Transaction Document or
limit the liability of Seller for any breach of such representations and
warranties;
(e) promptly notify Buyer of any circumstance, event, or action by the
Companies or otherwise (i) which, if known at the date of this Agreement,
would have been required to be disclosed in or pursuant to this Agreement, or
(ii) the existence, occurrence, or taking of which would result in any of the
representations and warranties of Seller in this Agreement or in any
Transaction Document not being true and correct when made or at Closing, and,
with respect to clause (ii), use its best efforts to remedy the same.
5.2 Certain Negative Covenants of Seller. Except as Buyer may otherwise
consent in writing, or as contemplated by this Agreement, between the date of
this Agreement and Closing Seller shall cause the Companies not to:
(a) modify, terminate, renew, suspend, or abrogate any Material Contract
or Governmental Permit relating to the Properties;
(b) dispose of any assets, except (i) tangible assets that do not relate
to the Properties and are not used by the Companies in their operations with
respect thereto, and (ii) in the case of Parent, dispositions of the Excluded
Assets and Excluded Liabilities;
(c) relinquish, surrender or dispose of any interest in the Properties;
(d) issue any shares of capital stock or other securities, except that the
Parent may issue additional shares of its common stock to Seller prior to
Closing;
(e) not amend the charter or bylaws of either of the Companies, except
that the charter of the Parent may be amended to increase the number of
authorized shares of its common stock in connection with the issuance of
additional shares to Seller prior to Closing;
(f) incur any indebtedness or other obligation except in the ordinary
course of business; or
(g) enter into any transaction or permit the taking of any action that
would result in any of the representations and warranties of Seller in this
Agreement or in any Transaction Document not being true and correct when made
or at Closing.
5.3 Required Consents. Seller shall exercise its reasonable best efforts
to obtain, as soon as possible and at its expense, the approval of the Toronto
Stock Exchange with respect to the transactions contemplated by this
Agreement. Buyer shall cooperate reasonably with Seller to obtain such
approval.
5.4 Confidentiality.
(a) Any non-public information that Buyer may obtain from Seller in
connection with this Agreement with respect to the Companies shall be deemed
confidential and, unless and until Closing shall occur, Buyer shall not
disclose any such information to any third party (other than its directors,
officers and employees, and representatives of its advisers and lenders whose
knowledge thereof is necessary in order to facilitate the consummation of the
transactions contemplated hereby); provided, however, that (i) Buyer may use
and disclose any such information once it has been publicly disclosed (other
than by Buyer in breach of its obligations under this Section) or which
rightfully has come into the possession of Buyer (other than from Seller),
(ii) to the extent that Buyer may become compelled by Legal Requirements to
disclose any of such information in any Litigation, Buyer may disclose such
information if it shall have used all reasonable efforts, and shall have
afforded Seller the opportunity, to obtain an appropriate protective order, or
other satisfactory assurance of confidential treatment, for the information
compelled to be disclosed, and (iii) subject to paragraph 5.4(c), Buyer may
make disclosures required by stock exchanges or automated quotation systems on
which its Affiliates' shares are listed. In the event of termination of this
Agreement, Buyer shall use all reasonable efforts to cause to be delivered to
Seller, and retain no copies of, any documents, work papers and other
materials obtained by Buyer or on its behalf from Seller, whether so obtained
before or after the execution hereof.
(b) Any non-public information that Seller shall obtain from Buyer in
connection with this Agreement with respect to Buyer or any of its Affiliates
shall be deemed confidential, and Seller shall not disclose such information
to any third party (other than its directors, officers and employees, and
representatives of its advisers and lenders whose knowledge thereof is
necessary in order to facilitate the consummation of the transactions
contemplated hereby); provided, however, that (i) Seller may use and disclose
any such information once it has been publicly disclosed (other than by Seller
in breach of its obligations under this Section) or which rightfully has come
into the possession of Seller (other than from Buyer), and (ii) to the extent
that Seller may become compelled by Legal Requirements to disclose any of such
information in any Litigation, Seller may disclose such information if it
shall have used all reasonable efforts, and shall have afforded Buyer the
opportunity, to obtain an appropriate protective order, or other satisfactory
assurance of confidential treatment, for the information compelled to be
disclosed and (iii) subject to paragraph 5.4(c), Seller may make disclosures
required by stock exchanges or automated quotation systems on which its or its
Affiliates' shares are listed. In the event of termination of this Agreement,
Seller shall use all reasonable efforts to cause to be delivered to Buyer, and
retain no copies of, any documents, work papers, and other materials obtained
by Seller or on its behalf from Buyer, whether so obtained before or after the
execution hereof.
(c) Except as required by applicable Legal Requirements or the
requirements of any stock exchange or automated quotation system on which
their or their Affiliates' shares are listed, neither Seller nor Buyer shall,
and Seller shall cause the Companies not to, make any press release or public
announcement or statement without the prior written consent and approval of
the other. Seller and Buyer shall consult with and cooperate with the other
with respect to the content and timing of all press releases and other public
announcements or statements, and any oral or written statements to Seller's
employees concerning this Agreement and the transactions contemplated hereby.
5.5 Responsibility for Taxes. Seller shall be responsible for all Taxes
payable by the Companies or Seller's other affiliates to Peruvian taxing
authorities with respect to the disposition of the Excluded Assets and
Excluded Liabilities to the extent that such Taxes are not fully offset by tax
losses and credits of the Parent and, only if the Company Shares are
transferred to Buyer pursuant to the proviso in Section 7.2(a), all Taxes
payable by the Parent or Seller's other affiliates to Peruvian taxing
authorities with respect to the transactions contemplated by this Agreement.
Buyer shall be responsible for all other Taxes payable by the Companies to
Peruvian taxing authorities with respect to the transactions contemplated by
this Agreement.
5.6 Properties. If during the five year period following Closing the
Company determines that it will surrender or relinquish (other than by any
inadvertent act or omission) to the granting Governmental Authority any of the
Properties (each a "Relinquishment Property"), Buyer shall so notify Seller in
writing (a "Relinquishment Notice"). Buyer shall include with each
Relinquishment Notice all reports of drilling activities and other material
exploration information obtained by Buyer with respect to the Relinquishment
Property following Closing. If within thirty days after the effective date of
a Relinquishment Notice (the "Election Period") Seller notifies Buyer in
writing that it wishes to obtain the Relinquishment Property, Buyer shall
cause the Company to convey all of its right, title and interest in the
Relinquishment Property to Seller (or a Person designated by Seller), without
warranty, liability or obligation of any kind. If Seller does not notify
Buyer in writing during the Election Period that it wishes to obtain a
Relinquishment Property, the Company shall be free to relinquish or surrender
the Relinquishment Property. Buyer shall cause any Person to which the
Company conveys any of the Properties, or to which Buyer directly or
indirectly conveys the Company, within five years after Closing to assume the
obligations of Buyer in this Section 5.6 in writing.
5.7 Disposition of Certain Assets and Liabilities. Prior to Closing,
Seller shall (i) cause the Parent to transfer or otherwise convey to one or
more Affiliates of Seller other than the Company (the "Transferees") all of
the assets of and properties described on Schedule 5.7 (the "Excluded
Assets"), (ii) cause the Transferee to assume all liabilities and obligations
whatsoever of the Parent, known or unknown, contingent or otherwise (the
"Excluded Liabilities"), (iii) cause the Parent no longer to have any
employees, and (iv) cause the Parent not to have any obligations of any kind
to any individuals at any time employed by it, including but not limited to
obligations for salary or wages, severance pay, vacation or sick pay, and all
benefits of any kind (the "Employee Liabilities").
5.8 Cooperation with Change of Entity. If at any time prior to Closing
Buyer informs Seller in writing that it intends to change the form of entity
of either or both of the Companies following Closing, Seller promptly shall,
at the expense of Buyer, take such actions in connection with such
contemplated change (including but not limited to publication of notice) as
Buyer requests, provided that such actions do not adversely affect Seller or
the Companies.
5.9 Resignation of Officers and Directors. Prior to Closing, Seller shall
take such actions as are necessary to effect the resignation of the officers
and directors of the Companies effective as of Closing, and the appointment,
effective as of Closing, of replacement officers and directors designated by
Buyer.
5.10 Change in Transaction Structure. If, prior to Closing, Seller and
Buyer mutually determine that it is mutually beneficial to modify the
structure of the transactions contemplated by this Agreement, they will
endeavor in good faith to agree upon an amendment to this Agreement that
effects such modification and is acceptable to Buyer and Seller, each in its
discretion.
5.11 Certain Deliveries. Within ten days after the date of this
Agreement, Seller shall make available to Buyer's designated representative in
Lima, Peru, true and complete copies of the following: (i) all Material
Contracts, including all amendments thereto (or in the case of oral Material
Contracts, written summaries thereof), and (ii) all income Tax Returns
(together with any agents' reports and any accountants' work papers) of the
Companies for the five most recent years for which such Tax Returns are due to
have been filed (including English language copies thereof, if any exist),
(iii) all Company Permits; and (iv) copies of the charter, bylaws, minute
books and share registers of the Companies.
5.12 Claims Litigation.
(a) Following Closing, if for any reason Buyer elects not to
continue to prosecute the Litigation with respect to the validity of Anna
Gabrielle Claims 48 and 49 described on Schedule 4.10 (the "Claims
Litigation") prior to the entry of a final, nonappealable Judgment with
respect to the validity of such claims, Buyer shall so notify Seller in
writing. If Seller so elects by written notice to Buyer given within ten
Business Days after the effective date of such notice, Seller shall be
entitled, at its sole expense, to prosecute the Claims Litigation for the
benefit of the Company, with counsel reasonably acceptable to Buyer. Buyer
shall cooperate reasonably with Seller in its conduct of the Claims
Litigation, including providing to Seller, upon request, relevant information
in Buyer's or the Companies' possession, and Seller shall reimburse Buyer and
the Companies for their actual expenses incurred in doing so.
(b) If at Closing Seller conveys the Company Shares to Buyer
pursuant to the proviso in Section 7.2(a), Seller and Buyer promptly shall
take such action as may be necessary to substitute the Company for the Parent
as the party in the Claims Litigation.
6. Conditions Precedent.
6.1 Conditions to Buyer's Obligations. The obligations of Buyer to
consummate the transactions contemplated by this Agreement shall be subject to
the following conditions, which may be waived by Buyer:
(a) Accuracy of Representations and Warranties. The representations and
warranties of Seller in this Agreement and in each Transaction Document shall
be true and accurate in all material respects at and as of Closing with the
same effect as if made at and as of Closing, except for any changes resulting
from actions contemplated by this Agreement.
(b) Performance Of Agreements. Seller shall have, in all material
respects, performed all obligations and agreements and complied with all
covenants in this Agreement or in any Transaction Document to be performed and
complied with by it at or before Closing.
(c) Officer's Certificate. Buyer shall have received a certificate
executed by an executive officer of Seller, dated as of Closing, reasonably
satisfactory in form and substance to Buyer, certifying that the conditions
specified in paragraphs 6.1(a) and (b) have been satisfied.
(d) Legal Proceedings. There shall be no Legal Requirement, and no
Judgment shall have been entered and not vacated by any Governmental Authority
of competent jurisdiction in any Litigation or arising therefrom, which (i)
enjoins, restrains, makes illegal, or prohibits consummation of the
transactions contemplated by this Agreement or by any Transaction Document, or
(ii) requires separation or divestiture by Buyer of all or any significant
portion of the Assets after Closing, and there shall be no Litigation pending
or threatened seeking, or which if successful would have the effect of, any of
the foregoing.
(e) Seller's Counsel Opinion. Buyer shall have received opinions dated as
of the Closing Date, in form and substance reasonably acceptable to Buyer and
its counsel, with respect to the matters described on Exhibit 6.1(e), of
Solomon Pearl Blum Heymann & Stich LLP, counsel to Seller, with respect to
matters of U.S. law, and of Peruvian counsel reasonably acceptable to Buyer,
with respect to matters of Peruvian law.
(f) Required Consents. Buyer shall have received evidence, in form and
substance reasonably satisfactory to it, that the Toronto Stock Exchange has
granted conditional approval of the transactions contemplated by this
Agreement.
(g) No Material Adverse Change. There shall not have been any material
adverse change in Properties or the other assets or properties of the
Companies, except for the disposition of the Excluded Assets.
(h) Disposition of Excluded Assets and Liabilities. Seller shall have
caused the Parent to dispose of the Excluded Assets and Excluded Liabilities
in accordance with Section 5.7, and shall have provided Buyer with evidence
thereof reasonably satisfactory to Buyer.
6.2 Conditions to Seller's Obligations. The obligations of Seller to
consummate the transactions contemplated by this Agreement shall be subject to
the following conditions, which may be waived by Seller:
(a) Accuracy of Representations and Warranties. The representations and
warranties of Buyer in this Agreement and in each Transaction Document to
which Buyer is a party shall be true and accurate in all material respects at
and as of Closing with the same effect as if made at and as of Closing.
(b) Performance of Agreements. Buyer shall have, in all material
respects, performed all obligations and agreements and complied with all
covenants in this Agreement or in any Transaction Document to which it is a
party to be performed and complied with by it at or before Closing.
(c) Officer's Certificate. Seller shall have received a certificate
executed by an executive officer of Buyer, dated as of Closing, reasonably
satisfactory in form and substance to Seller, certifying that the conditions
specified in paragraphs 6.2(a) and (b) have been satisfied.
(d) Required Consents. Seller shall have received evidence, in form and
substance reasonably satisfactory to it, that the Toronto Stock Exchange has
granted conditional approval of the transactions contemplated by this
Agreement.
(e) Legal Proceedings. There shall be no Legal Requirement, and no
Judgment shall have been entered and not vacated by any Governmental Authority
of competent jurisdiction in any Litigation or arising therefrom, which
enjoins, restrains, makes illegal, or prohibits consummation of the
transactions contemplated hereby or by any Transaction Document, and there
shall be no Litigation pending or threatened seeking, or which if successful
would have the effect of, any of the foregoing.
(f) Disposition of Excluded Assets and Liabilities. Seller shall have
caused the Parent to dispose of the Excluded Assets and Excluded Liabilities
in accordance with Section 5.7; provided, however, that if not previously
satisfied this condition shall expire, and shall be deemed to have been waived
by Seller, on August 25, 2000.
7. Closing.
7.1 Closing; Time and Place. The closing of the transactions contemplated
by this Agreement ("Closing") shall take place on the date that is seven
Business Days following the date on which Buyer's termination right in Section
8.1(d) expires or is earlier waived in writing by Buyer, at the offices of
Buyer in Denver, Colorado; provided, however, that either party may, at its
option, postpone Closing on one or more occasions to a later date (but in no
event later than the Outside Closing Date), in order to allow for the
satisfaction of the conditions to the obligations of such party stated in
Sections 6.1 or 6.2, as applicable.
7.2 Seller's Obligations. At Closing, Seller shall deliver or cause to be
delivered to Buyer the following:
(a) Share Certificates. The certificates for the Parent Shares, the
Parent Nominee Shares and the Company Nominee Shares, free and clear of all
Encumbrances, with all necessary transfer stamps, if any, attached; provided,
however, that if the condition in Section 6.1(h) has not been satisfied as of
the date of Closing, Seller instead shall cause to be delivered to Buyer, free
and clear of all Encumbrances, with all necessary transfer stamps, if any,
attached, certificates for the Company Shares and the Company Nominee Shares,
and shall not transfer the Parent Shares or the Parent Nominee Shares to
Buyer.
(b) Notices of Share Transfer. Notices in the form of Exhibit 7.2(b) from
the holders of the shares transferred to Buyer pursuant to Section 7.2(a),
advising the Parent and/or the Company, as may be the case, of the transfer of
such shares.
(c) Officer's Certificate. The certificate described in paragraph 6.1(c).
(d) Corporate Books and Records. The corporate minute books of the
Companies (or, if only the Company Shares and Company Nominee Shares are
transferred in accordance with Section 7.2(a), the Company), including minutes
of all meetings of the shareholders and directors and the share registers (the
delivery thereof to be made to Buyer's designated representative in Lima,
Peru).
(e) Evidence of Corporate Actions. Certified corporate resolutions, or
other evidence reasonably satisfactory to Buyer, that (i) Seller has taken all
action necessary to authorize the execution of this Agreement and the
consummation of the transactions contemplated by this Agreement, and (ii) if
the Company Shares are transferred to Buyer pursuant to Section 7.2(a), the
Parent has taken all actions necessary to authorize such transfer.
(f) Other. Such other documents and instruments, in form and substance
reasonably satisfactory to Buyer, as shall be necessary to effect the intent
of this Agreement and consummate the transactions contemplated hereby.
7.3 Buyer's Obligations. At Closing, except as otherwise provided below,
Buyer shall deliver or cause to be delivered to Seller:
(a) Cash Purchase Price. The Cash Purchase Price.
(b) Officer's Certificate. The certificate described in paragraph 6.2(c).
(c) Evidence of Corporate Actions. Certified resolutions of the board of
directors of Buyer, or other evidence reasonably satisfactory to Seller that
Buyer has taken all action necessary to authorize the execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement.
(d) Other. Such other documents and instruments, in form and substance
reasonably satisfactory to Seller, as shall be necessary to effect the intent
of this Agreement and consummate the transactions contemplated hereby.
8. Termination and Remedies.
8.1 Termination Events. This Agreement may be terminated prior to
Closing, and the transactions contemplated hereby may be abandoned:
(a) at any time, by the mutual agreement of the Buyer and Seller;
(b) by either Buyer or Seller, at any time, if the other is in material
breach or default of its respective covenants, agreements, or other
obligations in this Agreement, or if any of its representations in this
Agreement are not true and accurate in all material respects when made or when
otherwise required by this Agreement or any Transaction Document to be true
and accurate;
(c) by either Buyer or Seller upon written notice to the other, if Closing
shall not have occurred by August 31, 2000 (the "Outside Closing Date"), for
any reason other than a material breach or default by such party of its
respective covenants, agreements, or other obligations hereunder; provided,
however, that if Closing shall not have occurred by such Outside Closing Date
because of the material inaccuracy of any of the representations and
warranties of the terminating party, (i) its termination of this Agreement
shall not be effective if the other party waives in writing its conditions
under Section 6.1(a) or 6.2(a), as may be the case, with respect to such
inaccuracy, within five Business Days after the effective date of the written
notice of termination given by the terminating party, and (ii) the Outside
Closing Date shall be extended to the date that is five Business Days after
the effective date of such waiver, if it is timely given;
(d) By Buyer, by written notice given to Seller within ninety days after
the date of this Agreement (the "Due Diligence Period"), if Buyer determines
in its reasonable discretion, as a result of its investigation of the
Companies that their liabilities, title to the Properties, or the
environmental condition of the Properties vary materially and adversely from
Buyer's reasonable expectations with respect thereto as of the date of this
Agreement (a "Material Adverse Matter"). Without limiting the generality of
the foregoing, any liability that could, under a reasonable scenario, exceed
US$100,000 shall be deemed to be a Material Adverse Matter. If Buyer is
entitled to terminate this Agreement pursuant to this Section 8.1(d) but
notifies Seller in writing (a "Restructuring Notice") during the Due Diligence
Period that its wishes to restructure the transactions contemplated by this
Agreement so as to address the Material Adverse Matter while preserving for
Buyer and Seller the benefits of the transactions contemplated by this
Agreement, Buyer and Seller shall in good faith endeavor to agree on
modifications to this Agreement to do so ("Restructuring Modifications"). All
Restructuring Modifications must be acceptable to Buyer and Seller, each in
its reasonable discretion, but in no event shall Seller require any modification
to the terms of the Royalty, any increase in the Cash Purchase Price, or any
other increase in the consideration (including assumption of liabilities)
payable by Buyer under this Agreement. If Buyer gives a Restructuring Notice,
(i) it shall not be deemed to have waived any of its rights under this
Agreement, including but not limited to its right to terminate this Agreement
under this Section 8.1(d), at any time, and (ii) the Due Diligence Period
shall be extended by the number of days elapsing between the effective date of
the Restructuring Notice and either the effective date of any written
amendment to this Agreement between Buyer and Seller effecting the
Restructuring Modifications or the effective date of written notice by Buyer
to Seller that Buyer wishes to terminate discussions with respect to
Restructuring Modifications, but shall in no event be extended for more than
thirty days.
8.2 Effect of Termination. If this Agreement shall be terminated pursuant
to Section 8.1, all obligations of the parties hereunder shall terminate,
except for the obligations in Section 5.4 and Article 10. Termination of this
Agreement pursuant to Section 8.1 shall not limit or impair any remedies that
either Seller or Buyer may have with respect to a breach or default by the
other of its covenants, agreements or obligations under this Agreement or any
Transaction Document.
9. Indemnification.
9.1 Indemnification by Seller. From and after Closing, Seller shall
indemnify and hold harmless Buyer, its affiliates, officers and directors,
employees, agents, and representatives, and any Person claiming by or through
any of them, as the case may be, from and against any and all Losses arising
out of or resulting from:
(a) any representations and warranties made by Seller in this Agreement or
in any Transaction Document not being true and accurate when made or at
Closing, except for any changes resulting from actions contemplated by this
Agreement;
(b) any failure by Seller to perform any of its covenants, agreements, or
obligations in this Agreement or in any Transaction Document;
(c) all liabilities and obligations of the Companies arising out of or
attributable to periods prior to Closing, including but not limited to all
liabilities for Taxes attributable to periods prior to Closing, but excluding
Permitted Encumbrances.
(d) all Taxes for which Seller is responsible under Section 5.5;
(e) all Excluded Liabilities;
(f) any failure of Seller to cause the Parent to dispose of the Excluded
Assets and Excluded Liabilities prior to Closing as contemplated by Section
5.7, including but not limited to any amounts payable by the Parent or the
Company to any Person in respect thereof; and
(g) all Employee Liabilities.
9.2 Indemnification by Buyer. From and after Closing, Buyer shall
indemnify and hold harmless Seller, its affiliates, officers and directors,
agents, and representatives, and any Person claiming by or through any of
them, as the case may be, from and against any and all Losses arising out of
or resulting from:
(a) any representations and warranties made by Buyer in this Agreement or
in any Transaction Document not being true and accurate when made or at
Closing;
(b) any failure by Buyer to perform any of its covenants, agreements,
or obligations in this Agreement or in any Transaction Document;
(c) all liabilities and obligations of the Companies arising out of
or attributable to periods after Closing, including but not limited to all
liabilities for Taxes attributable to periods following Closing, but excluding
any liabilities and obligations with respect to which Seller has
indemnification obligations under Section 9.1; and
(d) all Taxes for which Buyer is responsible under Section 5.5.
9.3 Procedure for Indemnified Third Party Claim. Promptly after receipt
by a party entitled to indemnification hereunder (the "Indemnitee") of written
notice of the assertion or the commencement of any Litigation with respect to
any matter referred to in Sections 9.1 or 9.2, the Indemnitee shall give
written notice thereof to Seller if the Indemnitee is Buyer, or Buyer, if the
Indemnitee is Seller (in either case, the "Indemnitor"), and thereafter shall
keep the Indemnitor reasonably informed with respect thereto; provided,
however, that failure of the Indemnitee to give the Indemnitor notice as
provided herein shall not relieve the Indemnitor of its obligations hereunder
except to the extent that the Indemnitor is prejudiced thereby. If any
Litigation shall be commenced against any Indemnitee by a third party, the
Indemnitor shall be entitled to participate in such Litigation and, at its
option, assume the defense thereof with counsel reasonably satisfactory to the
Indemnitee, at the Indemnitor's sole expense; provided, however, that the
Indemnitor shall not have the right to assume the defense of any Litigation if
(i) the Indemnitee shall have one or more legal or equitable defenses
available to it which are different from or in addition to those available to
the Indemnitor, and, in the reasonable opinion of the Indemnitee, counsel for
the Indemnitor could not adequately represent the interests of the Indemnitee
because such interests could be in conflict with those of the Indemnitor, (ii)
such Litigation is reasonably likely to have a material adverse effect on any
other matter beyond the scope or limits of the indemnification obligation of
the Indemnitor, or (iii) the Indemnitor shall not have assumed the defense of
the Litigation in a timely fashion (but in any event within thirty days of
notice of such Litigation). If the Indemnitor shall assume the defense of any
Litigation, the Indemnitee shall be entitled to participate in any Litigation
at its expense, and the Indemnitor shall not settle such Litigation unless the
settlement shall include as an unconditional term thereof the giving by the
claimant or the plaintiff of a full and unconditional release of the
Indemnitee, from all liability with respect to the matters that are subject to
such Litigation, or otherwise shall have been approved reasonably by the
Indemnitee.
9.4 Determination of Indemnification Amounts and Related Matters. Amounts
payable pursuant to Sections 9.1 or 9.2 shall be payable by the Indemnitor as
incurred by the Indemnitee, and shall bear interest at the rate of ten percent
per annum from the date the Losses for which indemnification is sought were
incurred by the Indemnitee until the date of payment of indemnification by the
Indemnitor.
9.5 Survival. The representations and warranties of Buyer and Seller in
this Agreement and any Transaction Document shall survive Closing.
9.6 Other Indemnification. The provisions of Sections 9.3 and 9.4 shall
be applicable to any claim for indemnification made under any other provision
of this Agreement, and all references in Sections 9.3 and 9.4 to Sections 9.1
and 9.2 shall be deemed to be references to such other provisions of this
Agreement.
10. Miscellaneous Provisions.
10.1 Expenses. Except as otherwise provided in Section 10.13 or elsewhere
in this Agreement, each of the parties shall pay its own expenses and the fees
and expenses of its counsel, accountants, and other experts in connection with
this Agreement.
10.2 Brokerage. Seller shall indemnify and hold Buyer harmless from and
against any and all Losses arising from any employment by it of, or services
rendered to it by, any finder, broker, agency, or other intermediary, in
connection with the transactions contemplated hereby, or any allegation of any
such employment or services. Buyer shall indemnify and hold Seller harmless
from and against any and all Losses arising from any employment by it of, or
services rendered to it by, any finder, broker, agency, or other intermediary,
in connection with the transactions contemplated hereby, or any allegation of
any such employment or services.
10.3 Waivers. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party hereto, shall be deemed to
constitute a waiver by the party taking the action of compliance with any
representation, warranty, covenant or agreement herein or in any Transaction
Document. The waiver by any party hereto of any condition or of a breach of
another provision of this Agreement or any Transaction Document shall not
operate or be construed as a waiver of any other condition or subsequent
breach. The waiver by any party of any of the conditions precedent to its
obligations under this Agreement shall not preclude it from seeking redress
for breach of this Agreement other than with respect to the condition so
waived. Buyer and Seller acknowledge that, except as otherwise provided in
this Agreement, (i) neither party makes any representations or warranties to
the other with respect to the Properties or its knowledge with respect to the
Properties, and (ii) each party is relying on its own investigation and
information with respect to the Properties.
10.4 Notices. All notices, requests, demands, applications, services of
process, and other communications which are required to be or may be given
under this Agreement or any Transaction Document shall be in writing and shall
be deemed to have been duly given if sent by confirmed telecopy or facsimile
transmission, or delivered by courier or mailed, certified first class mail,
postage prepaid, return receipt requested, to the parties hereto at the
following addresses:
To Seller:
Solitario Resources Corporation
1675 Broadway, Suite 2400
Denver, CO 80208
Attention: Mr. Christopher E. Herald
Facsimile: 303.534.1809
Copies:
Solomon Pearl Blum Heymann & Stich LLP
1700 Broadway Suite 1700
Denver, CO 80290
Attention: Clifford R. Pearl
Facsimile: 303.832.6653
To Buyer:
One Norwest Center
1700 Lincoln Street, 28th Floor
Denver, CO 80203
Attention: Land Department
Facsimile: 303.837.5851
Copies:
One Norwest Center
1700 Lincoln Street, 28th Floor
Denver, CO 80203
Attention: Legal Department
Facsimile: 303.837.6007
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section. Such notice shall be effective,
(i) if delivered in person or by courier, upon actual receipt by the intended
recipient, or (ii) if sent by telecopy or facsimile transmission, when answer
back is received, or (iii) if mailed, upon the earlier of five days after
deposit in the mail and the date of delivery as shown by the return receipt
therefor.
10.5 Entire Agreement; Amendments. This Agreement embodies the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, oral or written, with
respect thereto. This Agreement may not be modified orally, but only by an
agreement in writing signed by the party or parties against whom any waiver,
change, amendment, modification, or discharge may be sought to be enforced.
10.6 Binding Effect; Benefits. This Agreement shall inure to the benefit
of and will be binding upon the parties hereto and their respective heirs,
legal representatives, successors, and permitted assigns. Neither Seller nor
Buyer shall assign this Agreement or delegate any of its duties hereunder to
any other Person without the prior written consent of the other, except that
(i) prior to Closing or termination of this Agreement pursuant to Section 8.1,
Buyer may assign this Agreement and delegate its duties hereunder to any
Affiliate of Buyer, and (ii) following Closing or termination of this
Agreement pursuant to Section 8.1, either party may assign this Agreement to
any Person. No assignment of this Agreement or delegation of duties under
this Agreement shall relieve the assigning or delegating party of its
obligations under this Agreement (the obligations under the Royalty not
constituting obligations under this Agreement). For purposes of this Section
a change in control of Seller or Buyer shall not constitute an assignment of
this Agreement or delegation of duties under this Agreement.
10.7 Headings, Schedules, and Exhibits. The section and other headings in
this Agreement are for reference purposes only and will not affect the meaning
or interpretation of this Agreement. Reference to Schedules or Exhibits
shall, unless otherwise indicated, refer to the Exhibits and Schedules
attached to this Agreement, which shall be incorporated in and constitute a
part of this Agreement by such reference. Any item that could be deemed to be
properly disclosable on more than one Schedule to this Agreement shall be
deemed to be properly disclosed on all such Schedules if it is disclosed in
reasonable detailed on any Schedule to the Agreement.
10.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together will be deemed to be one and the same instrument.
10.9 Governing Law. The validity, performance, and enforcement of this
Agreement and all Transaction Documents, unless expressly provided to the
contrary, shall be governed by the laws of the state of Colorado, without
giving effect to the principles of conflicts of law of such state.
10.10 Severability. Any term or provision of this Agreement which is
invalid or unenforceable shall be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable the remaining
rights of the Person intended to be benefited by such provision or any other
provisions of this Agreement.
10.11 Third Parties; Joint Ventures. This Agreement constitutes an
agreement solely among the parties hereto, and, except as otherwise provided
herein, is not intended to and will not confer any rights, remedies,
obligations, or liabilities, legal or equitable, including any right of
employment, on any Person (including but not limited to any employee or former
employee of Seller) other than the parties hereto and their respective
successors, or assigns, or otherwise constitute any Person a third party
beneficiary under or by reason of this Agreement. Nothing in this Agreement,
expressed or implied, is intended to or shall constitute the parties hereto
partners or participants in a joint venture.
10.12 Construction. This Agreement has been negotiated by Buyer and
Seller and their respective legal counsel, and legal or equitable principles
that might require the construction of this Agreement or any provision of this
Agreement against the party drafting this Agreement shall not apply in any
construction or interpretation of this Agreement.
10.13 Attorneys' Fees. If any Litigation between Seller and Buyer with
respect to this Agreement or the transaction contemplated hereby shall be
resolved or adjudicated by a Judgment of any court, the party prevailing under
such Judgment shall be entitled, as part of such Judgment, to recover from the
other party its reasonable attorneys' fees and costs and expenses of
litigation.
10.14 Specific Performance. In addition to such other rights and remedies
as are available under this Agreement, at law, or in equity, Buyer and Seller
shall be entitled to specific performance of this Agreement.
Buyer and Seller have executed this Agreement as of the date first written
above.
SELLER
Solitario Resources Corporation
By:
Name:
Title:
BUYER
Newmont Peru Limited
By:
Name:
Title:
EXHIBIT 2.2
to
Stock Purchase Agreement
dated
February 2, 2000
between
Newmont Peru Limited
and
Solitario Resources Corporation
The Royalty shall consist of a royalty on production of gold, silver and
copper from the Royalty Properties, equal to the Applicable Percentage
(defined below) of Net Smelter Returns (defined below), on the following terms
and conditions:
(i) Net Smelter Returns shall be calculated for each calendar quarter
in which Net Smelter Returns are realized, and such Royalty payments as are
due to the grantee of the Royalty or its assignee (the "Grantee") shall be
made within thirty days following the end of the calendar quarter in which the
Net Smelter Returns are realized. Payment may be made by check sent to
Grantee certified mail, return receipt requested, or by wire transfer to an
account designated by Grantee. All payments shall be accompanied by a
statement summarizing the computation of Net Smelter Returns and any
deductions made by the Company.
(ii) Royalty payments for each quarter will be provisional and
subject to adjustment at the end of the Company's accounting year. If no
written objection is made by Grantee to the correctness of a Royalty payment
or its accompanying statement within one year from the date of such payment,
such statement shall be conclusively deemed to be correct and such Royalty
payment sufficient and complete, and no exception or claim for adjustment
shall thereafter be permitted.
(iii) "Net Smelter Returns," in the case of gold and silver
("Precious Metals"), shall mean the amount determined by multiplying (A) the
gross number of troy ounces of Precious Metals contained in the production by
or for the account of Buyer or the Company from the Royalty Properties
("Quarterly Production") delivered to the smelter, refiner, processor,
purchaser or other recipient of such production (collectively, "Payor") during
the applicable calendar quarter, by (B) for gold, the average of the London
Bullion Market, Afternoon Fix, spot prices for the applicable calendar quarter
(the "Applicable Spot Price"), and (C) for silver, the average of the New York
Commodities Exchange final spot prices, for the applicable calendar quarter,
and subtracting from the product of (A) and (B) or (A) and (C) only the
Deductions (defined below). "Net Smelter Returns," in the case of copper,
shall mean the amount determined by multiplying (X) the gross amount of copper
contained in the Quarterly Production delivered to the Payor during the
applicable calendar quarter by (Y) the average of the New York Commodities
Exchange final daily spot prices for the applicable calendar quarter, and
subtracting from the product of (X) and (Y) only the Deductions. The amount
determined pursuant to (B), (C) or (Y) shall be determined in each case
without regard to any hedging transactions, forward sales or similar
transactions that Buyer or any affiliate of Buyer may have entered into.
"Deductions" shall mean the following:
(A) Custom smelting costs, treatment charges and penalties,
including but not limited to metal losses, penalties for impurities and
charges or deductions for refining, selling, and transportation from smelter
to refinery and from refinery to market; provided, however, in the case of
leaching operations, all processing and recovery costs incurred by the Company
beyond the point at which the metal being treated becomes dore shall be
considered as treatment charges (it being agreed and understood, however, that
such processing and recovery costs shall not include the cost of mining,
crushing, dump preparation, distribution of leach solutions or other mining
and preparation costs up to the point at which the metal becomes dore); and
(B) Cost of transporting mineral product from the concentrator
to a smelter or other place of treatment; and
(C) Production royalties now or hereafter payable to any
Governmental Authority; and
(D) Production taxes, severance taxes and sales, privilege and
other taxes measured by production or the value of production, but excluding
any taxes upon the net income of the Company from the Royalty Properties or
otherwise.
(iv) "Applicable Percentage" means
(A) with respect to copper, two percent;
(B) with respect to silver, three percent; and
(C) with respect to gold, (I) two percent if the Applicable Spot
Price of gold is less than $320 per ounce, (II) three percent if the
Applicable Spot Price of gold is equal to or greater than $320 but less than
$360 per ounce, (III) four percent if the Applicable Spot Price of gold is
equal to or greater than $360 but not greater than $400 per ounce, and (IV)
five percent if the Applicable Spot Price of gold is equal to or greater than
$400 per ounce.
(v) Notwithstanding the grant of the Royalty, the Company shall have
no obligation to explore or develop the Royalty Properties, and the Company
shall have sole discretion to determine the extent of its work, if any, on the
Property and the time or times for beginning, continuing or resuming any such
work.
(vi) The Company shall be entitled to commingle ore from
the Royalty Properties with ore from other properties, either before or after
concentration or beneficiation, so long as the data needed to determine the
weight and assay, both of the ore removed from the Properties and of other
ores to be commingled, are obtained by the Company. The Company shall be
obligated to use such weight and assay data to allocate the royalties from the
commingled ore between the Royalty Properties and other properties from which
the other commingled ore was removed. All such weight, assay and allocation
calculations by the Company shall be done in a manner recognized by the mining
industry as practical and sufficient.
(vii) The Company's records of all mining and milling operati
ons on the Royalty Properties, and its records with respect to commingling of
production from the Royalty Properties, shall be available for Grantee's (or
its authorized agents') inspection and/or audit upon reasonable advance notice
and during normal business hours, but no more frequently than once each
quarter. If any such audit or inspection reveals that Royalty payments for
any calendar year (after giving effect to year-end adjustments described in
the first sentence of section (ii) above) are underpaid by more than five
percent, the Company shall reimburse Grantee for its reasonable costs incurred
in such audit or inspection. Grantee shall be entitled to enter the mine
workings and structures on the Royalty Properties at reasonable times upon
reasonable advance notice for inspection thereof, but Grantee shall so enter
at its own risk and shall indemnify and hold the Company and their Affiliates
harmless against and from any Losses by reason of injury to Grantee or its
agents or representatives (including death) or damage to or destruction of any
property of Grantee or its agents or representatives while on the Royalty
Properties on or in such mine workings and structures, unless such injury,
damage, or destruction is a result of the sole negligence of the Company.
(viii) The Company will be entitled to assign or transfer
its obligations in respect of the Royalty as it relates to any of Royalty
Properties, to any Person without the consent of Grantee, in connection with
any transfer of such Royalty Properties to such Person. Any such assignment
will relieve and discharge the Company of its obligations in respect of the
Royalty obligations so assigned. The Royalty shall burden and run with the
Royalty Properties.
(ix) Changes in the ownership of the rights to receive
payments under the Royalty will not be binding upon the Company until it
receives written notice of such change from Grantee, together with a certified
copy or photographic copy of the documents reflecting such change. No change
or division in the ownership of the Royalty Properties or of rights under this
Agreement shall operate to enlarge the obligations of the Company or diminish
the rights of the Grantee in respect of the Royalty.
(x) If Buyer establishes a mineral resource or mineral
reserve on the Royalty Properties, as the case may be, Buyer shall provide to
Grantee the amount of such resource or reserve as soon as practicable after
Buyer makes a public declaration with respect to the establishment thereof
(xi) If the Company surrenders or relinquishes any
properties that constitute Royalty Properties, but reacquires any such
properties within a period of three years after the effective date of
relinquishment or abandonment, such reacquired properties shall be included in
the Royalty Properties from and after the date of such reacquisition.
.
EXHIBIT 6.1(e)
to
Stock Purchase Agreement
dated
February 2, 2000
between
Newmont Peru Limited
and
Solitario Resources Corporation
SELLER'S COUNSEL OPINION MATTERS
1. Seller is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Colorado.
2. Seller has all requisite power and authority to execute, deliver, and
perform this Agreement and consummate the transactions contemplated by the
Agreement. The execution, delivery, and performance of the Agreement and the
consummation of the transactions contemplated by the Agreement on the part of
Seller have been duly and validly authorized by all necessary action on the
part of Seller. This Agreement has been duly and validly executed and
delivered by Seller, and is the valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
3. The execution, delivery, and performance by Seller of the Agreement do
not and will not: (i) conflict with or violate any provision of the charter
or bylaws of Seller or of either of the Companies; (ii) violate any provision
of any Legal Requirements; (iii) result in the creation or imposition of any
Encumbrance against or upon any of the assets or properties of either of the
Companies, other than Permitted Encumbrances, pursuant to any Legal
Requirements; or (v) except only for the approval of the Toronto Stock
Exchange, require any consent, approval or authorization of, or filing of any
certificate, notice, application, report, or other document with, any
Governmental Authority.
4. The Company is a sociedad anomina cerrada, duly organized and validly
existing under the laws of the Republic of Peru. The Parent is a sociedad
anomina duly organized and validly existing under the laws of the Republic of
Peru. Each of the Companies has all requisite power and authority to own and
lease the properties and assets it currently owns and leases and to conduct
its activities as such activities currently are conducted. Each of the
Companies is duly qualified in all jurisdictions in which the ownership or
leasing of the Properties and assets owned or leased by it or the nature of
its activities make such qualification necessary.
5. The authorized capital stock of the Company consists solely of 450,000
shares of common stock, one Nuevo Sol per share par value, all of which are
issued and outstanding. All of the Company Shares are owned of record, by the
Parent, and the Company Nominee Shares are owned of record by the Company
Nominee. The issued and outstanding shares of the Company's common stock have
been duly authorized and are validly issued and outstanding, free of
preemptive rights and nonassessable.
6. The authorized capital stock of the Parent consists solely of
10,000 shares of common stock one Nuevo Sol per share par value, all of which
are issued and outstanding. All of the Parent Shares are owned of record by
Seller, and the Parent Nominee Shares are owned of record by the Parent
Nominees. The issued and outstanding shares of the Parent's common stock have
been duly authorized and are validly issued and outstanding, free of
preemptive rights and nonassessable.
EXHIBIT 7.2(b)
to
Stock Purchase Agreement
dated
February 2, 2000
between
Newmont Peru Limited
and
Solitario Resources Corporation
[Date]
[Minera Los Tapados S.A.]
[Minera Alborada S.A.C.]
Lima, Peru
Dear Sirs,
We hereby notify you that as of this date we have transferred to [Newmont Peru
Limited] each and all of the shares issued by your Company that we own, in the
terms and conditions of the Stock Purchase Agreement date January [__], 2000.
Please find attached all the share certificates issued to our name, in order
for you to void such certificates, register the share transfer and issue new
certificates to the name of [Newmont Peru Limited].
Sincerely yours,
SCHEDULE 4.5
to
Stock Purchase Agreement
dated
February 2, 2000
between
Newmont Peru Limited
and
Solitario Resources Corporation
Parent Subsidiaries
Minera Bongara S.A.
The Parent owns 39% of the stock of Minera Bongara; Cominco owns the
remaining 61% of this subsidiary (1)
Minera Soloco S.A.
The Parent and its nominees collectively own 100% of the stock of this
Subsidiary. (1)
Note: (1) Will not be owned post closing by Minera Los Tapados
SCHEDULE 4.6
to
Stock Purchase Agreement
dated
February 2, 2000
between
Newmont Peru Limited
and
Solitario Resources Corporation
Encumbrances (to be removed prior to closing)
1. Intercompany receivable to Seller as listed on the financial statements in
Schedule 4.13.
2. Accounts payable as listed on the financial statements in Schedule 4.13 and
any Encumbrance thereto in the normal course of business.
SCHEDULE 4.7
to
Stock Purchase Agreement
dated
February 2, 2000
between
Newmont Peru Limited
and
Solitario Resources Corporation
Properties
No.
Name
Code No.
Reg. Pub.
Anna Gabrielle 1
01-01484-93
ASTO 5-TOMO14-FOLIO 140
Anna Gabrielle 2
01-01485-93
ASTO 5-TOMO13-FOLIO 402
Anna Gabrielle 3
01-01486-93
ASTO 5-TOMO12-FOLIO 126
Anna Gabrielle 4
01-01487-93
ASTO 5-TOMO12-FOLIO 127
Anna Gabrielle 5
01-01488-93
ASTO 5-TOMO12-FOLIO 315
Anna Gabrielle 6
01-01489-93
ASTO 5-TOMO10-FOLIO 182
Anna Gabrielle 7
01-01490-93
ASTO 5-TOMO09-FOLIO 482
Anna Gabrielle 8
01-01491-93
ASTO 5-TOMO10-FOLIO 181
Anna Gabrielle 9
01-01492-93
ASTO 5-TOMO09-FOLIO 483
Anna Gabrielle 10
01-01493-93
ASTO 5-TOMO13-FOLIO 280
Anna Gabrielle 11
01-01494-93
ASTO 5-TOMO14-FOLIO 291
Anna Gabrielle 12
01-01495-93
ASTO 5-TOMO14-FOLIO 293
Anna Gabrielle 13
01-01496-93
ASTO 5-TOMO12-FOLIO 249
Anna Gabrielle 14
01-01497-93
ASTO 5-TOMO13-FOLIO 466
Anna Gabrielle 15
01-01498-93
ASTO 5-TOMO13-FOLIO 467
Anna Gabrielle 16
01-01499-93
ASTO 5-TOMO09-FOLIO 471
Anna Gabrielle 21
01-01509-93
ASTO 5-TOMO11-FOLIO 354
Anna Gabrielle 22
01-01510-93
ASTO 5-TOMO13-FOLIO 250
Anna Gabrielle 24
01-01512-93
ASTO 5-TOMO13-FOLIO 403
Anna Gabrielle 25
01-01513-93
ASTO 5-TOMO14-FOLIO 294
Anna Gabrielle 26
01-01514-93
ASTO 5-TOMO15-FOLIO 228
Anna Gabrielle 27
01-01515-93
ASTO 5-TOMO11-FOLIO 321
Anna Gabrielle 28
01-01516-93
ASTO 5-TOMO15-FOLIO 002
Anna Gabrielle 36
01-01664-93
ASTO 5-TOMO13-FOLIO 404
Anna Gabrielle 37
01-01665-93
ASTO 5-TOMO09-FOLIO 485
Anna Gabrielle 38
01-01666-93
ASTO 5-TOMO13-FOLIO 278
Anna Gabrielle 39
01-01667-93
ASTO 5-TOMO09-FOLIO 486
Anna Gabrielle 40
01-01668-93
ASTO 5-TOMO10-FOLIO 437
Anna Gabrielle 41
01-01669-93
ASTO 5-TOMO10-FOLIO 359
Anna Gabrielle 42
01-01670-93
ASTO 5-TOMO10-FOLIO 358
Anna Gabrielle 43
01-01671-93
ASTO 5-TOMO14-FOLIO 295
Anna Gabrielle 44
01-01672-93
ASTO 5-TOMO15-FOLIO 022
Anna Gabrielle 45
01-01673-93
ASTO 5-TOMO10-FOLIO 179
Anna Gabrielle 46
01-01674-93
ASTO 5-TOMO11-FOLIO 283
Anna Gabrielle 47
01-01675-93
ASTO 5-TOMO10-FOLIO 185
Anna Gabrielle 48
01-01676-93
ASTO 5-TOMO09-FOLIO 474
Anna Gabrielle 49
01-01677-93
ASTO 5-TOMO09-FOLIO 475
Anna Gabrielle 50
01-01678-93
ASTO 5-TOMO13-FOLIO 068
Anna Gabrielle 51
01-01679-93
ASTO 5-TOMO10-FOLIO 226
Anna Gabrielle 52
01-01680-93
ASTO 5-TOMO13-FOLIO 405
Anna Gabrielle 53
01-01681-93
ASTO 5-TOMO13-FOLIO 406
Anna Gabrielle 54
01-01682-93
ASTO 5-TOMO13-FOLIO 407
Anna Gabrielle 55
01-01683-93
ASTO 5-TOMO09-FOLIO 467
Anna Gabrielle 56
01-01684-93
ASTO 5-TOMO09-FOLIO 448
Anna Gabrielle 57
01-01685-93
ASTO 5-TOMO13-FOLIO 408
Anna Gabrielle 58
01-01686-93
ASTO 5-TOMO15-FOLIO 102
Anna Gabrielle 59
01-01687-93
ASTO 5-TOMO13-FOLIO 277
Anna Gabrielle 60
01-01688-93
ASTO 5-TOMO13-FOLIO 281
Anna Gabrielle 61
01-01689-93
ASTO 5-TOMO10-FOLIO 184
Anna Gabrielle 62
01-01690-93
ASTO 5-TOMO10-FOLIO 186
Anna Gabrielle 63
01-01691-93
ASTO 5-TOMO11-FOLIO 030
Anna Gabrielle 64
01-01692-93
ASTO 1-TOMO09-FOLIO 478
Anna Gabrielle 65
01-01693-93
ASTO 1-TOMO11-FOLIO 424
Anna Gabrielle 66
01-01694-93
ASTO 5-TOMO15-FOLIO 420
Anna Gabrielle 67
01-01783-93
ASTO 5-TOMO09-FOLIO 477
Anna Gabrielle 68
01-01784-93
ASTO 5-TOMO14-FOLIO 347
Anna Gabrielle 69
01-01785-93
ASTO 5-TOMO09-FOLIO 476
Anna Gabrielle 70
01-01786-93
ASTO 5-TOMO09-FOLIO 450
Anna Gabrielle 78
01-02641-93
ASTO 5-TOMO12-FOLIO 128
Anna Gabrielle 84
01-00829-94
ASTO 5-TOMO15-FOLIO 172
Anna Gabrielle 85
01-00830-94
ASTO 5-TOMO13-FOLIO 409
Anna Gabrielle 86
01-00831-94
ASTO 5-TOMO13-FOLIO 253
Anna Gabrielle 87
01-00832-94
ASTO 5-TOMO13-FOLIO 251
Anna Gabrielle 88
01-00833-94
ASTO 5-TOMO10-FOLIO 020
Anna Gabrielle 89
01-00834-94
ASTO 5-TOMO13-FOLIO 252
Anna Gabrielle 90
01-00835-94
ASTO 5-TOMO12-FOLIO 316
Anna Gabrielle 91
01-00836-94
ASTO 5-TOMO09-FOLIO 488
Anna Gabrielle 97
01-03065-95
ASTO 5-TOMO13-FOLIO 283
Anna Gabrielle 98
01-03064-95
ASTO 5-TOMO13-FOLIO 282
All claims listed are in good standing with the exceptions noted below.
Annual claim payments (Derechos de Vigencia) for the remainder of the claims
were paid in all applicable years except for year 1999.
The claims Anna Gabrielle 48 and 49 were declared abandoned in 1998 by the
Public Registry. That ruling is under appeal by the Parent.
Claim Anna Gabrielle 21 is subject to a surface rights agreement between the
Company and Minera Yanacocha affecting approximately two hectares.
SCHEDULE 4.8
to
Stock Purchase Agreement
dated
February 2, 2000
between
Newmont Peru Limited
and
Solitario Resources Corporation
Material Contracts
1. Letter Agreement and Restated Agreement: Bongara Property, Northern Peru,
with Cominco, Ltd.*
2. Letter Of Intent: Sapalache Property, with AngloGold Investments (Peru),
Ltd.*
3. Servidumbre with the community of Shipasbamba, Bongara Project*
4. Servidumbre with the Community of Yambrasbamba, Bongara Project*
5. Storage Lease, Miraflores, Lima, Peru*
6. Office Lease: Los Tucanes 234, San Isidro, Lima, Peru*
7. House Lease: Los Colibris 150, San Isidro, Lima, Peru*
8. Apartment Lease: Calle 31 253, Surquillo, Lima, Peru*
9. Lease Option Agreement: Soloco Property, with Andres Quiroz and spouse*
10. Security Contract: Forza S.A.*
11. Various Access (drill road construction) Agreements, 1994, Los Negritos
area of Yanacocha claims.
12. Terminated Joint Venture Agreements relating to the Properties with
affiliates of:
(a) Barrick Gold Corporation, signed May 1995
(b) Rio Tinto, Ltd., signed April 1997
(c) Placer Dome, Ltd., signed October 1998
*Indicates Contracts which are Excluded Assets.
SCHEDULE 4.10
to
Stock Purchase Agreement
dated
February 2, 2000
between
Newmont Peru Limited
and
Solitario Resources Corporation
Litigation
Informe Nro. 781-98-Em-DCM-EFM/DV was issued by Registro Publico de Minera
stating that the 1998 Derechos de Vigencia (annual claim payments) for Anna
Gabrielle claims 11, 48, 49 and 63 were received late. Pursuant to that
informe, claims Anna Gabrielle 48 and 49 were determined to be and declared
abandoned by Registro Publico. Claims 11 and 63 are in good standing. The
declaration of abandonment was appealed by the Parent and the ruling was
upheld by consejo de Mineria.
The case has been appealed to civil court. The Venue:
Sala Corporativa Transitoria Especializada en lo Contensioso
Administrativo Expediente Nro. 119.99
SCHEDULE 4.12
to
Stock Purchase Agreement
dated
February 2, 2000
between
Newmont Peru Limited
and
Solitario Resources Corporation
Company Permits
Parent Permits and Registrations
1. Registro Publico de Mineria - Constitucion de Sociedad - Ficha 40066
2. SUNAT-RUC - Registro Unico del Contribuyente - No. 21535575
3. Ministerio de Industria - Registro Unificado - No. F11-0015828*
4. Ministerio de Trabajo - Autorizacion Centro de Trabajo - No. 004302*
5. ESSALUD - Registro Patronal - No. 215355752100000*
6. Municipalidad San Isidro - Licencia Funcionamiento Local Comercial - No.
22221*
Company Permits and Registrations
1. Registro Publico de Mineria - Constitucion de Sociedad - Ficha 41170
1. SUNAT - RUC - Registro Unico del Contribuyente - No. 42434604
* Indicates Excluded Assets
SCHEDULE 4.13
to
Stock Purchase Agreement
dated
February 2, 2000
between
Newmont Peru Limited
and
Solitario Resources Corporation
Parent Financial Statements
Attached
SCHEDULE 5.7
to
Stock Purchase Agreement
dated
February 2, 2000
between
Newmont Peru Limited
and
Solitario Resources Corporation
Excluded Assets
1. All interests in entities described on Schedule 4.5.
2. La Pampa Concessions:
(a) La Pampa 1, Asto 1, Tomo 16, Folio 376, 01-00168-99
(b) La Pampa 2, Asto 1, Tomo 16, Folio 336, 01-00191-99
3. The Parent has conducted reconnaissance exploration throughout Peru and
more detailed exploration on various abandoned properties. The proprietary
data generated from these activities, other than those relating to the
Properties, are Excluded Assets.
4. Fixed Assets: see attached Schedule 5.7A.
5. Accounts Receivable: see attached Schedule 5.7B.
6. Contracts indicated with an asterisk on Schedule 4.8.
7. Company Permits indicated with an asterisk on Schedule 4.12.
dn-53946 v6
1
dn-53946 v6
Table of Contents
Page
31
dn-53946 v6
2.2-4
dn-53946 v6
6.1(e)-2
dn-53946 v6
7.2(b)-1
dn-53946 v6
S-11
dn-53946 v6
<PAGE>
Exhibit 10.22
First Amendment to Stock Purchase Agreement
This First Amendment to Stock Purchase Amendment (this "Amendment") is entered
into as of April 26, 2000, by and between Newmont Peru Limited, a Delaware
corporation ("Buyer") and Solitario Resources Corporation, a Colorado
corporation ("Seller").
Recitals
A. Buyer and Seller are parties to the Stock Purchase Agreement dated
February 2, 2000 (the "Agreement").
B. Buyer has given to Seller a Restructuring Notice under Section 8.1(d)
of the Agreement.
C. Buyer and Seller desire to amend the Agreement in certain respects,
including amendments addressing the items that were the subject of the Buyer's
Restructuring Notice.
Agreements
In consideration of the mutual covenants, terms and conditions in this
Amendment, Buyer and Seller agree as follows:
1. Amendments. The Agreement is amended as follows:
1.1 Amendment to Definition of Royalty Properties. The definition of
Royalty Properties, in Article 1, is amended in its entirety as follows:
"Royalty Properties" means the Properties excluding: (i) any portion
of the Properties with respect to which Buyer, any Affiliate of Buyer, or any
other Person has a superior claim as of the date of this Agreement; (ii) Anna
Gabrielle Claims 48 and 49, unless and until (A) there is entered a Judgment,
which either is unappealable or is not timely appealed, that such claims are
valid, or (B) Buyer or any Affiliate of Buyer obtains title to such claims,
whether pursuant to application or bidding or purchase from the successful
applicant or bidder, provided that Seller has reimbursed Buyer or such
Affiliate for all of its costs incurred in obtaining title, as provided in
Section 5.13(c); and (iii) Anna Gabrielle Claim 11, if (A) the Company's title
thereto is deemed to be defective, as provided in Section 5.13(b), and (B)
neither Buyer nor any Affiliate of Buyer obtains title to such claim, whether
pursuant to application or bidding or purchase from the successful applicant
or bidder, as contemplated by Section 5.13(c), or (C) if Buyer or an Affiliate
of Buyer obtains title to such claim, Seller does not reimburse Buyer or such
Affiliate for all of its costs incurred in obtaining such title, as provided
in Section 5.13(c).
1.2 Amendment to Section 2.2. Section 2.2 is amended in its entirety
as follows:
2.2 Consideration. As consideration for the Parent Shares, the
Parent Nominee Share and the Company Nominee Share, Buyer shall:
(a) Pay to Seller the sum of US$6 million (the "Cash
Purchase Price"), of which (i) US$5.6 million Buyer shall pay at Closing by
company check or wire transfer of immediately available funds to an account
designated by Seller, and (ii) US$400,000 (the "Reserve") Buyer shall retain
for disposition as provided in Section 9.7 of this Agreement; and
(b) within 120 days after the Closing Date, (i) create a
new royalty on the Royalty Properties conforming to the terms and conditions
of Exhibit 2.2 (the "New Royalty"), and (ii) cause the New Royalty to be
assigned to Seller or any affiliate of Seller designated in writing by Seller;
provided, however, that (x) Buyer shall not be obligated to create or convey
the New Royalty with respect to Anna Gabrielle Claims 48 or 49 until the date
that is 120 days after the date (if any) on which they become Royalty
Properties, and (y) if at the time of the conveyance described in clause (ii)
above the Company's title to Anna Gabrielle Claim 11 is deemed to be
defective, as provided in Section 5.13, Buyer shall not be obligated to create
or convey the New Royalty with respect to Anna Gabrielle Claim 11 until the
date that is 120 days after the date (if any) on which Buyer or an Affiliate
of Buyer obtains title to such claim, whether pursuant to bidding or purchase
from the successful applicant or bidder, as contemplated by Section 5.13.
1.3 Amendment to Section 5.12. The second sentence of Section
5.12(a) is amended in its entirety as follows: "If Seller so elects by
written notice to Buyer given within ten Business Days after the effective
date of such notice, Seller shall be entitled, at its sole expense, to
prosecute the Claims Litigation for the benefit of the Company, with counsel
reasonably acceptable to Buyer; provided; however, that Seller shall have no
right to prosecute the Claims Litigation with respect to either of those
claims for which Buyer or any affiliate of Buyer shall have obtained title,
whether pursuant to application or bidding or purchase from any successful
applicant or bidder."
1.4 Addition of New Section 5.13. There is added a new Section 5.13,
as follows:
5.13 Cure of Certain Title Defects.
(a) Buyer and Seller acknowledge that, notwithstanding the
pendency of the Claims Litigation, the Registry has announced that it will
open the areas covered by Anna Gabrielle Claims 48 and 49 for application.
(b) Seller represents and warrants that, since the date of
this Agreement, it has paid two years of Derechos de Vigencia with respect to
Anna Gabrielle Claim 11. Buyer shall, promptly following the forty-fifth day
after the date of Closing, apply to the Peruvian Registro Publico de Minera
(the "Registry") for a certificate establishing the validity of Anna Gabrielle
Claim 11 (a "Certificate"), unless a Certificate already has been issued
pursuant to the application of Seller made prior to Closing. The Company's
title to Anna Gabrielle Claim 11 shall be deemed to defective (solely for
purposes of this Agreement) if and only if: (i) (A) the Registry refuses to
issue a Certificate, or (B) the Registry fails to take any action with respect
to Buyer's application within thirty days after Buyer's submission thereof, or
(C) the Registry issues a Certificate that does not state either that (1) Anna
Gabrielle Claim 11 is valid and in good standing, without exception with
respect to the payment or nonpayment of Derechos de Vigencia, or (2) all
Derechos de Vigencia payable with respect to such claim for the year 1999 and
all prior years have been timely and properly paid without exception; and if
(ii) Buyer files (or causes to be filed) with the Registry a relinquishment of
the Company's interest in such claim within forty-five days after the date of
the first to occur of (i)(A), (B) or (C) (which relinquishment shall not be
subject to Section 5.6).
(c) Buyer and any Affiliate of Buyer shall apply and, if
there is more than one applicant, bid (in amounts determined in Buyer's or its
Affiliate's discretion) for claims on the areas covered by either or both of
Anna Gabrielle Claims 48 and 49 and, following any relinquishment thereof
pursuant to Section 5.13(b), Anna Gabrielle Claim 11, or, if any other party
is the successful applicant or bidder for any or all of such claims, attempt
to purchase such claims from such other party, all on such terms as Buyer or
its Affiliate shall determine in their sole discretion. Seller shall not, and
shall cause its Affiliates not to, apply or bid for or otherwise attempt to
acquire or acquire any of such claims for which Buyer or an Affiliate of Buyer
makes application or bids. If Buyer or any Affiliate of Buyer is successful
in obtaining any such claims, Buyer shall give Seller written notice thereof
(a "Claim Acquisition Notice"), stating the aggregate amount of out-of-pocket
costs and expenses incurred by Buyer and its Affiliates in doing so, including
but not limited to application fees, amounts paid to any successful bidder or
applicant, and fees and expenses of counsel ("Acquisition Costs"). Seller
may, at its option, elect to reimburse Buyer and its Affiliates for all
Acquisition Costs. If and only if Seller does reimburse Buyer and its
Affiliates for all Acquisition Costs with respect to any claim within thirty
days after the date of the Claim Acquisition Notice, then such claim shall
constitute a Royalty Property from and after the date of reimbursement.
(d) If the Company's title to Anna Gabrielle Claim 11 is
not deemed to be defective, as provided in Section 5.13(b), but the Registry
or any Peruvian Governmental Authority having jurisdiction takes any action to
invalidate such claim, Buyer or its Affiliate then holding such claim may at
its option relinquish such claim (Section 5.6 not applying to such
relinquishment). If it elects to relinquish such claim, Buyer shall notify
Seller in writing whether Buyer elects to apply for a claim or claims in the
areas covered by the relinquished claim. If Buyer so notifies Seller that it
elects to apply for such claim or claims, then (i) Buyer and any Affiliate of
Buyer shall apply and, if there is more than one applicant, bid (in amounts
determined in Buyer's or its Affiliate's discretion) for such claim or claims,
or, if any other party is the successful applicant or bidder for any or all of
such claims, attempt to purchase such claims from such other party, all on
such terms as Buyer or its Affiliate shall determine in their sole discretion,
and (ii) Seller shall not, and shall cause its Affiliates not to, apply for or
otherwise attempt to acquire or acquire any of such claims for which Buyer or
an Affiliate of Buyer makes application or bids. If Buyer so notifies Seller
that it does not elect to apply for such claim or claims, Seller or its
Affiliates may apply or bid for or otherwise attempt to acquire or acquire
such claims. If Buyer or any Affiliate of Buyer is successful in obtaining
any such claims, Buyer shall give Seller a Claim Acquisition Notice, stating
the aggregate amount of Acquisition Costs. Seller may, at its option, elect
to reimburse Buyer and its Affiliates for all Acquisition Costs. If and only
if Seller does reimburse Buyer and its Affiliates for Acquisition Costs with
respect to any claim within thirty days after the date of the Claim
Acquisition Notice, then such claim shall constitute a Royalty Property from
and after the date of reimbursement
(e) If Buyer or any Affiliate of Buyer obtains title to any
claims on areas covered by any of Anna Gabrielle Claims 11, 48 or 49, as
contemplated by this Section 5.13, such claims shall constitute Properties
subject to Section 5.6.
1.5 Addition of New Section 9.7. There is added a new Section 9.7 as
follows:
9.7 Reserve.
(a) Losses that are subject to indemnification under
Section 9.1 and that arise out of or result from matters identified in the
Restructuring Notice dated April 11, 2000, from Buyer to Seller
("Restructuring Notice Losses") shall be satisfied first from the Reserve
(including interest payable by Buyer upon disbursement thereof as provided
below), and Buyer shall have recourse to Seller under Section 9.1 in respect
of any Restructuring Notice Losses to the extent they are not satisfied out of
the Reserve. All Restructuring Notice Losses shall be subject to Section 9.3
of this Agreement, except that clause (ii) of such Section shall not apply.
Any Restructuring Notice Losses in respect of which Seller has undertaken
defense pursuant to Section 9.3 shall, so long as Seller is diligently
conducting such defense, be deemed to be "amounts subject to claims of Buyer"
for purposes of this Section 9.7.
(b) Within five business days following each of the first,
second, third and fourth anniversaries of the Closing Date, Buyer shall
disburse to Seller an amount equal to (i) $100,000 plus interest on that
amount from the date of Closing at the rate that is equal to the yield on
26-week maturity U.S. Treasury Bills as announced in the Wall Street Journal
on the date of Closing (in the case of interest accruing during the first year
after the date of Closing) and on each of the first, second and third
anniversaries of the date of Closing (in the case of interest accruing during
the year following each such anniversary), or the next business day if any
such day is not a business day, less (ii) any amounts applied in satisfaction
of claims under Section 9.1 with respect to Restructuring Notice Losses during
the preceding twelve month period, and less (iii) the aggregate of all amounts
subject to claims of Buyer (less any such amounts withheld from any previous
such disbursement). All amounts subject to claims by Buyer shall be applied
by Buyer in satisfaction of any Judgment or settlement of the corresponding
claims, or released to Seller upon Seller's satisfaction thereof. In no event
shall Seller's obligations under Section 9.1, with respect to Restructuring
Notice Losses or any other Losses, be limited to the Reserve.
2. Capitalized Terms. Capitalized terms used in this Amendment without
definition have the meanings given in the Agreement.
3. Effect of Amendments.
(a) This Amendment effects the Restructuring Modifications addressing
all of the Material Adverse Matters in the Restructuring Notice, but Buyer
does not waive or relinquish any other rights (including but not limited to
its rights under Section 9.1 of the Agreement) in respect of the matters
identified in the Restructuring Notice or any other matter. Notwithstanding
the foregoing, however, (i) Seller's representations and warranties with
respect to the Company's title to Anna Gabrielle Claim 11 shall be deemed to
have been amended to except the effects of a possible failure of the Company
timely and fully to pay Derechos de Vigencia with respect to such claim in
1998, and (ii) Buyer waives its rights solely under Section 6.1 of the
Agreement with respect to the matters identified in the Restructuring Notice.
(b) Except as amended by this Amendment, the Agreement shall remain
in full force and effect. In the event of any conflict between this Amendment
and the Agreement, this Amendment shall control.
Buyer and Seller have executed this Amendment as of the date first written
above.
Newmont Peru Limited
By:
Name:
Title:
Solitario Resources Corporation
By:
Name:
Title:
5
|dn-58127 v3
<PAGE>
Exhibit 10.23
CHANGE IN CONTROL SEVERANCE BENEFITS AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 19th day of June, 2000.
BETWEEN:
CROWN RESOURCES CORPORATION, a corporation incorporated under the laws of the
State of Washington,
(hereinafter called the "Corporation")
- and-
Christopher E. Herald, Chief Executive Officer and President of the
Corporation, of the City of Golden, in the State of Colorado,
(hereinafter called the "Executive")
WHEREAS the Corporation considers it essential to the best interest of
its stockholders to foster the continuous employment of key management
personnel. In this connection, the Board of Directors (the "Board") of the
Corporation recognizes that, as is the case with many publicly held
corporations and their subsidiaries, the possibility of a Change in Control
may exist and that such possibility, and the uncertainty and questions which
it may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Corporation and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of
the Corporation's management, including the Executive to their assigned duties
without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control of the Corporation.
The Corporation agrees that the Executive shall receive the severance
benefits set forth herein (the "Agreement") in the event the Executive's
employment with the Corporation is terminated subsequent to a "Change in
Control of the Corporation" (as defined herein) under the circumstances
below. This Agreement, however, does not otherwise change employment
arrangements and except for the conditions contained therein pertaining to a
Change in Control, the Executive's continued employment continues to be
subject to the will of the Board of the Corporation.
1. This Agreement shall commence on the date hereof and shall continue
in effect, provided, however, if a Change in Control of the Corporation shall
have occurred during the term of this Agreement, this Agreement shall continue
in effect for a period of three (3) years beyond the month in which such
Change in Control occurred; provided further, that in no event shall this
Agreement extend beyond normal retirement age unless specifically endorsed to
so provide.
2. No benefits shall be payable hereunder unless there shall have been
a Change in Control of the Corporation, as set forth below. For purposes of
this Agreement, a "Change in Control of the Corporation" shall be deemed to
have occurred if:
(i)Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation representing
twenty percent (20%) or more of the combined voting power of the Corporation's
then outstanding securities; or
(ii)the shareholders of the Corporation approve a merger or consolidation
of the Corporation with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least eighty percent (80%) of the combined voting power
of the voting securities of the company or such surviving entity outstanding
immediately after such merger or consolidation; or
(iii)the shareholders of the Corporation approve an agreement for the
sale or disposition of all or substantially all the Corporation's assets; or
(iv)the approval by the shareholders of the Corporation of any plan of
liquidation or dissolution of the Corporation.
3. In the event that following a Change of Control (as hereinafter
defined), either:
(i)The Corporation terminates the employment of the Executive other than
for Cause (as hereinafter defined); or
(ii)the Executive resigns from his employment hereunder for Good Reason
(as hereinafter defined),
the Corporation shall pay to the Executive a lump sum in cash on the date of
termination or resignation an amount equal to two and one-half (2.5) times the
Executive's annual salary in effect for the financial year of the Corporation
during which the Change of Control occurs.
4. "Good Reason" means any of the following kinds of circumstances
which induce the Executive to terminate his employment other than on a purely
voluntary basis:
(i)a reduction or diminution in the level of responsibility, title or
office of the Executive;
(ii)a reduction in the compensation level of the Executive, taken as a
whole;
(iii)forced relocation to another geographic location; or
(iv)the failure of the Corporation or any successor corporation to
maintain substantially similar employment terms with the Executive after the
Change of Control as were in existence prior to the Change of Control.
5. "Cause" means:
(i)the conviction of the Executive on a felony charge;
(ii)a gross and willful failure of the Executive to perform the duties
necessary to carry out the Executive's responsibilities in a manner consistent
with such performance prior to the Change of Control;
(iii)dishonest conduct which is intentional and materially injurious to
the Corporation.
6. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board called and held for such
purpose (after reasonable notice to the Executive and opportunity for the
Executive, together with counsel, to be heard before the Board), finding that
in the good faith opinion of the Board the Executive was guilty of conduct set
forth above in clause 5 and specifying the particulars thereof in detail.
7. The Corporation hereby irrevocably and unconditionally guarantees the
performance by the Corporation of all of its obligations hereunder, including
without limitation the payment of all amounts payable by the Corporation to
the Executive, and the Executive shall not be required to exhaust its remedies
against the Corporation prior to claiming against the Corporation pursuant to
this guarantee.
8. The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Corporation would be required to perform it if no
such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall entitle the Executive to compensation from the Corporation in the same
amount and on the same terms as the Executive would be entitled to hereunder
as if the employment had terminated for Good Reason following a Change in
Control of the Corporation, except that for purposes of implementing the
foregoing, the date of which any such succession becomes effective shall be
deemed the Date of Termination.
9. This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive
should die while any amount would still be payable hereunder had the Executive
continued to live, all such amounts unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the devisee, legatee or
other designee or, if there is no such designee, to the estate, of the
Executive.
10. Any notice in writing required or permitted to be given to the
Executive hereunder shall be sufficiently given if delivered to the Executive
personally or mailed by registered mail, postage prepaid, addressed to the
Executive at his last residential address known to the Secretary of the
Corporation. Any such notice mailed as aforesaid shall be deemed to have been
received by the Executive on the fifth business day following the date of
mailing. Any notice in writing required or permitted to be given to the
Corporation hereunder shall be given by registered mail, postage prepaid,
addressed to its head office. Any such notice mailed as aforesaid shall be
deemed to have been received by the Corporation on the third business day
following the date of mailing. Any such address for the giving of notices
hereunder may be changed by notice in writing given hereunder.
<PAGE>11. No provision of this Agreement may be modified, waived or
discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by the Executive and such officer of the Corporation as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly
set forth in this Agreement. Any payments provided for hereunder shall be
paid net or any applicable withholding required under federal, state or local
law.
12. The invalidity or unenforceable ability or any provision of this
Agreement shall not affect the validity or enforceability or any other
provision of this Agreement, which shall remain in full force and effect.
13. This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, but all of which together will constitute
one and the same instrument.
14. The provisions of this agreement shall be governed by and interpreted
in accordance with the laws of the State of Colorado and each of the parties
hereto by their execution of this agreement irrevocably attorns to the
jurisdiction of the courts of the said state.
IN WITNESS WHEREOF the parties hereto have set their hands and seals as
of the date first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
)
)
Executive
)
)
CROWN RESOURCES CORPORATION
by:
c/s
Exhibit 10.24
CHANGE IN CONTROL SEVERANCE BENEFITS AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 19th day of June, 2000.
BETWEEN:
CROWN RESOURCES CORPORATION, a corporation incorporated under the laws of the
State of Washington,
(hereinafter called the "Corporation")
- and-
Mark E. Jones, Chairman of the Board of the Corporation, of the City of
Houston, in the State of Texas,
(hereinafter called the "Executive")
WHEREAS the Corporation considers it essential to the best interest of
its stockholders to foster the continuous employment of key management
personnel. In this connection, the Board of Directors (the "Board") of the
Corporation recognizes that, as is the case with many publicly held
corporations and their subsidiaries, the possibility of a Change in Control
may exist and that such possibility, and the uncertainty and questions which
it may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Corporation and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of
the Corporation's management, including the Executive to their assigned duties
without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control of the Corporation.
The Corporation agrees that the Executive shall receive the severance
benefits set forth herein (the "Agreement") in the event the Executive's
employment with the Corporation is terminated subsequent to a "Change in
Control of the Corporation" (as defined herein) under the circumstances
below. This Agreement, however, does not otherwise change employment
arrangements and except for the conditions contained therein pertaining to a
Change in Control, the Executive's continued employment continues to be
subject to the will of the Board of the Corporation.
1. This Agreement shall commence on the date hereof and shall continue
in effect, provided, however, if a Change in Control of the Corporation shall
have occurred during the term of this Agreement, this Agreement shall continue
in effect for a period of three (3) years beyond the month in which such
Change in Control occurred; provided further, that in no event shall this
Agreement extend beyond normal retirement age unless specifically endorsed to
so provide.
2. No benefits shall be payable hereunder unless there shall have been
a Change in Control of the Corporation, as set forth below. For purposes of
this Agreement, a "Change in Control of the Corporation" shall be deemed to
have occurred if:
(i)Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation representing
twenty percent (20%) or more of the combined voting power of the Corporation's
then outstanding securities; or
(ii)the shareholders of the Corporation approve a merger or consolidation
of the Corporation with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least eighty percent (80%) of the combined voting power
of the voting securities of the company or such surviving entity outstanding
immediately after such merger or consolidation; or
(iii)the shareholders of the Corporation approve an agreement for the
sale or disposition of all or substantially all the Corporation's assets; or
(iv)the approval by the shareholders of the Corporation of any plan of
liquidation or dissolution of the Corporation.
3. In the event that following a Change of Control (as hereinafter
defined), either:
(i)The Corporation terminates the employment of the Executive other than
for Cause (as hereinafter defined); or
(ii)the Executive resigns from his employment hereunder for Good Reason
(as hereinafter defined),
the Corporation shall pay to the Executive a lump sum in cash on the date of
termination or resignation an amount equal to two and one-half (2.5) times the
Executive's annual salary in effect for the financial year of the Corporation
during which the Change of Control occurs.
4. "Good Reason" means any of the following kinds of circumstances
which induce the Executive to terminate his employment other than on a purely
voluntary basis:
(i)a reduction or diminution in the level of responsibility, title or
office of the Executive;
(ii)a reduction in the compensation level of the Executive, taken as a
whole;
(iii)forced relocation to another geographic location; or
(iv)the failure of the Corporation or any successor corporation to
maintain substantially similar employment terms with the Executive after the
Change of Control as were in existence prior to the Change of Control.
5. "Cause" means:
(i)the conviction of the Executive on a felony charge;
(ii)a gross and willful failure of the Executive to perform the duties
necessary to carry out the Executive's responsibilities in a manner consistent
with such performance prior to the Change of Control;
(iii)dishonest conduct which is intentional and materially injurious to
the Corporation.
6. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board called and held for such
purpose (after reasonable notice to the Executive and opportunity for the
Executive, together with counsel, to be heard before the Board), finding that
in the good faith opinion of the Board the Executive was guilty of conduct set
forth above in clause 5 and specifying the particulars thereof in detail.
7. The Corporation hereby irrevocably and unconditionally guarantees the
performance by the Corporation of all of its obligations hereunder, including
without limitation the payment of all amounts payable by the Corporation to
the Executive, and the Executive shall not be required to exhaust its remedies
against the Corporation prior to claiming against the Corporation pursuant to
this guarantee.
8. The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Corporation would be required to perform it if no
such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall entitle the Executive to compensation from the Corporation in the same
amount and on the same terms as the Executive would be entitled to hereunder
as if the employment had terminated for Good Reason following a Change in
Control of the Corporation, except that for purposes of implementing the
foregoing, the date of which any such succession becomes effective shall be
deemed the Date of Termination.
9. This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive
should die while any amount would still be payable hereunder had the Executive
continued to live, all such amounts unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the devisee, legatee or
other designee or, if there is no such designee, to the estate, of the
Executive.
10. Any notice in writing required or permitted to be given to the
Executive hereunder shall be sufficiently given if delivered to the Executive
personally or mailed by registered mail, postage prepaid, addressed to the
Executive at his last residential address known to the Secretary of the
Corporation. Any such notice mailed as aforesaid shall be deemed to have been
received by the Executive on the fifth business day following the date of
mailing. Any notice in writing required or permitted to be given to the
Corporation hereunder shall be given by registered mail, postage prepaid,
addressed to its head office. Any such notice mailed as aforesaid shall be
deemed to have been received by the Corporation on the third business day
following the date of mailing. Any such address for the giving of notices
hereunder may be changed by notice in writing given hereunder.
<PAGE>11. No provision of this Agreement may be modified, waived or
discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by the Executive and such officer of the Corporation as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly
set forth in this Agreement. Any payments provided for hereunder shall be
paid net or any applicable withholding required under federal, state or local
law.
12. The invalidity or unenforceable ability or any provision of this
Agreement shall not affect the validity or enforceability or any other
provision of this Agreement, which shall remain in full force and effect.
13. This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, but all of which together will constitute
one and the same instrument.
14. The provisions of this agreement shall be governed by and interpreted
in accordance with the laws of the State of Colorado and each of the parties
hereto by their execution of this agreement irrevocably attorns to the
jurisdiction of the courts of the said state.
IN WITNESS WHEREOF the parties hereto have set their hands and seals as
of the date first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
)
)
Executive
)
)
CROWN RESOURCES CORPORATION
by:
c/s
Exhibit 10.25
CHANGE IN CONTROL SEVERANCE BENEFITS AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 19th day of June, 2000.
BETWEEN:
CROWN RESOURCES CORPORATION, a corporation incorporated under the laws of the
State of Washington,
(hereinafter called the "Corporation")
- and-
James R. Maronick, Chief Financial Officer of the Corporation, of the City of
Lakewood, in the State of Colorado,
(hereinafter called the "Executive")
WHEREAS the Corporation considers it essential to the best interest of
its stockholders to foster the continuous employment of key management
personnel. In this connection, the Board of Directors (the "Board") of the
Corporation recognizes that, as is the case with many publicly held
corporations and their subsidiaries, the possibility of a Change in Control
may exist and that such possibility, and the uncertainty and questions which
it may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Corporation and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of
the Corporation's management, including the Executive to their assigned duties
without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control of the Corporation.
The Corporation agrees that the Executive shall receive the severance
benefits set forth herein (the "Agreement") in the event the Executive's
employment with the Corporation is terminated subsequent to a "Change in
Control of the Corporation" (as defined herein) under the circumstances
below. This Agreement, however, does not otherwise change employment
arrangements and except for the conditions contained therein pertaining to a
Change in Control, the Executive's continued employment continues to be
subject to the will of the Board of the Corporation.
1. This Agreement shall commence on the date hereof and shall continue
in effect, provided, however, if a Change in Control of the Corporation shall
have occurred during the term of this Agreement, this Agreement shall continue
in effect for a period of three (3) years beyond the month in which such
Change in Control occurred; provided further, that in no event shall this
Agreement extend beyond normal retirement age unless specifically endorsed to
so provide.
2. No benefits shall be payable hereunder unless there shall have been
a Change in Control of the Corporation, as set forth below. For purposes of
this Agreement, a "Change in Control of the Corporation" shall be deemed to
have occurred if:
(i)Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation representing
twenty percent (20%) or more of the combined voting power of the Corporation's
then outstanding securities; or
(ii)the shareholders of the Corporation approve a merger or consolidation
of the Corporation with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least eighty percent (80%) of the combined voting power
of the voting securities of the company or such surviving entity outstanding
immediately after such merger or consolidation; or
(iii)the shareholders of the Corporation approve an agreement for the
sale or disposition of all or substantially all the Corporation's assets; or
(iv)the approval by the shareholders of the Corporation of any plan of
liquidation or dissolution of the Corporation.
3. In the event that following a Change of Control (as hereinafter
defined), either:
(i)The Corporation terminates the employment of the Executive other than
for Cause (as hereinafter defined); or
(ii)the Executive resigns from his employment hereunder for Good Reason
(as hereinafter defined),
the Corporation shall pay to the Executive a lump sum in cash on the date of
termination or resignation an amount equal to one and one-half (1.5) times the
Executive's annual salary in effect for the financial year of the Corporation
during which the Change of Control occurs.
4. "Good Reason" means any of the following kinds of circumstances
which induce the Executive to terminate his employment other than on a purely
voluntary basis:
(i)a reduction or diminution in the level of responsibility, title or
office of the Executive;
(ii)a reduction in the compensation level of the Executive, taken as a
whole;
(iii)forced relocation to another geographic location; or
(iv)the failure of the Corporation or any successor corporation to
maintain substantially similar employment terms with the Executive after the
Change of Control as were in existence prior to the Change of Control.
5. "Cause" means:
(i)the conviction of the Executive on a felony charge;
(ii)a gross and willful failure of the Executive to perform the duties
necessary to carry out the Executive's responsibilities in a manner consistent
with such performance prior to the Change of Control;
(iii)dishonest conduct which is intentional and materially injurious to
the Corporation.
6. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board called and held for such
purpose (after reasonable notice to the Executive and opportunity for the
Executive, together with counsel, to be heard before the Board), finding that
in the good faith opinion of the Board the Executive was guilty of conduct set
forth above in clause 5 and specifying the particulars thereof in detail.
7. The Corporation hereby irrevocably and unconditionally guarantees the
performance by the Corporation of all of its obligations hereunder, including
without limitation the payment of all amounts payable by the Corporation to
the Executive, and the Executive shall not be required to exhaust its remedies
against the Corporation prior to claiming against the Corporation pursuant to
this guarantee.
8. The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Corporation would be required to perform it if no
such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall entitle the Executive to compensation from the Corporation in the same
amount and on the same terms as the Executive would be entitled to hereunder
as if the employment had terminated for Good Reason following a Change in
Control of the Corporation, except that for purposes of implementing the
foregoing, the date of which any such succession becomes effective shall be
deemed the Date of Termination.
9. This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive
should die while any amount would still be payable hereunder had the Executive
continued to live, all such amounts unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the devisee, legatee or
other designee or, if there is no such designee, to the estate, of the
Executive.
10. Any notice in writing required or permitted to be given to the
Executive hereunder shall be sufficiently given if delivered to the Executive
personally or mailed by registered mail, postage prepaid, addressed to the
Executive at his last residential address known to the Secretary of the
Corporation. Any such notice mailed as aforesaid shall be deemed to have been
received by the Executive on the fifth business day following the date of
mailing. Any notice in writing required or permitted to be given to the
Corporation hereunder shall be given by registered mail, postage prepaid,
addressed to its head office. Any such notice mailed as aforesaid shall be
deemed to have been received by the Corporation on the third business day
following the date of mailing. Any such address for the giving of notices
hereunder may be changed by notice in writing given hereunder.
<PAGE>11. No provision of this Agreement may be modified, waived or
discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by the Executive and such officer of the Corporation as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly
set forth in this Agreement. Any payments provided for hereunder shall be
paid net or any applicable withholding required under federal, state or local
law.
12. The invalidity or unenforceable ability or any provision of this
Agreement shall not affect the validity or enforceability or any other
provision of this Agreement, which shall remain in full force and effect.
13. This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, but all of which together will constitute
one and the same instrument.
14. The provisions of this agreement shall be governed by and interpreted
in accordance with the laws of the State of Colorado and each of the parties
hereto by their execution of this agreement irrevocably attorns to the
jurisdiction of the courts of the said state.
IN WITNESS WHEREOF the parties hereto have set their hands and seals as
of the date first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
)
)
Executive
)
)
CROWN RESOURCES CORPORATION
by:
c/s
