UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
Gold Capital Corporation
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(Name of Issuer)
Common Stock, $0.0001 par value per share
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(Title of Class of Securities)
380548 10 7
----------------------
(CUSIP Number)
Jack Stoch With copies to:
President Paul Hilton, Esq.
Globex Mining Enterprises Inc. Kevin P. Stichter, Esq.
146 - 14th Street Davis, Graham & Stubbs LLP
Rouyn-Noranda, 370 17th Street, Suite 4700
Quebec, Canada J9X 2J3 Denver, Colorado 80202
(819) 797-5242 (303) 892-9400
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
----------------------------------------------------
April 9, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 4 pages
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CUSIP No. 380548 10 7 SCHEDULE 13D Page 2 of 4 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Globex Mining Enterprises Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Quebec, Canada
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 6,706,657 See Item 5.
OWNED BY ----------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 6,706,657 See Item 5.
WITH ----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
6,706,657 See Item 5.
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,706,657 See Item 5.
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,706,657 See Items 4 and 5.
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
73.9%, based upon 9,073,653 shares of Common Stock outstanding as
of the date hereof. See Item 5.
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14 TYPE OF REPORTING PERSON*
CO
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Page 2 of 4 pages
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is amended by the addition of the following:
Globex intends to raise funds in an equity private placement
or offering in order to finance the purchase of the Company Common Stock owned
by Royalstar.
ITEM 4. PURPOSE OF THE TRANSACTION.
Item 4 is amended by the addition of the following:
(a)-(j) Pursuant to a Memorandum of Agreement, executed on
April 9, 1997 and effective as of April 8, 1997, between Globex and Royalstar
(the "Purchase Agreement"), Globex has agreed to acquire 4,419,110 shares of
Company Common Stock (representing approximately 49% of the outstanding shares
of Company Common Stock) for a price of U.S. $0.80 per share for a total of U.S.
$3,535,288. Pursuant to the Purchase Agreement and subject to consummation of
the Merger, Globex also agreed to cause the Company to repay U.S. $760,000 owed
by the Company to Royalstar, conditioned upon Royalstar's reduction of such
debts to 80% of such amounts. Consummation of the purchase of Royalstar's
Company Common Stock under the Purchase Agreement is subject to a number of
conditions including approval by Royalstar's shareholders. The purpose of the
Purchase Agreement and related transactions is for Globex to acquire complete
control of the Company.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is amended by substitution of the following:
(a)-(c) Taking into account the Company Common Stock subject
to the Purchase Agreement, Globex would be the beneficial owner of 6,706,657
shares of Company Common Stock which is 73.9% of the outstanding shares.
Because the Purchase Agreement is subject to a number of conditions, including
approval by Royalstar's shareholders, the filing of this Schedule shall not be
construed as an admission that Globex is, for the purposes of Sections 13(d) or
13(g)of the Act, the beneficial owner of the Company Common Stock subject to
the Purchase Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 is amended by the addition of the following:
Exhibit H Purchase Agreement, with attachments omitted.
Page 3 of 4 pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, the undersigned hereby certifies that the information as set forth in
this Amendment No. 2 to Schedule 13D is true, complete and correct.
GLOBEX MINING ENTERPRISES INC.
By: JACK STOCH
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Jack Stoch, President
Dated: April 14, 1997
Page 4 of 4 pages
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MEMORANDUM OF AGREEMENT made and entered into on the 8th day of April, 1997.
BETWEEN: ROYALSTAR RESOURCES LTD., a body politic
duly incorporated, having its principal office at 1055
W. Hastings Street, Suite 1400, Vancouver, British
Columbia V6E 2E9, herein acting and represented by
John M. Young, its President, and by John W.W.
Hick, Chairman of the Independent Committee of the
Board of Directors, duly authorized as they so declare
(hereinafter referred to as the "VENDOR");
PARTY OF THE FIRST PART
AND: GLOBEX MINING ENTERPRISES INC., a body
politic duly incorporated, having its principal office at
146 - 14th Street, Rouyn-Noranda, Quebec J9X 2J3,
herein acting and represented by Jack Stoch, its
President, duly authorized as he so declares
(hereinafter referred to as the "PURCHASER");
PARTY OF THE SECOND PART
WHEREAS the Purchaser wishes to acquire all of the issued and
outstanding shares in the capital stock of Gold Capital Corporation, a Colorado
corporation (hereinafter referred to as "GOLD CAP");
WHEREAS the Vendor owns 4,419,110 common shares in the capital
stock of Gold Cap, representing approximately 49% of the issued and outstanding
voting shares in the capital stock of Gold Cap (hereinafter referred to as the
"GOLD CAP SHARES");
WHEREAS, pursuant to an offer made by the Purchaser to the
Vendor dated December 4, 1996, which offer was accepted by the Vendor on
December 5, 1996, the Purchaser agreed to purchase from the Vendor and the
Vendor agreed to sell to the Purchaser
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all of the Gold Cap Shares at a purchase price of U.S. $0.80 per share
(hereinafter referred to as the "ACCEPTED OFFER");
WHEREAS, pursuant to, and in accordance with, the terms of the
Accepted Offer, the Vendor has agreed to sell the Gold Cap Shares to the
Purchaser and the parties wish to set forth hereinbelow their agreement with
respect to same; and
WHEREAS the Purchaser has agreed to cause Gold Cap to repay
all agreed upon amounts owing by Gold Cap to the Vendor as set out in the
audited financial statements of Gold Cap for the period ending December 31, 1996
and the parties wish to set forth hereinbelow their agreement with respect to
same;
NOW THEREFORE THE PARTIES HERETO AGREE AS FOLLOWS:
1. AGREEMENT TO PURCHASE
1.1 Subject to the terms and conditions of this Agreement, the Vendor
hereby agrees to sell, assign and transfer to the Purchaser at
the Time of Closing (as hereinafter defined) on the Closing Date (as
hereinafter defined) and the Purchaser agrees to purchase from the
Vendor at the Time of Closing on the Closing Date all of the Gold Cap
Shares.
1.2 The aggregate purchase price for the Gold Cap Shares shall be U.S.
$3,535,288.00 or U.S. $0.80 per share.
1.3 Subject to Section 10.3 hereof, payment of the purchase price for
the Gold Cap Shares shall be paid by the Purchaser to the Vendor in
full at the Time of Closing on the Closing Date by certified cheque or
other means acceptable to the Vendor.
2. REPAYMENT OF DEBTS OWED TO THE VENDOR
2.1 Subject to Section 2.2 hereof, at the Effective Date (as
hereinafter defined), the Purchaser shall cause Gold Cap (or the
company created from the Merger (as hereinafter defined)) to repay all
agreed upon amounts owing by Gold Cap to the Vendor as set out in the
audited financial statements of Gold Cap for the period ending December
31, 1996.
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2.2 Prior to the Closing Date, the Vendor shall reduce the amounts
owing from Gold Cap to the Vendor to eighty per cent (80%) of such
amounts. Such reduction shall be accomplished by means of a
contribution to capital within the meaning of Section 108(e)(6) of the
Code (as hereinafter defined) in form and substance acceptable to the
Purchaser, such that Gold Cap does not incur any discharge of
indebtedness income thereby. At or prior to the Closing Date, the
Vendor shall execute a forgiveness document in order to confirm and to
give effect to the foregoing. The Purchaser and the Vendor hereby agree
that the amount currently owed to the Vendor by Gold Cap is U.S.
$760,000.00. If any part of the foregoing amount is disputed by Gold
Cap, such disputed amount shall only be due and payable once the Vendor
has provided the Purchaser with evidence of the bona fide nature of the
indebtedness.
3. REPRESENTATIONS OF THE VENDOR
3.1 Subject to Section 3.3 hereof, the Vendor hereby represents and
warrants as follows and hereby acknowledges and confirms that the
Purchaser is relying on such representations and warranties in
connection with the consummation by the Purchaser of the transactions
contemplated in and by this Agreement:
(a) GOOD TITLE: The Vendor is the owner, beneficially and of
record, of the Gold Cap Shares with good and marketable
title thereto, free and clear of any claim, lien, mortgage,
security interest or encumbrance of any nature or kind
whatsoever, and as such, has the exclusive right and full
power to sell, transfer and assign the Gold Cap Shares to
the Purchaser free and clear of any claim, lien, mortgage,
security interest or encumbrance of any nature or kind
whatsoever. In addition, no person has any agreement or
option or any right capable of becoming an agreement for the
purchase of any of the Gold Cap Shares (other than the
Purchaser hereunder). Except as disclosed in Schedule
3.1(a), there is no suit, action or other legal proceeding
of any sort pending which could in any manner restrain or
prevent the Vendor from effectually and legally transferring
the Gold Cap Shares to the Purchaser at the Time of Closing
on the Closing Date, free and clear of all claims, liens,
mortgages, security interests and encumbrances of any nature
or kind whatsoever, or any action or proceeding, the effect
of which would be to cause a claim, lien, mortgage, security
interest or encumbrance of any nature or kind whatsoever to
attach to any of the Gold Cap Shares or to divest title to
the Gold Cap Shares in any manner whatsoever, or to make the
Purchaser, Gold Cap, the Vendor or any of them liable for
damages as a result of the execution and delivery of this
Agreement or the completion of the transactions contemplated
herein and the Vendor knows of no such action or proceeding
threatened in connection with any of the foregoing.
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(b) NO CONTRAVENTION, ETC.: The execution and delivery of this
Agreement by the Vendor and the observance and performance of
the terms and provisions of this Agreement on the part of the
Vendor to be observed and performed do not constitute a
violation of any applicable law or a violation or a breach of
either the Vendor's or Gold Cap's constating documents or
by-laws or any provision of any contract, indenture,
undertaking or other instrument to which the Vendor or Gold
Cap is a party or by which the Vendor or Gold Cap is bound, or
any statute, rule, by-law or regulation applicable to the
Vendor or Gold Cap, nor does such execution, delivery,
observance or performance constitute a default (or would with
the passage of time or the giving of notice or both, or
otherwise, constitute a default) under any contract, agreement
or instrument to which the Vendor or Gold Cap is a party or by
which the Vendor or Gold Cap is bound.
(c) BINDING AGREEMENT: This Agreement and all other documents,
instruments and agreements referred to herein have been
duly and validly executed and delivered by the Vendor and
constitute valid and legally binding agreements enforceable
against the Vendor in accordance with their respective
terms, except that the rights and remedies of the Purchaser
hereunder may be subject to and affected by the law relating
to bankruptcy, insolvency, re-organization and creditors'
rights generally and except that a court may or may not order
an injunction, specific performance or other equitable
remedies with respect to any particular provision of this
Agreement, or such other document, instrument or agreement.
(d) DULY SUBSISTING: Each of the Vendor and Gold Cap is duly
incorporated and is a valid and subsisting corporation in
good standing under the laws of its jurisdiction (being,
respectively, Canada and the State of Colorado) and under the
laws of each jurisdiction in which it carries on business.
(e) GOOD STANDING: Each of the Vendor and Gold Cap has all
requisite corporate power and authority to carry on its
business as currently conducted and to own, lease and operate
the properties and assets now owned, leased and operated by
it. Each of the Vendor and Gold Cap is duly qualified to do
business and to own, lease and operate its properties and
assets and at the Closing Date shall be in good standing in
every jurisdiction in which the character of the business
conducted, or the nature of the properties owned, leased or
operated by it, makes such qualification necessary.
(f) NO BANKRUPTCY/INSOLVENCY: At the Closing Date, neither
the Vendor nor Gold Cap will be insolvent, nor have committed
any act of bankruptcy or the like, proposed a compromise or
arrangement to its creditors generally, had any petition for a
receiving order in bankruptcy or the like filed against it,
taken any proceeding with respect to a compromise or
arrangement, taken any proceeding
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to have itself declared bankrupt or wound-up, taken any
proceeding to have a receiver or the like appointed over any
part of its assets, had any encumbrancer take possession of
any of its property, or had any execution or distress or the
like become enforceable or become levied upon any of its
property.
(g) BOOKS AND RECORDS COMPLETE: The books of account and
financial records of Gold Cap have been kept in accordance
with applicable law on a consistent basis and fairly and
correctly set out and disclose in all material respects the
current financial position of Gold Cap. All transactions
involving Gold Cap have been accurately recorded in such books
and records.
(h) NO JUDGMENTS: There are no judgments or executions
outstanding against Gold Cap nor are there any suits, actions
or legal, administrative, arbitration or other proceedings or
governmental investigations affecting the business,
operations, prospects, property or affairs of Gold Cap pending
or threatened against Gold Cap, other than as set out in
Schedule 3.1(h).
(i) REGULATORY COMPLIANCE: The business of Gold Cap, namely
mining, has been, and is now being, conducted and operated in
compliance, in all material respects, with all statutes,
by-laws, regulations, orders, covenants, restrictions or plans
of all state, federal or local authorities, agencies, boards
or licensing bodies applicable to Gold Cap and its business.
There is no threatened suspension, cancellation or
invalidation of any approval, license, permit or certificate
held by Gold Cap in connection with its business.
(j) SUBSIDIARY: Schedule 3.1(j) lists each corporation,
partnership, joint venture and other similar entities in which
Gold Cap holds more then a five per cent (5%) ownership
interest (hereinafter referred to as the "GOLD CAP
SUBSIDIARIES").
(k) AUTHORIZED CAPITAL: The authorized and issued capital
stock of Gold Cap consists of 25,000,000 shares of common
stock and 5,000,000 shares of preferred stock, of which
6,961,624 common shares and no preferred shares (and no more)
were issued and outstanding as at November 5, 1996. All such
issued and outstanding shares are fully paid and
non-assessable and have been issued in accordance with all
applicable securities legislation.
(l) APPROVALS: As at the Time of Closing on the Closing
Date, all necessary corporate action, proceedings and consents
of the Vendor and its shareholders relating to the transfer of
the Gold Cap Shares to the Purchaser contemplated herein will
have been taken and approved.
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(m) ENVIRONMENTAL MATTERS:
(a) Except as disclosed in Schedule 3.1(m)(a), Neither
Gold Cap nor any of the Gold Cap Subsidiaries has (x) placed
or disposed of any Hazardous Substances (as defined below) on,
under, from or at any of Gold Cap's or any of the Gold Cap
Subsidiaries' properties or any other properties (hereinafter
referred to as the "PROPERTIES") currently or formerly owned
or operated by Gold Cap or any of the Gold Cap Subsidiaries
including, without limitation, the Tonkin Springs project,
consisting of unpatented mining claims, unpatented millsites,
leases, improvements, permits, water rights, mines, fixtures
and equipment, all located in Eureka County, Nevada
(hereinafter referred to as the "PROJECT"), in violation of
any applicable Environmental Laws (as defined below), (y) any
knowledge of the presence of any Hazardous Substances on,
under or at any of the Properties or any other property but
arising from the Properties, in violation of any applicable
Environmental Laws, or (z) received any written notice (A)
from a court, administrative agency or commission or other
federal, state, provincial or local governmental authority or
instrumentality domestic or foreign (hereinafter referred to
as a "GOVERNMENTAL ENTITY") that Gold Cap or any of the Gold
Cap Subsidiaries is in violation of, or has failed to obtain
any necessary permit or authorization under, any Environmental
Laws, (B) of the institution or pendency of any suit, action,
claim, proceeding or investigation by any Governmental Entity
or any third party in connection with any such violation or in
connection with a release or threatened release of Hazardous
Substances at the Properties (whether due to past or present
operations or other factors or conditions) or any other
properties for which Gold Cap or any of the Gold Cap
Subsidiaries may be responsible, (C) requiring the response to
or remediation of a release or threatened release of Hazardous
Substances at or arising from any of the Properties or any
other properties or (D) demanding payment by Gold Cap or any
of the Gold Cap Subsidiaries for response to or remediation of
a release or threatened release of Hazardous Substances at or
arising from any of the Properties or any other properties.
Except as disclosed in Schedule 3.1(m)(a),(i) Gold Cap and the
Gold Cap Subsidiaries have conducted their business in
compliance with all Environmental Laws; (ii) neither Gold Cap
nor any of the Gold Cap Subsidiaries is in violation of or has
violated any Environmental Law; (iii) no Environmental Laws
require any investigation, work, repairs, construction,
remediation, expenditures or response costs of any kind or
nature (hereinafter collectively referred to as the
"ENVIRONMENTAL OBLIGATION") with respect to the Properties or
any of the actions, omissions or business endeavours of Gold
Cap or any of the Gold Cap Subsidiaries, nor has Gold Cap or
any of the Gold Cap Subsidiaries agreed or committed to any
Environmental Obligation; and (iv) to the knowledge of the
Vendor, neither Gold Cap nor any of the Gold Cap Subsidiaries
nor, any other person, including any previous or other owner,
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operator, tenant, occupant or user of any real property owned,
leased, operated or otherwise occupied by Gold Cap or any of
the Gold Cap Subsidiaries at any time, has released,
discharged or disposed of any Hazardous Substance on, under,
in or about any of the Properties (A) in any quantity or
concentration exceeding any limitation, standard or
prohibition under any Environmental Law or (B) in such a
manner or extent as to require or result in any Environmental
Obligation with respect to such property under any
Environmental Law.
(b) To the best of the Vendor's knowledge, no
Environmental Law imposes any obligation upon Gold Cap or the
Gold Cap Subsidiaries arising out of or as a condition to any
transaction contemplated by the Merger Agreement (as
hereinafter defined) including, without limitation, any
requirement to modify or to transfer any permit or license,
any requirement to file any notice or other submission with
any Governmental Entity, the placement of any notice,
acknowledgement or covenant in any land records, or the
modification of or provision of notice under any agreement,
consent order or consent decree. Except as set forth in
Schedule 3.1(n), no pledges, claims, liens, charges,
encumbrances and security interest of any kind or nature
whatsoever (hereinafter collectively referred to as the
"LIENS") have been placed upon any of Gold Cap's or the Gold
Cap Subsidiaries' Properties under any Environmental Law.
(c) For purposes of this Agreement, the term
"ENVIRONMENTAL LAWS" shall mean any and all federal, state and
local statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental
restrictions relating to the protection of human health,
safety or the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants,
chemicals, or industrial toxic or hazardous substances or
wastes into the environment including, without limitation,
ambient air, surface water, ground water or land, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes, which statutes and regulations
shall include, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act, as
amended, 42 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section
9601 et seq., the Federal Water and Pollution Control Act, as
amended, 33 U.S.C. Section 1251 et seq., the Federal Clean
Air Act, as amended, 42 U.S.C. Section 7401 et seq., the
Emergency Planning and Community Right to Know Act, as
amended, 42 U.S.C. Section 110101 et seq., the Toxic
Substances Control Act, as amended, 154 U.S.C. Section
2601-2629, the Safe Drinking Water Act, as amended, 42 U.S.C.
Section 330f-300j, and any and all Nevada state law
counterparts, and the regulations issued under each of such
federal or state statutes. The term "HAZARDOUS SUBSTANCE"
shall
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mean any toxic or hazardous materials, wastes or substances,
defined as, or included in the definition of, "hazardous
wastes", "hazardous materials" or "toxic substances" under
any Environmental Law, including asbestos, buried
contaminants, regulated chemicals, flammable explosives,
radioactive materials, polychlorinated biphenyls, petroleum
and petroleum products.
Notwithstanding any provision to the contrary, there shall be
no liability and no payment required to be made by the Vendor
to the Purchaser for a breach of its representations and
warranties contained in this Section 3.1(m), except for such
breaches which result, in the aggregate, in a liability in
excess of $5,000. For greater certainty, if the liability of
the Vendor exceeds, in the aggregate, the said threshold of
$5,000, the full amount of such liability shall be paid to the
Purchaser.
(n) TITLE TO PROPERTIES:
(a) Capitalized terms appearing in this Section 3.1(n),
if not defined in this Agreement, shall have the meanings
defined in that Loan Agreement among Gold Cap, the Purchaser,
U.S. Gold Corporation (hereinafter referred to as the "US
GOLD"), Tonkin Springs Venture Limited Partnership
(hereinafter referred to as "TSVLP") and Tonkin Springs Gold
Mining Company, dated January 16, 1997 (hereinafter referred
to as the "GLOBEX LOAN AGREEMENT"). Gold Cap owns an undivided
sixty percent (60%) interest in and to the Project pursuant to
that Purchase and Sale Agreement between Gold Cap and TSVLP
dated December 3, 1993 (hereinafter referred to as the
"PURCHASE AND SALE AGREEMENT") and the Mining Venture
Agreement (as defined hereinafter). The said Purchase and Sale
Agreement and the Mining Venture Agreement are in full force
and effect; provided, however, that the parties acknowledge
that Gold Cap is in technical default under the Purchase and
Sale Agreement and the Mining Venture Agreement as to the
performance of certain of Gold Cap's obligations as the
manager under the Mining Venture Agreement.
(b) (i) Gold Cap owns an undivided sixty percent (60%)
interest, and, to the best of the Vendor's knowledge,
TSVLP owns an undivided forty percent(40%) interest
in and to all of the unpatented lode mining claims
comprising a portion of the Project and which are
described in Schedule 3.1(n) and, which title is,
subject to Liens held by TSVLP and the Purchaser and
the Royalties described in Section 3.1(o), superior
and paramount to any adverse claim or right of title
which may be asserted, subject only to the paramount
title of the United States as to any unpatented mining
claims and the rights of third parties to such
unpatented
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mining claims pursuant to the Multiple Mineral
Development Act of 1954 and the Surface Resources and
Multiple Use Act of 1955.
(ii) Gold Cap and TSVLP are tenants in common and
hold an undivided one hundred percent (100%)
leasehold interest in and to each of the Mining
Leases. Each of the Mining Leases is in full force
and effect, and the lessee has performed all of its
obligations thereunder, and neither party is in
default thereunder. To the best of the Vendor's
knowledge, the title of the lessor under each of the
Mining Leases to the unpatented lode mining claims
covered thereby is, subject to Liens held by TSVLP or
the Purchaser, and the Royalties described in Section
3.1(o), superior and paramount to any adverse claim
or right of title which may be asserted, subject only
to the paramount title of the United States as to any
unpatented mining claims and the rights of third
parties to such unpatented mining claims pursuant to
the Multiple Mineral Development Act of 1954 and the
Surface Resources and Multiple Use Act of 1955.
(c) With respect to the unpatented lode mining claims
listed in Schedule 3.1(n): (1) Gold Cap is in exclusive
possession thereof, free and clear of all liens, claims,
encumbrances or other burdens on production (other than
Permitted Liens, the Lien held by TSVLP pursuant to the TSVLP
Security Agreement, Liens held by the Purchaser, and the
Royalties described in Section 3.1(o)); (2) the claims were
located, staked, filed and recorded on available public domain
land in compliance with all applicable state and federal laws
and regulations; (3) assessment work, intended in good faith
to satisfy the requirements of state and federal laws and
regulations and generally regarded in the mining industry as
sufficient, for all assessment years up to and including the
assessment year ending September 1, 1992, was timely performed
on or for the benefit of the claims and affidavits evidencing
such work were timely recorded; (4) claim rental and
maintenance fees required to be paid under federal law in lieu
of the performance of assessment work, in order to maintain
the claims commencing with the assessment year ending on
September 1, 1993 and through the assessment year ending on
September 1, 1997, have been timely and properly paid, and
affidavits or other notices evidencing such payments and
required under federal or state laws or regulations have been
timely and properly filed or recorded; (5) all filings with
the U.S. Bureau of Land Management (hereinafter referred to as
"BLM") with respect to the claims which are required under the
Federal Land Policy and Management Act of 1976 ("FLPMA") have
been timely and properly made, and (6) there are no actions or
administrative or other proceedings pending or to the best of
the Vendor's knowledge threatened against or affecting the
claims. With respect to the unpatented lode mining claims
listed
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in Schedule 3.1(n): (1) Gold Cap is in exclusive possession
thereof, free and clear of all liens, claims, encumbrances or
other burdens of production (except as set forth in the Mining
Leases); (2) to the best of the Vendor's knowledge, the claims
were located, staked, filed and recorded on available public
domain land in compliance with all applicable state and
federal laws and regulations; (3) to the best of the Vendor's
knowledge, assessment work, intended in good faith to satisfy
the requirement of state and federal laws and regulations and
generally regarded in the mining industry as sufficient for
all assessment years up to and including the assessment year
ending September 1, 1992 was timely performed on or for the
benefit of the claims and affidavits evidencing such work were
timely recorded; (4) claim rental and maintenance fees
required to be paid under federal law in lieu of the
performance of assessment work, in order to maintain the
claims commencing with the assessment year ending on September
1, 1993 and through the assessment year ending on September 1,
1997, have been timely and properly paid, and affidavits or
other notices evidencing such payment and required under
federal or state laws or regulations have been timely and
properly filed and recorded; (5) all filings with the BLM with
respect to the claims which are required under FLPMA have been
timely and properly made; and (6) there are no actions or
administrative or other proceedings pending or to the best of
the Vendor's knowledge threatened against or affecting the
claims. Nothing herein shall be deemed a representation that
any unpatented claims listed in Schedule 3.1(n) contains a
discovery of valuable minerals. In addition, with respect to
each of the unpatented mining claims listed in Schedule
3.1(n), the Vendor represents that Gold Cap has been
remonumented as necessary, and that evidence of such
remonumentation has been timely and properly recorded, all in
compliance with the provisions of Nevada Revised Statutes
Section 517. 030.
(d) Gold Cap has good and marketable title to the
equipment, machinery, property and fixtures comprising a
portion of the Project, as described in Schedule 3.1(n). The
lands that are described in Schedule 3.1(n) (hereinafter
referred to as the "LANDS") and the equipment, machinery,
property and fixtures described in Schedule 3.1(n) constitute
all of the properties and assets, tangible or intangible, real
or personal, which are used in the conduct of the business of
Gold Cap, as such business is currently being conducted and as
pertains to the Project. Except as set forth in Schedule
3.1(n), all such properties and assets are owned free and
clear of all clouds to title and of all Liens, except
Permitted Liens and Liens created under the TSVLP Security
Agreement or the Globex Loan Agreement. All equipment,
machinery, property and fixtures owned by Gold Cap and
described in Schedule 3.1(n) is in various states of repair
for normal operation and the Vendor knows of no major defects
therein, except for potential climatic deterioration since
June 1990. Any and all equipment, machinery,
<PAGE>
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property and fixtures on site at the Project are owned by the
Venture, unless specifically excluded in Schedule 3.1(n).
(e) None of the employees, officers or directors of the
Vendor owns any interest in real property, or any mineral
interest or estate therein, within one aerial mile of the
exterior boundaries of the Lands or the Project.
(f) Gold Cap holds legal and equitable title to or
otherwise has water and water rights sufficient to provide
water supplies adequate for the conduct of operations at the
Project as are currently being conducted and as may be
conducted in the future in accordance with the Tonkin Springs
Project Joint Venture's 1996 Plan of Operations, No.
N64-96-009P, as amended on or before March 5, 1997 (the "Plan
of Operations").
(g) Gold Cap owns easements, rights-of-way or otherwise
holds legal rights of access to the Property sufficient for
the conduct of operations at the Project as are currently
being conducted and as may be conducted in the future.
(o) LEASES AND ROYALTIES: Capitalized terms appearing in this
Section 3.1(o), if not defined in this Agreement, shall have
the meanings defined in the Globex Loan Agreement. The Lands
are not subject to any leases or other agreements other than
the Mining Venture Agreement and the Mining Leases. The Lands
are not subject to any Royalties (as hereinafter defined)
burdening such Lands, except as set forth in the Mining Leases
and other agreements listed in Schedule 3.1(o). For purposes
hereof, "ROYALTIES" shall mean all amounts payable as a share
of the product or profit from the Lands or any mineral
products produced therefrom and includes, without limitation,
production payments, net profits interests, net smelter
return royalties, landowner's royalties, minimum royalties,
overriding royalties and royalty bonuses.
(p) PARTNERSHIPS AND JOINT VENTURES: The mining venture agreement
between Gold Cap and TSVLP, dated December 31, 1993, governing
the Project (hereinafter referred to as the "MINING VENTURE
AGREEMENT") is in full force and effect and is valid, binding
and enforceable by Gold Cap in accordance with its terms
(subject to bankruptcy, insolvency, reorganization or other
laws of general application relating to or affecting creditors
rights and general equity principles), and has not been
amended or modified without the prior written consent of the
Purchaser. Except as set forth in Schedule 3.1(p), Gold Cap
is not in default under any of the provisions of the Mining
Venture Agreement, all contributions of Gold Cap under the
Mining Venture Agreement have been made and, except as
provided therein, Gold Cap has the full and unrestricted
rights of a joint venturer, free of any encumbrances, except
those created by the Mining Venture
<PAGE>
- 12 -
Agreement. All organizational, governance, management and
financial records, minutes and books pertaining to the joint
venture between TSVLP and Gold Cap, as described in the Mining
Venture Agreement (hereinafter referred to as the "VENTURE"),
the Project or any other activities conducted pursuant to the
Mining Venture Agreement are true and complete and fairly and
accurately present the material covered thereby. No
information provided by Gold Cap as manager of the Venture, to
U.S. Gold (or its direct or indirect subsidiaries or
affiliates) and used by U.S. Gold in its reports and filings
with the Securities and Exchange Commission (hereinafter
referred to as the "SEC") pursuant to the Securities Exchange
Act of 1934, as amended (hereinafter referred to as the "'34
ACT"), or included in its Annual Reports to Shareholders or
any other public document or statement has contained any
untrue statement of a material fact or omitted to state a
material fact necessary to make such information, in light of
the circumstances under which it was conveyed, not materially
misleading.
(q) ORE RESERVE INFORMATION: The proven and probable ore
reserve information of Gold Cap as of December 31, 1996, is
set forth in Schedule 3.1(q) and was prepared in accordance
with generally accepted definitions, methodology and criteria
applicable in the gold mining industry.
(r) INTELLECTUAL PROPERTY: Gold Cap and the Gold Cap Subsidiaries
own, or are validly licensed or otherwise have the right to
use, all patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, service marks, service mark
rights, copyrights, trade secrets, and other proprietary
intellectual property rights and computer programs, software
and data (hereinafter collectively referred to as the
"INTELLECTUAL PROPERTY") which are used in or necessary to the
conduct of the business of Gold Cap and the Gold Cap
Subsidiaries, as set forth in Schedule 3.1(r). All
Intellectual Property listed in Schedule 3.1(r) is free and
clear of the claims of others and of all Liens. The conduct
of the business of Gold Cap and the Gold Cap Subsidiaries as
currently conducted, and the conduct of such business as
proposed to be conducted, does not violate, conflict with or
infringe the Intellectual Property of any other person. There
are no infringement or other claims notified to or pending
or threatened against Gold Cap or any of the Gold Cap
Subsidiaries.
(s) LABOUR MATTERS: Except as set forth in Schedule 3.1(s),
there are no collective bargaining or other labour union
agreements to which Gold Cap or any of the Gold Cap
Subsidiaries is a party or by which any of them is bound.
Neither Gold Cap nor any of the Gold Cap Subsidiaries has been
subject to any labour union organizing activity, or had any
actual or threatened employee strikes, work stoppages,
slowdowns or lockouts.
<PAGE>
- 13 -
(t) INSURANCE: Schedule 3.1(t) sets forth a complete and accurate
list and description, including annual premiums and
deductibles, of all policies of fire, liability, product
liability, workmen's compensation, health and other forms of
insurance currently in effect with respect to Gold Cap's
business. All such policies are valid, outstanding and
enforceable policies and provide insurance coverage for the
properties, assets and operations of Gold Cap, of the kinds,
in the amounts and against the risks (i) required to comply
with laws and (ii) as management of Gold Cap deems to be
adequate. No notice of cancellation or termination has been
received with respect to any such policy. The activities and
operations of Gold Cap have been conducted in a manner so as
to conform in all material respects to all applicable
provisions of such insurance policies.
(u) TAXES:
(a) For purposes of this Agreement, (A) "TAX" or
"TAXES" means all federal, state, local, foreign and other
taxes, assessments, duties or similar charges of any kind,
including all payroll, employment and other withholding taxes,
and including any interest, penalties and additions imposed
with respect to such amounts; (B) "TAXING AUTHORITY" shall
mean any governmental or any quasi-governmental body
exercising any taxing authority or any other authority
exercising Tax regulatory authority; and (C) "RETURN" or
"RETURNS" shall mean all returns, declarations of estimated
tax payments, reports, estimates, information returns and
statements with respect to Taxes, including any related or
supporting information with respect to any of the foregoing,
filed or required to be filed with any Taxing Authority.
(b) (A) Gold Cap and each of the Gold Cap Subsidiaries,
and any consolidated, combined, unitary or affiliated group of
which Gold Cap or any of the Gold Cap Subsidiaries is or has
ever been a member (hereinafter referred to as an "AFFILIATED
GROUP"), has timely filed with the appropriate Taxing
Authority all Returns required to be filed on or prior to the
date hereof and each such Return was complete and correct in
all material respects at the time of filing and (B) all Taxes,
including Taxes for which no Returns are required to be filed
(i) of Gold Cap, and each of the Gold Cap Subsidiaries and any
Affiliated Group, (ii) for which Gold Cap or any of the Gold
Cap Subsidiaries is or could otherwise be held liable, or
(iii) which are or could otherwise become chargeable as an
encumbrance upon any property or assets of Gold Cap or any of
the Gold Cap Subsidiaries (the Taxes referred to in this
Section being "Covered Taxes"), have been duly and timely
paid.
(c) The Vendor has delivered or made available or has
caused to be delivered or made available to the Purchaser
(A) complete and correct copies of all Returns
<PAGE>
- 14 -
filed by Gold Cap, each of the Gold Cap Subsidiaries, and each
Affiliated Group for taxable periods ending after December 31,
1992 and for all other taxable periods for which the
applicable statute of limitations has not yet run and (B)
complete and correct copies of all ruling requests, private
letter rulings, revenue agent reports, information document
requests and responses thereto, notices of proposed
deficiencies, deficiency notices, applications for changes in
method of accounting, protests, petitions, closing agreements,
settlement agreements, and any similar documents submitted by,
received by or agreed to by or on behalf of Gold Cap, any of
the Gold Cap Subsidiaries or any Affiliated Group and relating
to Covered Taxes.
(d) Except as set forth in Schedule 3.1(u), no Liens
for Taxes exist with respect to any of the assets or
properties of any of the Gold Cap Subsidiaries or Gold Cap.
Except as set forth in Schedule 3.1(u), the Federal income Tax
Returns of Gold Cap, each of the Gold Cap Subsidiaries and
each Affiliated Group have been examined by the Internal
Revenue Service, or the statute of limitations with respect to
the relevant Tax liability has expired, for all taxable
periods through and including the taxable year ended on
December 31, 1995. All other Returns with respect to income,
profits, corporate franchise, receipts, sales, use, excise,
property, net worth and capital Taxes, and with respect to all
other material Taxes, have been examined by the appropriate
Taxing Authority, or the statute of limitations with respect
to the relevant Tax liability has expired, for all taxable
periods through and including the taxable period listed with
respect to each such jurisdiction in Schedule 3.1(u). Each
deficiency resulting from any audit or examination relating to
Covered Taxes by any Taxing Authority has been paid and no
material issues were raised in writing (or otherwise to the
actual knowledge of the Vendor) by the relevant Taxing
Authority during any such audit or examination that will apply
to taxable periods other than the taxable period to which such
audit or examination related. Except as set forth in Schedule
3.1(u), (A) no Returns with respect to Federal income Taxes or
other income Taxes of Gold Cap or any of the Gold Cap
Subsidiaries are currently under audit or examination relating
to Covered Taxes is currently being conducted by the Internal
Revenue Service or any other Taxing Authority, (B) no audit or
examination relating to Covered Taxes is currently being
conducted by the Internal Revenue Service or any other Taxing
Authority and (C) neither the Internal Revenue Service nor any
other Taxing Authority has given notice (either orally or in
writing) that it will commence any such audit or examination.
(e) Except as set forth in Schedule 3.1(u), (A) no
person has made with respect to Gold Cap or any of the Gold
Cap Subsidiaries, or with respect to any property held by Gold
Cap or any of the Gold Cap Subsidiaries, any consent under
Section 341 of the Code, (B) no property of Gold Cap or any of
the Gold
<PAGE>
- 15 -
Cap Subsidiaries is "TAX-EXEMPT USE PROPERTY" within the
meaning of Section 168(h) of the Code, (C) neither Gold Cap
nor any of the Gold Cap Subsidiaries is a party to any lease
made pursuant to Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect prior to the date of
enactment of the Tax Equity and Fiscal Responsibility Act of
1982, (D) none of the assets of Gold Cap or any of the Gold
Cap Subsidiaries is subject to a lease under Section 7701(h)
of the Code or under any predecessor, (E) none of Gold Cap or
any of the Gold Cap Subsidiaries has made any payments, is
obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any
payments that will not deductible under Section 280G of the
Code, and (F) none of Gold Cap, any of the Gold Cap
Subsidiaries or any other Affiliate of Gold Cap has made any
election under Section 13261(g)(2) or Section 13261(g)(3) of
the Revenue Reconciliation Act of 1993.
(f) Except as set forth in Schedule 3.1(u), there is no
agreement or other document extending, or having the effect of
extending, the period of assessment or collection of any
Covered Taxes and no power of attorney with respect to any
Covered Taxes has been executed or filed with the Internal
Revenue Service or any other Taxing Authority.
(g) Schedule 3.1(u) lists each affiliated, consolidated,
combined, unitary or aggregate group for purposes of
filing Returns or paying Taxes of which Gold Cap or any
of the Gold Cap Subsidiaries is or has been a member, the
jurisdiction in which such affiliated, consolidated,
combined, unitary or aggregate group has or has been required
to file a Return that includes Gold Cap, any of the Gold Cap
Subsidiaries, or the income, assets or activities of Gold Cap
or any of the Gold Cap Subsidiaries, and the corporation
and/or other person that is or was responsible for filing such
Returns.
(h) Except as set forth in Schedule 3.1(u), none of
Gold Cap, any of the Gold Cap Subsidiaries or any Affiliated
Group is a party to or is bound by any agreement, arrangement
or practice with respect to Taxes. Gold Cap has delivered to
the Purchaser complete and accurate copies of any such written
agreement, arrangement or practice, and complete and accurate
descriptions of any such oral agreement, arrangement or
practice.
(i) Schedule 3.1(u) sets forth as of December 31, 1995
with respect to Gold Cap and the Gold Cap Subsidiaries (1) the
tax basis of Gold Cap and the Gold Cap Subsidiaries in their
assets; and (2) the amount of any net operating loss, net
capital loss, unused investment or other credit, unused
foreign tax, or excess charitable contribution, including a
description of any material limitations affecting the use
thereof (including but not limited to limitations under
Sections
<PAGE>
- 16 -
382 and 383 of the Code) and a description of the methodology
used in computing such limitations.
(j) Schedule 3.1(u) lists each state, county, local,
municipal or foreign jurisdiction in which Gold Cap or any of
the Gold Cap Subsidiaries files, has ever filed, is required
to file or has been required to file a Return or is or has
been liable for Tax on a "nexus" basis. No claim has ever been
made by any other jurisdiction that Gold Cap or any of the
Gold Cap Subsidiaries is or may be subject to tax by that
jurisdiction.
(v) BENEFIT PLANS: Except as disclosed in Schedule 3.1(v),
there are no pension plans or benefit plans (collectively the
"BENEFIT PLANS") established for or by Gold Cap for its
employees and there are no outstanding liabilities of Gold Cap
in connection with the Benefit Plans disclosed in Schedule
3.1(v).
(w) CONSENT TO SALE OF GOLD CAP SHARES: No consent of any
party to any agreement, contract, commitment or arrangement to
which the Vendor or Gold Cap is a party or by which they or
any of their respective properties or rights are bound or
affected is required in order to consummate the sale of the
Gold Cap Shares contemplated herein, save and except for the
consents and approvals, if any, listed in Schedule 3.1(w), all
of which consents and approvals shall have been obtained by
the Time of Closing on the Closing Date.
(x) NO UNDISCLOSED FACTS: The Vendor has no knowledge of
any facts, nor are there any facts which should reasonably be
known to the Vendor relating to Gold Cap or to the Project not
herein disclosed, which might be reasonably expected to
diminish the Purchaser's appreciation of the worth or
profitability of Gold Cap or the Project or which, if known by
the Purchaser, might be reasonably expected to deter it from
completing the transaction herein contemplated.
3.2 The representations and warranties in Section 3.1 hereof shall
in no way be abridged, reduced, waived, considered fulfilled or
otherwise affected by any examination or inspection made by or on
behalf of the Purchaser at any time. With the exception of Sections
3.1(a), 3.1(b), 3.1(c), 3.1(d) and 3.1(e) hereof as they relate to the
Vendor, this Section 3.2 shall not apply if, as of the date hereof,
Jack Stoch, President of the Purchaser, has actual knowledge of any
facts inconsistent with the representations and warranties of the
Vendor made in this Section 3.1, unless Jack Stoch has so advised the
Purchaser in writing.
<PAGE>
- 17 -
3.3 On or about November 30, 1996, the Vendor ceased to have any
representation on the board of directors of Gold Cap. Consequently, any
representation or warranty set forth in Section 3.1 hereof, other than
Section 3.1(x), as it relates to the business, operations and affairs
of Gold Cap is limited to the period to and including November 30,
1996.
4. REPRESENTATIONS OF THE PURCHASER
4.1 The Purchaser hereby represents and warrants as follows and
hereby acknowledges and confirms that the Vendor is relying on such
representations and warranties in connection with the consummation by
the Vendor of the transactions contemplated in and by this Agreement:
(a) INCORPORATION: The Purchaser is duly incorporated and
is a valid and subsisting company in good standing under the
laws of its jurisdiction of incorporation (being the Province
of Quebec) and under the laws of each jurisdiction in which it
carries on business.
(b) CAPACITY: The Purchaser has the corporate capacity, power and
authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby.
(c) CORPORATE PROCEEDINGS: The Purchaser has, by proper corporate
proceedings, duly authorized the execution and delivery of
this Agreement and the performance of its obligations
contemplated herein.
(d) ENFORCEABILITY: This Agreement and all other documents,
instruments and agreements referred to herein to be executed
by the Purchaser have been duly and validly executed and
delivered by the Purchaser and, as of the Time of Closing on
the Closing Date, constitute legal, valid and binding
obligations of the Purchaser enforceable against it in
accordance with their respective terms, except that the rights
and remedies of the Vendor hereunder may be subject to and
affected by the law relating to bankruptcy, insolvency,
re-organization and creditors' rights generally and except
that a court may or may not order an injunction, specific
performance or other equitable remedies with respect to any
particular provision of this Agreement, or such other
document, instrument or agreement.
(e) NECESSARY APPROVALS: Neither the execution, delivery and
performance of this Agreement nor the consummation of the
transactions contemplated hereby will (i) violate any
provisions of the constating documents or by-laws of the
Purchaser;
<PAGE>
- 18 -
or (ii) violate any judgment, order, writ, injunction, decree
or award against, or binding upon, the Purchaser.
(f) REPORTING ISSUER: The Purchaser is a reporting issuer under
the provisions of the Securities Act (Quebec) and the
Securities Act (Ontario) and is not in default of any of the
requirements of either of the said Acts relating to continuous
disclosure.
(g) RESPECT OF OBLIGATIONS: The Purchaser shall comply with
Section 4.2 of the Merger Agreement. In the event that the
Purchaser ceases to fund pursuant to Section 4.2 of the Merger
Agreement prior to the Time of Closing, the Vendor shall be
entitled to treat this Agreement as terminated, upon sending
written notice to the Purchaser. Until the Time of Closing,
the Purchaser shall not agree to any amendment of Section 4.2
of the Merger Agreement without the prior written consent of
the Vendor, which consent shall not be unreasonably withheld.
4.2 The representations and warranties in Section 4.1 hereof shall
in no way be abridged, reduced, waived, considered fulfilled or
otherwise affected by any examination or inspection made by or on
behalf of the Vendor at any time.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
5.1 Except as may be specifically contemplated (including with
reference to the context of the statement or document), the
representations, warranties and covenants contained in this Agreement,
in any schedule to this Agreement, in any documents to be executed and
delivered pursuant to this Agreement and in any document executed and
delivered in connection with the completion of the transactions
contemplated herein shall survive the closing of the transactions
contemplated herein and, notwithstanding such closing and
notwithstanding any investigations made by or on behalf of any party
hereto, shall continue in full force and effect:
(a) with respect to the warranties, representations and covenants
contained in Sections 3.1(a), 3.1(c) and 3.1(w) hereof, forever;
and
(b) as to all other warranties, representations and all covenants,
for a period of three years following the Time of Closing on the
Closing Date.
<PAGE>
- 19 -
6. COVENANTS OF THE PARTIES DURING THE INTERIM PERIOD
6.1 The Vendor hereby covenants that, during the period commencing
on the date hereof and terminating at the Time of Closing on the
Closing Date (hereinafter referred to as the "INTERIM PERIOD"), the
Vendor will use its best efforts to cause Gold Cap:
(a) to carry on its business in the ordinary course and use its best
efforts to preserve the assets, its business and the clients,
customers and suppliers connected therewith;
(b) to give the Purchaser, its legal counsel, advisors and other
representatives full access during normal business hours
to its management, employees, properties, books, contracts,
commitments and records;
(c) to furnish the Purchaser with all information concerning its
affairs as the Purchaser may reasonably request, including,
without limitation, copies of all legal opinions with respect to
its title to the Project;
(d) to instruct and authorize its audit and tax advisors to
cooperate with the Purchaser's advisors and legal counsel and
to give to such advisors and legal counsel full access during
such period to its files and working papers;
(e) to permit the Purchaser to observe all its operations;
(f) to do all things and cause all things to be done to
ensure that the Merger Agreement is executed and that all of
the representations and warranties of the Vendor as they
relate to Gold Cap, its properties, assets and business,
contained in this Agreement, remain true and correct
throughout the Interim Period as if such representations and
warranties were continuously made throughout such period;
(g) not to enter into any contracts, commitments or
transactions pertaining to its business, provided that in no
event shall actions or matters permitted under this Section
6.1 together involve an amount greater than an aggregate of US
$15,000, without the prior written consent of the Purchaser,
which consent may be withheld at the discretion of the
Purchaser;
(h) not to enter into, prior to the termination, if any, of
this Agreement, any negotiations or discussions of any kind or
nature whatsoever with any person (other than the Purchaser)
relating to the potential sale of any portion of Gold Cap's
interest in the Project or with respect to any corporate
reorganization or merger of Gold Cap with any corporation
(other than the Merger);
<PAGE>
- 20 -
(i) not to incur any indebtedness, obligations or liability
or make any payment in respect thereof, provided that in no
event shall actions or matters permitted under this Section
6.1 together involve an amount greater than an aggregate of US
$15,000, without the prior written consent of the Purchaser;
(j) not to acquire or agree to acquire additional assets,
provided that in no event shall actions or matters permitted
under this Section 6.1 together involve an amount greater than
an aggregate of US $15,000, without the prior written consent
of the Purchaser, which consent may be withheld at the
discretion of the Purchaser;
(k) not to increase the wages or salaries or any other form
of remuneration, direct or indirect, of any of its directors,
officers, employees or consultants, except with the prior
written consent of the Purchaser, which consent may be
withheld at the discretion of the Purchaser;
(l) not to sell, agree to sell or otherwise dispose of any
of its assets, provided that in no event shall actions or
matters permitted under this Section 6.1 together involve an
amount greater than an aggregate of US $15,000, without the
prior written consent of the Purchaser, which consent may be
withheld at the discretion of the Purchaser;
(m) to keep its current insurance in full force and effect and, to
the extent that the Purchaser so directs, to increase its
insurance in the manner determined by the Purchaser;
(n) to pay, satisfy and discharge its obligations and
liabilities in the ordinary course of business, subject to the
prior written consent of the Purchaser, which consent may be
withheld at the discretion of the Purchaser;
(o) promptly to advise the Purchaser in writing of any material
adverse change in its condition, financial or otherwise;
(p) to provide the Purchaser with all information required
to enable the Purchaser to prepare and file all notices and
applications required to be filed for the purposes of
obtaining any regulatory consent which is required in
connection with the transactions contemplated herein;
(q) not to borrow or incur any indebtedness except with the prior
written consent of the Purchaser, which consent may be withheld
at the discretion of the Purchaser;
(r) not to make any payments of any type to any officer, director or
shareholder of Gold Cap or any person not dealing at arms'
length (as such term is construed in
<PAGE>
- 21 -
the Income Tax Act (Canada)) with any of the foregoing except
with the prior written consent of the Purchaser, which consent
may be withheld at the discretion of the Purchaser, and except
in connection with the agreements set out in Schedule 6.1(r);
(s) not to recapitalize or take any other steps which may
have a fundamental effect upon its financial position or its
business, except in connection with the agreements set out in
Schedule 6.1(s);
(t) not to amend its Articles, amalgamate or merge with any other
corporation (except for the Merger), or issue any shares,
options, warrants or other securities;
(u) to provide its written consent to any relevant governmental
authority to the release to the Purchaser of information
concerning it;
(v) to provide to the Purchaser and its legal counsel and other
representatives of the Purchaser its files and records relating
to any environmental audit, assessment, site characterization,
report, study or investigation relating to the environmental
status of the Project;
(w) to provide to the Purchaser, its legal counsel and other
advisors, copies of surveys of any of the Project prepared at
any time;
(x) to do all things necessary or desirable to assist the Purchaser
to prepare and file all necessary applications and documents
with the appropriate regulatory authorities in order to obtain
all necessary consents with respect to the transactions
contemplated herein;
(y) to use its best efforts to obtain the approval of NASDAQ and the
Securities and Exchange Commission with respect to the
transactions contemplated herein if such approval is, in fact,
required; and
(z) to cause a meeting of its shareholders to be duly called and
properly held as soon as possible after the date hereof, and in
no event later than August 30, 1997, to approve the Merger
(hereinafter referred to as the "GOLD CAP MERGER MEETING").
For the purposes of this Section 6.1, the parties acknowledge that the
Vendor has no representation on the board of directors of Gold Cap and
that none of the officers of Gold Cap are officers, directors or
employees of the Vendor.
<PAGE>
- 22 -
6.2 The Vendor hereby covenants that, during the Interim Period (unless
otherwise indicated), it will:
(a) do all things and cause all things to be done to ensure
that all of the representations and warranties of the Vendor
contained in this Agreement remain true and correct throughout
the Interim Period as if such representations and warranties
were continuously made throughout such period;
(b) provide the Purchaser with all information required to
enable the Purchaser to prepare and file all notices and
applications required to be filed for the purposes of
obtaining any regulatory consent which is required in
connection with the transaction contemplated herein;
(c) cause a meeting of its shareholders to be duly called and
properly held no later than May 14, 1997 to approve the sale
of the Gold Cap Shares to the Purchaser as contemplated herein
(the "ROYALSTAR MEETING"). At the Royalstar Meeting, in no
circumstance may the shareholders be called upon to vote on
any matter relating to the sale of any portion of the Gold
Cap Shares to any person, firm or corporation other than the
Purchaser or its nominee and the sale of the Gold Cap Shares
to the Purchaser shall be considered by the shareholders
prior to any other matter, to the extent permitted by
applicable law. In the event that the sale of the Gold Cap
shares to Globex is approved by the Royalstar shareholders
and the transaction does not close for reasons attributable
to Globex, Globex will assume the cost, up to a maximum
amount of CDN $20,000, of any subsequent meeting of the
shareholders of Royalstar called within one year thereafter
for the purposes of considering the sale by Royalstar of the
Gold Cap shares to a third party;
(d) with respect to the meeting of the shareholders of the Vendor
called to approve the purchase and sale of the Gold Cap
shares in accordance with the terms of this Agreement, the
Vendor shall deliver to the Purchaser a draft of the proxy
circular (the "PROXY CIRCULAR") that it intends to deliver to
each shareholder of the Vendor at least five (5) days prior
to the anticipated date of mailing or delivery of same in
order to permit the Purchaser to review and provide comments
on same, which comments the Vendor shall not be required to
act on so long as the Proxy Circular accurately represents
the Purchaser's offer and situation. The Proxy Circular shall
accurately reflect the terms and conditions of this Agreement;
(e) to use its best efforts to obtain the approval of the
Vancouver Stock Exchange and NASDAQ with respect to the
transactions contemplated herein if such approval is, in fact,
required;
<PAGE>
- 23 -
(f) grant and deliver to the Purchaser, concurrently with
the execution of this Agreement, an irrevocable power of
attorney, in form and substance satisfactory to the Purchaser
and its legal counsel, in order to permit the Purchaser to
vote the Gold Cap Shares in favour of the Merger at the Gold
Cap Merger Meeting;
(g) deliver to the Purchaser, concurrently with the execution of
this Agreement, an irrevocable proxy in form and substance
satisfactory to the Purchaser and its legal counsel from
each director and officer of the Vendor holding shares of
the Vendor, whether directly or indirectly, permitting the
Purchaser to vote the shares held by such director, officer or
shareholder in the capital stock of the Vendor at any meeting
of the shareholders of the Vendor which is called to approve
the purchase of the Gold Cap Shares by the Purchaser as
contemplated herein;
(h) with respect to the meeting of the shareholders of the
Vendor called to approve the purchase and sale of the Gold Cap
shares in accordance with the terms of this Agreement, do all
things and cause each of its officers and directors to do all
things in order that the shareholders approve the purchase and
sale, including, without limitation, public and written
statements in favour thereof and solicitation of proxies from
shareholders in favour thereof;
(i) do all things necessary or desirable to assist the
Purchaser to prepare and file all necessary applications and
documents with the appropriate regulatory authorities in order
to obtain all necessary consents with respect to the
transactions contemplated herein;
(j) not to initiate or pursue, prior to the termination, if
any, of this Agreement, any negotiations or discussions of any
kind or nature whatsoever with any person (other than the
Purchaser) relating to the potential sale of any portion of
the Gold Cap Shares to any third party;
(k) not purchase or otherwise acquire any shares or other
securities in the capital stock of Gold Cap without the prior
written consent of the Purchaser;
(l) consent to and cause its employees, officers and
directors to consent to the cancellation of all outstanding
options to purchase capital stock of Gold Cap, if any, which
are currently held by any of the Vendor's employees, officers
or directors;
(m) include in the Proxy Circular that is mailed or delivered to
the shareholders of the Vendor a statement, in form and
substance satisfactory to the Purchaser and its legal counsel,
to the effect that TVX Gold Inc. will be voting its shares
at such
<PAGE>
- 24 -
meeting in favour of the purchase of the Gold Cap Shares by
the Purchaser as contemplated herein.
6.3 The Purchaser hereby covenants that during the Interim Period,
it will use its best efforts to obtain all regulatory approvals
required of it (including, without limitation, those of The Toronto
Stock Exchange and The Montreal Exchange) with respect to the
transactions contemplated herein.
7. CONDITIONS OF CLOSING IN FAVOUR OF THE PURCHASER
7.1 The purchase and sale of the Gold Cap Shares is subject to the
following terms and conditions which are deemed to be for the exclusive
benefit of the Purchaser, to be fulfilled or performed at or prior to
the Time of Closing on the Closing Date:
(a) All representations and warranties contained herein on the
part of the Vendor shall be true in all respects at the Time
of Closing on the Closing Date, as though then made, except
to the extent that a different time is stated in such
representation and warranty; and there shall have been
compliance in all respects with the covenants and obligations
on the part of the Vendor and Gold Cap contained herein,
which are to be complied with at or prior to the Time of
Closing on the Closing Date, each and every one of which is
hereby deemed to be a condition to the closing of the
transaction contemplated herein. In this regard, the Vendor
shall deliver to the Purchaser a certificate of an officer of
the Vendor confirming that the representations and warranties
of the Vendor contained in this Agreement are true in all
respects as at the Time of Closing on the Closing Date, as
though then made and that the covenants of the Vendor to be
complied with at or prior to the Time of Closing on the
Closing Date have been complied with in all respects;
provided that the receipt of such evidence and the closing of
the transaction contemplated herein shall not be a waiver
of the representations, warranties and covenants of the Vendor
which are contained in this Agreement.
(b) All required regulatory and third party approvals and
consents to the transactions contemplated herein shall have
been obtained in form and upon terms satisfactory to the
Purchaser and its legal counsel in compliance with applicable
laws and without affecting or resulting in the cancellation or
termination of any license or permit held by Gold Cap relating
to the Project or any part thereof.
(c) The Vendor shall have delivered proof satisfactory to
the Purchaser and its legal counsel, that the approval of the
shareholders of the Vendor to the purchase and sale of the
Gold Cap Shares in accordance with the terms of this Agreement
has
<PAGE>
- 25 -
been obtained by the requisite majority pursuant to a meeting
of such shareholders, duly called and properly held to
consider same.
(d) The Purchaser shall have received proof satisfactory to it
and its legal counsel that the shareholders of Gold Cap have
approved, by the requisite majority, the merger of a
wholly-owned subsidiary of the Purchaser (hereinafter
referred to as the "MERGER") with Gold Cap in accordance with
the terms of an agreement entered into between, inter alia,
the Purchaser and Gold Cap dated as of March 5, 1997 pursuant
to which all of the shares in Gold Cap held by shareholders
other than the Vendor will be exchanged upon the Effective
Date (as defined hereinafter) for shares of the Purchaser
on the basis of one common share of the Purchaser for every
3.622 common shares in the capital stock of Gold Cap held by
a shareholder (other than the Vendor), subject to adjustment
in the manner set out in the said agreement (hereinafter
referred to as the "MERGER AGREEMENT").
(e) The Purchaser and its legal counsel shall be satisfied
that each of the purchase and sale of the Gold Cap Shares
contemplated herein and the Merger is an exempt takeover bid
within the meaning of the Securities Act (British Columbia)
and applicable United States securities legislation.
(f) The Purchaser shall have satisfied itself that the
representations and warranties of the Vendor as set forth in
this Agreement relating to the Project are true and correct.
(g) The Purchaser shall have received all financing necessary
(upon terms and conditions satisfactory to the Purchaser in
its sole and absolute discretion) to purchase the Gold
Cap Shares, as contemplated herein, and to effect the
repayment of debt contemplated in Section 2.2 hereof. In
connection with the foregoing, the Purchaser shall advise the
Vendor, as soon as possible after the date hereof, as to the
minimum amount of financing that the Purchaser will require
in order to meet its obligations as described in this
subsection (g) (the "MINIMUM AMOUNT"). Furthermore, prior to
the Royalstar Meeting, the Purchaser shall confirm, in
writing, to the Vendor that it, or any agent engaged by it,
has procured subscribers for the Minimum Amount, subject
to final documentation and regulatory approval.
(h) The Purchaser shall have received a written opinion of
legal counsel addressed to the Purchaser and its legal
counsel, in form and substance satisfactory to the Purchaser
and its legal counsel, that all acts and steps necessary or
desirable to effect the Merger have been completed.
<PAGE>
- 26 -
(i) The Purchaser shall have received a written opinion of
the Vendor's legal counsel (which opinion shall not relate to
the laws of the United States), in a form and substance
satisfactory to the Purchaser and its legal counsel:
(i) that the Vendor has been duly incorporated and
organized and is a valid and subsisting corporation
under the laws of its incorporation;
(ii) that all necessary corporate actions and proceedings
have been taken by the Vendor to authorize and permit
the due and valid transfer of the Gold Cap Shares at
the Time of Closing on the Closing Date from the
Vendor to the Purchaser;
(iii) that the purchase of the Gold Cap Shares pursuant to
this Agreement is an exempt takeover bid within the
meaning of the Securities Act (British Columbia);
(iv) that this Agreement has been duly executed and
delivered by the Vendor and constitutes a valid and
binding obligation of the Vendor enforceable against
it in accordance with its terms (subject to
bankruptcy laws and the availability of equitable
remedies) and, to the knowledge of counsel, does not
violate the provisions of any instrument or agreement
to which the Vendor is a party or by which it is
bound; and
(v) as to such other matters as the Purchaser may
reasonably specify.
(j) All of the conditions set forth in Section 6.2 of the Merger
Agreement shall have been fulfilled.
(k) The Vendor shall cause all necessary steps and
proceedings as may reasonably be approved by the Purchaser's
legal counsel to be taken so that the Gold Cap Shares may be
properly transferred to the Purchaser at the Time of Closing
on the Closing Date; and in this regard, to deliver to the
Purchaser at the Time of Closing on the Closing Date
certificates representing all of the Gold Cap Shares, duly
endorsed in blank for transfer.
(l) The Vendor shall execute and deliver to the Purchaser
all other documents which require execution and delivery by
the Vendor pursuant to this Agreement at the Time of Closing
on the Closing Date.
(m) The Purchaser is satisfied that all acts, steps and
events necessary or desirable to effect the Merger have been
completed, including, without limitation, the filing
<PAGE>
- 27 -
of the Articles of Merger with the Colorado Secretary of State
and the acceptance by the Colorado Secretary of State of the
Articles of Merger.
(n) The Purchaser shall have received confirmation
satisfactory to it from the auditors of Gold Cap that all
financial statements of Gold Cap delivered to the Purchaser or
its advisors for the period up to the Time of Closing have
been prepared in accordance with generally accepted accounting
principles and present in a fair and accurate manner the
financial status of Gold Cap for the period covered by such
financial statements.
(o) The Purchaser and its legal counsel shall be satisfied that
none of Gold Cap or any of the Gold Cap Subsidiaries will be
required to include in a taxable period on or after the later
of (X) the filing of the Articles of Merger with the Colorado
Secretary of State; and (Y) the effective date specified in
the Articles of Merger, which date shall be no later than
August 31, 1997 (hereinafter referred to as the "EFFECTIVE
DATE") taxable income (1) attributable to income that
economically accrued in a taxable period ending on or before
the Effective Date, including, without limitation, as a result
of the installment method of accounting, the completed
contract method of accounting, the long-term contract method
of accounting or the cash method of accounting, or (2) by
reason of Section 481 of the Code or comparable provisions of
state, local or foreign law.
7.2 In case any of the conditions set forth in Section 7.1 hereof shall not
be satisfied at the Time of Closing on the Closing Date, the Purchaser
may:
(a) refuse to complete the transaction contemplated herein
by notice to the Vendor, and, in such event, subject to
Section 11 hereof, each of the Purchaser and the Vendor shall
be released from all obligations hereunder and the Agreement
terminated; or
(b) complete the transaction contemplated herein, it being
expressly understood and agreed that the Purchaser may rely,
notwithstanding such completion, upon the representations,
warranties, covenants and conditions contained in this
Agreement, provided that any of the unsatisfied conditions
may be waived in whole or in part by the Purchaser without
prejudice to its rights of rescission in the event of the non-
fulfilment and/or non-performance of any other condition or
conditions. Any such waiver must be in writing and delivered
to the Vendor prior to the Time of Closing on the Closing
Date.
<PAGE>
- 28 -
8. CONDITIONS OF CLOSING IN FAVOUR OF THE VENDOR
8.1 The purchase and sale of the Purchased Shares is subject to the
following terms and conditions which are deemed to be for the exclusive
benefit of the Vendor, to be fulfilled or performed at or prior to the
Time of Closing on the Closing Date:
(a) All representations and warranties contained herein on the
part of the Purchaser shall be true in all respects at the
Time of Closing on the Closing Date, as though then made.
In this regard, the Purchaser shall deliver to the Vendor a
certificate of an officer of the Purchaser confirming that
the representations and warranties of the Purchaser contained
in this Agreement are true in all respects as at the Time of
Closing on the Closing Date, as though then made and that the
covenants of the Purchaser to be complied with at or prior to
the Time of Closing on the Closing Date have been complied
with in all respects; provided that the receipt of such
evidence and the closing of the transaction contemplated
herein shall not be a waiver of the representations,
warranties and covenants of the Purchaser which are contained
in this Agreement.
(b) The purchase price for the Gold Cap Shares shall be
paid to the Vendor at the Time of Closing in accordance with
the provisions of Section 1.3 hereof.
8.2 In case any of the conditions set forth in Section 8.1 hereof shall
not be satisfied at the Time of Closing on the Closing Date, the Vendor
may:
(a) refuse to complete the transaction contemplated herein
by notice to the Purchaser, and, in such event, each of the
Purchaser and the Vendor shall be released from all
obligations hereunder and the Agreement terminated; or
(b) complete the transaction contemplated herein, it being
expressly understood and agreed that, following such
completion, the Vendor may rely, notwithstanding such
completion, upon the representations, warranties, covenants
and conditions contained in this Agreement, provided that any
of the unsatisfied conditions may be waived in whole or in
part by the Vendor without prejudice to its rights of
rescission in the event of the non-fulfilment and/or
non-performance of any other condition or conditions. Any
such waiver must be in writing and delivered to the Purchaser
prior to the Time of Closing on the Closing Date.
<PAGE>
- 29 -
9. INDEMNIFICATION
9.1 The Vendor covenants and agrees to indemnify and save harmless
the Purchaser from and against any loss or damage suffered by the
Purchaser as a result of any breach of, non-compliance with, or untruth
of any of the representations, warranties, covenants or indemnities of
the Vendor contained in this Agreement, in any schedule, in any
documents to be executed and delivered by the Vendor to this Agreement
or in any documents executed and delivered by the Vendor in connection
with the completion of the transactions contemplated herein, including,
without limiting the generality of the foregoing, all costs and
expenses (including legal fees incurred in connection with any such
loss or damage and in connection with any claim under this Section 9).
9.2 The Purchaser covenants and agrees to indemnify and save harmless
the Vendor from and against any loss or damage suffered by the
Vendor as a result of any breach of, non-compliance with, or untruth of
any of the representations, warranties, covenants or indemnities of the
Purchaser contained in this Agreement, in any schedule, in any
documents to be executed and delivered by the Purchaser to this
Agreement or in any documents executed and delivered by the Purchaser
in connection with the completion of the transactions contemplated
herein, including, without limiting the generality of the foregoing,
all costs and expenses (including legal fees incurred in connection
with any such loss or damage and in connection with any claim under
this Section 9).
9.3 For greater certainty, unless otherwise specifically stated
herein, any claim for indemnification under this Section 9 must be made
by the Claimant (as defined below) on or prior to the date on which the
representation, warranty or covenant in question ceases to survive
pursuant to the provisions of Section 4 hereof.
9.4 Any party entitled to indemnification hereunder (hereinafter
referred to as the "CLAIMANT") shall give notice to the party from whom
indemnification is claimed (hereinafter referred to as the
"INDEMNIFIER"), as soon as reasonably possible, of any claims asserted
by such Claimant or by third parties for which the Indemnifier may be
liable pursuant to the provisions of this Section 9 and shall provide
reasonable particulars thereof (provided that any accidental failure to
provide any such notice or particulars shall not prejudice the rights
of the Claimant).
The Indemnifier shall be entitled (but not required), at its sole
expense, to participate in or to assume the defence of any suit or the
conduct of any proceeding brought to enforce such claim or proceeding,
provided that it so notifies the Claimant hereunder within five days of
receipt or deemed receipt of such notice and furnishes to the Claimant
hereunder such security or other assurances as such party may
reasonably request in connection therewith and provided further that
such dispute is prosecuted or negotiations conducted by the Indemnifier
in good faith and with due diligence. In such event the Claimant shall
<PAGE>
- 30 -
cooperate and shall be entitled to participate with the Indemnifier in
maintaining such defence; provided, however, that any defence so
assumed shall be conducted through legal counsel acceptable to the
Claimant, acting reasonably, and that no settlement or admission of
liability may be made by the Indemnifier or the Claimant without the
prior written consent of the other. Provided further that, in the event
that the Claimant shall be unable to obtain timely advice from the
Indemnifier with respect to any such matter relating to any such
negotiations, the Claimant shall be entitled to deal with same in such
manner as it, in the reasonable exercise of its judgment, deems
appropriate.
If the Indemnifier does not elect to participate in or assume the
defence of such claim, the reasonable fees, costs and expenses of the
counsel for the Claimant shall be paid by the Indemnifier. If the
Indemnifier does elect to participate in or assume the defence of such
claim, the Claimant shall have the right to retain other counsel to act
on its behalf; provided that the fees and disbursements of such other
counsel shall be paid by the Claimant, unless:
(a) the Indemnifier and the Claimant shall have mutually agreed to
the retention of the other counsel at the cost and expense of
either of them; or
(b) the representation of such parties by the same counsel
would, in the reasonable opinion of the Claimant, be
inappropriate due to the differing acts of, or potential
differing interests between them or potential differing legal
defences, in which case such fees and disbursements shall be
paid by the Indemnifier.
9.5 Any payment required to be made pursuant to this Section 9 shall
be increased by an amount in respect of interest accrued, in arrears,
from the date upon which the Claimant pays money giving rise to the
claim to the time of repayment by the Indemnifier at an annual rate
equal to the prime rate then in effect at the Purchaser's principal
bank.
9.6 Save and except with regard to the representations and warranties
referred to in Sections 3.1(a), 3.1(c) and 3.1(w), there shall
be no liability and no payment required to be made by one party
to the other pursuant to the provisions of this Section 9 for a breach
of its covenants, representations and warranties contained herein,
except for such breaches which result, in the aggregate, in a liability
for indemnification in excess of $50,000.00. For greater certainty, if
the liability of the indemnifying party exceeds, in the aggregate, the
said threshold of $50,000.00, the full amount of such liability shall
be payable.
9.7 The rights and benefits provided in this Section 9 are supplemental
to any other rights, actions or causes of action which may arise
pursuant to any other section of this Agreement.
<PAGE>
- 31 -
10. CLOSING ARRANGEMENTS
10.1 The closing of the transactions contemplated herein shall occur no
later than the seventh (7th) business day following (i) the date on
which all regulatory approvals required to be obtained in connection
with the transactions contemplated in and by this Agreement are, in
fact, obtained; and (ii) the requirements of Section 7 hereof have been
fully satisfied (hereinafter referred to as the "CLOSING DATE").
Notwithstanding the foregoing, each of the parties hereto covenants to
use its best efforts to close the transactions herein contemplated on
or before June 30, 1997. In the event that the Closing Date has not
occurred by August 29, 1997, this Agreement shall be terminated and
each of the parties shall be released from all further obligations
hereunder, subject to the right of the Purchaser to receive shares of
the Vendor as contemplated in Section 11 hereof.
10.2 The closing of the transactions contemplated herein shall occur at
10:00 a.m. (hereinafter referred to as the "TIME OF CLOSING") on the
Closing Date, at the offices of Heenan Blaikie, located at Suite 2600,
Royal Bank Plaza, 200 Bay Street, South Tower, Toronto, Ontario, M5J
2J4 or at such other time or place as may be agreed to in writing by
the parties hereto.
10.3 The Purchaser shall withhold and deduct from the purchase price any and
all amounts required under Section 1445 of the U.S. Internal Revenue
Code of 1986, as amended (the "CODE") and pay such amount to the U.S.
Internal Revenue Service. In general, such withholding will be ten
percent (10%) of the purchase price. The Purchaser shall be required to
make such withholding unless the Vendor is able to satisfy the
Purchaser, pursuant to the terms and procedures of Section 1445 and the
regulations and administrative procedures thereunder, that such
withholding is not required or that a lesser amount of withholding is
required.
10.4 At the Effective Date as referred to in section 7.1(o) of this
Agreement, the Purchaser shall cause Gold Cap to pay the Vendor US
$608,000, which shall constitute full and final payment of all amounts
due or owing by Gold Cap to the Vendor.
11. RIGHT TO RECEIVE SHARES OF THE VENDOR
11.1 In the event that the shareholders of the Vendor do not, by the
requisite majority, approve the transactions contemplated herein at a
meeting of such shareholders, duly called and properly held, and,
within one (1) year of such vote, the Vendor enters into an agreement,
commitment or arrangement to sell any of the Gold Cap Shares to any
person (other than the Purchaser) or to grant an option or other right
capable of becoming an agreement to sell any of the Gold Cap Shares to
any person (other than the Purchaser) (hereinafter referred to as the
"THIRD- PARTY TRANSACTION"), then, in such
<PAGE>
- 32 -
circumstance, the Vendor shall be required to pay to the Purchaser an
amount equal to 15% of the amount by which the price at which the
Vendor has agreed to sell each such Gold Cap Share pursuant to the
Third-Party Transaction exceeds U.S. $0.80 multiplied by the number of
Gold Cap Shares which are the object of the Third-Party Transaction,
subject to adjustment in the event of the consolidation, subdivision or
other reorganization of Gold Cap or its share capital. In the event
that non-monetary consideration is to be received by the Vendor
pursuant to the terms of the Third-Party Transaction, the value of such
non-monetary consideration shall be determined by an independent
valuator selected by the parties hereto within seven days of the
entering into of the Third-Party Transaction by the Vendor and, in the
absence of an agreement as to the independent valuator, then such
selection shall be made by a judge of the Supreme Court of the Province
of British Columbia at the request of either party hereto. Payment of
the amount due to the Purchaser pursuant to this Section 11 shall be
made within three days of the closing of the Third-Party Transaction or
in the event that non-monetary consideration is to be received by the
Vendor pursuant to the terms of the Third-Party Transaction, such
payment shall be made within three days following the determination of
the independent valuator as to the monetary value of such
consideration.
11.2 The provisions of this Section 11 shall survive the termination of the
Agreement.
12. PUBLIC DISCLOSURE
12.1 At Time of Closing on the Closing Date, the parties will cooperate in
making a joint public announcement as to completion of the transactions
herein. After the Closing Date, the Vendor will not issue any press
release or make any other public disclosures concerning the contents of
this Agreement without the prior written consent of the Purchaser.
Notwithstanding the above, nothing in this Section 12 will preclude any
party from making any disclosures required by law, regulation or court
or administrative order or necessary and proper in conjunction with the
filing of any tax return or other document required to be filed with
any federal, provincial, state or local governmental body, authority or
agency (including, without limitation, any filings or notifications
required to be made pursuant to applicable securities laws and
regulations).
13. MISCELLANEOUS
13.1 This Agreement is subject to regulatory approval.
13.2 All notices, requests, demands or other communications by the terms
hereof required or permitted to be given by one party to another shall
be given in writing by personal delivery or facsimile transmission
(provided an original copy is immediately sent by
<PAGE>
- 33 -
prepaid courier specifying immediate or next day delivery) addressed to
such other party or delivered or transmitted to such other party as
follows:
If to the Purchaser: Globex Mining Enterprises Inc.
146 - 14th Street
Rouyn-Noranda, Quebec
J9X 2J3
ATTENTION: THE PRESIDENT
Telecopier No: (819) 797-1470
with a copy to: Heenan Blaikie
1250 Rene-Levesque Blvd. West
Suite 2500
Montreal, Quebec
H3B 4Y1
ATTENTION: NEIL WIENER
Telecopier No: (514) 846-3427
If to the Vendor: Royalstar Resources Ltd.
1055 W. Hastings Street
Suite 1400
Vancouver, British Columbia
V6E 2E9
ATTENTION: THE PRESIDENT
Telecopier No: (604) 683-6699
with a copy to: Mr. John W.W. Hick
c/o TVX Gold Inc.
Suite 4300, 161 Bay Street
BCE Place
Toronto, Ontario
M5J 2S1
Telecopier No: (416) 366-8163
<PAGE>
- 34 -
or at such other address as may be given by any of them to the others
in writing from time to time and such notices, requests, demands or
other communications shall be deemed to have been received when
delivered, or, if transmitted, when the sender has confirmation that it
has been received without interruption and has delivered an original
copy for prepaid next day delivery.
13.3 The parties hereto agree and acknowledge that no provision contained
herein shall be deemed to engage, in any way, the personal liability of
any of the directors of the Vendor, unless a director acts in bad faith
or in a dishonest manner.
13.4 The parties hereto covenant and agree to sign such other papers, cause
such meetings to be held, resolutions passed and by-laws enacted,
exercise their vote and influence, do and perform and cause to be done
and performed such further and other acts and things as may be
necessary or desirable in order to give full effect to this Agreement
and every part hereof.
13.5 Save and except as otherwise provided herein, each party shall be
responsible for its own legal and audit fees and other expenses
incurred in connection with the purchase and sale of the Gold Cap
Shares, the completion of the transactions contemplated herein and any
post-closing matters in connection with the transactions contemplated
herein.
13.6 This Agreement means this present agreement; "HERETO", "HEREOF" and
"HEREUNDER" and similar expressions mean and refer to this Agreement
and not to a particular section or provision. The division of this
Agreement into sections and the insertion of headings are for
convenience of reference only and shall not affect the interpretation
of this Agreement. Unless otherwise indicated, any reference in this
Agreement to a section or a schedule refers to the specified section
of, or schedule to, this Agreement.
13.7 In this Agreement, words importing the singular number only shall
include the plural and vice versa, words importing gender shall include
all genders and words importing persons shall include individuals,
corporations, partnerships, associations, trusts, unincorporated
organizations, governmental bodies and other legal or business
entities.
13.8 This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether
written or oral. There are no conditions, covenants, agreements,
representations, warranties or other provisions, express or implied,
collateral, statutory or otherwise, relating to the subject matter
hereof except as herein provided.
<PAGE>
- 35 -
13.9 Time shall be of the essence of this Agreement and of every part hereof
and no extension or variation of this Agreement shall operate as a
waiver of this provision.
13.10 This Agreement shall be construed, interpreted and enforced in
accordance with, and the respective rights and obligations of the
parties shall be governed by, the laws of the Province of British
Columbia and the federal laws of Canada applicable therein, and each
party hereby irrevocably and unconditionally submits to the
non-exclusive jurisdiction of the courts of such province and all
courts competent to hear appeals therefrom.
13.11 If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not impair or affect the validity,
legality or enforceability of the remaining provisions hereof, and each
provision is hereby declared to be separate, severable and distinct.
13.12 This Agreement shall enure to the benefit of and shall be binding on
the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns. No party may assign
any of its rights or obligations hereunder without the prior written
consent of the other party, save and except that the Purchaser may,
without the prior written consent of the Vendor, assign its rights to
purchase the Gold Cap Shares hereunder to a subsidiary, in which event
all references hereunder to the "Purchaser" shall mean and refer to
such subsidiary, except where the context indicates otherwise.
13.13 No amendment or waiver of any provision of this Agreement shall be
binding on any party unless consented to in writing by such party. No
waiver of any provision of this Agreement shall constitute a waiver of
any other provision, nor shall any waiver constitute a continuing
waiver unless otherwise expressly provided.
13.14 In the event that this Agreement is terminated, nothing herein shall in
any way be an admission of any adverse fact or a waiver by either party
of any rights.
13.15 This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may be signed by
telecopier and any such signature shall be valid and binding.
13.16 The parties hereto acknowledge that they have required that the present
Agreement, as well as all documents, notices and legal proceedings
entered into, given or instituted pursuant hereto or relating directly
or indirectly hereto be drawn up in English. Les parties reconnaissent
avoir exige la redaction en anglais de la presente convention, ainsi
que de tous documents executes, avis donnes et procedures judiciaires
intentees, directement ou indirectement, a la suite ou relativement a
la presente convention.
<PAGE>
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IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATE FIRST
HEREINABOVE MENTIONED.
ROYALSTAR RESOURCES LTD.
Per: JOHN M. YOUNG
----------------------------------------
Name: John M. Young
Title: President
Per: JOHN W.W. HICK
----------------------------------------
Name: John W.W. Hick
Title: Chairman of the Independent
Committee of the Board of
Directors
GLOBEX MINING ENTERPRISES INC.
Per: JACK STOCH
---------------------------------------
Name: Jack Stoch
Title: President
