CALL OPTION AGREEMENT
CALL OPTION AGREEMENT made as of February ___, 2001, by and among SUNSHINE
INTERNATIONAL MINING, INC., a Delaware corporation ("Grantor"), SUNSHINE MINING
AND REFINING COMPANY, a Delaware corporation (the "Company"), SUNSHINE
ARGENTINA, INC., a Delaware corporation ("SAI"), (each a "Sunshine Company" and
collectively, the "Sunshine Companies"), XXXXXXX INTERNATIONAL, L.P., a Cayman
Islands limited partnership ("EILP"), THE LIVERPOOL LIMITED PARTNERSHIP, a
Bermuda limited partnership ("TLLP" and, together with EILP, the "Xxxxxxx
Holders") and STONEHILL INSTITUTIONAL PARTNERS, L.P. ("SIP") and STONEHILL
OFFSHORE PARTNERS LIMITED ("SOPL" and, together with SIP, the "Stonehill
Holders" )(collectively, the "Holders").
WHEREAS, in connection herewith, the Company, SAI, together with Sunshine
Precious Metals Inc., a Delaware corporation, have filed a Joint Chapter 11 Plan
of Reorganization in the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court") which shall have been co-proposed by the
Xxxxxxx Holders and the Stonehill Holders (the "Plan") and related statements,
motions and applications and the agreements and instruments to be entered into
by the Sunshine Companies pursuant to the Plan and attached as exhibits thereto
(the "Transaction Documents") and among other things, provide for the
restructuring of the Company (the "Restructuring");
WHEREAS, in connection with the Restructuring, the Company and the Holders
are entering into that certain Registration Rights Agreement of even date
herewith (the "Registration Rights Agreement");
WHEREAS, upon the completion of the Restructuring, assuming that there have
been no stock splits, dividends, combinations, reorganizations,
recapitalizations and similar capital structure changes ("Capital Structure
Changes") with respect thereto, the Xxxxxxx Holders will have received, or be
entitled to receive, a total of 50.98% of outstanding shares ("Xxxxxxx'x
Interest") of the Company's common stock, par value $.01 (the "Common Stock")
and the Stonehill Holders will have received or be entitled to receive a total
of 39.01% of the outstanding shares of Common Stock ("Stonehill's Interest");
WHEREAS, the Company owns 100% of the capital stock of the Grantor;
WHEREAS, Grantor owns 100% of the capital stock in SAI;
WHEREAS, pursuant to the Transaction Documents, the parties hereto desire
that Grantor issue a call option to each Holder (each a "Call Option" and,
collectively, the "Call Options") to purchase, collectively, up to 100% of the
shares of capital stock of SAI (the "SAI Shares") and to grant each Holder a
first priority perfected security interest in such SAI Shares in connection
therewith;
NOW, THEREFORE, in consideration of the premises, and for such other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Call Options.
----------------------
(a) Subject to Section 1(b) below and the terms and conditions
herein, Grantor hereby grants to each Holder a Call Option to purchase up
to a certain maximum number of SAI Shares (as adjusted for Capital
Structure Changes) at a certain purchase price per SAI Share (the "Purchase
Price"), all as set forth in Schedule 1 annexed hereto.
(b) In the event that the Xxxxxxx Holders sell more than 50% of their
shares of Common Stock initially received in the Restructuring (as adjusted
for Capital Structure Changes) or the Stonehill Holders sell more than 50%
of their shares of Common Stock initially received in the Restructuring (as
adjusted for Capital Structure Changes), then the number of SAI Shares that
the Xxxxxxx Holders or the Stonehill Holders, respectively, are entitled to
purchase as set forth in Schedule 1 hereto shall be reduced ratably to the
extent that such Holders sold in excess of such amounts. For example, if
the Xxxxxxx Holders were to sell 55% of their shares of Common Stock
initially received in the Restructuring, then the maximum number of SAI
Shares that the Xxxxxxx Holders could purchase, in the aggregate, upon the
exercise of their Call Options would be reduced by a percentage equal to
(55% - 50% ) x 2, or 10%. Schedule 1 shall be amended and redistributed to
the parties hereto and the Pledge Agent (as defined in Section 4) shall be
directed to reflect any such reductions.
2. Term. The term of each Call Option (the "Term") shall commence on the
date upon which the Plan approved by the Bankruptcy Court goes effective (the
"Closing Date") and shall expire upon the earlier of the following:
(a) the exercise in full of such Call Option,
(b) The market capitalization of the Company shall exceed $150
million for at least 60 consecutive calendar days, and
(c) The ten year anniversary of the effective date of the Plan of
Reorganization
; provided, however, that, with respect to (b) above, all of the Common Stock is
registered and freely tradeable during such 60-day-period (e.g., among other
things, (x) no Interfering Event has occurred, without giving effect to any
Suspension Grace Period (each as defined in the Registration Rights Agreement),
(y) the Holders are not restricted from trading because the Holders are in
possession of material, non-public information and (z) none of the events set
forth in Section 3(a) below shall have occurred.
3. Exercise of Call Options.
-------------------------
(a) Right to Exercise. The Call Option shall become exercisable upon
the occurrence of any one of the following:
(i) the Common Stock is delisted from, or not approved for
trading on, the New York Stock Exchange, the American Stock Exchange,
the Nasdaq National Market System, the Nasdaq Small-Cap Market or the
Nasdaq OTC Bulletin Board (each, an "Approved Market");
(ii) the Common Stock is suspended from listing or is no longer
approved for trading on an Approved Market for at least seven (7)
consecutive calendar days;
(iii) the market capitalization of the Company is less than $15
million for at least fifteen (15) consecutive calendar days; provided,
however, that such market capitalization shall not have subsequently
gone above $15 million for at least 30 calendar days (but if the
market capitalization thereafter drops below $15 million for at least
15 consecutive calendar days, then the Call Option shall again become
exercisable);
(iv) a bankruptcy proceeding has occurred with respect to a
Sunshine Company or any other direct or indirect subsidiary of the
Company;
(v) the Company fails to comply with its obligations set forth
in this Agreement;
(vi) unless waived by all of the Holders, (A) any person not
designated by the Holders, other than management directors, is serving
as a member of the board of directors of the Grantor or (B) any person
designated by the Holders in accordance with Section 6(j) hereof to
serve as a member of the board of directors of the Grantor is not
serving in such capacity as a result of any action or omission on the
part of any Sunshine Company;
(vii any Interfering Event (as defined in the Registration
Rights Agreement) has occurred which causes the Call Options to become
immediately exercisable pursuant to the Registration Rights Agreement;
(viii) any representation or warranty of the Sunshine Companies
made in this Agreement, the Pledge Agreement or any other Transaction
Document shall be false or misleading; or
(ix) any of the Sunshine Companies otherwise fails to comply
with or breaches any other provision of any Transaction Document or
the by-laws or charter of any Sunshine Company.
The Company and the Grantor shall provide the Holders with immediate
written notice of the occurrence of any of the events described in (i),
(ii), (iv), (v), (vi), (vii), (viii) or (ix).
(b) Exercise Notice. If any of the conditions to exercise set forth
in Section 3(a) above shall have been met, then the Call Options may be
exercised, at any time and from time to time, by each Holder in full or in
part by the tendering of a written notice (the "Exercise Notice") to the
Grantor and the Pledge Agent (as defined in Section 4(b) below) at the
address set forth in Section 9(c) herein. The Exercise Notice shall
specify:
(i) the date on which the purchase is to take place (the
"Purchase Date"), which may be the same date as the Exercise Notice;
(ii) the number of SAI Shares with respect to which the Holder is
then exercising its Call Option (the "Call Amount");
(iii) the aggregate purchase price for the Call Amount
(determined by multiplying the Purchase Price set forth in Schedule 1
hereto by the Call Amount); and
(iv) whether the exercising Holder elects to pay the aggregate
purchase price in cash or by delivering shares of Common Stock
(pursuant to Section 3(c) and 3(d)(ii) below) in lieu of cash.
Upon receipt of the Exercise Notice as a result of which the Holders shall
have acquired, in the aggregate, a majority of the SAI Shares, the Company
and Grantor shall cause each officer and director of SAI to offer his or
her resignation in writing to the Holder(s), which such resignation shall
become effective upon the Purchase Date unless otherwise agreed to by the
officer or director and the Holder(s).
(c) Cashless Exercise. If the exercising Holder elects to pay for the
Call Amount by delivering shares of Common Stock, the number of shares of
Common Stock to be delivered by the Holder(s) shall be computed using the
following formula:
X = Y x B
------
A
where: X = the number of shares of Common Stock to be delivered
Y = the number of SAI Shares included in the Call Amount
A = the Market Value (defined below) per share of Common Stock
B = the Purchase Price
For the purposes of the foregoing, "Market Value" shall mean the price of
one share of Common Stock determined as follows:
(i) if the Common Stock is listed on the New York Stock
Exchange or on the American Stock Exchange, the closing price on such
exchange on the date prior to the Purchase Date;
(ii) if (i) does not apply and the Common Stock is listed on
the NASDAQ National Market System, the NASDAQ Small-Cap Market or the
NASDAQ OTC Bulletin Board, the last reported bid price on the day
preceding the Purchase Date;
(iii if neither (i) nor (ii) apply but the Common Stock is
quoted in the over-the-counter market, another recognized exchange or
on the pink sheets, the closing bid price on the day preceding the
Purchase Date; and
(iv) if neither clause (i), (ii) or (iii) above applies, the
fair market value of the Common Stock as reasonably determined in good
faith by the Company's board of directors with the concurrence of an
investment banker acceptable to the Holders and with the concurrence
of the Holders.
(d) Purchase Date.
-------------
(i) On the Purchase Date, the Grantor shall deliver beneficial
ownership of the Call Amount to the Holder by delivering, or causing
the Pledge Agent (as defined in Section 4 below) to deliver, the
certificates therefore together with duly executed "stock powers". In
the event that the Call Amount is not delivered to the Holder in
accordance with the foregoing on a timely basis, the Holder may, by
written notice, rescind its exercise of the Call Option, in whole or
in part, reserving all rights to damages for breach of this Agreement
or any other Transaction Document.
(ii) On the Purchase Date, SAI agrees to register the transfer
of the shares of capital stock of SAI included in the Call Amount to
the name of the exercising Holder or its designee. This obligation of
SAI is and shall at all times be valid and enforceable and SAI
absolutely, unconditionally and irrevocably waives any and all rights
to assert any defense or other objection to this obligation.
(iii) On the Purchase Date, provided that as a result of the
exercise of the Call Option, the Holders shall have acquired, in the
aggregate, a majority of the outstanding SAI Shares, the written
resignation of each director and officer of SAI shall be delivered to
the Holders and shall become effective unless otherwise agreed to by
the director or the officer and the Holder(s) pursuant to Section 3(b)
above.
(iv) In exchange for the above, on the Purchase Date, the
exercising Holder shall deliver (A) the aggregate purchase price set
forth in the Exercise Notice to the Grantor by wire transfer in
immediately available funds to an account designated on Schedule 2
annexed hereto or such other account as may be designated in writing
by the Grantor from time to time or (B) if the Holder opted for a
cashless exercise in the Exercise Notice, (1) the physical stock
certificates representing the Common Stock deliverable upon such
cashless exercise (as determined in accordance with Section 3(c)
above) or (2) in lieu thereof, provided the transfer agent of such
Holder is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer ("FAST") program, upon request of the
Grantor, the Holder shall use its best efforts to cause its transfer
agent to electronically transmit such shares of Common Stock to the
Grantor on the Purchase Date by crediting the account of Grantor's
prime broker with DTC through its Deposit Withdrawal Agent Commission
("DWAC") system. The parties agree to coordinate with DTC to
accomplish this objective.
(e) Transfer Tax. Transfers of the Call Amounts upon exercise of the
Call Options shall be made without charge to the Holders for any transfer
tax or other costs in respect thereof.
4. Security Interest.
-----------------
(a) Generally. In order to secure the observance and performance of
the Grantor's obligations under this Agreement, the Grantor hereby
transfers, assigns and grants to the Pledge Agent for the ratable benefit
of the Holders a first priority perfected and continuing security interest
in the SAI Shares.
(b) Perfection of Security Interest. The security interest and lien
granted to the Holders hereunder shall constitute valid, perfected and
first priority security interests and liens in and to the SAI Shares, in
each case enforceable against third parties and securing the obligations
purported to be secured thereby, upon:
(i) the execution of this Agreement and that certain Pledge
Agreement of even date among the Grantor, the Holders and Xxxxx Fargo
Bank Minnesota, N.A. (the "Pledge Agent") attached hereto as Exhibit 1
(the "Pledge Agreement");
(ii) (A) the pledge of the SAI Shares by the Grantor to the
Pledge Agent for the ratable benefit of the Holders, and (B) the
delivery by the Grantor of the certificates representing such SAI
Shares together with duly executed "stock powers" to the Pledge Agent
in connection therewith; and
(iii) the filing of certain UCC-1 financing statements
describing the SAI Shares with the appropriate offices in Idaho and
Delaware.
(c) Pledge of SAI Shares. In connection with the pledge and delivery
of SAI Shares to the Pledge Agent pursuant to the Pledge Agreement, Grantor
will grant the Pledge Agent the right (and the obligation) to vote such SAI
Shares as instructed by the Holders in accordance with the Pledge
Agreement.
5. Representations and Warranties of the Sunshine Companies. Each of the
Sunshine Companies, severally and jointly, hereby makes the following
representations and warranties to Holders as of the date hereof:
(a) Representations and Warranties. Each of the representations and
warranties of the Sunshine Companies contained in the other Transaction
Documents are true and accurate.
(b) Due Organization. Each Sunshine Company is a corporation duly
organized and in good standing under the laws of the State of Delaware.
Each Sunshine Company is duly qualified as a foreign corporation in each
jurisdiction where the nature and conduct of its business or the location
of its assets so requires.
(c) Power and Authority. Each Sunshine Company has full power and
authority to enter into and perform this Agreement and the Pledge Agreement
and the Grantor has full power and authority to sell, create a security
interest in, and pledge the SAI Shares in accordance herewith. This
Agreement (i) has been duly authorized, executed and delivered by each
Sunshine Company and (ii) is legal, valid and binding and enforceable
against such
Sunshine Company in accordance with its terms, subject as to enforceability
to general principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to,
or affecting generally, the enforcement of applicable creditors' rights and
remedies.
(d) No Other Consents. Other than the approval of the Bankruptcy
Court, no consent is required to be received by any Sunshine Company from
any governmental authority or any other person in connection with the
execution or delivery by each such Sunshine Company of this Agreement or
the exercise of the Call Options or the Pledge Agreement, or the sale,
creation of a security interest in, or pledge of, the SAI Shares.
(e) No Violations. The execution and delivery of this Agreement and
the Pledge Agreement by the Sunshine Companies, the consummation by each
Sunshine Company of the transactions contemplated herein and therein and
the compliance by each Sunshine Company with any of the provisions hereof
and thereof relating to the Sunshine Companies will not (i) conflict with
or result in any breach of any provision of the certificate of
incorporation, by-laws or other charter document of the Sunshine Company,
(ii) result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms,
conditions or provisions of, any material contract, agreement, note,
indenture, mortgage, lease, license or other arrangement or understanding
to which such Sunshine Company is a party or by which such Sunshine Company
or any of its assets or property is subject, (iii) result in the creation
or imposition of any material lien or encumbrance of any kind upon any of
the asset of such Sunshine Company or any subsidiary thereof or (iv)
violate any applicable provision of any U.S., state, local or foreign
statute, law, rule or regulation or any order, decision, injunction,
judgment, aware or decree to which such Sunshine Company or its assets or
properties are subject.
(f) Capitalization.
--------------
(i) SAI is a direct and wholly-owned subsidiary of Grantor.
The authorized capital stock of SAI consists of 10,000 shares of
common stock. As of the date hereof, there were 1,000 shares of common
stock issued and outstanding, all of which are owned legally and
beneficially by Grantor, and no shares of capital stock are reserved
for issuance. All of the outstanding shares of capital stock of SAI
have been validly issued and are fully paid and nonassessable. There
are currently no outstanding options, outstanding warrants nor other
rights to acquire SAI capital stock.
(ii) There are no other scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights exchangeable or convertible into, SAI Shares, or contracts,
commitments, understandings, or arrangements by which SAI is or may
become bound to issue additional shares of capital stock of SAI or
options, warrants, scrip, rights to subscribe to, or commitments to
purchase or acquire, any shares, or securities or rights convertible
into shares, of capital stock of SAI.
(g) Subsidiaries. Except as disclosed in the Transaction Documents,
SAI has no subsidiaries.
(h) Due Authorization. The SAI Shares will be delivered by the
Grantor to the Pledge Agent in the manner set forth in the Pledge Agreement
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on voting rights, charges
and other encumbrances whatsoever, except for those created for the benefit
of the Holders pursuant to the Transaction Documents. The delivery by the
Pledge Agent to the Holders of the SAI Shares in the manner provided in
this Agreement and the Pledge Agreement will transfer to the Holders good
and valid title to the SAI Shares, free and clear of all security
interests, liens and encumbrances whatsoever, except for those created by
the Holder or those created for the benefit of the Holders pursuant to the
Transaction Documents.
(i) Indebtedness and Other Liabilities. Neither the Grantor nor SAI
has any Indebtedness (as defined below) except as disclosed in the Plan or
Schedule 5(i) hereto. Each of the Grantor and SAI has no other liabilities
or obligations (including, without limitation, claims existing under
environmental or similar laws) that are not disclosed in the Plan or on
Schedule 5(i) hereto other than those liabilities incurred in the ordinary
course of such Sunshine Company's respective businesses since December 31,
1999, which liabilities, individually or in the aggregate, do not or would
not have a Material Adverse Effect (as defined in the Transaction
Documents) on such Sunshine Company. There are no liens, security interests
or other encumbrances on, or with respect to, any asset of SAI other than a
mortgage on the Pirquitas Mine to secure financing made to SAI by Highwood
Partners, L.P. and Stonehill Capital Management, LLC..
"Indebtedness" means, with respect to any person or entity, all
obligations (s) which in accordance with the generally accepted accounting
principles in the U.S., shall be classified upon the balance sheet of such
person as liabilities, (t) for borrowed money, (u) consisting of
intercompany advances, (v) which have been incurred in connection with the
acquisition of any property (including without limitation, all obligations
evidenced by any indenture, bond, note, commercial paper or other similar
security, but excluding, in any case, obligations arising from the
endorsement in the ordinary course of business of negotiable instruments
for deposit or collection), (w) obligations secured by any lien existing on
property owned, even though such person has not assumed or become liable
for the payment of such obligations, (x) obligations created or arising
under conditional sale or other title retention agreement with respect to
property acquired by such person, notwithstanding the fact that the rights
and remedies of the seller, lender or lessor under such agreement in the
event of default are limited to repossession or sale of such property, (y)
for capitalized leases, (z) for all guarantees, whether or not reflected in
the balance sheet of such person, and (aa) all reimbursement and other
payment obligations (whether contingent, matured or otherwise) of such
person in respect of acceptance or documentary credit. Notwithstanding the
foregoing, the definition of the term Indebtedness will not apply to any of
the following:
(i) trade debt to unaffiliated third parties incurred in the
ordinary course of business;
(ii) hedging obligations incurred in connection with the
ordinary course of business to protect against currency exchange rate
risks or precious metal price risks;
(iii) performance bonds or surety or appeal bonds entered into
in the ordinary course of business; and
(iv) Indebtedness represented by lease obligations, mortgage
financings or purchase money obligations, in each case incurred for
the purpose of financing all or any part of the purchase price or cost
of construction or improvements of property used in the business of
the Company or such subsidiary in an outstanding aggregate principal
amount not to exceed $25,000.
(j) SAI Ownership of Pirquitas Mine. SAI is the sole record and
beneficial owner of the silver mine in Argentina known as the "Pirquitas
Mine" (the "Pirquitas Mine"), all real property and personal property
relating to the mining operations thereon, and all rights and permits to
develop and operate the Pirquitas Mine.
6. Covenants of Sunshine Companies. During the Term of the Call Option,
each of the Sunshine Companies, severally and jointly, hereby covenants to the
Holders that:
(a) Corporate Existence. The Sunshine Companies shall maintain and
preserve their individual corporate existence unless otherwise agreed to in
writing by each of the Holders.
(b) Indebtedness. Neither the Grantor nor SAI shall incur
Indebtedness or pledge, hypothecate, grant any lien with respect to or
otherwise encumber any assets without the prior written approval of each of
the Holders.
(c) Transfers, Liens, Etc.
---------------------
(i) Except as otherwise provided in any Transaction Document
to the contrary, neither the Grantor nor SAI shall split, combine or
reclassify, sell, assign, divide, transfer, dispose of, or pledge,
hypothecate or otherwise encumber the SAI Shares or any securities
convertible into or exchangeable for such SAI Shares, without the
written consent of each of the Holders.
(ii) Neither Grantor nor SAI shall create, incur or permit to
exist any security interest, lien or other encumbrance on or with
respect to any SAI Shares other than in accordance with the
Transaction Documents.
(iii) Any attempted transfer of SAI Shares in contravention of
the provisions of this Section 6(c) shall be void and ineffectual and
shall not bind or be recognized by any Sunshine Company.
(iv) Except as required by this Agreement, SAI shall not issue
any additional shares of capital stock.
(d) Subsidiaries. The Grantor and SAI shall not create, own or hold
any interest in any subsidiary (other than the subsidiaries disclosed in
the Transaction Documents) without the written consent of each Holder.
Unless otherwise agreed to in writing by each of the Holders, in the event
that the Grantor or SAI shall create, own or hold any interest in any
subsidiary in accordance with the foregoing:
(i) the Grantor and SAI shall cause such subsidiary to sign
this Agreement as an additional party, at which time all capital stock
of the subsidiary ("Subsidiary Shares") shall be treated the
equivalent of SAI Shares for all purposes hereunder;
(ii) the Grantor, SAI and such subsidiary shall assume the
equivalent obligations that the Grantor and SAI have with respect to
SAI Shares in connection with the Subsidiary Shares (including, but
not limited to, granting to the Holders a first priority perfected
security interest in the Subsidiary Shares and perfecting such
security interest in accordance with Section 4(b) hereof); and
(iii) the Grantor, SAI and such subsidiary shall take all such
further actions and deliver all documents and instruments as may be
necessary to accomplish the foregoing.
(e) Transfer of Assets.
------------------
(i) Neither Grantor nor SAI shall transfer any asset, or a
controlling interest therein (including, but not limited to, any
amounts received, directly or indirectly, by such Sunshine Company
from one or more of the Holders pursuant to the Transaction Documents)
to any of the other Sunshine Companies or any affiliates of the
Sunshine Companies (including any subsidiaries of such Sunshine
Company) without the prior written approval of each Holder.
(ii) Neither Grantor nor SAI shall transfer any asset or a
controlling interest therein outside the ordinary course of business.
(iii) Any attempted transfer in contravention of the provisions
of this Section 6(e) shall be void and ineffectual and shall not bind
or be recognized by the Company or SAI.
(f) Obligations of SAI. On each Purchase Date, SAI shall (i) register
the transfer of the SAI Shares included in the Call Amount to the name of
the exercising Holder or its designee and (ii) if as a result of the Call
Option exercise, the Holders shall in the aggregate, have acquired a
majority of the SAI Shares, take all such actions as are necessary to
effectuate the resignation of each officer of SAI unless otherwise agreed
to by the officer and the exercising Holder(s) pursuant to Section 3(b)
above.
(g) No Conflicting Actions. No Sunshine Company shall take any action
which is inconsistent or in conflict with the terms and provisions of this
Agreement and the Pledge Agreement.
(h) No Modification. The obligations of the Sunshine Companies
hereunder shall not be modified by any sale or issuance of each of their
capital stock to another person or entity.
(i) Accuracy of Representations and Warranties. The representations
and warranties of each Sunshine Company will be true and correct in all
material respects as of the date when made, except for representations and
warranties of an earlier date, which will be true and correct in all
material respects as of such date.
(j) Board of Directors. For so long as any Holder holds any Call
Option, the directors of Grantor, other than management directors, shall be
nominated solely by the Holders holding a Call Option, the Company agrees
to vote the capital stock of Grantor in favor of such Holders' nominees and
the Company agrees not to remove any director without the consent of the
Holders holding Call Options. Furthermore, for so long as any Holder holds
any Call Option, the Company agrees that it shall make no stockholder
proposals with respect to Grantor and shall not nominate any directors
(other than the nominees proposed by the Holders other than the management
director).
(k) No Dividends or Other Distribution. No Sunshine Company shall,
without the written consent of each of the Holders, declare or pay any
dividends, purchase, redeem, retire, defease or otherwise acquire for value
any of its capital stock or any warrants, rights or options to acquire such
capital stock, now or hereafter outstanding, return any capital to its
stockholders as such, make any distribution of assets, capital stock,
warrants, rights, options, obligations or securities to its stockholders as
such or issue or sell any capital stock or any warrants, rights or options
to acquire such capital stock, or permit any of its subsidiaries to
purchase, redeem, retire, defease or otherwise acquire for value any
capital stock of a Sunshine Company or any warrants, rights or options to
acquire such capital stock or to issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock.
(l) No Burdensome Agreements. No Sunshine Company shall become a
party to any agreement or arrangement, or otherwise undertake any
responsibility, that may prove to be materially burdensome on the Sunshine
Company or its ability to comply with the provisions hereof.
(m) Transactions With Affiliates. Each Sunshine Company agrees that
any transaction or arrangement between it or any of its subsidiaries and
any affiliate or employee of the Sunshine Company shall be effected on an
arms' length basis in accordance with customary commercial practice and,
except with respect to grants of options and stock to service providers,
including employees, shall receive the prior written approval of each
Holder holding a Call Option.
7. Indemnification. Each of the Sunshine Companies, jointly and
severally, agrees to indemnify each Holder and hold it harmless from and against
(a) any loss, costs and damages (including reasonable attorney's fees) incurred
as of result of such party's breach of any representation, warranty, covenant or
agreement in this Agreement or incurred in connection with the enforcement of
this indemnity; (b) any and all injuries, claims, damages, judgments,
liabilities,
costs and expenses (including, without limitation, reasonable fees and
disbursements of counsel whether involving a third party or a claim between the
parties), charges and encumbrances which may be incurred by or asserted against
a Holder in connection with or arising out of this Agreement other than those
resulting from Holder's breach of this Agreement; (c) any assertion, declaration
or defense of the Holders' rights or security interest under the provisions of
this Agreement or the Pledge Agreement in connection with the realization,
possession, safeguarding, insuring or other protection of the SAI Shares or in
connection with the collecting, perfecting or protecting of the Holders' liens
and security interests hereunder or under the Pledge Agreement.
8. Miscellaneous.
-------------
(a) Further Assurances. Each of the Sunshine Companies and each of
the Holders shall promptly execute and deliver all further instruments and
documents and take all further action that may be reasonably necessary or
desirable to effect the purposes of this Agreement.
(b) Amendment. This Agreement may not be amended, modified or
terminated except by written agreement of each of the Sunshine Companies
and each of the Holders.
(c) Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing by facsimile, mail or personal
delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:
to the Sunshine Companies:
Sunshine Mining and Refining Company
Sunshine International Mining, Inc.
Sunshine Argentina, Inc.
0000 Xxxxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
with copies to:
Prager, Xxxxxxx & Xxxxxxx, PLLC
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
to the Stonehill Holders:
c/o Stonehill Capital Management LLC
000 X. 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
to the Xxxxxxx Holders:
c/x Xxxxxxx Management Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxx
Facsimile: (000) 000-0000
with copies to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Any party hereto may from time to time change its address for notices by
giving written notice of such changed address to the other parties hereto.
(d) Titles. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting
this Agreement.
(e) No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any
party.
(f) Successors and Assigns. This Agreement shall be binding upon the
inure to the benefit of the parties and their successors and permitted
assigns. Each Holder may assign this Agreement or any rights or obligations
hereunder without the consent of the Sunshine Companies, but only if such
transfer is made to an entity that, on the date hereof, is an affiliate of
such Holder.
(g) Remedies Cumulative. Each Holder's rights and remedies under this
Agreement and the Pledge Agreement shall be cumulative and non-exclusive of
any other rights or remedies which it or he may have under any other
Transaction Document or any other agreement or instrument, by operation of
law or otherwise, and may be exercised alternatively, successively or
concurrently as each Holder may deem expedient.
(h) Severability. Any provision of this Agreement that may be
determined by competent authority to be illegal, invalid, prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such illegality, invalidity, prohibition or
unenforceability without invalidating the remaining terms and provisions
hereof, and any such illegality, invalidity, prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable any terms and provisions hereof in any other jurisdiction.
(i) Governing Law. This Agreement and the validity and performance of
the terms hereof shall be governed and construed in accordance with the
laws of the State of Delaware applicable to contracts executed and to be
performed entirely within such state.
(j) Jurisdiction. The Sunshine Companies and the Holders (i) hereby
irrevocably submit to the exclusive jurisdiction of the state and federal
courts in the State of Delaware for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement and (ii) hereby
waive, and agree not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or
that the venue of the suit, action or proceeding is improper. To the
fullest extent permitted by applicable law, the Sunshine Companies and the
Holders consent to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect
for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof.
Nothing in this Section 8(j) shall affect or limit any right to serve
process in any other manner permitted by law.
(k) Specific Performance. The Sunshine Companies and the Holders
acknowledge and agree that irreparable damage would occur in the event that
any of the provisions of this Agreement or the Pledge Agreement were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and the Pledge Agreement and to enforce specifically the
terms and provisions hereof and thereof, this being in addition to any
other remedy to which any of them may be entitled by law or equity.
(l) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY
JURY.
(m) No Third Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto
and their respective successors and assigns.
(n) Execution in Counterpart. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement, it being understood that all parties need not sign the
counterpart.
IN WITNESS WHEREOF, the parties hereof have caused this Agreement to be
duly executed as of the date first above written.
THE SUNSHINE COMPANIES THE HOLDERS
SUNSHINE INTERNATIONAL MINING, INC. XXXXXXX INTERNATIONAL, L.P.
By: Xxxxxxx International Capital
Advisors, Inc.
Attorney-in-Fact
By: By:
---------------------------- ----------------------------
Name: Name: Xxxx X. Xxxxxx
Title: Title: President
SUNSHINE MINING AND REFINING THE LIVERPOOL LIMITED PARTNERSHIP
COMPANY By: Liverpool Associates, Ltd.
General Partner
By: By:
----------------------------- ----------------------------
Name: Name: Xxxx X. Xxxxxx
Title: Title: President
SUNSHINE ARGENTINA, INC. STONEHILL INSTITUTIONAL
PARTNERS, L.P.
By: By:
----------------------------- ----------------------------
Name: Name: Xxxx Xxxxxxxx
Title: Title: General Partner
STONEHILL OFFSHORE
PARTNERS LIMITED
By: Stonehill Advisors LLC
By:
----------------------------
Name: Xxxx Xxxxxxxx
Title: Managing Member
SCHEDULE 1
to the Call Option Agreement
XXXXXXX XXXXXXXXX
HOLDERS HOLDERS
------- -------
--------------------------------------------------------------------------------
SAI SHARES
(a) maximum # of SAI Shares 566 434
(b) Purchase Price $1,000 per share $1,000 per share
--------------------------------------------------------------------------------
SCHEDULE 2
to the Call Option Agreement
Wire Instructions for Grantor:
INDEX OF DEFINED TERMS
As Defined on Page
Approved Market................................................................3
Bankruptcy Court...............................................................1
Call Amount....................................................................4
Call Option....................................................................1
Call Options...................................................................1
Capital Structure Changes......................................................1
Closing Date...................................................................2
Common Stock...................................................................1
Company........................................................................1
DTC............................................................................5
DWAC...........................................................................5
EILP...........................................................................1
Xxxxxxx Holders................................................................1
Xxxxxxx'x Interest.............................................................1
ExerciseNotice.................................................................3
FAST...........................................................................5
Grantor........................................................................1
Holders........................................................................1
Indebtedness...................................................................8
Market Value...................................................................4
Pirquitas Mine.................................................................9
Plan...........................................................................1
Pledge Agent...................................................................6
Pledge Agreement...............................................................6
Purchase Date..................................................................4
Purchase Price.................................................................4
Registration Rights Agreement..................................................1
Restructuring..................................................................1
SAI............................................................................1
SAI Shares.....................................................................1
SIP............................................................................1
SOPL...........................................................................1
Stonehill Holders..............................................................1
Stonehill's Interest...........................................................1
Subsidiary Shares.............................................................10
Sunshine Companies.............................................................1
Sunshine Company...............................................................1
Term...........................................................................2
TLLP...........................................................................1
Transaction Documents..........................................................1
