Exhibit 10.1
Termination Agreement
In relation to the Unincorporated Association Contract ("the Contract," which
expression includes the hereinbelow mentioned amendments) executed by and
between Minera Santa ▇▇▇▇ ▇. de ▇. ▇. de C.V. ("MSR"), represented by ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, on one hand, as the active partner, and
Grupo ▇▇▇▇▇▇ ▇▇ S.A. de C.V. ("FG"), represented by ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, on the
other hand, as the silent partner, on February 23 (twenty three) 2002 (two
thousand and two), as amended on 15 (fifteen) August 2002 (two thousand and
two), 15 (fifteen) January 2003 (two thousand and three), 23 (twenty-three)
February 2003 (two thousand and three), and on January 7 (seven), 2004 (two
thousand and four), in regards to the development of the "El Chanate" project
("the Project"), comprising certain mining lots, covered by concessions owned or
held by Oro de Altar S.A. de C.V., located in the Municipality of Altar, Sonora,
MSR and FG agree as follows:
1. Due to the fact that no financing was obtained at the latest on
March 31 (thirty-one), 2004 (two thousand and four), for the
execution of Phase IV and, in general, for the development of the
Project, and, furthermore, due to the fact that FG and MSR have
decided not to make additional contributions, by application of
clauses 5 (five) section (C) and 14 (fourteen) section (A) (8) of
the Contract, the Contract is deemed terminated and, consequently,
without any obligatoriness or efficacy, effective precisely as of
and from March 31 (thirty-one), 2004 (two thousand and four) ("the
Effective Date"), without obligations and responsibilities other
than the ones expressly stipulated in this agreement.
2. During the life of the Contract, FG invested in Phases I and II of
the Project the sum of US$457,455 (four hundred fifty-seven thousand
four hundred fifty-five dollars of the United States of America). In
consideration of said investment and in consideration of FG's
acceptance of the hereinbelow called "Participation Certificate,"
MSR obligates itself to act as follows:
A. At the latest within 30 (thirty) calendar days following the
Effective Date, MSR shall have the partners who own all of the
portions of interest that represent its capital stock
affirmatively vote these resolutions:
a. An amendment to the pertinent clauses of the bylaws of
MSR, so that MSR may issue a certificate of
participation ("the Participation Certificate") that,
without representing capital stock, confer these rights
on its owner:
a.1. the right to receive a 5% (five percent) of the
profits of each fiscal year of MSR with respect to
which the payments of dividends is ordered ("the
Fixed Percentage"),
a.2. the right that the Fixed Percentage be
non-dilutable by contributions of MSR or of other
persons to the capital stock of MSR or for other
causes or reasons, and that the rights of the
owner of the
Minera Santa ▇▇▇▇ ▇. de ▇.▇. de C.V. and
Grupo ▇▇▇▇▇▇ ▇▇ S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 2
Participation Certificate be not modified without
the consent of its owner,
a.3. the right to abstain from contributing to the
capital stock of MSR and from contributing for the
development of the Project, without this
abstention causing a dilution of the Fixed
Percentage or a modification of the rights of the
owner of the Participation Certificate without the
owner's consent,
a.4. the right to participate in the meetings of the
partners of MSR, in the sessions of the Board of
Managers of MSR, and in the sessions of the
Technical Committee if one is formed in regard to
the development and operation of the Project, all
of the above with the right to speak but without
the right to vote. FG shall keep the information
made known to it by reason of its participation in
the above meetings and sessions fully
confidential, unless it must disclose it by final
court or administrative authority order, under
penalty of payment of damages and indemnification
of losses, without prejudice to other legal
remedies that MSR might have in this regard, and
a.5. the right to name, at its cost and risk, an
auditor commissioned to review MSR financial
statements and to determine whether or not the
Fixed Percentage was calculated correctly. If FG's
auditor fails to formulate and communicate to MSR
objections within the 30 (thirty) calendar days
following the date on which the payment of
dividends has been decreed, the calculation of the
Fixed Percentage carried out by MSR shall be
deemed correct.
The amendment to the bylaws set forth in this section
(A) shall also provide as follows in regard to the
Participation Certificate:
a.6. only one person may be entitled to own it,
a.7. it shall be indivisible, that is, the rights
derived from it may not be separated from its
ownership and also may not be separated among
themselves,
a.8. its owner shall not enjoy the right of withdrawal,
redemption, reimbursement, amortization or any
other that implies the obligation to pay its value
by MSR or any of its members, unless MSR or the
said members agree to do it,
-2-
Minera Santa ▇▇▇▇ ▇. de ▇.▇. de C.V. and
Grupo ▇▇▇▇▇▇ ▇▇ S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 3
a.9. it shall be governed by clause 8th (eighth) of the
bylaws of MSR; consequently, among other
consequences of the application of the said
clause, the members of MSR shall enjoy the right
of first refusal to purchase the Participation
Certificate,
a.10. it shall not give its owner any rights on MSR's
assets, goods, rights, or privileges nor on the
Project,
a.11. it shall not impose on its owner the obligation to
be responsible for the losses of the Project or
else for the losses of MSR, in any percentage,
a.12. it shall not give its owner any participation in
the development of the Project nor in the
operation or administration of the mine other than
the participation expressly set forth in
subsections (a.4) and (a.5) of section (A) of this
clause 2 (two),
a.13. it shall give its owner no assurance or guaranty
that the Project and the mine shall ultimately
turn out to be profitable or that they shall
generate profits or dividends, given the
unpredictable nature of all mining businesses, and
a.14. it shall not give its owner the right that the
Project gets actually executed or carried out or
executed or carried out in any of its Phases nor
the right that the mine be exploited or operated,
for whether or not that will be done will
ultimately depend on market, financial, and other
circumstances that are not within the MSR's
control.
For the purposes of subsection (a.1) section (A) of this
clause 2 (two), "profits" shall mean those determined
pursuant to generally accepted Mexican accounting
principles and those MSR's members ordered paid as
dividends pursuant to MSR's bylaws, and, in any event,
those resulting after payment of taxes, after payment of
the employees' share in the business' profits (PTU),
after payments of the amounts due by MSR or its
affiliates pursuant to an Stock Purchase Option
Agreement entered into between AngloGold (Jerritt
Canyon) Corp. and AngloGold North America Inc., of the
one part, and Leadville Mining & Milling Corporation and
Leadville Mining & Milling Holding Corporation, of the
other part, on December 15 (fifteen), 2000 (two
thousand), of which an authentic copy was attached to
the Contract, and after payment of the amounts owing by
MSR to whomever finances the development or execution of
the Project, if that is the case. This agreement does
not affect or modify any of
-3-
Minera Santa ▇▇▇▇ ▇. de ▇.▇. de C.V. and
Grupo ▇▇▇▇▇▇ ▇▇ S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 4
AngloGold (Jerritt Canyon) Corp.'s and AngloGold North
America Inc.'s rights under the above Stock Purchase
Option Agreement.
b. Within the 5 (five) calendar days following the approval
of the hereinbefore mentioned bylaws amendment, MSR
shall issue and deliver the Participation Certificate to
FG and shall have the issuance and delivery entered on
the company's corporate books.
B. At the latest within 30 (thirty) calendar days following the
Effective Date, MSR shall have Capital Gold Corporation
("CGC") shall issue for the benefit of and deliver to FG
2,000,000 (two million) shares of its capital stock ("the CGC
Shares"), non transferable before the lapse of 1 (one) year,
from the date they are delivered to FG, and subject to the
regulations of the Securities and Exchange Commission of the
United States of America. In order for that issuance and
delivery to be possible and lawful pursuant to the laws and
provisions that govern the CGC Shares, FG shall expeditiously
sign and deliver to CGC or to the said Securities and Exchange
Commission, such documents and information as may be required
from it. In addition, with respect to the acquisition of the
CGC Shares, FG makes the representations and warranties set
forth in the attached Exhibit hereto.
C. MSR shall give FG the right of first refusal to carry out the
works and render the construction services called for by the
construction of the Project, on equal terms in relation to
other bidders regarding prices, times, qualities, guaranties,
and other conditions, as specified by MSR in its requests for
bids. This rule may suffer exceptions if whoever finances the
development or execution of the Project determines that the
above construction works or services be carried out or
rendered by company or companies other than FG. The
construction of the said works and the rendering of those
construction services by FG, to be carried out pursuant to
contracts hereinafter called "the Works Contracts," shall not
turn FG into an industrial partner of MSR or of the Project,
or of both. MSR shall not disclose to other bidders FG's bids
or offers, unless it must disclose them by final court or
administrative authority order, under penalty of payment of
damages and indemnification of losses, without prejudice to
other legal remedies that FG might have in this regard
3. During the term of the Contract, FG failed to contribute the sum of
US$126,144 (one hundred twenty-six thousand one hundred forty-four
dollars of the United States of America) for the execution of Phase
II of the Project, which sum had to be contributed by MSR, with its
own funds or with funds borrowed from third parties. MSR irrevocably
forgives FG the payment of the above amount, likewise as
consideration of FG's acceptance of the Participation Certificate.
-4-
Minera Santa ▇▇▇▇ ▇. de ▇.▇. de C.V. and
Grupo ▇▇▇▇▇▇ ▇▇ S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 5
4. Each party shall pay the taxes which, as the case may be, are to be
due by it in connection with the making of this agreement and in
connection with the discharging of its obligations and the
exercising of its rights hereunder, without being entitled to
reimbursement, compensation, or apportionment of any kind
whatsoever, and each party shall hold the other party and its
shareholders, affiliates, subsidiaries, directors, attorneys in
fact, employees, and consultants, free and clear of claims,
assessments, auditings, proceedings, and charges relating to the
taxes due by it, and each party shall pay or reimburse to the other
party or any of its shareholders, affiliates, subsidiaries,
directors, attorneys in fact, employees, and consultants, the
reasonable attorneys' and accountants' fees and court fees and
expenses that the other party had to pay to defend from any such
claims, assessments, auditings, proceedings, and charges.
5. At the latest within 30 (thirty) calendar days following the
Effective Date, FG shall deliver to MSR all the maps, calculations,
assay results, and documents in general in its possession relating
to the Project, generated by FG, by MSR, or by any other persons,
and the discharging of this obligation shall not give FG a right to
receive any additional payment coming from MSR or from any other
person.
6. At the latest within 30 (thirty) calendar days following the
Effective Date, FG shall assign or otherwise transfer to MSR all the
permits, licenses, consents, or authorizations, regardless of the
name the laws or regulations give them, which, if that was the case,
FG had applied for and obtained in its name in connection with the
execution or development of the Project if the said permits,
licenses, consents, or authorizations are assignable or
transferable. FG hereby shall be deemed giving its irrevocable
consent for the cancellation or deprival of effects of the said
permits, licenses, consents, or authorizations in the event such
consent were necessary for the same, or any of them, to be issued or
re-issued in the name of MSR, and the granting of such consent shall
not give FG a right to receive any additional payment coming from
MSR or from any other person.
7. As between FG and CGC there has not been and there will not be any
legal or business relationship of any kind different from the one
that there will exist derived from the ownership of the CGC Shares
by FG. Additionally, nothing of what has been agreed upon in this
agreement turns or shall turn CGC into a party of this agreement, a
member, partner, silent partner, or active partner of FG, or MSR's
joint and several obligor, in any manner whatsoever, or gives or
shall give FG right or action of any kind as against CGC different
from the ones that shall derive to FG from its ownership of the CGC
Shares, and FG and CGC shall refrain from affirming that between
them there is a legal or business
-5-
Minera Santa ▇▇▇▇ ▇. de ▇.▇. de C.V. and
Grupo ▇▇▇▇▇▇ ▇▇ S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 6
relationship different from the one to exist as a result of the
ownership of the CGC Shares.
8. Once MSR gets CGC to issue and deliver to FG the CGC Shares, MSR's
obligations relating to the CGC Shares shall terminate, and there
shall be no other obligation on MSR to perform in connection with
the CGG Shares. Consequently, among other consequences of the said
termination, FG shall hold MSR and its shareholders, affiliates,
subsidiaries, directors, attorneys in fact, employees, and
consultants, free and clear of complaints, claims, proceedings,
accusations, and charges relating to the CGC Shares, and FG shall
pay or reimburse to MSR and its shareholders, affiliates,
subsidiaries, directors, attorneys in fact, employees, and
consultants, the reasonable attorneys' and accountants' fees and
court fees and expenses that MSR and any of its shareholders,
affiliates, subsidiaries, directors, attorneys in fact, employees,
and consultants, had to pay to defend from any such complaints,
claims, proceedings, accusations, and charges.
9. As of and from the Effective Date, the only legal and business
relationships that shall exist as between MSR and FG shall be those
derived from this agreement, from the Participation Certificate, and
from the Works Contracts, if any, that MSR enters into with FG
pursuant to section (C) of clause 2 (two) hereof. Consequently,
nothing of what has been agreed upon in this agreement or to be
agreed upon in the Works Contracts or the issuance and delivery of
the Participation Certificate shall turn FG into a member, partner,
silent partner, or active partner of MSR, or gives or shall give FG
right or action of any kind as against MSR different from the ones
that shall derive to FG from this agreement, from the Participation
Certificate, or from the Works Contracts.
10. The employees and consultants of FG shall continue to be FG's
employees and consultants, notwithstanding that FG had employed them
in activities relating with the execution or development of the
Project, and the employees and consultants of MSR shall continue to
be MSR's employees and consultants, notwithstanding that MSR had
employed them in activities relating with the execution or
development of the Project. Consequently, among other consequences
ensuing from this clause, the employees and consultants of one party
shall not be deemed employees and consultants of the other party and
no employer substitution of any kind shall take place as regards the
employees of both parties. Neither FG nor MSR assume or shall assume
any labor-law related obligations, the tax obligations, the social
security obligations, and of any other kind whatsoever relating to
the employees and consultants that the other party had employed in
activities relating to the execution or development of the Project,
whether or not the party had hired or paid them with the other
party's consent and within the framework of the Contract.
-6-
Minera Santa ▇▇▇▇ ▇. de ▇.▇. de C.V. and
Grupo ▇▇▇▇▇▇ ▇▇ S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 7
11. This agreement substitutes, terminates, and makes ineffectual any
verbal or written discussions, negotiations, communications, or
understandings previous or contemporaneous to the Effective Date.
There has not been, there are no, and there shall be no verbal
accord, arrangement, or understanding that modify, substitute,
supersede, novate, or terminate this agreement nor the acts derived
or to be derived from the same. All modifications to this agreement
and to the acts derived from it must be agreed in writing and signed
by both parties, and they shall not bind without that formality
being fulfilled.
12. Each party hereto undertakes to sign and deliver in an expeditious
manner to the other party or to the competent authorities any other
documents or agreements or communications conducive to the
achievement of the goals and the realizations of the provisions
agreed herein, all of the above in this clause in MSR's exclusive
discretion.
13. FG and MSR shall take all the steps deemed convenient or necessary
for the dissolution and liquidation of the unincorporated
association created by the Contract. The fees, expenses, and costs
associated with the dissolution and liquidation of the
unincorporated association shall be paid in a 95% (ninety-five
percent) by MSR and in a 5% (five percent) by FG, without
entitlement to reimbursement, compensation, or apportionment of any
kind whatsoever.
14. MSR shall not undertake a mining project other than the Project,
without prejudice to MSR's rights to abandon one or more of the
claims encompassed in the Project and to add claims to it, or to
regroup claims, and without prejudice to MSR's rights pursuant to
the Mining Law and its Regulation.
15. All notices, notifications, or communications given or due to be
given in regard to this agreement and the acts derived therefrom
shall be delivered or sent to the following addresses, unless the
parties indicate others at least 15 (fifteen) calendar days in
advance of the date in which the change of domicile is meant to take
effect:
(A) If they are for MSR:
Minera Santa ▇▇▇▇ ▇. de ▇. ▇. de C.V.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇
U.S.A.
To the attention of: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-7-
Minera Santa ▇▇▇▇ ▇. de ▇.▇. de C.V. and
Grupo ▇▇▇▇▇▇ ▇▇ S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 8
With copy for: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ o ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Boulevard ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
(▇) If they are for FG:
Grupo ▇▇▇▇▇▇ ▇▇ S.A. de C.V.
Calle del Cobre 91
Entre ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
To the attention of: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
With copy for: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Calle del Cobre 91, entre
▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Unless otherwise agreed in this agreement, the notices,
notifications, or communications referred to in this clause shall
take affect on the business day immediately following the day on
which they have effectively been received or delivered to the other
party (even if a copy of the notice, notification, or communication
has not been sent or delivered to the persons to whom they must be
copied), at the above indicated addresses, to the party to which
they were directed or to any employee, director, officer, or to any
individual of age who resides in the domicile of the party's agent.
If the post is used, the notices, communications, and notifications
shall always be sent by registered mail, return receipt requested.
16. All the controversies or disputes that arise between MSR and FG in
regard to this agreement, to the Works Contracts, and to the
Participation Certificate shall be settled or resolved by a
competent judge sitting in Hermosillo, Sonora, pursuant to the
applicable Mexican substantive and procedural laws, for which MSR
and FG waive the jurisdiction and venue of any other judges or
tribunals that may be indicated by reason of territory, address,
main location where they carry out their businesses, and other
similar reasons or circumstances.
17. As a consequence of what has been agreed herein, each party hereto
grants to the other party irrevocable payment receipt and releasing
settlement as regards all its obligations stemming from the
Contract, effective as of the Effective Date.
18. This agreement may be signed in English and in Spanish, but the
Spanish version shall prevail in case of discrepancy. An exception
to the preceding rule shall be the stipulations and definitions
contained in the Exhibit hereto, which
-8-
Minera Santa ▇▇▇▇ ▇. de ▇.▇. de C.V. and
Grupo ▇▇▇▇▇▇ ▇▇ S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 9
shall also be signed in English and in Spanish, and whose English
version shall prevail in case of discrepancy.
19. Any of the parties hereto shall be entitled to have this agreement
formalized by a Notary Public's instrument and registered with the
Public Commerce Registry, on its own behalf and in the name and on
behalf of the other party, in which case the fees, expenses, and
registration fees shall be on the party that performs those actions,
without being entitled to reimbursement, compensation, or
apportionment of any kind whatsoever. The right and the
representation agreed upon in this clause shall be deemed
irrevocable.
20. This agreement has neither been negotiated nor signed under the
influence or determination of fraud, bad faith, violence,
unlawfulness, overreaching, mistake, reverential fear, or inability
or under any other defect of the will or of the consent.
Well informed as to the legal reach and scope of this agreement, the parties
sign it in full conformity and make it binding in all legal respects in 4 (four)
original copies, each of which shall be considered an original and shall be
equally valid, in Hermosillo, Sonora, the representative of FG on April 6 (six),
2004 (two thousand and four), and in the United States of America the
representatives of MSR on April 8 (eight), 2004 (two thousand and four), but
effective as of and from the Effective Date.
For Grupo ▇▇▇▇▇▇ ▇▇ S.A. de C.V.
-----------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
Sole Administrator
Witness to the execution by ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇:
------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Cibrian
For Minera Santa ▇▇▇▇ ▇. de ▇. ▇. de C.V.
--------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
Attorneys in fact
-9-
Minera Santa ▇▇▇▇ ▇. de ▇.▇. de C.V. and
Grupo ▇▇▇▇▇▇ ▇▇ S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 10
Witnesses to the execution by
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Exhibit
to the Termination Agreement entered into between Minera Santa ▇▇▇▇ ▇. de
▇. ▇. de C.V., of the one part, and Grupo ▇▇▇▇▇▇ ▇▇ S.A. de C.V. ("FG"),
of the other part, effective as of and from March 31, 2004
a. Investment Purpose . FG is acquiring the CGC Shares, for its own account for
investment only and not with a view towards, or for resale in connection with,
the public sale or distribution thereof, except pursuant to sales registered or
exempted under the United States Securities Act of 1933, as amended (the "1933
Act").
b. Accredited Investor Status . FG is an "accredited investor" as that term is
defined in Rule 501(a)(3) of Regulation D under the 1933 Act and was not
organized for the specific purpose of acquiring the shares.
Traduccion
a. Objeto de la Inversion. FG adquiere las Acciones CGC por su cuenta solo para
fines de inversion y sin miras a la venta o distribucion publica de las mismas y
sin miras a la reventa relacionada con dicha venta o distribucion publica, salvo
que fuese de conformidad con una venta registrada o exenta en los terminos de ▇▇
▇▇▇ de Valores de los Estados Unidos de America de 1933, segun ha sido
modificada (la "Ley de 1933").
b. Calidad de Inversionista Acreditado. FG es un "inversionista acreditado" tal
como se define dicho termino en la ▇▇▇▇▇ 501(a)(3) del Reglamento D de ▇▇ ▇▇▇ de
1933 Act y no fue constituido con el objeto especifico de adquirir las acciones.
-10-
