EXHIBIT 2.1
SHARE PURCHASE AGREEMENT
BETWEEN
TREND MINING COMPANY
AND
PACIFIC RIM MINING CORP.
SEPTEMBER 20, 2005
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement ("AGREEMENT") is made as of September 20,
2005, by and between TREND MINING COMPANY, a corporation organized and existing
under the laws of the State of Delaware, United States of America (the "BUYER"),
and PACIFIC RIM MINING CORP., a company organized and existing under the laws of
the Province of British Columbia, Canada (the "SELLER").
RECITALS
A. The Seller is the holder of 100% of the issued and outstanding shares in DMC
Cayman Inc., a Cayman Island company ("DMC"), consisting of 12,975,919 ordinary
shares and 56,564,757 preference shares (collectively, the "SHARES"), and is a
creditor of DMC in the amount of the Pacrim Loan;
B. DMC is the holder of 100% of the issued and outstanding shares in each of
Andacollo Gold, Inc., a Cayman Island company ("AGI") and La Serena, Inc., a
Cayman Island company ("LSI"). AGI and LSI are collectively the holders of 100%
of the issued share capital of the Compania Minera Dayton, a Chilean sociedad
contractual minera ("CMD"). CMD operates the Mining Project (herein defined);
C. DMC is the holder of 99.9290941% of the rights in the capital of Dayton Chile
Exporaciones Minera Limitada, a Chilean sociedad de responsibilidad limitada,
("DCEM"), with the balance being held by a Chilean individual for the benefit of
the Seller;
D. The Seller desires to sell, and the Buyer desires to purchase, all of the
Shares and, thereby, to indirectly acquire the ownership of AGI, LSI, CMD and
DCEM, on the terms and subject to the conditions set forth in this Agreement;
and the Seller desires to assign, and the Buyer desires to assume, the Pacrim
Loan; and
E. The Seller and the Buyer entered into the Letter of Intent effective as of
June 20, 2005; and
F. The Buyer intends to cause CMD to restart mining operations.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
ARTICLE 1
CONSTRUCTION AND DEFINITIONS
1.1 CONSTRUCTION
Any reference in this Agreement to an "Article," "Section" or
"Schedule" refers to the corresponding Article, Section or Schedule of or to
this Agreement, unless the context indicates otherwise. The headings of Articles
and Sections are provided for convenience only and should not affect the
construction or interpretation of this Agreement. All words used in this
Agreement
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shall be construed to be of such gender or number as the circumstances require.
The terms "include" and "including" (and their derivatives) indicate examples of
a foregoing general statement and not a limitation on that general statement.
Any reference to a statute refers to the statute, any amendments or successor
legislation, and all regulations promulgated under or implementing the statute,
as in effect at the relevant time. Any reference to a contract or other document
as of a given date means the contract or other document as amended, supplemented
and modified from time to time through such date.
1.2 DEFINITIONS
For the purposes of this Agreement, the following terms and variations
on them have the meanings specified in this Section 1.2:
(a) "ACQUIRED COMPANIES" means, collectively, the Companies and
CMD, and "ACQUIRED COMPANY" means any one of DMC, AGI, LSI,
DCEM or CMD;
(b) "ACCEPTANCE DATE" means June 20, 2005.
(c) "ADVERSE CONSEQUENCE" means any Liability, loss, damage
(including incidental and consequential damages), claim, cost,
deficiency, diminution of value, or expense (including costs
of investigation and defence, penalties and reasonable legal
fees and costs), whether or not involving a third-party claim;
(d) "AGI" has the meaning set forth in the Recitals;
(e) "AGREEMENT" has the meaning set forth in the introduction, and
includes all Schedules, which are incorporated herein by this
reference;
(f) "ANCILLARY AGREEMENTS" means the Promissory Note, and the
Security Agreement;
(g) "BANK" is defined in Section 3.15(b);
(h) "BEST EFFORTS" means the efforts that a prudent Person
desirous of achieving a result would use in similar
circumstances to achieve that result as expeditiously as
possible;
(i) "BUSINESS DAY" means a day that is not a Saturday, Sunday or
legal holiday in the Province of British Columbia, Canada, or
the State of Colorado, United States of America;
(j) "BUYER" has the meaning set forth in the introduction;
(k) "BUYER INDEMNITEES" is defined in Section 12.2;
(l) "CLOSING" means the consummation and completion of the
purchase and sale of the Shares and the assignment and
assumption of the Pacrim Loan;
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(m) "CLOSING DATE" means the date on which the Closing actually
takes place;
(n) "CLOSING ESCROW AGENT" is defined in Section 2.7;
(o) "CMD" has the meaning set forth in the Recitals;
(p) "CMD SHARES" is defined in Section 3.4(e);
(q) "CMP" means Compania Minera Pacific Rim Chile Limitada, a
Chilean limited liability company;
(r) "CMP II" means Compania Minera Pacific Rim Chile Dos
Limitada., a Chilean limited liability company;
(s) "COMPANIES" means, collectively, DMC, AGI, LSI and DCEM;
(t) "COMPANY CONTRACT" means any Contract:
(i) under which any Acquired Company has or may acquire
rights, or
(ii) under which any Acquired Company is or may become
subject to any Liability, or
(iii) without limitation, the contracts with respect to the
Real Property, Mining Concessions and Water Rights
noted in Schedules 3.6(a), (b) and (c), and the
additional contracts identified in Schedule 3.7 and
Schedule 3.19;
(u) "COMPANY PLANS" means any obligation, arrangement or customary
practice owed, adopted or followed by any Acquired Company,
whether or not legally enforceable, to provide benefits, other
than salary, as compensation for services rendered, to present
or former directors, officers, employees or agents of such
Acquired Company;
(v) "CONSENT" means any approval, consent, ratification, waiver or
other authorization;
(w) "CONTEMPLATED TRANSACTIONS" means all of the transactions to
be carried out in accordance with this Agreement, including
the purchase and sale of the Shares to the Buyer, the
assumption of the Pacrim Loan by the Buyer, the resignations
of the current directors and officers of the Acquired
Companies, the performance by the parties of their other
obligations under this Agreement and the execution, delivery,
registration and performance of the Ancillary Agreements;
(x) "CONTRACT" means any contract, agreement, commitment,
understanding, lease, license, franchise, warranty, guaranty,
mortgage, note, bond or other instrument or consensual
obligation (whether written or oral and whether express or
implied) that is legally binding;
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(y) "CONTRAVENE" an act or omission would "Contravene" something
if, as the context requires:
(i) the act or omission would conflict with that
something, violate that something, result in a breach
or violation of or failure to comply with that
something, or constitute a default under that
something,
(ii) the act or omission would give any Governmental Body
or other Person the right to challenge, revoke,
withdraw, suspend, cancel, terminate or modify that
something, to exercise any remedy or obtain any
relief under that something, or to declare a default
or accelerate the maturity of any obligation under
that something, or
(iii) the act or omission would result in the creation of
an Encumbrance on the stock or assets of any Acquired
Company;
(z) "DCEM" has the meaning set forth in the Recitals;
(aa) "DISPUTE NOTICE" is defined in Section 12.7(a);
(bb) "DMC" has the meaning set forth in the Recitals;
(cc) "ENCUMBRANCE" means any charge, claim, demand, mortgage,
servitude, easement, right of way, community or other marital
property interest, covenant, equitable interest, license,
lease or other possessory interest, lien, option, warrant,
pledge, right of first refusal, purchase right, voting trust
agreement, proxy, contract, commitment, understanding,
power-of-attorney, security interest, preference, priority, or
similar restriction;
(dd) "FACILITIES" means the xxxxx pads, structures, plant,
machinery and equipment owned and operated by or on behalf of
CMD, for the purposes of processing ore from the Mining
Concessions in connection with the Mining Project at the
respective locations of the Real Property listed in Schedule
3.6(a);
(ee) "FUNDS" is defined in Section 3.15(b);
(ff) "GAAP" means generally accepted accounting principles for
financial reporting consistently applied:
(i) in the Republic of Chile, with respect to CMD and
DCEM, and
(ii) in the Cayman Islands, with respect to the remaining
Companies;
(gg) "GOVERNING DOCUMENT" means any charter, articles, bylaws,
certificate, statement, statutes or similar document adopted,
filed or registered in connection with the creation, formation
or organization of an entity, and any Contract among any
equityholders, partners or members of an entity;
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(hh) "GOVERNMENTAL AUTHORIZATION" means any Consent, license,
permit or registration issued, granted, given or otherwise
made available by or under the authority of any Governmental
Body or pursuant to any Law;
(ii) "GOVERNMENTAL BODY" means any:
(i) nation, region, state, county, city, town, village,
district or other jurisdiction,
(ii) federal, state, local, municipal, foreign or other
government,
(iii) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch,
department or other entity and any court or other
tribunal),
(iv) multinational organization,
(v) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative,
policy, regulatory or Taxing Authority or power of
any nature, or
(vi) official of any of the foregoing;
(jj) "IMPROVEMENTS" means:
(i) the Facilities, and
(ii) all other buildings, structures, fixtures and other
improvements owned or leased by or on behalf of
either or both of CMD and DCEM, and located on the
Real Property;
(kk) "INDEMNIFICATION CLAIM DEADLINE" means the date which is 24
months following the Closing Date;
(ll) "INDEMNIFICATION NOTICE" is defined in Section 12.7;
(mm) "INDEMNIFIED PERSON" is defined in Section 16.6(a);
(nn) "INDEMNIFYING PERSON" is defined in Section 12.6(a);
(oo) "KNOWLEDGE" means the actual knowledge, after completing
reasonable investigations, of an existing director or senior
officer of a party or of any affiliated entity of a party;
(pp) "LAW" means any constitution, law, statute, treaty, rule,
regulation, ordinance, code, binding case law, principle of
common law or notice of any Governmental Body;
(qq) "LENDER" is defined in Section 7.1;
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(rr) "LETTER OF INTENT" means that certain letter agreement between
the Buyer and the Seller effective June 20, 2005 and the
amendment agreement dated August 16, 2005 between the Buyer
and the Seller;
(ss) "LIABILITIES" means, as to any Person, any and all liabilities
or obligations of such Person of any nature, whether known or
unknown, whether absolute, accrued, contingent, xxxxxx,
inchoate or otherwise, whether due or to become due, and
whether or not required to be reflected on a balance sheet
prepared in accordance with GAAP;
(tt) "LSI" has the meaning set forth in the Recitals;
(uu) "MINING PROJECT" means, collectively:
(i) the acquisition and maintenance of the Real Property
and Mining Concessions,
(ii) the mining and extraction of ore from the Mining
Concessions and the processing thereof through the
Facilities,
(iii) the sale of the resulting mineral products, and
(iv) the decommissioning of the Facilities and the
reclamation and restoration of the Mining Concessions
and Real Property under applicable Law,
all as heretofore carried out, or proposed or required to be
carried out, by CMD;
(vv) "MINING CONCESSIONS" is defined in Section 3.6(b);
(ww) "MOVABLE ASSETS" is defined in Section 3.6(d);
(xx) "ORDER" means any order, injunction, judgment, decree, ruling,
assessment or arbitration award of any Governmental Body or
arbitrator and any Contract with any Governmental Body
pertaining to compliance with Law;
(yy) "ORDINARY COURSE OF BUSINESS" means actions taken in any
Acquired Company's normal operation, including, with respect
to CMD, the winding up of mining and processing operations and
the reclamation required as a result thereof, in each case
consistent with its past practice or in accordance with the
requirements of applicable Law;
(zz) "PACRIM LOAN" means the loan(s), aggregating Canadian EIGHT
MILLION FOUR HUNDRED AND SEVENTY-SIX THOUSAND EIGHT HUNDRED
AND NINETY-EIGHT (CAD 8,476,898) DOLLARS as at July 31, 2005
and made by the Seller to DMC in its capacity as a shareholder
of DMC;
(aaa) "PERSON" means an individual or an entity, including a
corporation, share company, limited liability company,
partnership, trust, association, Governmental
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Body or any other body with legal personality separate from
its equityholders or members;
(bbb) "POWERS" means the powers of attorney and other authorizations
granted by an Acquired Company to a third party and more
particularly set forth in Schedule 3.18;
(ccc) "PRE-CLOSING PERIOD" means the period commencing upon the date
of execution of this Agreement and ending on and including the
Closing Date;
(ddd) "PROCEEDING" means any action, arbitration, audit, claim,
examination, investigation, hearing, litigation or suit
(whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, and whether public
or private) commenced, brought, conducted or heard by or
before, or otherwise involving, any Governmental Body or
arbitrator;
(eee) "PROJECT ENCUMBRANCES" is defined in Section 7.1(a);
(fff) "PROMISSORY NOTE" is defined in Section 2.4(a);
(ggg) "PROVIDED INFORMATION" is defined in Section 15.1;
(hhh) "PURCHASE PRICE" is defined in Section 2.2;
(iii) "PURCHASED ASSETS" means, collectively:
(i) the Shares, and
(ii) the Pacrim Loan;
(jjj) "QUALIFIED SUCCESSOR" is defined in Section 7.1(b);
(kkk) "REAL PROPERTY" is defined in Section 3.6(a);
(lll) "RELATED PERSON" means, with respect to a particular Person,
any other Person directly or indirectly controlling,
controlled by or under common control with, such Person and,
with respect to an individual, any other individual that is a
member of the individual's immediate family (by blood,
marriage or adoption), a member of the individual's household,
an entity in which the individual participates in management
or an employee or employer of the individual. For purposes of
this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of an entity, whether through the
ownership of voting securities or otherwise;
(mmm) "REORGANIZATION" is defined in Section 3.12;
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(nnn) "REPRESENTATIVE" means, with respect to a particular Person,
any director, officer, employee, agent, consultant, advisor,
legal counsel, accountant or other representative of that
Person;
(ooo) "SECURITY AGREEMENT" is defined in Section 2.4(b);
(ppp) "SELLER" has the meaning set forth in the introduction;
(qqq) "SELLER INDEMNITEES" is defined in Section 12.3;
(rrr) "SHARES" has the meaning set forth in the Recitals;
(sss) "SPECIFIED COLLATERAL" has the meaning set forth in Section
7.1(a);
(ttt) "TAX" or "TAXES" means any and all taxes, charges, fees,
duties (including customs duties), levies or assessments,
including income, gross receipts, net proceeds, alternative or
add-on minimum, ad valorem, turnover, real and personal
property (tangible and intangible), sales, use, franchise,
excise, value added, stamp, leasing, lease, user, transfer,
fuel, excess profits, occupational, interest equalization,
windfall profits, severance, license, payroll, environmental,
capital stock, disability, employee's income withholding,
other withholding, unemployment and social security taxes,
that are imposed by any Governmental Body, and including any
interest, penalties or additions to tax attributable thereto;
(uuu) "TAX RETURN" means any report, return or other information
required to be supplied to a Governmental Body in connection
with any Taxes;
(vvv) "TAXING AUTHORITY" means the Governmental Body(ies) in each
jurisdiction of the Acquired Companies responsible for
collecting and administering Taxes in such jurisdiction; and
(www) "WATER RIGHTS" is defined in Section 3.6(c).
ARTICLE 2
SALE AND PURCHASE OF THE PURCHASED ASSETS AND CLOSING
2.1 AGREEMENT OF SALE AND PURCHASE
Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing the Seller will sell, assign and transfer the
Purchased Assets to the Buyer, and the Buyer will purchase and acquire the
Purchased Assets from the Seller.
2.2 PURCHASE PRICE
The consideration to be paid by the Buyer to the Seller for the
Purchased Assets (the "PURCHASE PRICE") will be the sum of US FIVE MILLION FOUR
HUNDRED THOUSAND (USD 5,400,000) DOLLARS, such Purchase Price being allocated
amongst the Purchased Assets as follows:
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(a) as to the sum of US TWO HUNDRED (USD 200) DOLLARS, to the
Shares (being the sum of US ONE HUNDRED (USD 100) DOLLARS to
the ordinary shares comprised in the Shares and US ONE HUNDRED
(USD 100) DOLLARS to the preference shares); and
(b) as to the sum of US FIVE MILLION THREE HUNDRED NINETY-NINE
THOUSAND EIGHT HUNDRED (USD 5,399,800) DOLLARS, to the Pacrim
Loan.
2.3 PAYMENT OF THE PURCHASE PRICE
The Buyer will pay the Purchase Price to the Seller as follows:
(a) the sum of US THREE HUNDRED THOUSAND DOLLARS (USD $300,000)
has been paid by the Buyer to the Seller pursuant to the
Letter of Intent on June 20, 2005, and the Seller acknowledges
receipt thereof;
(b) the sum of US THREE HUNDRED THOUSAND DOLLARS (USD $300,000)
has been paid by the Buyer to the Seller pursuant to the
Letter of Intent on July 20, 2005, in order to extend the
Closing Date to August 19, 2005, and the Seller acknowledges
receipt thereof;
(c) the sum of US THREE HUNDRED THOUSAND DOLLARS (USD $300,000)
has been paid by the Buyer to the Seller on August 17, 2005,
pursuant to an extension of the Letter of Intent dated August
16, 2005, in order to extend the Closing Date to September 20,
2005, and the Seller acknowledges receipt thereof;
(d) as to the sum of US TWO MILLION ONE HUNDRED THOUSAND DOLLARS
(USD $2,100,000) by the delivery by the Buyer to the Seller,
at Closing, by wire transfer, or by delivery of a certified
cheque or bank draft, in either case in favour of the Seller
and drawn on a Canadian chartered bank immediately and
unconditionally negotiable and payable at par in Vancouver,
British Columbia, Canada, in that amount;
(e) as to the sum of US ONE MILLION DOLLARS (USD $1,000,000) by
the delivery by the Buyer to the Seller by wire transfer, on
or before the date which is twelve (12) months following the
Closing Date, or by delivery of a certified cheque or bank
draft, in either case in favour of the Seller and drawn on a
Canadian chartered bank immediately and unconditionally
negotiable and payable at par in Vancouver, British Columbia,
Canada, in that amount;
(f) as to the sum of US ONE MILLION FOUR HUNDRED THOUSAND DOLLARS
(USD $1,400,000) DOLLARS by the delivery by the Buyer to the
Seller by wire transfer, on or before the date which is
twenty-four (24) months following the Closing Date, or by
delivery of a certified cheque or bank draft, in either case
in favour of the Seller and drawn on a Canadian chartered bank
immediately and unconditionally negotiable and payable at par
in Vancouver, British Columbia, Canada, in that amount.
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2.4 SECURITY FOR PAYMENT OF BALANCE OF PURCHASE PRICE
In order to evidence the indebtedness of the Buyer to the Seller in
respect of, and to secure the payment of the balance of, that portion of the
Purchase Price payable after the Closing Date, the Buyer will, on Closing,
deliver to the Seller:
(a) a promissory note, duly and validly executed in the amount of
US TWO MILLION FOUR HUNDRED THOUSAND (USD $2,400,000) (the
"PROMISSORY NOTE"), in favour of the Seller and providing for
payment of the principal balance, without interest thereon, in
the amounts and on the dates, specified in Sections 2.3 (d)
and (e); and
(b) a duly and validly executed agreement (the "SECURITY
AGREEMENT"), governed by the laws of the Cayman Islands,
pursuant to which the Buyer creates, in favour of the Seller,
an equitable charge over the Purchased Assets, ranking in
priority ahead of, and which shall be free and clear of, any
other Encumbrances with respect to the Purchased Assets,
subject to the rights granted by the Seller pursuant to
Section 7.1.
2.5 CLOSING
The Closing will be subject to approval of the Contemplated
Transactions by such Governmental Authorities as are necessary to effect the
Contemplated Transactions, on terms reasonably acceptable to the Buyer and the
Seller. Unless otherwise agreed by the Seller and the Buyer in writing, the
Closing will take place at the offices of Xxxxxx and Xxxxxx, Xxxxxx House, South
Church Street, Xxxxxx Town, Grand Cayman Island, British West Indies at 1:00
p.m. (local time) on September 20, 2005, or such other date and place as the
Seller and the Buyer may mutually agree in writing. Subject to Article 11,
failure to consummate the purchase and sale provided for in this Agreement at
the place and on the date determined by the previous sentence will not result in
the termination of this Agreement and will not relieve any party of any
obligation under this Agreement. For all purposes under this Agreement and each
of the Ancillary Agreements, the Closing will be deemed to have occurred at 1:00
p.m. (Cayman Islands local time) on the Closing Date, irrespective of the actual
time that the Closing takes place.
2.6 CLOSING DELIVERIES
At the Closing:
(a) the Seller will deliver, or cause to be delivered, to the
Buyer, or to the Buyer's Representative(s) in locations other
than the Cayman Islands:
(i) evidence satisfactory to the Buyer, acting
reasonably, to effect the transfer of the Shares into
the name of the Buyer, together with a duly prepared
entry in the share registry of DMC evidencing the
Buyer as the holder of the Shares, and accompanied by
any certificates representing the Shares,
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(ii) resignations of such of the directors and officers of
each of the Acquired Companies as may be requested by
the Buyer or the Seller, such resignations to include
confirmation that the relevant director or officer
has no outstanding claims against the relevant
Acquired Company, whether for loss of office or
otherwise,
(iii) evidence reasonably satisfactory to the Buyer of the
termination of any Powers, other than the Powers
identified to the Seller by the Buyer in writing
prior to Closing;
(iv) certified copies of resolutions of the directors of
the Seller approving this Agreement and the
Contemplated Transactions and authorizing the
performance by the Seller of its obligations
hereunder,
(v) a certificate executed by the Seller as to the
accuracy of the Seller's representations and
warranties as of the Closing in accordance with
Section 9.1 and as to the Seller's compliance with
and performance of its covenants and obligations to
be performed or complied on or before the Closing
Date in accordance with Section 9.2,
(vi) a duly and validly executed assignment of the Pacrim
Loan to the Buyer, acknowledged by DMC,
(vii) the additional documentation specified in Section
9.3,
(viii) the Governing Documents, minute books, share
register(s), corporate seal (if any) ands other books
and records pertaining to each of the Acquired
Companies,
(ix) such documents as may be required pursuant to Chilean
Law in order to transfer the rights currently held by
Xx. Xxxxxxx Xxxxxx Xxxxxxx in DCEM to the nominee of
the Buyer as required to ensure that DCEM will,
following Closing, have a minimum of two (2)
partners;
(x) a waiver from Xxxxxx Xxxxxxxx Majlis & Cia., Chilean
counsel to the Seller, with respect to the 60 day
cancellation restriction in such firm's engagement
agreement, and
(xi) any other documentation reasonably required to give
effect to the Contemplated Transactions and required
to be executed by the Seller or persons on behalf of
the Seller; and
(b) the Buyer will deliver, or cause to be delivered, to the
Seller, or to the Seller's representative(s) in locations
other than the Cayman Islands:
(i) the wire transfer confirmation, solicitors' trust
cheque, bank draft or certified cheque as provided in
Section 2.3(c),
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(ii) duly executed releases by each of the Acquired
Companies of each of the directors and officers whose
resignations are delivered pursuant to Section
2.6(a)(ii),
(iii) certified copies of resolutions of directors of the
Buyer approving this Agreement and the Contemplated
Transactions and authorizing the performance by the
Buyer of its obligations hereunder,
(iv) the Promissory Note,
(v) the Security Agreement,
(vi) confirmations of all Governmental Authorities or
other offices or registries as to the registration of
the Security Agreement as necessary to make the
security interests granted thereby valid and
enforceable under applicable Laws,
(vii) a certificate executed by the Buyer as to the
accuracy of the Buyer's representations and
warranties as of the Closing in accordance with
Section 10.1 and as to its compliance with and
performance of its covenants and obligations to be
performed or complied with on or before the Closing
Date in accordance with Section 10.2,
(viii) any other documentation reasonably required to give
effect to the Contemplated Transactions and required
to be executed by the Buyer or persons on behalf of
the Buyer.
2.7 CLOSING PROCEDURES
For the convenience of the parties, prior to the Closing each party may
deliver all certificates and other documents to be delivered by such party at
the Closing to a mutually agreed escrow agent, which (absent such agreement)
will be Xxxxxx and Xxxxxx, Cayman Islands counsel to the Seller or, if
applicable, the Seller's counsel in such other jurisdictions in which Closing
deliveries may be required (each, a "CLOSING ESCROW AGENT"), with copies to all
other parties. Provided that all Closing Escrow Agents have received written
notice from each party on or prior to the Closing Date that all conditions to
such party's performance hereunder have been waived or satisfied (or will be
satisfied upon delivery of the certificates and documents held by the Closing
Escrow Agents), the purchase and sale contemplated by this Agreement will then
be made by the Closing Escrow Agents on the Closing Date and the Closing Escrow
Agents will each promptly thereafter deliver to each party those certificates
and other documents such party is entitled to receive at the Closing under the
terms of this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Buyer acknowledges that the Purchased Assets, and all assets and
Liabilities associated with the Purchased Assets including, without limitation,
the Acquired Companies and their respective shares, assets and Liabilities, are
being sold to the Buyer on an "as is, where is"
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basis without any representations or warranties other than the following
specific and limited representations and warranties set out herein. Subject to
the foregoing, the Seller represents and warrants to the Buyer that:
3.1 ORGANIZATION AND GOOD STANDING OF ACQUIRED COMPANIES
(a) Each of DMC, AGI and LSI is a company, DCEM is a "sociedad de
responsabilidad limitada" (limited liability partnership) and
CMD is a "sociedad contractual minera", in each case duly
organized, validly existing and in good standing with respect
to any required annual filings or reports under the governing
business organization Law of its jurisdiction of organization,
with full company power and authority to conduct its business
as presently conducted, to own or use the properties and
assets that it purports to own or use, and to perform all its
obligations under all its Company Contracts.
(b) The only assets of DMC are the shares in AGI and LSI, the
rights in the capital of DCEM and US$418.67 cash. Except for
the Pacrim Loan and any Liabilities that may arise with regard
to the shares in AGI, LSI and DCEM, DMC has no Liabilities.
(c) The only assets of AGI are the shares in CMD and US$157.45
cash. Except for any Liabilities to DMC and Liabilities that
may arise with regard to the shares in CMD, AGI has no
Liabilities.
(d) The only assets of LSI are the shares in CMD and US$253.43
cash. Except for any Liabilities to DMC and Liabilities that
may arise with regard to the shares in CMD, LSI has no
Liabilities.
(e) To the Knowledge of the Seller, CMD was properly transformed
from a "sociedad anonima" to a "sociedad contractual minera"
in 1994.
3.2 ENFORCEABILITY
The Seller is a company duly organized, validly existing and in good
standing under the laws of the Province of British Columbia, Canada and has the
absolute and unrestricted right, power and authority to execute and deliver this
Agreement and the Ancillary Agreements and to perform its obligations under this
Agreement and the Ancillary Agreements, which actions have been duly authorized
and approved by all necessary corporate action of the Seller. Pursuant to a
Certificate of Amalgamation dated April 11, 2001, the Seller is the sole
surviving entity of an amalgamation of the Seller and Dayton Mining Corporation,
and is the legal and beneficial owner of the Shares free and clear of all
Encumbrances. Assuming due authorization, execution and delivery of this
Agreement and the Ancillary Agreements by the Buyer, this Agreement and the
Ancillary Agreements constitute the legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms, subject to
the usual exceptions with respect to creditors' rights and the availability of
equitable remedies.
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3.3 REQUIRED CONSENTS; NO VIOLATION
Neither the Seller nor any Acquired Company will be required to give
any notice to any Person or obtain any Governmental Authorization or other
Consent in connection with the execution and delivery of this Agreement or any
Ancillary Agreement, or the consummation or performance of any of the
Contemplated Transactions, and neither the execution and delivery of this
Agreement or any Ancillary Agreement, nor the consummation or performance of any
of the Contemplated Transactions, will directly or indirectly (with or without
notice or lapse of time):
(a) Contravene any provision of the Governing Documents of the
Seller or an Acquired Company, or any resolution adopted by
the shareholders or board of directors of the Seller or an
Acquired Company;
(b) Contravene any Company Contract, Governmental Authorization,
Law or Order to which any Acquired Company, the Seller, or any
of the assets owned or used by the Seller or an Acquired
Company, may be subject;
(c) result in the imposition or creation of any Encumbrance upon
or with respect to any of the assets owned or used by the
Seller or an Acquired Company; or
(d) give any Person the right to prevent, delay or otherwise
interfere with all or any portion of the Contemplated
Transactions.
3.4 CAPITALIZATION AND OWNERSHIP
The authorized and issued share capital of each of the Acquired
Companies is as follows:
(a) the authorized share capital of DMC consists of US TWO HUNDRED
MILLION DOLLARS (USD 200,000,000) DOLLARS divided into:
(i) ONE HUNDRED MILLION (100,000,000) ordinary shares of
a par value of US ONE (USD 1.00) DOLLAR per share, of
which TWELVE MILLION, NINE HUNDRED AND SEVENTY-FIVE
THOUSAND NINE HUNDRED AND NINETEEN (12,975,919)
ordinary shares are issued and outstanding all of
which are fully paid and non-assessable, and
(ii) ONE HUNDRED MILLION (100,000,000) preference shares
of a par value of US ONE (USD 1.00) DOLLAR per share,
of which FIFTY-SIX MILLION FIVE HUNDRED AND
SIXTY-FOUR SEVEN HUNDRED AND SIXTY-SEVEN (56,564,767)
preference shares are issued and outstanding all of
which are fully paid and non-assessable,
all of which are, and will immediately prior to Closing be,
held beneficially and of record by the Seller, free and clear
of all Encumbrances;
(b) the authorized share capital of AGI consists of US FIFTY
THOUSAND (USD 50,000) DOLLARS divided into FIFTY THOUSAND
(50,000) ordinary shares of a par value of US ONE (USD 1.00)
DOLLAR per share, of which TWO (2)
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ordinary shares are issued and outstanding both of which are
fully paid and non-assessable, all of which are, and will
immediately prior to Closing be, held beneficially and of
record by DMC, free and clear of all Encumbrances;
(c) the authorized share capital of LSI consists of US FIFTY
THOUSAND (USD 50,000) DOLLARS divided into FIFTY THOUSAND
(50,000) ordinary shares of a par value of US ONE (USD 1.00)
DOLLAR per share, of which TWO (2) ordinary shares are issued
and outstanding both of which are fully paid and
non-assessable, all of which are, and will immediately prior
to Closing be, held beneficially and of record by DMC, free
and clear of all Encumbrances;
(d) the authorized share capital of DCEM, pursuant to its
Governing Documents, consists of SIX HUNDRED NINETY MILLION
EIGHTY HUNDRED THIRTY THREE THOUSAND AND THREE HUNDRED THIRTY
(CLP 690,833,330) CHILEAN PESOS, expressed in one hundred
(100) rights or participations, all of which are subscribed
and outstanding and are, and will immediately prior to Closing
be, held beneficially and of record, as to 99.9290941% of the
rights in the capital of DCEM, equivalent to SIX HUNDRED
NINETY MILLION THREE HUNDRED FORTY-THREE THOUSAND AND FOUR
HUNDRED EIGHTY-NINE (CLP 690,343,489) CHILEAN PESOS, by DMC
and as to 0.0709059% of the rights in the capital of DCEM,
equivalent to FOUR HUNDRED EIGHTY-NINE THOUSAND AND EIGHT
HUNDRED FORTY-ONE (CLP 489,841) CHILEAN PESOS, by Xx. Xxxxxxx
Xxxxxx Xxxxxxx. The capital of DCEM has been paid up to the
amount of FIVE HUNDRED THIRTY-FIVE MILLION EIGHT HUNDRED
SEVENTY-ONE THOUSAND AND THREE HUNDRED AND THIRTY (CLP
535,871,330) CHILEAN PESOS and ONE HUNDRED FIFTY-FOUR MILLION
NINE HUNDRED SIXTY-TWO THOUSAND (CLP 154,962,000) CHILEAN
PESOS remains to be paid by DMC on the outstanding rights,
which rights are assessable in respect of the unpaid capital
thereon. All rights in the capital of DCEM are, and will
immediately prior to the closing be, free and clear of all
Encumbrances (other than in respect of calls or assessments
for unpaid capital in respect of such shares as noted above);
and
(e) the authorized capital of CMD consists of US ONE HUNDRED
MILLION (USD 100,000,000) DOLLARS, divided into FIFTY-FOUR
MILLION (54,000,000) no par value shares (the "CMD SHARES"),
all of which are issued, subscribed and outstanding and are,
and will immediately prior to Closing be, held beneficially
and of record, as to FIFTY-THREE MILLION SEVEN HUNDRED AND
THIRTY THOUSAND (53,730,000) by AGI, and as to TWO HUNDRED AND
SEVENTY THOUSAND (270,000) by LSI. The capital of CMD has been
paid up to the amount of US NINETY-TWO MILLION NINE HUNDRED
FORTY-ONE THOUSAND TWO HUNDRED SIXTY-FIVE (USD 92,941,265)
DOLLARS and US SEVEN MILLION FIFTY-EIGHT THOUSAND SEVEN
HUNDRED AND THIRTY-FIVE (USD 7,058,735) DOLLARS remains to be
paid by the holders of the issued and outstanding CMD Shares,
which shares are assessable in respect of the unpaid capital
thereon. All of the CMD Shares are, and will immediately prior
to Closing be, free and clear of all Encumbrances
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(other than in respect of calls or assessments for unpaid
capital in respect of such shares as noted above).
No portion of the issue capital of any Acquired Company was issued in violation
of any pre-emptive, first refusal or other subscription rights of any member,
partner or shareholder of such Acquired Company or of any other Person. No
Person other than the Seller owns or otherwise has any rights to any of the
Shares. Other than the Seller and the Acquired Companies, no Person owns or
otherwise has any right to any of the share capital of DCM, AGI, LSI, CMD or
DCEM. There are no Contracts relating to the issuance, sale or transfer of any
equity securities or other securities of any Acquired Company and no Acquired
Company owns, or has any Contract to acquire, any equity securities or other
securities of any Person or any direct or indirect equity or ownership interest
in any other business. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Seller to pay dividends or
distributions on or to purchase, redeem or retire any shares or other interests
in the Acquired Companies, or that could require the Seller or any Acquired
Company to pay dividends or distributions on or to purchase, redeem or retire
any shares of any Acquired Company. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation or similar rights with respect
to or any of the Acquired Companies. There are no voting trusts, proxies,
powers-of-attorney or other agreements or understandings currently in effect
with respect to the voting of any of the shares in any Acquired Company other
than those described in Schedule 3.18. Upon Closing, after taking into account
the Contemplated Transactions, the Buyer shall acquire from the Seller good and
marketable to all of the issued and outstanding stock of and any other voting,
equity or ownership interest in DMC, free and clear of any and all Encumbrances,
other than Encumbrances pursuant to this Agreement and the Ancillary Agreements.
3.5 BOOKS AND RECORDS
To the Knowledge of the Seller, except as disclosed to the Buyer in a
letter from the Seller dated September 20, 2005:
(a) the books of account and company minute books of the Acquired
Companies are accurate and complete in all material respects
and have been maintained in accordance with applicable Law;
(b) each material transaction of each Acquired Company is recorded
on the books of account of such Acquired Company; and
(c) the minute books of each Acquired Company contain reasonably
accurate records of the proceedings of, and resolutions passed
at, all meetings held by such Acquired Company's owners and
directors.
3.6 REAL PROPERTY; MINING CONCESSIONS; WATER RIGHTS; MOVABLE ASSETS;
ENCUMBRANCES
(a) Schedule 3.6(a) contains:
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(i) a legal description of all of the material Real
Property owned by DCEM or CMD,
(ii) a description (by subject leased Real Property, name
of lessor, date of lease and term expiration date) of
all leases of Real Property in which DCEM or CMD has
a leasehold estate, and
(iii) a description of any active easements, rights-of-way
and mortgages granted in favour of DCEM or CMD,
(collectively, the "REAL PROPERTY");
(b) Schedule 3.6(b) contains:
(i) a legal description of all exploitation mining
concessions with respect to which DCEM or CMD has a
property title, and
(ii) a description (by subject leased mining concession,
name of lessor, date of lease and term expiration
date) of all leases of mining concessions held by
DCEM or CMD,
(collectively, the "MINING CONCESSIONS");
(c) Schedule 3.6(c) contains a legal description and
identification number of all water rights owned by DCEM or CMD
(collectively, the "WATER RIGHTS");
(d) Schedule 3.6(d) contains:
(i) a list of all material movable assets owned by DCEM
or CMD and utilized in the Mine Project,
(ii) a list of all leases of material movable assets held
by DCEM or CMD, and
(iii) a list of any other material interest(s) in material
movable assets held by DCEM or CMD,
(collectively, the "MOVABLE ASSETS");
(e) to the Knowledge of the Seller and except as disclosed in any
of Schedules 3.6(a), (b), (c) and (d), each of DCEM and CMD
holds title to its respective estates in the Real Property,
Mining Concessions, Water Rights, and Movable Assets free and
clear of any Encumbrances, other than liens for Taxes for the
current Tax year which are not yet due and payable, provided,
however, that it is expressly acknowledged by the Buyer that,
notwithstanding any of the foregoing, the Seller expressly
makes no representation or warranty with respect to:
(i) the existence, nature or legal effect of any real
property or mining concessions interests which may be
owned (whether such ownership is
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registered or unregistered) by third parties or to or
in which third parties may assert, claim, hold or own
any other title or interest, which may overlap,
conflict with, constitute prior title to or otherwise
constitute an Encumbrance upon, any Real Property or
Mining Concessions, or
(ii) the nature, legal validity or enforceability of any
interest in any real property or mining concessions
which may have been acquired by, or sought to have
been acquired by, DCEM or CMD from any holder of real
property or mining concessions described in Section
3.6(e)(iii),
and, provided, further, that all risk and Liability in
connection with the foregoing subparagraphs (i) and (ii), is
hereby expressly assumed by the Buyer without any recourse
whatsoever by the Buyer to the Seller; and
(f) there are no applications that have been presented by DCEM or
CMD for the granting of exploitation or exploration mining
concessions and are currently outstanding.
3.7 CONTRACTS; NO DEFAULTS
Schedule 3.7 contains a list of all material Contracts to which an
Acquired Company is a party or by which it is bound. Each Company Contract
listed on Schedule 3.7 is in full force and effect and is valid and enforceable
in accordance with its terms and:
(a) neither any Acquired Company nor, to the Knowledge of the
Seller, any other party to any such Company Contract has
Contravened any of the applicable terms of such Company
Contract; and
(b) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may constitute or result
directly or indirectly in Contravention of any such Company
Contract by any Acquired Company or, to the Knowledge of the
Seller, any other party thereto.
3.8 TAXES
With respect to Taxes:
(a) the Seller and all Acquired Companies have filed (or have had
filed on their behalf) all required Tax Returns; and
(b) all Taxes shown as due and owing on all such Tax Returns have
been paid and there are no assessments outstanding,
provided that it is expressly acknowledged, notwithstanding the foregoing, that
the Seller makes no representation or warranty whatsoever with respect to the
existence, nature, amount, assignability or deductibility of any "tax losses" or
"tax benefits" apparently held by or accruing to an Acquired Company.
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3.9 PROCEEDINGS
Schedule 3.9 lists all Proceedings and pending Proceedings:
(i) by or against the Seller with respect to or
involving, or which might reasonably involve, any of
the Purchased Assets or any Acquired Company, or
(ii) by or against any Acquired Company.
To the Knowledge of the Seller no other Proceeding has been threatened.
3.10 PACRIM LOAN
The Pacrim Loan represents actual advances of funds by the Seller to
DMC, is duly and validly owing to the Seller as at the date hereof and will,
immediately prior to Closing, be so owing, is not subject to any arrangement,
compromise, postponement or priority agreement which would prevent the same from
being repaid in the normal course, is unsecured and non-interest bearing and is
properly and accurately reflected in the accounting records of DMC.
3.11 DELIVERY OF DOCUMENTS TO BUYER NOT TO CONSTITUTE REPRESENTATION OR
WARRANTY
Other than documents available in public records, the Seller has
delivered or made available to the Buyer all documents that are, to the Seller's
Knowledge, material to the Acquired Companies or the Mining Project. The Buyer
acknowledges, confirms and agrees that no delivery of any documentation by or on
behalf of the Seller in connection with the Contemplated Transactions will
constitute, or be deemed for any reason to constitute (including as a result of
any oral communications by a Representative of the Seller or an Acquired Company
in connection therewith, whether contemporaneous with the delivery thereof or
otherwise) a representation or warranty with respect to the truth, accuracy or
reliability of such documentation, the contents thereof or the information
contained therein, save and except that if such documentation was prepared by a
current director, officer or employee of the Seller or of any Acquired Company,
the Seller represents and warrants that such document was prepared in good
faith. In particular, the Buyer acknowledges that, with respect to any
information or documentation with respect to the geology, geochemistry,
geophysics, mineralogy or metallurgy, or mineral reserves or resources, in, upon
or under the Mining Concessions, the Seller expressly makes no representation or
warranty with respect to the accuracy, completeness, correctness or reliability
of any such materials and that any reliance thereon or use thereof by the Buyer
or any of its Representatives is at their sole and only risk and liability.
3.12 FORMAL PREVENTIVE REORGANIZATION
On December 19, 2000, CMD filed a formal preventive reorganization
before the Andacollo Civil Court of the Republic of Chile, and on May 15, 2001,
CMD executed an agreement with its unsecured creditors ("Convenio Judicial
Preventivo") pursuant to Chilean bankruptcy law (collectively, the
"REORGANIZATION"). All of the unsecured creditors of CMD who or which were a
party to the Reorganization, including the Seller, have been paid and
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acknowledged in writing that CMD has complied with the terms and conditions of
the Reorganization. Hence, all of the unsecured creditors of CMD who or which
were a party to the Reorganization have declared the Reorganization to be
terminated and waived any rights to any further compensation of any kind
whatsoever. To the Knowledge of Seller, there are no unsecured or secured
creditors of CMD other than specifically as disclosed in this Agreement and the
Schedules attached hereto. CMD obtained a loan from the Bank, which loan was
used to pay unsecured creditors of CMD. The reclamation fund was subsequently
closed and part of the funds that were allocated to such reclamation fund were
used by CMD to repay the loan obtained from the Bank. The remaining funds,
identified in Section 3.15(b)(i), subsequently have been and are being used to
pay CMD's ongoing obligations.
3.13 PREVIOUS BIDDERS
The Seller has previously conducted negotiations for the indirect sale
of the Purchased Assets with third parties ("Previous Bidders") and has entered
certain agreements with the Previous Bidders, all of which have expired or are
void and without force or effect. There is no Contract or understanding with any
Previous Bidder or any third party which grants any rights or interests in, or
the right to acquire any interest in, the Mining Project, any Acquired Company
or the Purchased Assets.
3.14 PERMITS
CMD currently holds all permits related to the current status of
operations at the Mining Project, which status is currently "in closure", and
such permits are described in Schedule 3.14. Except as listed in Schedule 3.14,
all such permits are in good standing and CMD has not received any notice of any
violation of any such permits; provided that:
(a) CMD has not proceeded with the filing of the final closure
plan prepared by CMD for the xxxxx pad, process plant and
other remaining facilities (the "Closure Plan") for approval
with any Governmental Body, and
(b) CMD, of itself, did not prepare the information and data
contained in the environmental impact statement (Declaracion
de Impacto Ambiental) ("DIA") submitted by CMD to the regional
environmental authority (Comision Regional del Medio Ambiente)
in connection with an application to re-commence mining
operations at the Mining Project.
Accordingly, the Seller makes no representation or warranty to the Buyer as to:
(x) the adequacy or sufficiency of the information contained in
the DIA;
(y) the ability of the Buyer or its Affiliates to commence, with
or without delay, through CMD, operations at the Mining
Project by virtue of the filing of the DIA with the regional
environmental authority (Comision Regional del Medio
Ambiente); or
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(z) the ability of the Buyer or its Affiliates to commence, with
or without delay, through CMD, operations at the Mining
Project arising as a result of CMD having refrained from
timely filing the Closure Plan with any Governmental
Authority.
3.15 FINANCIAL STATEMENTS
(a) Except as disclosed in a letter dated September 20, 2005,
delivered by the Seller to the Buyer pursuant to Section 3.5,
CMD's audited and unaudited financial statements have been
prepared in accordance with GAAP, consistently applied and are
true and accurate in all material respects. CMD has no
material Liabilities other than:
(i) a bank loan in the approximate amount of US$ 197,500,
(ii) current payables incurred in the Ordinary Course of
Business,
(iii) accrued Liabilities to current employees in an amount
that does not exceed US$400,000,
(iv) as disclosed in Schedules 3.6(a) - (d), and
(v) the Liabilities arising from contracts listed in
Schedule 3.7, the Proceedings listed in Schedule 3.9
and the permits listed in Schedule 3.14.
Since the date of the latest financial statements of CMD,
there has not been any material adverse change in the
business, operations, properties, prospects, condition or
status of CMD, its assets and Liabilities, and no event has
occurred that reasonably may be expected to result in such a
material adverse change other than as a result of general
economic conditions.
(b) As disclosed on CMD's financial statements, as at July 31,
2005, CMD held:
(i) US$ 204,853 in a term deposit representing the
remaining portion of the reclamation fund, and
(ii) US$100,106 in a combination of cash on hand and in a
bank account in the name of CMD
(collectively, the "FUNDS"), with Corpbanca in La Serena,
Chile (the "BANK").
3.16 SELLER'S RESIDENCY AND LOCATION
The Seller is not, and will not immediately prior to Closing be, a
non-resident of Canada for the purposes of the Income Tax Act (Canada). The
Seller's chief executive office is that set out in Section 16.2.
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3.17 CMP AND CMP II; NO RESIDUAL INTERESTS OR LIABILITIES
The creation of each of CMP and CMP II, and the transfers of the rights
of each from DMC to a nominee of the Seller prior to Closing were each carried
out in accordance with applicable Law. Neither CMP nor CMP II have any right,
title or interests in the Mining Project, the Mining Concessions, the Real
Property, the Movable Assets, any Improvements or the Acquired Companies, nor
are there any Liabilities of either CMP or CMP II to an Acquired Company, or of
any Acquired Company to either CMP or CMP II.
3.18 POWERS
Schedule 3.18 is a list of:
(a) all Powers granted from April 30, 2001 to the date hereof and
currently in effect; and
(b) to the Knowledge of the Seller, all Powers granted prior to
April 30, 2001 and currently in effect.
3.19 FOREIGN INVESTMENT CONTRACTS
Schedule 3.19 contains a list of all Foreign Investment Contracts
executed in connection with CMD and DCEM pursuant to Decree Law Xx. 000 xx xxx
Xxxxxxxx xx Xxxxx.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that, except as set
forth herein:
4.1 ORGANIZATION AND GOOD STANDING OF BUYER
The Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, its jurisdiction of
organization, with full corporate power and authority to conduct its business as
presently conducted, to own or use the properties and assets that it purports to
own or use, and to perform all its obligations under all agreements to which it
is a party.
4.2 ENFORCEABILITY
The Buyer has the absolute and unrestricted right, power and authority to
execute and deliver this Agreement and its Ancillary Agreements and to perform
its obligations under this Agreement and its Ancillary Agreements, which actions
have been duly authorized and approved by all necessary corporate action of the
Buyer. Assuming the execution and delivery of this Agreement by the Seller, this
Agreement constitutes the legal, valid and binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms, subject to the usual
exceptions with respect to creditors' rights and the availability of equitable
remedies. Assuming their execution and delivery by the other parties thereto,
the Ancillary Agreements to which the Buyer becomes a party will, upon execution
and delivery, constitute legal, valid and binding
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obligations of the Buyer enforceable against the Buyer in accordance with their
respective terms, subject to the usual exceptions with respect to creditors'
rights and the availability of equitable remedies.
4.3 NO CONSENTS REQUIRED
The Buyer is not, and will not be, required to obtain any Governmental
Authorization or other Consent in connection with the execution and delivery of
this Agreement or the Ancillary Agreements, or the consummation or performance
of any of the Contemplated Transactions.
4.4 NO CONFLICT
Neither the execution and delivery of this Agreement or the Ancillary
Agreements by the Buyer nor the consummation or performance of any of the
Contemplated Transactions by the Buyer will give any Person the right to
prevent, delay or otherwise interfere with any of the Contemplated Transactions
pursuant to:
(a) any provision of the Buyer's Governing Documents;
(b) any resolution adopted by the board of directors or the
stockholders of the Buyer;
(c) any Law, Order or Governmental Authorization to which the
Buyer may be subject; or
(d) any Contract to which the Buyer is a party or by which the
Buyer may be bound.
4.5 PROCEEDINGS
There are no Proceedings, and no Proceeding is pending, against the
Buyer that challenges, or may have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the Contemplated Transactions, and
to the Buyer's Knowledge, no such Proceeding has been threatened.
ARTICLE 5
COVENANTS OF THE SELLER BEFORE CLOSING
5.1 ACCESS AND INVESTIGATION
During the Pre-Closing Period, upon reasonable advance notice from the
Buyer, the Seller will, and will cause the Acquired Companies and its and their
respective Representatives to, at the expense of the Buyer:
(a) afford the Buyer and its Representatives full access to each
Acquired Company's personnel, properties, assets, Contracts,
books and records, and other documents and data;
(b) furnish such Persons with copies of all such Contracts, books
and records, and other documents and data as the Buyer may
reasonably request; and
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(c) furnish such Persons with such additional financial, operating
and other data and information as the Buyer may reasonably
request.
5.2 ASSISTANCE
During the Pre-Closing Period, the Seller will, and will cause each
Acquired Company, at the cost of the Buyer, to cooperate with the Buyer with
respect to all filings that the Buyer elects to make or that the Buyer is
required by Law to make in connection with the Contemplated Transactions.
5.3 NOTIFICATION
During the Pre-Closing Period, the Seller will promptly notify the
Buyer in writing if any Acquired Company or the Seller or any of their
respective Representatives becomes aware of:
(a) any fact or condition that causes or constitutes a breach of
any of the Seller's representations and warranties as of the
date of this Agreement; or
(b) the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such
representation or warranty had that representation or warranty
been made as of the time of the occurrence or discovery of
such fact or condition.
5.4 NO NEGOTIATION
During the Pre-Closing Period, the Seller will not, and will cause each
Acquired Company and any of its or their respective Representatives not to,
engage in any negotiations or discussions with any Person (other than the Buyer)
relating to any sale, assignment, transfer of business combination transaction
involving any Acquired Company, including the sale of any of the shares of any
Acquired Company, any merger or consolidation, or the sale of any of the assets
of any Acquired Company (other than in the Ordinary Course of Business). Until
such time, if any, as this Agreement is terminated pursuant to Article 11, the
Seller will not, and will cause each Acquired Company and its and their
respective Representatives not to, directly or indirectly, solicit, initiate,
encourage or entertain any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the merits of any
inquiries or proposals from, any Person (other than the Buyer) relating to any
such transaction involving any Acquired Company. The Seller will immediately
notify the Buyer regarding any contact between the Seller, any Acquired Company
or any of its or their respective Representatives, and any other Person
regarding any such transaction or any related inquiry.
5.5 BEST EFFORTS
The Seller will use its Best Efforts to cause the conditions in Article
9 and Section 10.3 to be satisfied on or before September 20, 2005, provided,
however, that the Seller will not be required to make any material change to its
business, dispose of any material asset, expend material funds, incur any
material burden or take actions that would result in a material adverse change
in the benefits to the Seller of this Agreement and the Contemplated
Transactions.
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5.6 CONDUCT OF BUSINESS BEFORE CLOSING - AFFIRMATIVE COVENANTS
During the Pre-Closing Period, the Seller will cause each of the
Acquired Companies to do the following, unless the Buyer, acting reasonably, has
previously otherwise consented in writing:
(a) conduct its affairs in the Ordinary Course of Business;
(b) to the extent consistent with the current level and nature of
the activities of CMD, use their Best Efforts to preserve
intact the current business organization of CMD, keep
available the services of the current employees of CMD, and
maintain relations and goodwill with suppliers, customers,
landlords, creditors, employees, agents and others having
business relationships with CMD;
(c) maintain the register of shareholders and all other corporate
records of DMC within the Cayman Islands and in accordance
with applicable Law;
(d) maintain the register of shareholders and all other corporate
records of AGI and LSI within the Cayman Islands and in
accordance with applicable Law;
(e) maintain the books and records of CMD and DCEM in Chile and in
accordance with applicable Law;
(f) transfer all rights currently held by DMC in CMP to a nominee
of the Seller;
(g) transfer all rights held by DMC in CMP II to a nominee of the
Seller; and
(h) confer with the Buyer concerning operational matters of a
material nature.
5.7 CONDUCT OF BUSINESS BEFORE CLOSING - NEGATIVE COVENANTS
During the Pre-Closing Period the Seller will not, and will cause the
Acquired Companies not to, take any affirmative action, or fail to take any
reasonable action within their or its control, as a result of which any of the
following would be likely to occur:
(a) a change in any Acquired Company's authorized or issued
shares; grant of any equity option or right to purchase shares
of any Acquired Company; issuance of any security convertible
into such equity; purchase, redemption, retirement or other
acquisition by an Acquired Company of any shares; or
declaration or payment of any dividend or other distribution
or payment with respect to any shares,
(b) an amendment to the Governing Documents of an Acquired
Company;
(c) a payment or increase by any Acquired Company of any bonuses,
salaries or other compensation to the Seller or any director,
officer or employee of any Acquired
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Company, or entry into any employment, severance or similar
Contract with any director, officer or employee of any
Acquired Company;
(d) a transfer or withdrawal of all or any portion of the Funds
from the Bank other than in the Ordinary Course of Business;
(e) the adoption of, amendment to or increase in the payments to
or benefits under, any Company Plan;
(f) the damage to or destruction or loss of any asset or property
of an Acquired Company, whether or not covered by insurance,
with an aggregate value to the Company in excess of US ONE
HUNDRED THOUSAND (USD 100,000) DOLLARS;
(g) the entry into, modification, cancellation or termination or
non-extension of any Company Contract,
(h) the sale, lease or other disposition of any asset or property
of an Acquired Company, or the creation of any Encumbrance on
any material asset of an Acquired Company, except with respect
to the sale or Encumbrance of assets pursuant to the
Reorganization,
(i) cancellation or waiver of any claims or rights with a value to
an Acquired Company in excess of US TEN THOUSAND (USD 10,000)
DOLLARS,
(j) material change in the accounting methods used by an Acquired
Company,
(k) incurring of any expenditures other than in the Ordinary
Course of Business;
(l) any changes in the employment arrangements of any employees of
an Acquired Company or the hiring of any additional employees
by any Acquired Company;
(m) the sale, transfer, encumbrance or disposition of any material
part of the Mining Project;
(n) declaration or payment of any dividends on any of the shares
or rights of participation of all or any of any of the
Acquired Companies;
(o) any change by any Acquired Company in the arrangements with
any consultants or agents, or the retaining by any Acquired
Company any additional consultants;
(p) any modifications to any Governmental Authorization held by or
on behalf of any Acquired Company;
(q) any transaction which would materially diminish the value of
the Acquired Companies or any of their respective assets;
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(r) other than in connection with the Reorganization or as
contemplated by this Agreement or any Ancillary Agreement, any
compromise or settlement of any pending or threatened material
Proceeding to which any Acquired Company is a party or for
which any Acquired Company has any Liability; or
(s) the entry by any Acquired Company into any Contract to do any
of the foregoing.
5.8 AGREEMENT NOT TO AFFECT CERTAIN OBLIGATIONS OF ACQUIRED COMPANIES
Nothing in this Article 5 will, or will be interpreted or construed to, prevent
or prohibit any activities of the Acquired Companies reasonably required or
desirable pursuant to any Company Contract, applicable Law or Governmental
Approval.
ARTICLE 6
COVENANTS OF THE BUYER BEFORE CLOSING
6.1 BEST EFFORTS
The Buyer will use its Best Efforts to cause the conditions in Section
9.3 and Article 10 to be satisfied on or before September 20, 2005, provided,
however, that the Buyer will not be required to make any material change to its
business, dispose of any material asset, expend material funds, incur any
material burden or take actions that would result in a material adverse change
in the benefits to the Buyer of this Agreement and the Contemplated
Transactions.
ARTICLE 7
FINANCING OF THE PROJECT
7.1 PROJECT FINANCE AND ENCUMBRANCES
(a) Subject to the further provisions of this Article 7:
(i) the Buyer may pledge, grant, transfer, assign, charge
or otherwise encumber, partially or totally, all or
any portion of its rights, title, interest and
obligations under this Agreement and the Ancillary
Agreements in order to obtain the financing necessary
to acquire the Purchased Assets, and
(ii) if Closing occurs, the Buyer, any Acquired Company or
any Related Person of the Buyer or any Acquired
Company may pledge, grant, transfer, assign, charge
or otherwise encumber, partially or totally, all or
any portion of its rights, title, interest and
obligations under this Agreement and the Ancillary
Agreements, in the Mining Concessions, the Real
Property, the Water Rights and the Movable Assets,
the Mining Project, all other assets and interests of
any Acquired Company, including any Company Contract,
the Shares and the share capital of any other
Acquired Company and the Pacrim Loan (as applicable,
the "SPECIFIED COLLATERAL") in order to finance,
develop, operate or expand the Mining
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Project, in favour of one or more banks, financing
institutions or third party arm's length credit
sources, domestic or foreign, acting (as the case may
be) as lender to the Buyer, any Acquired Company, any
Related Person of the Buyer or an Acquired Company or
the Mining Project, or agents or trustees appointed
for such lender (collectively, the "LENDER");
provided that all such pledges, grants, transfers,
assignments, charges or other encumbrances of Specified
Collateral created pursuant to this Section 7.1 (collectively,
"PROJECT ENCUMBRANCES") shall provide that, until the Purchase
Price is paid in full, the rights of the Buyer under and in
and to the Specified Collateral may only be transferred (other
than the grant to a Lender of Project Encumbrances for
purposes of collateral security) to a Person that:
(iii) is a Lender, or
(iv) possesses the technical and managerial expertise in
the handling of mining projects, as well as the
financial capability necessary, to develop and
operate the Mining Project and to perform the Buyer's
obligations as set forth in this Agreement and the
Ancillary Agreements (a "QUALIFIED SUCCESSOR"), and
(v) that, in either case, has agreed, in a writing
satisfactory to the Seller acting reasonably, to
assume the Buyer's obligations under this Agreement
and the Ancillary Agreements and cure any existing
defaults of the Buyer under this Agreement and the
Ancillary Agreements.
(b) All Project Encumbrances created in compliance with the terms
of this Section 7.1 shall have a priority senior to any
Encumbrances covering Specified Collateral granted to the
Seller under this Agreement or any Ancillary Agreement or at
law, and the Seller shall execute any and all documents or
other instruments reasonably necessary or required to
subordinate such Encumbrances of the Seller covering Specified
Collateral to the Project Encumbrances that comply with the
terms of this Section 7.1.
7.2 RIGHTS OF LENDERS.
(a) Upon the creation by the Buyer of Project Encumbrances in
favour of any Lender in compliance with Section 7.1:
(i) The Buyer shall promptly give the Seller notice of
such occurrence and of the name and address of such
Lender,
(ii) The Seller hereby irrevocably agrees to:
(1) perform its obligations under this Agreement
and the Ancillary Agreements for the benefit
of the Lender (or its Qualified Successor)
provided the Buyer, the Lender or the
Qualified
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Successor is performing the Buyer's
obligations under this Agreement and the
Ancillary Agreements, and
(2) execute and deliver to the Lender such
acknowledgments, consents, opinions or other
agreements with the Lender as the Lender may
reasonably require to accomplish and perfect
the creation of such Project Encumbrances
and other rights of the Lender, and as
reasonably necessary to subordinate any
Encumbrances covering Specified Collateral
granted to the Seller to any Project
Encumbrances or other rights granted to the
Lender.
(b) Unless and until a Lender (or its Qualified Successor) has
assumed the obligations of the Buyer under this Agreement and
the Ancillary Agreements in accordance with this Article 7,
the Buyer shall continue as a party to this Agreement and the
Ancillary Agreements for all purposes.
(c) Provided that the Buyer has notified the Seller of the name
and address of the Lender pursuant to Section 7.2(a)(i), the
Seller irrevocably agrees that the Lender shall be entitled to
(but shall not be obligated to) exercise all rights, perform
all obligations and cure any defaults of the Buyer under this
Agreement or any Ancillary Agreement.
(d) Upon the occurrence and during the continuation of any default
by the Buyer under this Agreement or any Ancillary Agreement
that entitles the Seller to exercise any of its remedies under
this Agreement or any Ancillary Agreement, the Seller agrees:
(i) to give the Lender written notice of such default, in
the manner specified in Section 16.2;
(ii) that the Lender shall have the right, but not the
obligation, to cure any such Buyer default under this
Agreement or any Ancillary Agreement within a period
of sixty (60) days after the receipt by the Lender of
the notice of such default; and
(iii) not to invoke any of its remedies, either express or
implied, with respect to such default during any
period within which the Lender is entitled to cure
such default pursuant to Section 7.2(d)(ii) or, if
such default is not reasonably capable of being cured
within such sixty (60) day period, during any further
time period that the Lender is proceeding with due
diligence to cure any such default which is
susceptible of cure by the Lender except as necessary
for the Seller to comply with Law or to preserve any
rights to payment, indemnity or contribution
hereunder (including, without limitation, pursuant to
Section 8.2(b) hereof) or to defend itself against
any claim made against it by a third party arm's
length Person which is not the Buyer.
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(e) If the Lender should acquire this Agreement and the Ancillary
Agreements by foreclosure, an assignment in lieu of
foreclosure or otherwise, the Seller agrees that the Lender
may assign this Agreement to a Qualified Successor. The Seller
further agrees that in the event the Lender forecloses on the
Buyer's interests under this Agreement and the Ancillary
Agreements (or if this Agreement and the Ancillary Agreements
should be assigned to the Lender in lieu of foreclosure or to
a Qualified Successor following or in lieu of foreclosure),
the Lender (or its Qualified Successor) shall be entitled to
succeed to the Buyer's interests under this Agreement and the
Ancillary Agreements, and such succession shall not constitute
a breach of any provision of this Agreement or any Ancillary
Agreement prohibiting assignment or of any other provision of
this Agreement or any Ancillary Agreement. In the event of any
such assignment to the Lender or its Qualified Successor, such
assignee shall be entitled to the benefit of all of the
provisions of this Agreement and the Ancillary Agreements and
shall assume all obligations of the Buyer under this Agreement
and the Ancillary Agreements, and the Buyer shall have no
further obligations under this Agreement or any Ancillary
Agreement or otherwise in favour of the Seller; provided that
such assignee shall cure all defaults of the Buyer under this
Agreement and the Ancillary Agreements which are capable of
being cured within a reasonable period of time.
7.3 RIGHTS OF THE SELLER
The Buyer shall fully inform any Lender of the rights of the Seller
under this Agreement. With respect to any matter on which Lender is authorized
to instruct the Seller, if the Seller receives conflicting instructions from the
Buyer and Lender, the Seller shall be entitled to rely on the instructions of
Lender without liability to the Buyer.
7.4 COSTS AND EXPENSES OF THE SELLER
All reasonable costs and expenses of the Seller (including, without
limitation, those of the Seller's legal counsel) incurred in connection with
Seller's compliance with this Article 7 will be for the account of the Buyer and
will be due and payable upon presentation by the Seller to the Buyer of an
invoice therefor.
ARTICLE 8
COVENANTS OF THE BUYER AFTER CLOSING
8.1 OPERATION OF ACQUIRED COMPANIES POST-CLOSING AND PRIOR TO FINAL PAYMENT
The Buyer acknowledges that, pursuant to the Security Agreement, the
Buyer will grant a security interest and equitable charge over the Purchased
Assets to and in favour of the Seller to secure the obligations of the Buyer to
make all of the payments required pursuant to Sections 2.3(d), and (e), subject
to any rights granted by the Seller pursuant to Section 7.1. Accordingly,
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the parties covenant and agree that, with respect to the operation of the
Acquired Companies during the period from the Closing until all of the required
payments hereunder have been received by the Seller, the Buyer will cause the
Acquired Companies to conduct their operations in a prudent manner and not to
dispose of any material assets other than pursuant to Section 7.1.
8.2 LIABILITY OF BUYER FOR RECLAMATION
The Buyer acknowledges and confirms that it is aware that the business
of CMD is, and has always been, the mining of the Mining Concessions, and the
processing and treatment of ore through the Facilities and that, as a
consequence, following the termination of such activities, CMD is required to
carry out all reclamation, remediation, rehabilitation, restoration and clean-up
activities in respect of the Mining Project and the Real Property, Mining
Concessions and Water Rights as required by applicable Law and Governmental
Authorizations, which obligations and Liabilities are substantial. Accordingly,
the parties agree that, subject to Closing occurring:
(a) the Buyer will, and will cause CMD to, at their sole cost and
expense, carry out all reclamation, remediation,
rehabilitation, restoration or clean-up activities or other
environmental and regulatory obligations as required by
applicable Law and Governmental Authorizations, whether such
activities are required as a result or consequence of
operations carried out by or on behalf of CMD (or any of its
predecessors-in-title) before or after the Closing Date; and
(b) the Seller will have no obligation or liability whatsoever to
the Buyer, any of the Acquired Companies or any other Person
in respect of any such reclamation, remediation,
rehabilitation, restoration or clean-up activities, and the
Buyer will save the Seller harmless, and defend and indemnify
the Seller in respect thereof in accordance with Article 12.
8.3 LIABILITY OF BUYER FOR ADDITIONAL CAPITAL CONTRIBUTIONS TO SUBSIDIARY
The Buyer acknowledges that:
(a) as set forth in Section 3.4(d), the issued rights in the
capital of DCEM are not fully paid, and CMD, as the partner
who holds title to the unpaid participation, remains subject
to further calls or assessments on those rights on account of
unpaid capital; and
(b) as set forth in Section 3.4(e), the issued shares in the
capital of CMD are not fully paid, and each of AGI and LSI, as
holders of all of the issued shares of CMD, remain subject to
further calls or assessments on those shares on account of
unpaid capital.
Accordingly, the Buyer confirms and agrees that, following Closing, the Seller
will not have any liability or obligation whatsoever to the Buyer or any of the
Acquired Companies with respect to any capital calls or assessments that may be
made by DCEM or CMD in respect of any of its
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outstanding shares, or any liability or obligation to reimburse any of the
Buyer, DMC, AGI or LSI for any such required capital contributions.
ARTICLE 9
CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATION TO CLOSE
The Buyer's obligation to purchase the Purchased Assets and to take the
other actions required to be taken by the Buyer at the Closing in order to
consummate the Contemplated Transactions is subject to the satisfaction, on or
before the Closing Date, of each of the following conditions (any or all of
which may be waived by the Buyer, in whole or in part):
9.1 ACCURACY OF REPRESENTATIONS
All of the Seller's representations and warranties in this Agreement
(considered both collectively and individually) must be accurate in all material
respects as of the Closing Date as if then made.
9.2 THE SELLER'S PERFORMANCE
All of the covenants and obligations that the Seller is required to
perform or to comply with under this Agreement on or before the Closing Date
(considered both collectively and individually) must have been duly performed
and complied with in all material respects. In addition, the Seller must have
delivered or caused to be delivered each document that Section 2.6(a) requires
it to deliver.
9.3 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to the Buyer:
(a) an opinion of Gowling Xxxxxxx Xxxxxxxxx LLP, British Columbia
counsel to the Seller, dated the Closing Date, with respect
to:
(i) the due and valid incorporation and good standing of
the Seller,
(ii) that the Seller has all necessary corporate power and
authority to carry on business and to carry out the
Contemplated Transactions pursuant to this Agreement,
(iii) that this Agreement have been duly and validly
authorized, executed and delivered by the Seller and
is a valid and binding obligation of the Seller
(subject to the usual exceptions),
(iv) that the Security Agreement has been duly and validly
authorized and executed by the Seller, and
(v) no consents being necessary (other than as already
obtained) in order for the Seller to complete the
Contemplated Transactions pursuant to this
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Agreement and the Ancillary Agreements, and to carry
out its obligations hereunder and thereunder
in form satisfactory to the parties, acting reasonably;
(b) an opinion of Xxxxxx and Calder, Cayman Islands counsel to the
Seller, DMC, AGI and LSI, dated the Closing Date, with respect
to:
(i) the due and valid incorporation and good standing of
each of DMC, AGI and LSI and as to the issued and
authorized capital of each,
(ii) the Shares, and the issued and outstanding shares of
each of AGI and LSI, having been validly issued,
(iii) all necessary actions having been take in order to
duly and validly transfer the Shares to the Buyer,
and
(iv) based solely upon a search of the Register of Writs
and other Originating Process of the Grand Court of
the Cayman Islands conducted at the close of business
in the Cayman Islands on September 19, 2005, (which
would not reveal details of proceedings which have
been filed but not actually entered in the Register
of Writs and other Originating Process of the Grand
Court of the Cayman Islands at the time of our
search), there are no actions or petitions pending
against DMC, AGI or LSI in the Grand Court of the
Cayman Islands as at the close of business in the
Cayman Islands on September 19, 2005,
in form satisfactory to the parties, acting reasonably; and
(c) an opinion of Xxxxxx Xxxxxxxx Majlis & Cia, Chilean counsel to
the Seller and CMD, dated the Closing Date, with respect to:
(i) the due and valid incorporation of each of DCEM and
CMD and as to the issued and authorized capital of
each of DCEM and CMD,
(ii) the shares or rights, as the case may be, in the
capital of each of DCEM and CMD having been validly
issued,
in form satisfactory to the parties, acting
reasonably; and
(d) such other documentation as may be reasonably requested by the
Buyer in connection with the consummation and completion of
the purchase and sale of the Purchased Assets.
9.4 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
threatened against the Buyer, or against any Related Person of the Buyer, any
Proceeding:
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(a) involving any challenge to, or seeking damages or other relief
in connection with, any of the Contemplated Transactions, or
(b) that may have the effect of preventing, delaying, making
illegal or otherwise interfering with any of the Contemplated
Transactions.
9.5 NO CLAIM REGARDING EQUITY OWNERSHIP OR SALE PROCEEDS
There must not have been made or threatened by any Person who is not a
party to this Agreement or the Ancillary Agreements any claim asserting that
such Person:
(a) is the holder or the beneficial owner of, or has the right to
acquire or to obtain beneficial ownership of, any stock of or
any other voting, equity or ownership interest in any Acquired
Company, or
(b) is entitled to all or any portion of the Purchase Price.
9.6 NO PROHIBITION
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), Contravene, or cause the Buyer or any Related Person of the Buyer to
suffer any Adverse Consequence under:
(a) any applicable Law, Order or Governmental Authorization, or
(b) any Law or Order that has been published, introduced, or
otherwise proposed by or before any Governmental Body.
ARTICLE 10
CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATION TO CLOSE
The Seller's obligation to sell the Purchased Assets and to take the
other actions required to be taken by the Seller at the Closing is subject to
the satisfaction, on or before the Closing Date, of each of the following
conditions (any or all of which may be waived by the Seller, in whole or in
part):
10.1 ACCURACY OF REPRESENTATIONS
All of the Buyer's representations and warranties in this Agreement
(considered both collectively and individually) must be accurate in all material
respects as of the Closing Date as if then made.
10.2 THE BUYER'S PERFORMANCE
All of the covenants and obligations that the Buyer is required to
perform or to comply with under this Agreement on or before the Closing Date
(considered both collectively and individually) must have been performed and
complied with in all material respects. In addition,
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the Buyer must have delivered each of the documents required to be delivered by
the Buyer pursuant to Section 2.6(b).
10.3 NO PROHIBITION
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), Contravene, or cause the Seller or any Related Person of the Seller to
suffer any Adverse Consequence under:
(a) any applicable Law, Order or Governmental Authorization, or
(b) any Law or Order that has been published, introduced, or
otherwise proposed by or before any Governmental Body.
10.4 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to the Seller:
(a) an opinion of Xxxxxxxx Xxxxxxx, United States corporate
counsel to the Buyer, dated the Closing Date, with respect to:
(i) the incorporation and good standing of the Buyer,
(ii) that the Buyer has all necessary corporate power and
authority to carry on business and to carry out the
transactions pursuant to this Agreement and the
Ancillary Agreements,
(iii) that this Agreement and the Ancillary Agreements have
each been duly and validly authorized, executed and
delivered by the Buyer and are valid and binding
obligations of the Buyer (subject to the usual
exceptions), and
(iv) no consents are required from the shareholders of the
Buyer or under applicable United States securities
laws in order for the Buyer to complete the
transactions pursuant to this Agreement and the
Ancillary Agreements and to carry out its obligations
hereunder and thereunder,
in form satisfactory to the parties, acting reasonably; and
(b) such other documentation as may be reasonably requested by the
Seller in connection with the consummation and completion of
the purchase and sale of the Purchased Assets.
ARTICLE 11
TERMINATION
11.1 TERMINATION EVENTS
Subject to Section 11.2, this Agreement may, by notice given before or
at the Closing, be terminated:
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(a) by mutual consent of the Buyer and the Seller;
(b) by the Buyer if the Seller has committed a material breach of
any provision of this Agreement and the Buyer has not waived
such breach;
(c) by the Seller if the Buyer has committed a material breach of
any provision of this Agreement and the Seller has not waived
such breach;
(d) by the Buyer if the satisfaction of any condition in Article 9
is or becomes impossible (other than through the failure of
the Buyer to comply with its obligations under this Agreement)
and the Buyer has not waived such condition;
(e) by the Seller if the satisfaction of any condition in Article
10 is or becomes impossible (other than through the failure of
any the Seller to comply with its obligations under this
Agreement) and the Seller has not waived such condition; or
(f) by either the Buyer or the Seller if the Closing has not
occurred (other than through the failure of any party seeking
to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before September 20,
2005, or such later date as the Buyer and the Seller may agree
upon.
11.2 EFFECT OF TERMINATION UNDER SECTION 11.1
The Buyer's right of termination under Section 11.1 is in addition to
any other rights it may have under this Agreement or otherwise, and the exercise
of such right of termination will not be an election of remedies. The Seller's
right of termination under Section 11.1 shall be the sole and exclusive right
and remedy the Seller will have under this Agreement or otherwise, and the
exercise of such right of termination will be an election of remedies; provided
that if the Seller terminates this Agreement pursuant to Section 11.1, the
Seller shall be entitled to retain the payment(s) made by the Buyer pursuant to
Sections 2.3(a), (b) and (c). If this Agreement is terminated by either party
pursuant to Section 11.1, all obligations of the parties under this Agreement
will terminate, except that the obligations in Article 15, and Sections 14.5,
16.1 and 16.2 will survive.
ARTICLE 12
INDEMNIFICATION; REMEDIES
12.1 SURVIVAL
All representations, warranties, covenants and obligations in this
Agreement will survive the Closing and the consummation of the Contemplated
Transactions, subject to the limitations set forth in this Article 12.
12.2 INDEMNIFICATION BY THE SELLER
Subject to the provisions of Section 11.2, the Seller will indemnify
and hold harmless the Buyer and (provided that Closing occurs) the Acquired
Companies (collectively, the "BUYER
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INDEMNITEES") for and from, and will pay to the Buyer Indemnitees the monetary
value of, any Adverse Consequences arising, directly or indirectly, from or in
connection with:
(a) any material breach of any representation or warranty made by
the Seller in this Agreement;
(b) any material breach by the Seller of any covenant or
obligation in this Agreement;
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person
with the Seller or any Acquired Company (or any Person acting
on their behalf) in connection with any of the Contemplated
Transactions;
(d) any Adverse Consequence directly or indirectly arising from
the transactions disclosed to the Buyer in a letter from the
Seller dated September 20, 2005; and
(e) any Proceedings, demands or assessments incidental to any of
the matters set forth in Sections 12.2(a), (b), (c) or (d).
12.3 INDEMNIFICATION BY THE BUYER
Subject to the provisions of Section 11.2, the Buyer will indemnify and
hold harmless the Seller and, if Closing does not occur, the Acquired Companies,
(collectively, the "SELLER INDEMNITEES") for and from, and will pay to the
Seller Indemnitees the monetary value of any Adverse Consequences arising,
directly or indirectly, from or in connection with:
(a) any material breach of any representation or warranty made by
the Buyer in this Agreement;
(b) any material breach by the Buyer of any covenant or obligation
in this Agreement;
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with
the Buyer (or any Person acting on its behalf) in connection
with any of the Contemplated Transactions; and
(d) any Proceedings, demands or assessments incidental to any of
the matters set forth in Sections 12.3(a), (b) or (c).
12.4 TIME LIMITATIONS
If the Closing occurs:
(a) the Seller will have no Liability (for indemnification or
otherwise) pursuant to Section 12.2 unless on or before the
Indemnification Claim Deadline, the Buyer notifies the Seller
in writing of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by the
Buyer provided, however, that
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this Section 12.4(a) will not apply to any Liability of the
Seller to defend, indemnify and save harmless the Buyer with
respect to any breach by the Seller of its obligations
pursuant to any of Sections 3.4, 3.6(e) or 12.2(d), in respect
of which Liability there is no time limit; and
(b) the Buyer will have no Liability (for indemnification or
otherwise) pursuant to Section 12.3, unless on or before the
Indemnification Claim Deadline, the Seller notifies the Buyer
in writing of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by the
Seller, provided, however, that this Section 12.4(b) will not
apply to any Liability of the Buyer to defend, indemnify and
save harmless the Seller with respect to any breach by the
Buyer of its obligations pursuant to any of Sections 8.2 or
8.3 or Article 13, in respect of which Liability there is no
time limit.
12.5 LIMITATIONS ON TOTAL INDEMNITY AMOUNT - THE SELLER
Notwithstanding anything else in this Agreement, the maximum liability
of the Seller under the indemnity provided in this Article 12, inclusive of any
other claims (if any) which may be successfully made against the Seller in
connection with this Agreement and the Contemplated Transactions, will be
limited to a maximum of US FIVE MILLION FOUR HUNDRED THOUSAND (USD $5,400,000)
DOLLARS; provided that any Liabilities arising pursuant to Section 12.2(d) shall
have no maximum liability limit; provided further that if, at the time that the
Buyer may make a successful claim for indemnity hereunder, any portion of the
Purchase Price remains outstanding and unpaid by the Buyer, then any amount
claimed in such indemnity in excess of the amounts actually paid by the Buyer to
the Seller on account of the Purchase Price at the time such claim is made may
be recovered by the Buyer solely by way of set-off against the unpaid portion of
the Purchase Price.
12.6 PROCEDURE FOR INDEMNIFICATION--DEFENCE OF THIRD-PARTY CLAIMS
The following procedures will be applicable to claims for
indemnification made as a consequence of any claims made by third parties:
(a) promptly after receipt by a Person entitled to indemnity under
Section 12.2 or 12.3 (an "INDEMNIFIED PERSON") of notice of
the assertion of a third-party claim against it, the
Indemnified Person will, if a claim is to be made against a
Person obligated to indemnify under such Section (an
"INDEMNIFYING PERSON"), give notice to the Indemnifying Person
of the assertion of such claim;
(b) an Indemnified Person's failure to notify an Indemnifying
Person will not relieve the Indemnifying Person of any
Liability that it may have to the Indemnified Person, except
to the extent that the Indemnifying Person demonstrates that
the resolution of such claim is prejudiced by the Indemnified
Person's failure to give such notice;
(c) if any claim referred to in Section 12.6(a) is brought against
an Indemnified Person by means of a Proceeding and the
Indemnified Person gives notice to the
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Indemnifying Person of the commencement of such Proceeding,
the Indemnifying Person will be entitled to participate in
such Proceeding and, to the extent that it wishes, to assume
the defence of such Proceeding with counsel satisfactory to
the Indemnified Person, acting reasonably, unless:
(i) the Indemnifying Person is also a party to such
Proceeding and the Indemnified Person is advised by
legal counsel that joint representation would be
inappropriate, or
(ii) the Indemnifying Person fails to provide reasonable
assurance to the Indemnified Person of its financial
capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding;
(d) after notice from the Indemnifying Person to the Indemnified
Person of its election to assume the defence of such
Proceeding, the Indemnifying Person will not, as long as it
diligently conducts such defence, be liable to the Indemnified
Person under this Article 12 for any fees of other counsel or
any other expenses with respect to the defence of such
Proceeding, in each case subsequently incurred by the
Indemnified Person in connection with the defence of such
Proceeding, other than reasonable costs of investigation;
(e) if the Indemnifying Person assumes the defence of a
Proceeding:
(i) it will be conclusively established for purposes of
this Agreement that the claims made in that
Proceeding are within the scope of and subject to
indemnification,
(ii) no compromise or settlement of such claims may be
effected by the Indemnifying Person without the
Indemnified Person's consent unless:
(1) there is no finding or admission of any
violation of Laws or any violation of the
rights of any Person and no effect on any
other claims that may be made against the
Indemnified Person, and
(2) the sole relief provided is monetary damages
that are paid in full by the Indemnifying
Person, and
(iii) the Indemnified Person will have no Liability with
respect to any compromise or settlement of such
claims effected without its consent;
(f) if notice is given to an Indemnifying Person of the
commencement of any Proceeding and the Indemnifying Person
does not, within ten (10) days after the Indemnified Person's
notice is given, give notice to the Indemnified Person of its
election to assume the defence of such Proceeding, the
Indemnifying Person will be bound by any determination made in
such Proceeding or any compromise or settlement effected by
the Indemnified Person;
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(g) notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its
affiliates other than as a result of monetary damages for
which it would be entitled to indemnification under this
Agreement, the Indemnified Person may, by notice to the
Indemnifying Person, assume the exclusive right to defend,
compromise or settle such Proceeding, but the Indemnifying
Person will not be bound by any determination of a Proceeding
so defended or any compromise or settlement effected without
its consent (which may not be unreasonably withheld);
(h) notwithstanding the provisions of Section 14.5, the
Indemnifying Party consents to the non-exclusive jurisdiction
of any court in which a Proceeding is brought against any
Indemnified Person for purposes of any claim that an
Indemnified Person may have under this Agreement with respect
to such Proceeding or the matters alleged therein. Each party
agrees that process may be served on such party with respect
to such a claim anywhere in the world.
12.7 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party
claim may be asserted by written notice (the "INDEMNIFICATION NOTICE") to the
party obligated to indemnify and:
(a) if the person obligated to indemnify disputes either the
obligation to indemnify or the amount or nature of such
indemnification as set forth in the Indemnification Notice, it
will, within ten (10) days, give notice (the "DISPUTE NOTICE")
to the person claiming indemnification, setting forth in
reasonable detail the reasons for such dispute and the matter
will, if such dispute is not settled by the parties within a
period of twenty-one (21) days of receipt of the Dispute
Notice, the matter will be referred to arbitration in
accordance with Article 14; or
(b) if the person obligated to indemnify does not dispute either
the obligation to indemnify or the amount or nature of such
indemnification by the delivery of a Dispute Notice within ten
(10) days of receipt of an Indemnification Notice, the person
obligated to indemnify will pay the amount claimed in the
Indemnification Notice promptly after the expiry of such ten
(10) day period.
ARTICLE 13
TAX MATTERS
13.1 PREPARATION AND FILING OF TAX RETURNS; PAYMENT OF TAXES
The Seller will cause each of the Acquired Companies to prepare and
file, or to cause to be prepared and filed, all of the Tax Returns for such
Acquired Companies for all taxable years or periods ending on or prior to the
Closing Date, and the Seller will pay, or cause to be paid, all Taxes shown as
due thereon. Subject to Section 13.2, the Buyer will cause each of the Acquired
Companies to prepare and file, or to cause to be prepared and filed, all of the
Acquired
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Companies' Tax Returns for all taxable years or periods ending after the Closing
Date, and the Buyer will pay, or cause to be paid, all Taxes shown as due
thereon.
13.2 TAX RETURNS FOR FISCAL YEAR INCLUDING CLOSING DATE
With respect to any Tax Returns for the Acquired Companies applicable
to the fiscal year in which the Closing Date occurs (the "CLOSING YEAR"):
(a) the Buyer will cause each Acquired Company to prepare, or to
cause to be prepared, such Tax Returns using accounting
methods and other practices that are consistent with
applicable Law and with those used by the Acquired Companies
in their prior Tax Returns;
(b) the Buyer will cause each Acquired Company to deliver, or to
cause to be delivered, a draft of each of the Tax Returns for
the Acquired Companies to the Seller not less than thirty (30)
days prior to the due date for filing such Tax Returns, and
the Seller will provide the Buyer (or the applicable Acquired
Company) with its comments on, and any proposed changes to,
such Tax Returns not later than fifteen (15) days after
receipt of such draft Tax Return;
(c) if any aspect of such Tax Returns remains in dispute within
five (5) days prior to the due date for filing such Tax
Returns, the matter in dispute will be submitted to:
(i) in the case of DMC, AGI or LSI, the auditors of
Pacrim, or
(ii) in the case of CMD or DCEM, CMD's Chilean tax
consultants,
for resolution, whose decision will be final and binding on
the parties, and the fees and expenses of the auditors or
consultants, as applicable, will be paid one-half (1/2) by the
Buyer and one-half (1/2) by the Seller; and
(d) the Seller will reimburse the Buyer for the Taxes paid by the
Buyer (as calculated in the applicable Tax Return) in respect
of that portion of the operations of any Acquired Company
occurring during the Closing Year and prior to the Closing
Date, such proportion to be determined in a fair and equitable
manner, having regard for all the circumstances, and if the
parties cannot agree, the matter will be referred to
arbitration in accordance with Article 14.
13.3 TRANSACTIONAL TAXES
Notwithstanding any other provision of this Agreement, all transfer,
documentary, recording, notarial, sales, use, ad valorem, registration, stamp
and other similar Taxes or fees imposed by any Taxing Authority in connection
with the Contemplated Transactions will be borne by the Buyer regardless of
which party is obligated to pay such Tax under applicable Law provided that any
capital gains or income taxes owing by the Seller pursuant to the Income Tax Act
(Canada) or the Laws of the Cayman Islands as a consequence of the Contemplated
Transactions are and will remain the sole obligation of the Seller. The Buyer
and the Seller will
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cooperate in timely making and filing all Tax Returns that may be required to
comply with Laws relating to such Taxes.
13.4 TAX SHARING AGREEMENTS
The Seller will, at the expense of the Buyer (if any), cause each
Acquired Company to terminate as of the Closing Date any Tax sharing, indemnity
or allocation agreement between the Acquired Company and any other party.
13.5 TAX ELECTIONS
The Seller will not, without the prior written consent of the Buyer
(which consent may not be unreasonably withheld), make or revoke, or cause or
permit to be made or revoked, any Tax election pertaining to any Acquired
Company or ownership of the Shares.
13.6 TAX RECORDS
The Seller will make available to the Buyer such records as the Buyer
may require for the preparation of any Tax Return and such records as the Buyer
may require for the defence of any Proceeding concerning such Tax Return.
ARTICLE 14
ARBITRATION
14.1 SUBMISSION OF DISPUTES TO ARBITRATION
Any dispute, controversy or claim arising out of or relating to this
Agreement or the Contemplated Transactions, or the breach, termination or
invalidity of this agreement, or any deadlock or inability of the parties to
agree on a course of action to be taken hereunder, will be referred to and
finally resolved by arbitration under the UNCITRAL Arbitration Rules (1976) in
effect as at the commencement of any such arbitration.
14.2 ARBITRATION PROVISIONS
The parties agree that:
(a) the appointing authority will be the British Columbia
International Commercial Arbitration Centre;
(b) the case will be administered by the British Columbia
International Commercial Arbitration Centre in accordance with
the UNCITRAL Arbitration Rules (1976);
(c) the place of arbitration will be Vancouver, British Columbia;
(d) the number of arbitrators will be one; and
(e) the language used in the arbitral proceeding will be English.
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14.3 ARBITRATOR'S FEES
The arbitrator's fees will be paid by both parties in equal parts
during the course of the arbitration but, upon final decision of the dispute,
the unsuccessful party will pay all costs and reimburse all arbitration costs,
including the arbitration fees, administrative expenses and actual legal fees
and disbursements paid by the successful party, subject to the contrary decision
of the arbitrator.
14.4 ENFORCEMENT OF ARBITRATION AWARDS
Arbitrations pursuant to this Article 14 will be carried out in such a
manner as to render, insofar as is possible, the arbitration award enforceable
in each of British Columbia, the Cayman Islands, the United States, and Chile
and, in that regard, all requirements of any such jurisdiction with respect to
rendering a foreign arbitral award enforceable will be complied with. The
parties agree to the following venues for any legal proceedings to enforce any
arbitral award pursuant to this Article 14:
(a) the City of Vancouver, with respect to enforcement in British
Columbia;
(b) the City of Georgetown, with respect to enforcement in the
Cayman Islands;
(c) the City of Denver with, respect to enforcement in the United
States; and
(d) the City of Xxxxxxxx with respect to enforcement in Chile.
14.5 JURISDICTION
Any action, hearing, suit or proceeding arising out of or relating to any
arbitration, or, if permitted by the applicable court, outside of arbitration,
related to this Agreement or any Contemplated Transaction must be brought in the
courts of the Province of British Columbia, Canada. Each of the parties
irrevocably submits to the exclusive jurisdiction of such court in any such
Proceeding and waives any objection it may now or hereafter have to venue or to
convenience of forum. The parties agree that any or all of them may file a copy
of this Section with any court as written evidence of the knowing, voluntary and
bargained agreement between the parties irrevocably to waive any objections to
venue or to convenience of forum. Process in any Proceeding referred to in this
Section may be served on any party anywhere in the world.
ARTICLE 15
CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS
15.1 CONFIDENTIALITY
Except as otherwise provided in this Agreement, each party agrees that,
without the prior written consent of the other party, it will treat as
confidential and prevent disclosure to any third parties of any geological,
geophysical or other factual and technical information and data relating to the
assets, ownership, management, business operations, financial status, business
plans or otherwise related, directly or indirectly, to the Acquired Companies
(the "PROVIDED INFORMATION"). This obligation will be a continuing obligation of
each party throughout the
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term of this Agreement and for a period of three (3) years following termination
of this Agreement. Except as expressly provided herein, each of the parties will
be entitled to all information respecting the Provided Information or activities
related to the Provided Information, including copies of all maps, data and
reports which can be reproduced and which have not previously been furnished to
the party.
15.2 PUBLIC ANNOUNCEMENTS
No party will make any announcement, press release or public statement
relating in any manner to this Agreement, the Provided Information or activities
related to the Provided Information without first furnishing the proposed text
thereof to the other party at least two (2) business days prior to the proposed
date of release of such disclosure and obtaining the other party's prior
approval in writing, which approval will not be unreasonably withheld or
delayed.
15.3 EXCEPTIONS
The approval(s) otherwise required by Sections 15.1 and 15.2 will not
be required with respect to the following disclosure(s) of Provided Information:
(a) to an affiliate, consultant, contractor, or subcontractor that
has a bona fide need to be informed;
(b) as reasonably required by a third party or parties in
connection with negotiations for a permitted transfer of an
interest under this Agreement, an interest in the Provided
Information, or the acquisition of an equity or other interest
in a party to such third party or parties, subject in each
case to Section 15.4;
(c) to a governmental agency or to the public which the disclosing
party believes in good faith is required by applicable Law or
the rules or policies of any stock exchange or securities
regulatory authority;
(d) as reasonably required by a party in the prosecution or
defence of a Proceeding;
(e) as reasonably required by a financial institution or other
similar entity in connection with any financing being
undertaken by a party hereto for purposes of the Contemplated
Transactions or the operation of the Mining Project;
(f) of information which is or becomes part of the public domain
other than through a breach of this Agreement;
(g) of information which was already in the possession of a party
or its affiliate prior to receipt thereof from any other party
or its affiliates or development of such information under
this Agreement;
(h) of information lawfully received by a party or an affiliate
from a third party not under an obligation of secrecy to the
other party; or
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(i) following termination of this Agreement, of information
reasonably required by a third party or parties in connection
with negotiating for a transfer of an interest in the
Purchased Assets.
In any case to which this Section 15.3 (other than Section 15(d) (if the other
party is an adverse party in such Proceeding), and Sections 15.3(f), (g), (h)
and (i)) is applicable, the disclosing party will provide the proposed text to
the other party a reasonable time prior to making such disclosure. As to any
disclosure pursuant to any of Sections 15.3(a), (b) or (e) only such
confidential information as such third party shall have a legitimate business
need to know will be disclosed and such third party must first agree in writing
to protect the confidential information from further disclosure to the same
extent as the parties are obligated under this Article 15.
15.4 COMMUNICATIONS WITH PERSONS DEALING WITH THE ACQUIRED COMPANIES
The Seller and the Buyer will consult with each other concerning the
means by which the Acquired Companies' employees, creditors, customers,
suppliers and others having dealings with the Acquired Companies will be
informed of the Contemplated Transactions, and a Representative of the Buyer
will have the right to be present for any such communication(s).
15.5 OBLIGATIONS OF THE BUYER IF CLOSING DOES NOT OCCUR
Should Closing not occur, for any reason whatsoever, the Buyer will
forthwith return, or cause to be returned, to the Seller all Provided
Information, without retaining copies thereof.
ARTICLE 16
GENERAL PROVISIONS
16.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of its Representatives. If this
Agreement is terminated, the obligation of each party to pay its own expenses
will be subject to any rights of such party arising from a breach of this
Agreement by another party, provided, however, that the parties agree that, if
this Agreement is terminated prior to Closing by a party due to either:
(a) that party not obtaining any Consents as required hereunder;
or
(b) that party voluntarily and unilaterally electing to terminate
this Agreement other than as a consequence of a default of the
other party in the performance of its obligations hereunder,
such party will forthwith reimburse the other party for the expenses incurred by
the other party in connection with this Agreement and the Contemplated
Transactions, up to a maximum of US ONE HUNDRED THOUSAND (USD 100,000) DOLLARS.
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16.2 NOTICES
All notices, consents, waivers and other communications under this
Agreement must be in writing and will be deemed given to and received by a party
when:
(a) delivered to the appropriate address by hand or by nationally
recognized overnight courier service (costs prepaid);
(b) sent by facsimile with confirmation of transmission by the
transmitting equipment; or
(c) received or rejected by the addressee, if sent by certified
mail, return receipt requested,
in each case to the following addresses or facsimile numbers and marked to the
attention of the individual (by name or title) designated below (or to such
other address, facsimile number, or individual as a party may designate by
notice to the other parties):
If to the Seller:
Pacific Rim Mining Corp.
Suite 410 - 000 Xxxx Xxxxxx
Xxxxxxxxx, X.X.
Xxxxxx X0X 0X0
Attention: Xxxxxxx X. Church
Facsimile: (000) 000-0000
with a copy (which will not constitute notice) to:
Gowling Xxxxxxx Xxxxxxxxx LLP
Suite 2300, 0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
Xxxxxx X0X 0X0
Attention: Xxxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
If to the Buyer:
Trend Mining Company
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
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with a copy (which will not constitute notice) to:
Holland & Xxxx
0000 Xxxx Xxxxxxxx Xxxxxxx, Xxx 000
Xxxxxxxxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Facsimile: (000) 000-0000
with a copy (which will not constitute notice) to:
Xxxxx & Ashton
Xxxxxxx Xxxxxx Xxx 00, Xxxx 00
Xxx Xxxxxx-Xxxxxxxx
Xxxxx
Attention: Xxxxx X. Xxxxx
Facsimile: (x00 0) 000-0000
16.3 FURTHER ACTIONS
Upon the request of any party to this Agreement, the other party will:
(a) furnish to the requesting party any additional information
reasonably requested,
(b) execute and deliver, at its own expense, any other documents
reasonably requested; and
(c) take any other actions as the requesting party may reasonably
require to more effectively carry out the intent of this
Agreement and the Contemplated Transactions.
16.4 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements among the parties with
respect to its subject matter including the Letter of Intent and constitutes
(along with the documents delivered pursuant to this Agreement) a complete and
exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended, supplemented
or otherwise modified except in a written document executed by the party against
whose interest the modification will operate.
16.5 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
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16.6 DRAFTING AND REPRESENTATION
The parties have participated jointly in the negotiation and drafting
of this Agreement. No provision of this Agreement will be interpreted for or
against any party because that party or its legal representative drafted the
provision.
16.7 SEVERABILITY
If a court of competent jurisdiction holds any provision of this
Agreement invalid or unenforceable, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
16.8 ASSIGNMENT; SUCCESSORS; NO THIRD-PARTY RIGHTS
No party may assign any of its rights or delegate any of its
obligations under this Agreement without the prior written consent of the other
party, and such consent may be given, if at all, upon such terms and conditions
as the consenting party may determine in its sole discretion. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the parties and their respective successors
and permitted assigns. Nothing expressed or referred to in this Agreement will
be construed to give any Person, other than the parties to this Agreement, any
legal or equitable right, remedy or claim under or with respect to this
Agreement or any provision of this Agreement except such rights as may inure to
a successor or permitted assignee under this Section 16.8. provided, however,
that the Buyer has the right to assign its rights hereunder to any affiliate
(provided that the obligations of such affiliate are guaranteed by the Buyer).
16.9 ENFORCEMENT OF AGREEMENT
Each party acknowledges and agrees that the other could be damaged
irreparably if any of the provisions of this Agreement are not performed in
accordance with the specific terms and that any breach of this Agreement by a
party could not be adequately compensated in all cases by monetary damages
alone. Accordingly, each party agrees that, in addition to any other right or
remedy to which the other may be entitled, at law or in equity, the other party
will be entitled to enforce any provision of this Agreement by a decree of
specific performance and to temporary, preliminary and permanent injunctive
relief to prevent breaches or threatened breaches of any of the provisions of
this Agreement.
16.10 WAIVER
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither any failure nor any delay by either party in
exercising any right, power or privilege under this Agreement or any of the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law:
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(a) no claim or right arising out of this Agreement or any of the
documents referred to in this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of
the claim or right unless in a written document signed by the
other party;
(b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given, and
(c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of that party or of the right of the
party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
16.11 GOVERNING LAW
This Agreement will be governed by and interpreted in accordance with
the laws of the Province of British Columbia, and the federal laws of Canada
applicable therein, without regard to conflicts of laws principles that would
require the application of any other law.
16.12 COUNTERPARTS
This Agreement, and any certificates or other writing delivered in
connection herewith, may be executed in any number of counterparts with the same
effect as if all parties had all signed the same documents, and all such
counterparts and adopting instruments will be construed together and will
constitute one and the same instrument. The execution of this Agreement and
[Remainder of page left blank intentionally.]
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any other writing by any party hereto or thereto will not become effective until
counterparts hereof or thereof, as the case may be, have been executed by all
the parties hereto or thereto, and executed copies delivered to each party who
is a party hereto or thereto. Such delivery may be made by facsimile
transmission of the execution page or pages, hereof or thereof, to each of the
other parties by the party signing the particular counterpart, provided that
forthwith after such facsimile transmission, an originally executed execution
page or pages is forwarded by prepaid express courier to each of the other
parties by the party signing the particular counterpart.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date indicated in the first sentence of this Agreement.
TREND MINING COMPANY
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx
President
PACIFIC RIM MINING CORP.
By: /s/ Xxxxxxxxx XxXxxx-Xxxxxxx
-----------------------------------------
Xxxxxxxxx XxXxxx-Xxxxxxx,
President
TABLE OF CONTENTS
PAGE
ARTICLE 1 CONSTRUCTION AND DEFINITIONS...............................................................1
1.1 CONSTRUCTION...................................................................................1
1.2 DEFINITIONS....................................................................................2
ARTICLE 2 SALE AND PURCHASE OF THE PURCHASED ASSETS AND CLOSING......................................8
2.1 AGREEMENT OF SALE AND PURCHASE.................................................................8
2.2 PURCHASE PRICE.................................................................................8
2.3 PAYMENT OF THE PURCHASE PRICE..................................................................9
2.4 SECURITY FOR PAYMENT OF BALANCE OF PURCHASE PRICE.............................................10
2.5 CLOSING.......................................................................................10
2.6 CLOSING DELIVERIES............................................................................10
2.7 CLOSING PROCEDURES............................................................................12
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLER..............................................12
3.1 ORGANIZATION AND GOOD STANDING OF ACQUIRED COMPANIES..........................................13
3.2 ENFORCEABILITY................................................................................13
3.3 REQUIRED CONSENTS; NO VIOLATION...............................................................14
3.4 CAPITALIZATION AND OWNERSHIP..................................................................14
3.5 BOOKS AND RECORDS.............................................................................16
3.6 REAL PROPERTY; MINING CONCESSIONS; WATER RIGHTS; MOVABLE ASSETS; ENCUMBRANCES.................16
3.7 CONTRACTS; NO DEFAULTS........................................................................18
3.8 TAXES.........................................................................................18
3.9 PROCEEDINGS...................................................................................19
3.10 PACRIM LOAN...................................................................................19
3.11 DELIVERY OF DOCUMENTS TO BUYER NOT TO CONSTITUTE REPRESENTATION OR WARRANTY...................19
3.12 FORMAL PREVENTATIVE REORGANIZATION............................................................19
3.13 PREVIOUS BIDDERS..............................................................................20
3.14 PERMITS.......................................................................................20
3.15 FINANCIAL STATEMENTS..........................................................................21
3.16 SELLER'S RESIDENCY AND LOCATION...............................................................21
3.17 CMP AND CMP II; NO RESIDUAL INTERESTS OR LIABILITIES..........................................22
3.18 POWERS........................................................................................22
3.19 FOREIGN INVESTMENT CONTRACTS..................................................................22
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE BUYER...............................................22
4.1 ORGANIZATION AND GOOD STANDING OF BUYER.......................................................22
4.2 ENFORCEABILITY................................................................................22
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TABLE OF CONTENTS
(continued)
PAGE
4.3 NO CONSENTS REQUIRED..........................................................................23
4.4 NO CONFLICT...................................................................................23
4.5 PROCEEDINGS...................................................................................23
ARTICLE 5 COVENANTS OF THE SELLER BEFORE CLOSING....................................................23
5.1 ACCESS AND INVESTIGATION......................................................................23
5.2 ASSISTANCE....................................................................................24
5.3 NOTIFICATION..................................................................................24
5.4 NO NEGOTIATION................................................................................24
5.5 BEST EFFORTS..................................................................................24
5.6 CONDUCT OF BUSINESS BEFORE CLOSING - AFFIRMATIVE COVENANTS....................................25
5.7 CONDUCT OF BUSINESS BEFORE CLOSING - NEGATIVE COVENANTS.......................................25
5.8 AGREEMENT NOT TO AFFECT CERTAIN OBLIGATIONS OF ACQUIRED COMPANIES.............................27
ARTICLE 6 COVENANTS OF THE BUYER BEFORE CLOSING.....................................................27
6.1 BEST EFFORTS..................................................................................27
ARTICLE 7 FINANCING OF THE PROJECT..................................................................27
7.1 PROJECT FINANCE AND ENCUMBRANCES..............................................................27
7.2 RIGHTS OF LENDERS.............................................................................28
7.3 RIGHTS OF THE SELLER..........................................................................30
7.4 COSTS AND EXPENSES OF THE SELLER..............................................................30
ARTICLE 8 COVENANTS OF THE BUYER AFTER CLOSING......................................................30
8.1 OPERATION OF ACQUIRED COMPANIES POST-CLOSING AND PRIOR TO FINAL PAYMENT.......................30
8.2 LIABILITY OF BUYER FOR RECLAMATION............................................................31
8.3 LIABILITY OF BUYER FOR ADDITIONAL CAPITAL CONTRIBUTIONS TO SUBSIDIARY.........................31
ARTICLE 9 CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATION TO CLOSE...................................32
9.1 ACCURACY OF REPRESENTATIONS...................................................................32
9.2 THE SELLER'S PERFORMANCE......................................................................32
9.3 ADDITIONAL DOCUMENTS..........................................................................32
9.4 NO PROCEEDINGS................................................................................33
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9.5 NO CLAIM REGARDING EQUITY OWNERSHIP OR SALE PROCEEDS..........................................34
9.6 NO PROHIBITION................................................................................34
ARTICLE 10 CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATION TO CLOSE..................................34
10.1 ACCURACY OF REPRESENTATIONS...................................................................34
10.2 THE BUYER'S PERFORMANCE.......................................................................34
10.3 NO PROHIBITION................................................................................35
10.4 ADDITIONAL DOCUMENTS..........................................................................35
ARTICLE 11 TERMINATION...............................................................................35
11.1 TERMINATION EVENTS............................................................................35
11.2 EFFECT OF TERMINATION UNDER SECTION 11.1......................................................36
ARTICLE 12 INDEMNIFICATION; REMEDIES.................................................................36
12.1 SURVIVAL......................................................................................36
12.2 INDEMNIFICATION BY THE SELLER.................................................................36
12.3 INDEMNIFICATION BY THE BUYER..................................................................37
12.4 TIME LIMITATIONS..............................................................................37
12.5 LIMITATIONS ON TOTAL INDEMNITY AMOUNT - THE SELLER............................................38
12.6 PROCEDURE FOR INDEMNIFICATION--DEFENCE OF THIRD-PARTY CLAIMS...................................38
12.7 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS....................................................40
ARTICLE 13 TAX MATTERS...............................................................................40
13.1 PREPARATION AND FILING OF TAX RETURNS; PAYMENT OF TAXES.......................................40
13.2 TAX RETURNS FOR FISCAL YEAR INCLUDING CLOSING DATE............................................41
13.3 TRANSACTIONAL TAXES...........................................................................41
13.4 TAX SHARING AGREEMENTS........................................................................42
13.5 TAX ELECTIONS.................................................................................42
13.6 TAX RECORDS...................................................................................42
ARTICLE 14 ARBITRATION...............................................................................42
14.1 SUBMISSION OF DISPUTES TO ARBITRATION.........................................................42
14.2 ARBITRATION PROVISIONS........................................................................42
14.3 ARBITRATOR'S FEES.............................................................................43
14.4 ENFORCEMENT OF ARBITRATION AWARDS.............................................................43
14.5 JURISDICTION..................................................................................43
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ARTICLE 15 CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS..................................................43
15.1 CONFIDENTIALITY...............................................................................43
15.2 PUBLIC ANNOUNCEMENTS..........................................................................44
15.3 EXCEPTIONS....................................................................................44
15.4 COMMUNICATIONS WITH PERSONS DEALING WITH THE ACQUIRED COMPANIES...............................45
15.5 OBLIGATIONS OF THE BUYER IF CLOSING DOES NOT OCCUR............................................45
ARTICLE 16 GENERAL PROVISIONS........................................................................45
16.1 EXPENSES......................................................................................45
16.2 NOTICES.......................................................................................46
16.3 FURTHER ACTIONS...............................................................................47
16.4 ENTIRE AGREEMENT AND MODIFICATION.............................................................47
16.5 TIME OF ESSENCE...............................................................................47
16.6 DRAFTING AND REPRESENTATION...................................................................48
16.7 SEVERABILITY..................................................................................48
16.8 ASSIGNMENT; SUCCESSORS; NO THIRD-PARTY RIGHTS.................................................48
16.9 ENFORCEMENT OF AGREEMENT......................................................................48
16.10 WAIVER........................................................................................48
16.11 GOVERNING LAW.................................................................................49
16.12 COUNTERPARTS..................................................................................49
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