_____________________________
STOCK PURCHASE AGREEMENT
for
ST. CLOUD MINING COMPANY AND
THE GOLDFIELD CONSOLIDATED MINES COMPANY
between
THE GOLDFIELD CORPORATION
and
IMAGIN MINERALS, INC.
Dated as of
December 4, 2002
_____________________________
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1 Definitions.................................................1
Section 1.2 Interpretation..............................................6
ARTICLE II
SALE OF COMMON STOCK
Section 2.1 Purchase and Sale of the Common Stock.......................6
Section 2.2 Closing.....................................................7
Section 2.3 Tax Election................................................7
Section 2.4 Excluded Assets.............................................7
Section 2.5 Payment of Post-Closing Adjustment..........................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER RELATING TO SELLER AND
THE COMPANIES
Section 3.1 Organization, Standing and Power................................9
Section 3.2 Capitalization of the Companies.................................9
Section 3.3 Authority Relative to this Agreement...........................10
Section 3.4 No Conflict or Violation; Consents and Approvals...............10
Section 3.5 Financial Statements...........................................11
Section 3.6 Absence of Certain Changes.....................................11
Section 3.7 Compliance with Law............................................11
Section 3.8 Permits........................................................12
Section 3.9 Litigation.....................................................12
Section 3.10 Taxes 12
Section 3.11 Environmental Matters..........................................12
Section 3.12 Employee Benefit Plans; ERISA..................................12
Section 3.13 Labor Matters..................................................13
Section 3.14 Brokers and Finders............................................13
Section 3.15 Title to Assets................................................13
Section 3.16 Undisclosed Liabilities........................................13
Section 3.17 Real Property..................................................14
Section 3.18 Contracts......................................................14
Section 3.19 Water Permits..................................................14
Section 3.20 Mining Claims..................................................15
Section 3.21 Equipment......................................................15
Section 3.22 Prior Dispositions of Property.................................15
i
Section 3.23 Expiration of Summit Mine Agreement............................15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Section 4.1 Organization Standing and Power................................15
Section 4.2 Authority Relative to this Agreement...........................16
Section 4.3 No Conflict or Violation; Consents and Approvals...............16
Section 4.4 Legal Proceedings..............................................16
Section 4.5 Investment Intent..............................................16
Section 4.6 Knowledgeable Purchaser........................................17
Section 4.7 Available Funds................................................17
Section 4.8 Investment Company Act.........................................17
Section 4.9 Brokers and Finders............................................17
ARTICLE V
TAX MATTERS
Section 5.1 Tax Matters....................................................17
ARTICLE VI
COVENANTS
Section 6.1 Conduct of the Business Pending the Closing....................20
Section 6.2 Consents and Approvals.........................................20
Section 6.3 Filings........................................................21
Section 6.4 Covenant to Satisfy Conditions.................................21
Section 6.5 Exclusivity....................................................21
Section 6.6 Further Assurances.............................................21
Section 6.7 Employee Benefits - COBRA......................................22
Section 6.8 Name 22
Section 6.9 Transition Services............................................22
Section 6.10 Mine Closure...................................................22
Section 6.11 Post Closing Permit and Bond Transfer..........................22
ARTICLE VII
CONDITIONS TO EACH PARTY'S OBLIGATIONS
Section 7.1 Regulatory Approvals...........................................23
ARTICLE VIII
CONDITIONS TO THE SELLER'S OBLIGATIONS
Section 8.1 Representations and Warranties of the Buyer True...............23
Section 8.2 Performance....................................................23
Section 8.3 Buyer Guarantee................................................23
Section 8.4 Certificates...................................................23
ii
Section 8.5 No Injunction or Proceeding....................................24
ARTICLE IX
CONDITIONS TO THE BUYER'S OBLIGATIONS
Section 9.1 Representations and Warranties of the Seller True..............24
Section 9.2 Performance by the Seller......................................24
Section 9.3 Certificates...................................................24
Section 9.4 No Injunction or Proceeding....................................24
Section 9.5 Officer and Director Resignations..............................24
ARTICLE X
TERMINATION AND ABANDONMENT; INDEMNIFICATION
Section 10.1 Termination....................................................24
Section 10.2 Procedure and Effect of Termination............................25
Section 10.3 Survival of Representations and Warranties.....................25
Section 10.4 Indemnification................................................25
ARTICLE XI
MISCELLANEOUS
Section 11.1 Waivers and Amendments.........................................28
Section 11.2 Representations and Warranties; Etc............................28
Section 11.3 Entire Agreement; Assignment...................................28
Section 11.4 Validity.......................................................29
Section 11.5 Notices........................................................29
Section 11.6 Governing Law..................................................30
Section 11.7 Publicity......................................................30
Section 11.8 Jurisdiction; Forum............................................30
Section 11.9 WAIVER OF JURY TRIAL...........................................30
Section 11.10 Indemnification Provisions.....................................31
Section 11.11 Descriptive Headings...........................................31
Section 11.12 Counterparts...................................................31
Section 11.13 Expenses.......................................................31
Section 11.14 Parties in Interest............................................31
Section 11.15 Interpretation.................................................31
Section 11.16 Other Acknowledgments and Disclaimers..........................32
EXHIBIT A Guarantee of Xxxxxx X. Xxxxxxxx
EXHIBIT B Preliminary Allocation of Purchase Price
EXHIBIT C Transition Services Agreement
iii
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of this fourth
day of December, 2002, is made by and between THE GOLDFIELD CORPORATION
("Seller"), a Delaware corporation, and Imagin Minerals, Inc., a Delaware
corporation ("Buyer").
RECITALS:
WHEREAS, the Seller owns all of the shares of capital stock of each of
St. Cloud Mining Company, a Florida corporation ("St. Cloud") and The Goldfield
Consolidated Mines Company, a Florida corporation ("Consolidated"); and
WHEREAS, Consolidated owns all of the shares of capital stock of The
Lordsburg Mining Company, a Florida corporation ("Lordsburg," and together with
St. Cloud and Consolidated, the "Companies"); and
WHEREAS, the Buyer desires to purchase from the Seller all of the
shares of capital stock of each of St. Cloud and Consolidated on the terms and
subject to the conditions herein contained, and the Seller has agreed to sell
such interests on such terms and subject to such conditions;
NOW THEREFORE, in consideration of the mutual covenants contained
herein and of other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1 Definitions. The terms defined in this Article I, whenever
used herein, shall have the following meanings for all purposes of this
Agreement.
"1940 Act" shall have the meaning set forth in Section 4.8.
"Acquisition Proposal" shall have the meaning set forth in Section
6.5.
"Additional Deductions" shall have the meaning set forth in Section
10.4(f).
"Adjusted Net Working Capital Balance" shall mean the balance of
current assets (exclusive of cash and current portion of the notes receivable)
less current liabilities, as reflected on the Consolidated Financial Statements
at the respective reporting dates, using consistent valuation methods.
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under the Exchange Act.
"Agreement" shall mean this Stock Purchase Agreement together with the
Schedules and Exhibits.
"Buyer" shall have the meaning set forth in the preamble.
"Buyer Disclosure Schedule" shall have the meaning set forth in
Article IV.
"Buyer Indemnified Parties" shall have the meaning set forth in
Section 10.4(a).
"Buyer's Reclamation Activities" shall have the meaning set forth in
Section 6.10.
"Buying Group" shall have the meaning set forth in Section 11.2(b).
"Closing" shall have the meaning set forth in Section 2.2(a).
"Closing Date" shall have the meaning set forth in Section 2.2(a).
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1986, as amended.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Companies" shall have the meaning set forth in the recitals.
"Common Stock" shall have the meaning set forth in Section 3.2(a).
"Consolidated Financial Statements" shall mean the unaudited financial
statements consolidating the financial information for St. Cloud and
Consolidated as set forth in Section 3.5 of the Seller Disclosure Schedule.
"Confidentiality Agreement" shall mean the confidentiality agreement
entered into by and between Buyer and Xxxx Xxxxxxxx, dba Dirt Level Solutions,
LLC, acting on behalf of Seller, dated as of June 19 , 2002.
"Consolidated" shall have the meaning set forth in the recitals.
"Consolidated Stock" shall have the meaning set forth in Section
3.2(a).
"Continuing Support Obligations" shall have the meaning set forth in
Section 6.11.
"Continuing Support Obligation Indemnification" shall have the meaning
set forth in Section 6.11.
"Contracts" shall mean the contracts listed on Section 3.18 of the
Seller Disclosure Schedule.
"Damages" shall mean any cash, out-of-pocket liabilities, costs or
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages and amounts paid in settlement, except to the extent caused by
the negligence, willful misconduct or fraud of an Indemnified Party.
2
"Deductible Amount" shall have the meaning set forth in Section
10.4(c).
"Elephant Property" shall have the meaning set forth in Section
2.4(d).
"Elephant Property Indemnification" shall have the meaning set forth
in Section 2.4(d).
"Encumbrance" shall mean any lien, encumbrance, security interest,
charge, mortgage, option, pledge or restriction on transfer of any nature
whatsoever (except for encumbrances pursuant to any Permits, regulations or
other actions by Governmental Entities).
"Environmental Claim" means any claim, action, demand, order, or
written notice pending, or any investigation or notice of violation threatened,
by or on behalf of any Governmental Entity or other Person alleging potential
liability based on or resulting from the violation of any Environmental Law or
environmental permit, provided that any action taken by any Governmental Entity
in connection with the Reclamation and Closure Plans shall not be an
Environmental Claim.
"Environmental Laws" shall mean all federal, state, tribal, local laws
and regulations, and all binding final judicial and administrative orders and
determinations applicable to the Companies' businesses and operations to the
extent relating to the protection of natural resources and biota, releases or
threatened releases of Hazardous Materials or otherwise relating to the
generation, treatment, storage, transport or handling of Hazardous Materials in
connection with the reclamation, restoration or closure of mines and their
immediate environment, including the requirements of the Surface Mining Control
and Reclamation Act of 1977, as amended, the Federal Water Pollution Control Act
(including NPDES programs), as amended, the Clean Air Act, as amended, the
Federal Mine Safety and Health Act of 1977, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, the Toxic Substances Control
Act of 1976, as amended, or the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, their state law analogues
and their respective implementation regulations, including the New Mexico Mining
Act, the New Mexico Water Quality Act, the New Mexico Air Quality Control Act,
and their respective implementing regulations.
"Equipment" shall mean all the equipment and machinery owned by the
Companies and listed on Section 3.21 of the Seller Disclosure Schedule.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"GAAP" shall mean United States generally accepted accounting
principles as in effect on the date or for the period with respect to which such
principles are applied.
"Governmental Entity" shall have the meaning set forth in Section 3.4.
3
"Guarantee" shall mean the personal guarantee of Xxxxxx X. Xxxxxxxx,
in the form of Exhibit A hereto, guaranteeing the Continuing Support
Obligations.
"Hazardous Materials" shall mean all substances defined as hazardous
substances, pollutants or wastes under any Environmental Law.
"HIPAA" shall mean Health Insurance Portability and Accountability Act
of 1996, as amended, or any successor law, and all rules and regulations
thereunder or under any successor law.
"Indemnified Party" shall have the meaning set forth in Section
10.4(g).
"Indemnifying Party" shall have the meaning set forth in Section
10.4(g).
"Lordsburg" shall have the meaning set forth in the recitals.
"Lordsburg Stock" shall have the meaning set forth in Section 3.2(a).
"Material Adverse Effect" shall have the meaning set forth in Section
3.7.
"Midnight Mine" shall have the meaning set forth in Section 2.4(c).
"Midnight Mine Indemnification" shall have the meaning set forth in
Section 2.4(c).
"Overlap Period" shall have the meaning set forth in Section 5.1(b).
"Overlap Period Taxes" shall have the meaning set forth in Section
5.1(b).
"Permits" shall mean licenses, approvals, franchises, authorizations,
certifications, registrations and similar documents or instruments issued by a
Governmental Entity and listed on Section 3.8 of the Seller Disclosure Schedule.
"Person" shall mean any individual, partnership, joint-stock company,
joint venture, corporation, limited liability company, trust or unincorporated
organization, or a Governmental Entity or political subdivision thereof.
"Plan" shall have the meaning set forth in Section 3.12(a).
"Pre-Closing Taxes" shall have the meaning set forth in Section
5.1(b).
"Purchase Price" shall have the meaning set forth in Section 2.1.
"Real Property" shall mean all land, together with all buildings,
structures, improvements, and fixtures located thereon, together with all
easements and other rights and interests appurtenant thereto (including air,
oil, gas, mineral, and water rights) owned, leased or subleased by any of the
Companies.
4
"Real Property Leases" means all leases, subleases, licenses,
concessions and other agreements (written or oral), including all amendments,
extensions, and renewals with respect thereto, pursuant to which any of the
Companies holds any Real Property.
"Reclamation and Closure Plans" shall mean the reclamation and closure
plans relating to the sites listed on Section 6.10 of the Seller Disclosure
Schedule and any operating permits issued in respect of such plans.
"Reclamation Indemnification" shall have the meaning set forth in
Section 6.10.
"Representative" shall mean, with respect to any Person, each of such
Person's directors, officers, employees, representatives and agents.
"Section 338(h)(10) Election" shall have the meaning set forth in
Section 2.3(b).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall have the meaning set forth in the preamble.
"Seller Disclosure Schedule" shall have the meaning set forth in
Article III.
"Seller Indemnified Parties" shall have the meaning set forth in
Section 10.4(b).
"Selling Group" shall have the meaning set forth in Section 11.2(b).
"St. Cloud" shall have the meaning set forth in the recitals.
"St. Cloud Stock" shall have the meaning set forth in Section 3.2(a).
"Summit Property" shall have the meaning set forth in Section 3.15.
"Tax Claims" shall mean any claims, actions, causes of action,
liabilities, losses, damages, deficiencies, judgments, settlements, costs and
expenses whatsoever (including reasonable out-of-pocket expenses and reasonable
attorneys' fees), whether or not resulting from third party claims, relating to
Taxes.
"Taxes" shall mean all income, gross receipts, profits, franchise,
single business, sales, use, transfer, occupation, property (including in
lieu-of-taxes), capital, environmental, employment, severance, excise, workers'
compensation, social security, withholding or similar taxes or other
governmental fees or charges of a similar nature, however denominated, imposed
by any federal, state, local or other political subdivision taxing authority,
together with any interest, additions or penalties with respect thereto.
"Tax Return" shall mean any return, report, statement, information or
other document including any amendment thereto filed or to be filed or required
to be filed or supplied to any federal, state, or local Tax authority or any
other government entity with respect to Taxes, including, where permitted or
required, combined or consolidated returns for any group of entities.
5
"Transaction Regulatory Approvals" shall mean all regulatory approvals
required to consummate the transactions contemplated hereby.
"Transfer Taxes" shall have the meaning set forth in Section 5.1(a).
"Transition Services Agreement" shall have the meaning set forth in
Section 6.9.
As used in this Agreement, references to the "Knowledge" of any Person
shall mean the actual knowledge of the executive officers of such Person as
listed on Section 1.1 of the Seller or Buyer Disclosure Schedule, as the case
may be, and of the senior employees as listed on Section 1.1 of the Seller or
Buyer Disclosure Schedule, as the case may be, of such Person responsible for
the area of operations of such Person to which such Person's Knowledge relates.
Section 1.2 Interpretation. When a reference is made in this Agreement
to a Section, Article, Schedule or Exhibit, such reference shall be to a
Section, Article, Schedule or Exhibit of this Agreement unless otherwise
indicated or unless the context shall otherwise require. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. The
definitions of terms in this Agreement shall be applicable to both the plural
and the singular forms of the terms defined when either such form is used in
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." The words "hereof," "herein" and "hereunder," and other words of
similar import, refer to this Agreement as a whole and not to any particular
Article, Section, subsection, paragraph or clause.
ARTICLE II
SALE OF COMMON STOCK
Section 2.1 Purchase and Sale of the Common Stock. (a) The Buyer and
the Seller hereby agree that upon the terms and subject to the satisfaction or
waiver, if permissible, of the conditions set forth herein, the Seller shall
sell, transfer and deliver to the Buyer and the Buyer shall purchase from the
Seller, free and clear of all Encumbrances, the Common Stock for a purchase
price equal to Two Million, Five Hundred Seventy-Seven Thousand, Nine Hundred
and Thirty-Eight Dollars ($2,577,938) (the "Purchase Price") in cash. The
Purchase Price shall be allocated among the Companies as set forth in Section
5.1.
(b) Closing Adjustment to Purchase Price. At Closing, the Purchase
Price shall be increased by $29,027, which is the amount that the Adjusted Net
Working Capital Balance as of October 31, 2002 (being the sum of $536,461)
exceeded the Adjusted Net Working Capital Balance as of May 31, 2002 (being the
sum of $507,434), for a total of $2,606,965 payable to Seller at Closing.
(c) Post-Closing Adjustment to Purchase Price. The Purchase Price
shall be increased by the amount that the Adjusted Net Working Capital Balance
as of November 30, 2002 exceeds the Adjusted Net Working Capital Balance as of
October 31, 2002 (being the sum of $536,461), or decreased by the amount that
the Adjusted Net Working Capital Balance as of
6
November 30, 2002 is less than the Adjusted Net Working Capital Balance as of
October 31, 2002, as the case may be (the "Post-Closing Adjustment").
Section 2.2 Closing. (a) The closing of the transactions contemplated
by this Agreement (the "Closing") shall be held at 10:00 a.m. Eastern Daylight
Time on December 4, 2002, to be effective as of November 30, 2002, at the
offices of LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P. in New York, New York, or at
such other time, date or place as the parties may mutually agree (hereinafter
referred to as the "Closing Date").
(b) At the Closing, the Seller shall deliver the following to the
Buyer:
a) stock certificates duly endorsed or accompanied by stock
powers duly endorsed in blank with appropriate transfer stamps,
if any, affixed thereto, representing the Common Stock;
b) the certificates contemplated by Section 9.3;
c) the executed Transition Services Agreement and
d) all other documents required to be delivered by the Seller on
or prior to the Closing Date pursuant to this Agreement.
(c) At the Closing, the Buyer shall deliver to the Seller:
a) the Purchase Price, as adjusted pursuant to Section 2.1(b);
b) the certificates contemplated by Section 8.4;
c) the executed Transition Services Agreement and
d) all other documents required to be delivered by the Buyer on
or prior to the Closing Date pursuant to this Agreement.
(d) All payments to be made by the Buyer pursuant to this Section 2.2
shall be made by wire transfer of immediately available funds on the Closing
Date to such bank account or bank accounts as the Seller shall designate at
least two business days prior to the Closing Date.
Section 2.3 Tax Election. The Buyer and the Seller shall make an
election pursuant to section 338(h)(10) of the Code (the "Section 338(h)(10)
Election").
Section 2.4 Excluded Assets. (a) Immediately prior to the Closing, the
Seller shall cause each of the Companies to declare and pay a dividend to Seller
an aggregate amount equal to the Companies' cash on hand as of closing, and such
payment shall not affect the Purchase Price nor require any adjustment thereto.
(b) (i) Immediately prior to the Closing, the Seller shall cause each
of the Companies to cancel any receivable from the Seller or any Affiliate of
the Seller (other than the Companies) and release the Seller or such Affiliate,
as the case may be, from any further
7
obligation with respect to such receivable. Such cancellation and release shall
not affect the Purchase Price nor require any adjustment thereto.
(ii) Prior to the Closing, the Seller shall cancel, and cause any
Affiliate of the Seller (other than the Companies) to cancel, any receivable
from the Companies, or either of them, and release the Companies from any
further obligation with respect to such receivable. Such cancellation and
release shall not affect the Purchase Price nor require any adjustment thereto.
(c) The Buyer and the Seller have agreed that the property known as
the "Midnight Mine" is to be excluded from the transactions contemplated hereby,
it being understood that the Midnight Mine has been sold by the Seller in a
separate transaction, whereby the Seller shall retain the sales proceeds from
such sale and all other funds associated therewith. As requested by the Seller,
Buyer shall assist Seller in taking any action necessary to cause the permit for
the Midnight Mine to be transferred to the buyer of the Midnight Mine; provided
that, Seller shall reimburse Buyer for any labor, equipment and other costs
incurred by Buyer in taking such action. Seller shall indemnify and hold
harmless Buyer and the Companies, and their respective officers and directors,
from and against any and all Damages, claims, actions or expenses resulting from
or in connection with the transfer of, or failure of Seller to transfer, the
Midnight Mine permit, which transfer shall be effected as expeditiously as
possible, consistent with Seller's other obligations under this Agreement (the
"Midnight Mine Indemnification").
(d) Seller shall indemnify and hold harmless Buyer and the Companies,
and their respective officers and directors, from and against any and all
Damages, claims, actions or expenses resulting from or in connection with the
possible title issue or claim relating to the property known as the "Elephant
Property," as described in Section 3.22 of the Seller Disclosure Schedule (the
"Elephant Property Indemnification").
(e) Seller shall take all steps necessary to secure the release of St.
Cloud from any obligations under the Agreement of Indemnity dated December 26,
2001, by and among Seller, Southeast Power Corporation, St. Cloud, and Great
American Insurance Company and its affiliates (including, but not limited to,
Great American Alliance Insurance Company, Great American Insurance Company of
New York and Great American Assurance Company), only insofar as such agreement
provides for indemnification with respect to bonds issued for parties other than
St. Cloud. Seller shall indemnify and hold harmless St. Cloud with respect to
any liabilities or expenses, including reasonable attorneys' fees, related
thereto.
(f) Those four (4) certain notes payable to St. Cloud as set forth in
Section 2.4(f) of the Seller Disclosure Schedule.
Section 2.5 Payment of Post-Closing Adjustment. On Friday, December
20, 2002, the Buyer shall deliver to Seller a payment in the amount of any
increase in the Purchase Price, or the Seller shall deliver to Buyer a payment
in the amount of any decrease in the Purchase Price, as the case may be, and
such payment shall be in the amount of the Post-Closing Adjustment as determined
pursuant to Section 2.1(c).
8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
RELATING TO SELLER AND THE COMPANIES
The Seller shall deliver to the Buyer a Disclosure Schedule
concurrently with the execution and delivery by the Seller of this Agreement, as
attached hereto (the "Seller Disclosure Schedule"). Disclosure of any fact or
item in the Seller Disclosure Schedule with reference to a particular paragraph
or section in the Agreement shall, should the existence of the fact or item or
its contents be relevant to any other paragraph or section in the Agreement, be
deemed to be disclosed with respect to such other paragraph or section whether
or not a specific cross-reference appears; provided that the relevance of such
fact or item shall be reasonably evident from such disclosure. Except as set
forth in the Seller Disclosure Schedule, the Seller hereby represents and
warrants to the Buyer as follows:
Section 3.1 Organization, Standing and Power. Each of the Seller and
the Companies is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Each of the Seller and the
Companies has all requisite power and authority to conduct its business as it is
now being conducted and to own, lease and operate its property and assets,
except as otherwise provided in this Article III. Each of the Companies is
qualified or licensed to do business as a foreign corporation or company and is
in good standing in each jurisdiction in which ownership of property or the
conduct of its business requires such qualification or license.
Section 3.2 Capitalization of the Companies. (a) The authorized equity
capital of each of the Companies is as follows: (i) St. Cloud's authorized
equity capital consists of 50 shares of common stock, $10.00 par value per
share, of which 50 shares have been issued and are outstanding (the "St. Cloud
Stock"); (ii) Consolidated's authorized equity capital consists of 50 shares of
common stock, $10.00 par value per share, of which 49 shares have been issued
and are outstanding (the "Consolidated Stock," and together with the St. Cloud
Stock, the "Common Stock") and (iii) Lordsburg's authorized equity capital
consists of 100 shares of common stock, $5.00 par value per share, of which 100
shares have been issued and are outstanding (the "Lordsburg Stock"). All of the
shares of Common Stock are duly authorized, validly issued, fully paid and
non-assessable and free of any preemptive rights in respect thereto and are held
beneficially and of record by the Seller. All of the shares of Lordsburg Stock
are duly authorized, validly issued, fully paid and non-assessable and free of
any preemptive rights in respect thereto and are held beneficially and of record
by Consolidated.
(b) There are no outstanding (i) securities convertible into or
exchangeable for the equity capital of any of the Companies, (ii) options,
warrants or other rights to purchase or subscribe for equity capital of any of
the Companies or (iii) contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance of any equity capital of any
of the Companies or any such convertible or exchangeable securities or any such
options, warrants or rights, pursuant to which, in any of the foregoing cases,
is subject to or bound.
9
(c) Upon delivery of the Common Stock against payment of the Purchase
Price by the Buyer in accordance with Section 2.2, valid and marketable title to
the Common Stock, free and clear of any Encumbrance will pass to the Buyer.
Section 3.3 Authority Relative to this Agreement. The Seller has all
requisite corporate authority and power to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all required action on the part
of the Seller, including approval of the board of directors of the Seller, and
no other proceedings on the part of the Seller are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by the Seller and, assuming
this Agreement has been duly authorized, executed and delivered by the Buyer,
this Agreement constitutes a valid and binding agreement of the Seller,
enforceable against the Seller in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting creditors'
rights generally, including the effect of statutory and other laws regarding
fraudulent conveyances and preferential transfers, and subject to the
limitations imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
Section 3.4 No Conflict or Violation; Consents and Approvals. Neither
the execution and delivery of this Agreement by the Seller nor the consummation
of the transactions contemplated hereby by the Seller will (a) violate any
provision of the certificate of incorporation or by-laws of the Seller, (b)
require the consent, waiver or approval of any federal, state, local or foreign
government, or regulatory authority, agency or commission, including courts of
competent jurisdiction, domestic or foreign (a "Governmental Entity"), except
for consents and approvals to be made and obtained before the Closing and those
which have been made and obtained, and provided that no requirements of or
actions taken by any Governmental Entity in connection with the activities
associated with the Reclamation and Closure Plans or the Continuing Support
Obligations, as contemplated by Sections 6.10 and 6.11 hereof, shall be deemed
such a consent, waiver or approval, (c) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or acceleration or any obligation
to repay) under, any of the terms, conditions or provisions of any indenture,
mortgage, note, bond, encumbrance, license, contract, lease, franchise, permit,
agreement or other instrument or obligation to which the Seller or any of the
Companies is a party or by which the Seller or any of the Companies or any of
their respective properties or assets may be bound, (d) violate any order, writ,
judgment, injunction, decree, statute, ordinance, rule or regulation of any
Governmental Entity applicable to the Seller or any of the Companies or by which
any of their respective properties or assets may be bound, except as otherwise
provided in this Article III, and (e) require the consent, waiver or approval of
any third party in connection with the Equipment, Real Property or Real Property
Leases and the transactions contemplated by this Agreement, provided that no
requirements of or actions taken by any third party in connection with the
activities associated with the Reclamation and Closure Plans or the Continuing
Support Obligations, as contemplated by Sections 6.10 and 6.11 hereof, shall be
deemed such a consent, waiver or approval.
10
Section 3.5 Financial Statements. (a) The Seller has previously made
available to the Buyer (i) the audited consolidated financial statements of the
Seller (including any related notes) for the fiscal years ending December 31 of
each of 1999, 2000 and 2001, which have been prepared in accordance with GAAP
consistently applied and fairly present the financial position, results of
operations, cash flows and stockholders' equity for the Seller for the periods
indicated and (ii) the consolidating statements related to the Companies
prepared in connection with the 2001 year end audit.
(b) The Seller has previously furnished to the Buyer the unaudited
monthly balance sheets and income statements of each of the Companies for the
months of January 2002, February 2002, March 2002, April 2002, May 2002, June
2002, July 2002, August 2002, September 2002 and October 2002. The unaudited
monthly balance sheets and income statements of each of the Companies for the
months of May 2002 and October 2002 are attached to Section 3.5 of the Seller
Disclosure Schedule. The unaudited financial statements have been prepared on a
consistent basis with the Seller's audited financial statements, and include all
adjustments, consisting only of normal recurring adjustments necessary for a
fair presentation of the results of operations and financial position of the
Companies for the periods indicated.
Section 3.6 Absence of Certain Changes. Except as disclosed in Section
3.6 of the Seller Disclosure Schedule, and unless otherwise provided for in
Section 2.4 hereof, since October 31, 2002, none of the Companies has (a)
suffered any material adverse change in its business, operations or financial
position, (b) conducted its business in any material respect not in the ordinary
and usual course consistent with past practice, (c) incurred any long-term
indebtedness or issued any debt securities or assumed or guaranteed the
obligations of any other Person, (d) sold, transferred or otherwise disposed of
any of its material property or assets, (e) created any material Encumbrance on
any of its material property or assets, (f) increased in any manner the rate or
terms of compensation of any of its directors or officers, (g) paid or agreed to
pay any pension, retirement allowance or other employee benefit not required by
law or any existing Plan or other agreement or arrangement to any such director,
officer or employee, whether past or present, or (h) entered into or amended any
employment, bonus, severance or retirement contract.
Section 3.7 Compliance with Law. The businesses of the Companies are
not being conducted in violation of any applicable order, writ, judgment,
injunction, decree, statute, ordinance, rule or regulation of any Governmental
Entity, except for such violations as, in the aggregate, will not have a
material adverse effect on the business, results of operations, assets or
financial condition of the Companies taken as a whole, that would likely result
in liability against or expenses to the Companies of $25,000 or more (any such
effect, a "Material Adverse Effect"). None of the Companies is in default or
violation (and no event has occurred which with notice or the lapse of time or
both would constitute a default or violation) of any term, condition or
provision of (a) its certificate of incorporation or by-laws or (b) any order,
writ, judgment, injunction, decree, statute, ordinance, rule or regulation of
any Governmental Entity applicable to such Company except for such defaults and
violations as, in the aggregate, will not have a Material Adverse Effect.
11
Section 3.8 Permits. Section 3.8 of the Seller Disclosure Schedule
sets forth a complete and correct list of all Permits held by each of the
Companies that are necessary for the conduct of their businesses in all material
respects as presently conducted. Each of the Companies is in material compliance
with the terms of the Permits.
Section 3.9 Litigation. Except as otherwise disclosed in writing to
the Buyer, there are no actions, suits or proceedings pending or, to the
Knowledge of the Seller, threatened against the Seller or any of the Companies
or any properties or rights of the Seller or any of the Companies before any
Governmental Entity.
Section 3.10 Taxes. (a) The Seller has, with respect to the Companies,
within the time and manner prescribed by law, (i) filed or caused to be filed
with the appropriate taxing authorities (or joined in the filing of) all
material Tax Returns required to be filed by them in respect of any Taxes, and
each such Tax Return was complete and accurate in all material respects, and
(ii) paid in full or caused to be paid in full all Taxes shown to be due and
payable thereon, except those being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established.
(b) No deficiencies for any Taxes have been asserted in writing
against any of the Companies, which remain unpaid and which in the aggregate are
material to the businesses or financial conditions of the Companies, or which
are not being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established and the Companies have adequately
reserved for all material Taxes payable by the Companies for which no Tax Return
has yet been filed.
Section 3.11 Environmental Matters. Except as set forth in Section
3.11 of the Seller Disclosure Schedule, to the Seller's Knowledge, except where
such failures to comply with any applicable Environmental Law will not, in the
aggregate, have a Material Adverse Effect, (a) the operations of each of the
Companies are in compliance with all applicable Environmental Laws, (b) there
has been no disposal or release of any Hazardous Materials on or from the Real
Property in violation of any applicable Environmental Law, (c) the Real Property
is in compliance with all applicable Environmental Laws, and (d) no event has
occurred which could be the basis for any written notice of violation,
compliance order, or cessation order under any Environmental Law. Except as set
forth in Section 3.11 of the Seller Disclosure Schedule, to the Seller's
Knowledge, there are no Environmental Claims, pending or threatened against any
of the Companies which, if determined adversely against such Company, would have
a Material Adverse Effect.
Section 3.12 Employee Benefit Plans; ERISA. (a) Section 3.12(a) of the
Seller Disclosure Schedule sets forth a complete and correct list of all
material "employee benefit plans," as defined in Section 3(3) of ERISA,
maintained, or contributed to, by any of the Companies on behalf of any
employee, officer or director of any of the Companies and all material written
bonus or other incentive compensation, deferred compensation, salary
continuation, disability, stock award, stock option, stock purchase, severance,
parachute or other material employee benefit policies or arrangements which any
of the Companies maintains or
12
contributes to on behalf of any employee, officer or director of any of the
Companies (collectively referred to as the "Plans").
(b) The Plans are in full force and effect, are in substantial
compliance with applicable law, including ERISA and the Code, and have been
administered and operated in all material respects in accordance with their
terms.
(c) All premiums for the Plans have been paid or accrued in full for
the applicable period prior to the Closing Date.
(d) Except as set forth in Section 3.12 (d) of the Seller Disclosure
Schedule, as of the Closing Date, no liabilities have been incurred with respect
to any employee, former employee or person on laid-off or inactive status or who
is receiving short-term or long-term disability benefits under a Plan.
Section 3.13 Labor Matters. (a) None of the Companies is (i) a party
to or bound by any collective bargaining agreement with a labor union or labor
organization, (ii) a party to or bound by any contract for the employment of any
of its employees, or (iii) the subject of any proceeding asserting that such
Company has committed an unfair labor practice or is seeking to compel it to
bargain with any labor organization as to wages or conditions of employment.
(b) Except as set forth in Section 3.13(b) of the Seller Disclosure
Schedule (i) there are no workers' compensation or unemployment claims pending,
or, to the Seller's Knowledge, threatened against the Companies and (ii) all
workers' compensation insurance policies held by each of the Companies are in
full force and effect in accordance with their terms.
Section 3.14 Brokers and Finders. Except as set forth in Section 3.14
of the Seller Disclosure Schedule, no broker, finder or investment banker, other
than XxXxxxxxx Xxxxx & Co., LLC, is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Seller or any of
the Companies.
Section 3.15 Title to Assets. Except as set forth in Section 3.15 of
the Seller Disclosure Schedule, (i) each of the Companies has good and
marketable title to the properties and assets owned by it and used in its
operations or shown on the unaudited monthly balance sheet dated as of October
31, 2002 referenced in Section 3.5(b), free and clear of all Encumbrances and
(ii) each of the Real Property Leases listed in Section 3.18 of the Seller
Disclosure Schedule is in full force and effect, there is no material default by
any of the Companies under any such Real Property Lease and each such Real
Property Lease will remain in full force and effect immediately following the
Closing. No representation or warranty is made with respect to the title to the
property known as the "Summit Property."
Section 3.16 Undisclosed Liabilities. Neither the Companies nor any of
their respective subsidiaries have any liabilities, obligations, guarantees,
warranties, claims or losses (whether liquidated or unliquidated, secured or
unsecured, absolute, accrued, contingent or
13
otherwise), other than those incurred in the ordinary course of the Companies'
or their respective subsidiaries' businesses (which shall include warranties
provided in connection with construction contracts or zeolite products), and
which, individually or in the aggregate, do not or would not have a Material
Adverse Effect on the Companies.
Section 3.17 Real Property. Section 3.17 of the Seller Disclosure
Schedule sets forth a complete and correct list of all Real Property owned by
the Companies. Seller has not been served with service of process in any
condemnation, expropriation or other proceeding in eminent domain, pending, in
each case naming any of the Companies as a party, or, to the Knowledge of the
Companies, threatened, affecting any Real Property or any portion thereof or
interest therein. To Seller's Knowledge, there is no injunction, decree, order,
writ or judgment outstanding, nor any claims, litigation, particular
adjudicatory administrative actions or similar proceedings, pending, in each
case naming any of the Companies as a party, or, to the Knowledge of the
Companies, threatened (except for legislative/rulemaking or administrative
proceedings relating to mining or similar properties generally), relating to the
ownership, lease, use, occupancy of, or the operation of any of the Companies'
businesses as currently conducted on, any of the Real Property or any portion
thereof.
Section 3.18 Contracts. Except as disclosed in Section 3.18 of the
Seller Disclosure Schedule, none of the Companies is a party to any Real
Property Lease, or any management, service, supply, maintenance or other
contracts which are material to the operation of the Companies' businesses or
use of their respective assets. Seller has provided to Buyer a copy of each
agreement listed in Section 3.18 of the Seller Disclosure Schedule. The
Contracts are in full force and effect according to their terms and none of the
Companies has received any notice of default under any of the Contracts.
Section 3.19 Water Permits. (a) The water permits issued under New
Mexico State Engineer Office ("OSE") File No. RG-36763 through S-6 are valid and
effective permits according to their terms for the diversion of 196 acre feet of
water per year for mining, milling and associated purposes, with respect to
which water permits none of the Companies has received notice of abandonment or
forfeiture, and the Acceptance by the State Engineer of a Dedication of Water
Right (RG-34371), dated August 13, 1990, is an approved dedication for 12.13
acre feet of offset rights allowing the diversion of 75 acre feet from RG-36763
through S-6 (collectively, the "Water Permits").
(b) The existing xxxxx, pumps, pipes, sprinklers and other equipment
currently used in the operations of the Companies' businesses in connection with
the Water Permits are in good operating condition.
(c) With respect to the Water Permits, Seller is in substantial
compliance with all applicable regulations and requirements of the OSE.
(d) The OSE Permit to Construct a Tailings Impoundment, issued under
File No. 3914 is a valid and effective permit according to its terms.
14
Section 3.20 Mining Claims. The Unpatented Mining Claims identified in
Section 3.20 of the Seller Disclosure Schedule have been located, perfected and
maintained in accordance with federal and state law, all annual rental fees have
been paid to the United States Bureau of Land Management, all assessment work
required by applicable law with respect to such claims has been done and all
recordings and filings required by applicable law with respect to such claims
have been made.
Section 3.21 Equipment. A list of all Equipment owned by any of the
Companies which is material to their operations as presently conducted is set
forth in Section 3.21 of the Seller Disclosure Schedule, and is in all material
respects in working order, ordinary wear and tear excepted.
Section 3.22 Prior Dispositions of Property. Section 3.22 of the
Seller Disclosure Schedule lists all of the material mining properties (i)
formerly owned by the Companies or either of them that have been sold or
otherwise disposed of prior to the date hereof and (ii) formerly operated by the
Companies, or either of them, where neither of the Companies has conducted
operations since December 31, 2001. Section 3.22 of the Seller Disclosure
Schedule fairly summarizes, in all material respects, the nature of the
Companies' operations that were conducted at each of the properties listed
thereon, the time period during which the Companies conducted operations at such
property, the disposition (with respect to formerly owned property) and current
status of such property and any continuing contractual obligations of the
Companies with respect to such property, if any. To Seller's Knowledge, there
are no Environmental Claims with respect to the properties or operations listed
on Section 3.22 of the Seller Disclosure Schedule.
Section 3.23 Expiration of Summit Mine Agreement. The Summit Mine
Agreement dated as of December 15, 1998, between Royal Ecoproducts Limited, a
body corporate incorporated under the laws of Ontario, Canada, and Lordsburg has
expired under its terms, is of no force or effect, and neither party thereto has
any liability thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer shall deliver to the Seller a Disclosure Schedule
concurrently with the execution and delivery by the Buyer of this Agreement, as
attached hereto (the "Buyer Disclosure Schedule"). Disclosure of any fact or
item in the Buyer Disclosure Schedule with reference to a particular paragraph
or section in the Agreement shall, should the existence of the fact or item or
its contents be relevant to any other paragraph or section in the Agreement, be
deemed to be disclosed with respect to such other paragraph or section whether
or not a specific cross-reference appears; provided that the relevance of such
fact or item shall be reasonably evident from such disclosure. Except as set
forth in the Buyer Disclosure Schedule, the Buyer hereby represents and warrants
to the Seller as follows:
Section 4.1 Organization Standing and Power. The Buyer is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. The Buyer has all requisite power and
authority to conduct its business as it is now being conducted
15
and to own, lease and operate its property and assets except as otherwise
provided in this Article IV.
Section 4.2 Authority Relative to this Agreement. The Buyer has all
requisite authority and power to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all required action on the part of the
Buyer, including approval of the board of directors of the Buyer, and no other
proceedings on the part of the Buyer are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Buyer and, assuming this
Agreement has been duly authorized, executed and delivered by the Seller, this
Agreement constitutes a valid and binding agreement of the Buyer, enforceable
against the Buyer in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers, and subject to the limitations imposed
by general equitable principles (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
Section 4.3 No Conflict or Violation; Consents and Approvals. Neither
the execution and delivery of this Agreement by the Buyer nor the consummation
of the transactions contemplated hereby by the Buyer will (a) violate any
provision of the certificate of incorporation or by-laws of the Buyer, (b)
require the consent, waiver or approval of any Governmental Entity, except for
(i) consents and approvals to be made and obtained before the Closing and those
which have been made and obtained, (c) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or acceleration or any obligation
to repay) under, any of the terms, conditions or provisions of any indenture,
mortgage, note, bond, encumbrance, license, contract, lease, franchise, permit,
agreement or other instrument or obligation to which the Buyer is a party or by
which the Buyer or any of its properties or assets may be bound or (d) violate
any order, writ, judgment, injunction, decree, statute, ordinance, rule or
regulation of any Governmental Entity applicable to the Buyer or by which any of
its properties or assets may be bound.
Section 4.4 Legal Proceedings. There are no actions, suits or
proceedings pending or, to the Knowledge of the Buyer, threatened against the
Buyer before any court, arbitrator or governmental or regulatory body or
authority which would prevent or delay the consummation of the transactions
contemplated by this Agreement.
Section 4.5 Investment Intent. The Buyer is acquiring the Common Stock
for its own account for investment and not with any present intention of
distributing the Common Stock in violation of the Securities Act, other
applicable federal or state securities laws, and the rules and regulations
promulgated thereunder. The Buyer understands that the Common Stock has not been
registered under the Securities Act or other applicable federal or state
securities laws, and the rules and regulations promulgated thereunder, by reason
of the contemplated sale of the Common Stock in a transaction exempt from the
registration requirements of the Securities Act and state securities laws, and
the rules and regulations promulgated thereunder. The Buyer
16
represents that it is fully informed as to the applicable limitations upon any
distribution or resale of the Common Stock under the Securities Act and other
applicable federal and state securities laws, and the rules and regulations
promulgated thereunder, and the Buyer agrees that it will refrain from
transferring, distributing or otherwise disposing of the Common Stock, or any
interest therein, in such manner as to violate the registration requirements of
the Securities Act or of any applicable Federal or state securities law, and the
rules and regulations promulgated thereunder, and that the Buyer is an
"accredited investor" as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act.
Section 4.6 Knowledgeable Purchaser. The Buyer (a) is represented by
competent legal, tax and financial counsel in connection with the negotiation,
execution, and delivery of this Agreement, (b) together with its Affiliates, has
sufficient Knowledge and experience in owning (directly or indirectly), managing
and operating mining properties to enable it to evaluate the Companies and the
business of the Companies and the technical, commercial, financial, legal,
regulatory and other risks associated with owning the Common Stock, (c)
acknowledges that pursuant to this Agreement it has, prior to the date hereof,
performed all due diligence that it has deemed necessary to perform in order to
close the transactions contemplated hereby, in making the decision to enter into
this Agreement and to consummate the transactions contemplated hereby, (d) has
relied on its own independent investigation, analysis and evaluation of the
Companies and their properties, assets, business, financial condition and
prospects and upon the express representations and warranties of the Seller in
this Agreement and in any certificate delivered at the Closing, and is not
relying on any other representations, warranties, documents or statements of or
provided by the Seller or any Affiliate thereof, whether in writing or orally,
and (e) together with its Affiliates, is financially capable of purchasing and
owning the Common Stock and performing its obligations under this Agreement.
Section 4.7 Available Funds. As of the Closing Date, the Buyer will
have sufficient funds available to satisfy the obligation of the Buyer to pay
the Purchase Price and to pay all fees and expenses of the Buyer related to the
transactions contemplated hereby without obtaining additional financing.
Section 4.8 Investment Company Act. The Buyer is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940 of the United States, as amended (the
"1940 Act"), or an "investment advisor" within the meaning of the 1940 Act.
Section 4.9 Brokers and Finders. No broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Buyer.
ARTICLE V
TAX MATTERS
Section 5.1 Tax Matters. (a) (a) Transfer Taxes. The Seller shall pay
all sales, use, transfer, real property transfer, recording, gains, stock
transfer and other similar taxes and fees ("Transfer Taxes"), if any, arising
out of or in connection with the sale of the Common
17
Stock and the Lordsburg Stock pursuant to this Agreement (including any Transfer
Taxes resulting from the Section 338(h)(10) Election), and shall indemnify,
defend, and hold harmless the Buyer with respect to such Transfer Taxes. The
Seller shall file all necessary documentation and Tax Returns with respect to
such Transfer Taxes.
(b) Indemnification. (i) The Seller shall indemnify and hold harmless
the Buyer from and against any and all Tax Claims (other than Transfer Taxes
subject to indemnification pursuant to Section 5.1) relating to any of the
Companies resulting from, arising out of or relating to: (A) any and all Taxes
imposed on or incurred by the Buyer or the Companies relating to any taxable
period ending on or prior to the Closing Date including Taxes resulting from the
Section 338(h)(10) Election ("Pre-Closing Taxes") and (B) with respect to any
taxable period ending on or after the Closing Date that includes the Closing
Date (the "Overlap Period"), any and all Taxes imposed on or incurred by the
Buyer or the Companies attributable to the period ending on or prior to the
Closing Date ("Overlap Period Taxes") (reduced in each case by (i) any Tax Claim
for which reserves have been established by the Companies on or prior to the
Closing Date; however, the reduction shall be limited to the amount of the
reserve and (ii) any Tax payments (estimated or otherwise) made on or prior to
the Closing Date with respect to any Tax Claims of the Companies). For purposes
of the Overlap Period, Taxes shall be attributable to the period ending on or
prior to the Closing Date: (A) in the case of any real or personal property tax
imposed on or incurred by any of the Companies in an amount equal to the real or
personal property tax for the entire period multiplied by a fraction the
numerator of which is the number of days in the period for which such real or
personal property tax is paid ending on the Closing Date and the denominator of
which is the number of days in the entire period; and (B) in the case of any
other Taxes imposed on or incurred by the Companies to the extent of any Taxes
imposed on or incurred by any of the Companies that would be payable if the
taxable year ended on the Closing Date.
(ii) The Buyer shall indemnify and hold harmless the Seller and its
Affiliates from and against any and all Tax Claims relating to the Buyer, any of
the Companies or any Affiliate thereof other than Tax Claims resulting from,
arising out of or relating to Pre-Closing Taxes or Overlap Period Taxes.
(c) Refunds. Any refund or credit of any of the Companies for
Pre-Closing Taxes or Overlap Period Taxes shall be for the benefit of the Seller
and the Buyer shall pay any such refund, after netting any related taxes that
result from the refund, to the Seller within 30 days after such Company receives
such refund or actually realizes the benefit of such refund or credit. The
Buyer, upon receipt of a written request by the Seller, shall cause a relevant
Company to file an amended Tax Return if such Tax Return results in a decrease
in any Tax liability subject to indemnification pursuant to Section 5.1(b)(i) or
a Tax refund payable to the Seller pursuant to this Section 5.1(c) provided that
such amended Tax Return does not result in an increase in the Tax liability
attributable to any Company that is not subject to indemnification pursuant to
Section 5.1(b)(i). The Buyer shall not file or cause to be filed any amended Tax
Return if such return results in an increase in any Tax liability subject to
indemnification pursuant to Section 5.1(b)(i) without the prior written consent
of the Seller.
18
(d) Contests. The Seller and the Buyer agree that, in the event that
any of the Companies receives notice in writing of any examination, claim,
settlement, proposed adjustment, administrative or judicial proceeding, or other
matter related to any Pre-Closing Taxes or Overlap Period Taxes, the Seller or
the Buyer, as the case may be, shall notify the other party in writing as soon
as reasonably practical (but in no event not more than 10 business days) after
receipt of such notice and the Seller shall be entitled to control, at the
Seller's own expense, all such matters; provided, the Seller notifies the Buyer
in writing within 45 business days following receipt or issuance by the Seller
of such written notice that the Seller intends to exercise its rights pursuant
to this Section 5.1(d). The Buyer shall cooperate with the Seller by giving the
Seller and its representatives, on prior reasonable notice, access and
cooperation during normal business hours to all information, books and records
pertaining to each Company's Pre-Closing Taxes and Overlap Period Taxes.
(e) Information. The Seller and the Buyer will make available to each
other, and the Buyer will cause each of the Companies, to make available as
reasonably requested, and to any taxing authority, all information, records, or
documents relating to the liability or potential liability for Pre-Closing
Taxes, Overlap Period Taxes and post-closing Taxes and will preserve such
information, records or documents until the expiration of any applicable statute
of limitations or extensions thereof. The Buyer shall make available relevant
Company employees and officers, as reasonably requested by the Seller, on a
mutually convenient basis during normal business hours (at the reasonable
expense of the requesting party) to aid the Seller in connection with any Tax
matter addressed in this Article V.
(f) Code Section 338(h)(10) Election; Purchase Price Allocation. Upon
the consummation of the purchase contemplated by this Agreement, the Seller and
the Buyer shall join in making a timely Section 338(h)(10) Election with respect
to the purchase of the Common Stock and the Lordsburg Stock, and shall make
similar elections under state and local law to the fullest extent possible. The
Buyer will be responsible for preparing and filing all documents and materials
necessary in connection with making the Section 338(h)(10) Election and any
similar elections under state and local law. On or prior to the Closing Date,
the Seller shall prepare and deliver to the Buyer a proposed allocation of the
Purchase Price, as adjusted if necessary, for purposes of the Section 338(h)(10)
Election made by the Buyer as contemplated by Section 5.1(g) below. The final
allocation shall be provided to the Buyer within ninety (90) days after the
Closing Date, and shall be substantially similar to the proposed preliminary
allocation attached hereto as Exhibit B, except for final adjustments based on
the November 30, 2002 balance sheet. The Buyer and the Seller shall timely
complete and file Form 8023 and any similar form under applicable state law. If
the Buyer and the Seller cannot agree on such allocation, the Buyer and the
Seller will select a nationally recognized accounting firm or other recognized
expert to appraise the assets for purposes of determining such allocation. The
cost of such appraisal will be divided between the Buyer and the Seller equally.
The Buyer and the Seller agree not to take any position inconsistent with any
such allocation for Tax reporting purposes.
(g) Tax Returns. The Buyer shall be responsible for preparing and
filing all Tax Returns of the Companies relating to Tax periods ending after the
Closing Date. The Seller shall cooperate with the Buyer with respect to
preparing and filing such Tax Returns and shall promptly provide all information
reasonably requested by the Buyer necessary to prepare and file
19
the Tax Returns. Not later than 30 days prior to the filing of any Tax Return
relating to the Companies that includes any Tax liability subject to
indemnification pursuant to Section 5.1(b)(i), the Buyer shall provide the
Seller copies for review of any such Tax Returns setting forth any amount
subject to indemnification pursuant to Section 5.1(b)(i). The Seller shall
notify the Buyer within 10 days of any disagreement with respect to any amount
subject to indemnification pursuant to Section 5.1(b)(i). To the extent that the
Buyer and the Seller cannot resolve such dispute, the Buyer and the Seller will
select a nationally recognized accounting firm or other recognized expert to
resolve such dispute. The cost of such review and resolution will be divided
between the Buyer and the Seller equally.
(h) Survival of Obligations. The obligations of the parties set forth
in this Article V shall be unconditional and absolute and shall remain in effect
until the expiration of the applicable statutes of limitation.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of the Business Pending the Closing. Except as
contemplated by this Agreement, including without limitation Section 2.4 hereof,
or with the prior written consent of the Buyer, during the period from the date
of this Agreement to the Closing, the Seller shall use commercially reasonable
efforts to cause each of the Companies to: conduct its businesses and operations
according to its ordinary and usual course of business consistent with past
practice and shall use commercially reasonable efforts consistent therewith to
preserve intact its properties, assets and business organizations, keep
available the services of its officers and employees (to the extent such
officers and employees are willing to remain employed) and maintain satisfactory
relationships with customers, suppliers, distributors and others having
commercially beneficial business relationships with such Company, in each case
in the ordinary course of business consistent with past practice.
Section 6.2 Consents and Approvals. (a) Each of the parties hereto
shall use commercially reasonable efforts to (i) obtain as promptly as
practicable all consents, authorizations, approvals and waivers required in
connection with the consummation of the transactions contemplated by this
Agreement under any federal, state, local or foreign law or regulation
(including, without limitation, all of the Transaction Regulatory Approvals),
(ii) promptly cause to be lifted or rescinded any injunction or restraining
order or other order adversely affecting the ability of the parties hereto to
consummate the transactions contemplated hereby and (iii) promptly effect all
necessary registrations and filings (including filings with Governmental
Entities necessary to obtain all of the Transaction Regulatory Approvals) and
submissions of information requested by any Governmental Entity. The parties
hereto further covenant and agree, with respect to any threatened or pending
preliminary or permanent injunction or other order, decree or ruling or statute,
rule, regulation or executive order that would adversely affect the ability of
the parties hereto to consummate the transactions contemplated hereby, to
respectively use commercially reasonable efforts to prevent the entry, enactment
or promulgation thereof, as the case may be. Prior to making any such filing
each party shall provide the other with reasonable opportunity to comment
thereon.
20
(b) Each party hereto shall promptly inform the other of any material
communication from any Governmental Entity regarding any of the transactions
contemplated hereby. If any party hereto or any Affiliate thereof receives a
request for additional information or documentary material from any such
Governmental Entity with respect to the transactions contemplated hereby, then
such party shall endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other party, an
appropriate response in compliance with such request. The Buyer shall advise the
Seller promptly in respect of any understandings, undertakings or agreements
(oral or written) that the Buyer proposes to make or enter into with any
Governmental Entity in connection with the transactions contemplated hereby.
Section 6.3 Filings. Promptly after the execution of this Agreement,
each of the parties hereto shall prepare and make or cause to be prepared and
made any required filings, submissions and notifications under the laws of any
jurisdiction to the extent that such filings are necessary to consummate the
transactions contemplated hereby (including, without limitation, to obtain the
consents and approvals, contemplated by Section 6.2 hereof) and shall use
commercially reasonable efforts to take all other actions necessary to
consummate the transactions contemplated hereby in a manner consistent with
applicable law. Each of the parties hereto will furnish to the other party such
necessary information and reasonable assistance as such other party may
reasonably request in connection with the foregoing.
Section 6.4 Covenant to Satisfy Conditions. The Seller and the Buyer
will each respectively use commercially reasonable efforts to ensure that the
conditions set forth herein are satisfied, insofar as such matters are within
the control of such party.
Section 6.5 Exclusivity. From the date hereof until the earlier of
that date which is (a) the date that this Agreement has been terminated pursuant
to Section 10.1 or (b) the Closing Date, neither the Seller nor the Companies
nor any of their respective officers, directors, employees, agents or
representatives shall initiate or solicit, directly or indirectly, any inquiries
or the making of any proposal with respect to the purchase of any of the Common
Stock or a merger, consolidation or similar transaction involving, or any
purchase of all or any significant portion of the assets of, the Companies (an
"Acquisition Proposal") or engage in any negotiations with, or provide any
confidential information or data to, or have any discussions with, any Person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal, except as contemplated by
this Agreement.
Section 6.6 Further Assurances. Upon the terms and subject to the
conditions herein provided, each of the parties hereto shall use commercially
reasonable efforts to take or cause to be taken all action, to do or cause to be
done, and to assist and cooperate with the other party hereto in doing, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement, including, but not limited to, (a)
the satisfaction of the conditions precedent to the obligations of any of the
parties hereto, (b) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
performance of the obligations hereunder or thereunder and (c) the execution
21
and delivery of such instruments, and the taking of such other actions as the
other party hereto may reasonably require in order to carry out the intent of
this Agreement.
Section 6.7 Employee Benefits - COBRA. The Buyer shall be responsible
and liable for providing the appropriate COBRA notices and coverage to all
employees of each of the Companies who experience a "qualifying event" on or
after the Closing, and to related COBRA beneficiaries.
Section 6.8 Name. After the Closing, the Buyer will not use the name
"Goldfield" in conducting the business of any of the Companies and promptly
after the Closing will change the name of Consolidated to remove "Goldfield"
from the name.
Section 6.9 Transition Services. To facilitate the orderly transition
of the Companies' business, the Buyer and the Seller will enter into a
Transition Services Agreement (the "Transition Services Agreement") at the
Closing, in the form of Exhibit C hereto.
Section 6.10 Mine Closure. The Buyer shall use its best efforts to
proceed expeditiously with the closure and reclamation actions and activities at
the sites as required by the Reclamation and Closure Plans, any applicable
Environmental Laws, and in accordance with the timetables set forth in the
Reclamation and Closure Plans described in Section 6.10 of the Seller Disclosure
Schedule as such Reclamation and Closure Plans may be modified in accordance
with applicable law. The Buyer shall have the sole responsibility for directing
and supervising the actions and activities undertaken pursuant to this Section
6.10 (the "Buyer's Reclamation Activities") and shall indemnify the Seller for
any payments made by or Damages imputed to the Seller for actions or activities
undertaken by the Buyer or at the Buyer's direction or omissions by the Buyer or
at the Buyer's direction occurring subsequent to the Closing Date in connection
with the Buyer's Reclamation Activities to the fullest extent permitted by law
(the "Reclamation Indemnification"). Notwithstanding any other provision in this
Agreement, the Buyer's liability under the Reclamation Indemnification shall not
be limited in any way.
Section 6.11 Post Closing Permit and Bond Transfer. The Buyer shall
proceed expeditiously to arrange the release of the Seller from any and all of
the Seller's obligations in respect of the Seller's guarantees for the benefit
of third parties associated with the Reclamation and Closure Plans, as well as
any and all of the Seller's obligations in respect of the Seller's guarantees
for the benefit of third parties that have been provided by Seller in connection
with all other operations and activities of the Companies (including all
construction performance bonds) which obligations, guarantees, assurances and
performance bonds are set forth in Section 6.10 of the Seller Disclosure
Schedule (the "Continuing Support Obligations"). The Seller shall maintain the
Continuing Support Obligations for the time period necessary for the Buyer to
make such arrangements; provided that at the Closing the Buyer shall provide the
Guarantee for the outstanding Continuing Support Obligations. Prior to the
release of the Seller from the Continuing Support Obligations, the Companies may
continue to operate under all permits secured by the bonds listed on Section
6.10 of the Seller Disclosure Schedule, subject to the maintenance of the
Guarantee. The Buyer shall comply with all of the terms and conditions of such
permits and all applicable laws and regulations. The Buyer shall indemnify the
Seller for any payments made by Seller in respect of the Continuing Support
Obligations and for any
22
Damages arising in connection with the Continuing Support Obligations (the
"Continuing Support Obligation Indemnification"). Notwithstanding any other
provision in this Agreement, the Buyer's liability under the Continuing Support
Obligation Indemnification shall not be limited in any way.
ARTICLE VII
CONDITIONS TO EACH PARTY'S OBLIGATIONS
The obligation of each party to effect the transactions contemplated
hereby shall be subject to the fulfillment, or written waiver by each of the
parties, at or prior to the Closing of each of the following conditions:
Section 7.1 Regulatory Approvals. All of the material Transaction
Regulatory Approvals shall have been obtained.
ARTICLE VIII
CONDITIONS TO THE SELLER'S OBLIGATIONS
The obligations of the Seller to effect the transactions contemplated
hereby shall be subject to the fulfillment, or written waiver by the Seller, at
or prior to the Closing, of each of the following conditions:
Section 8.1 Representations and Warranties of the Buyer True. The
representations and warranties of the Buyer contained herein qualified as to
materiality shall be true and correct and those not so qualified shall be true
and correct in all material respects as of the date hereof and at and as of the
Closing Date as though such representations and warranties were made at and as
of such date unless limited by their terms to a prior date.
Section 8.2 Performance. The Buyer shall have performed and complied
in all material respects with all agreements, obligations, covenants and
conditions required by this Agreement to be performed or complied with by the
Buyer on or prior to the Closing.
Section 8.3 Buyer Guarantee. The Buyer shall have provided to the
Seller the Guarantee for the Continuing Support Obligations, which are set forth
on Section 6.10 of the Seller Disclosure Schedule; provided, however, if the
Buyer has arranged for the release of the Seller from all of the Seller's
obligations in respect of any one or more of the Continuing Support Obligations,
as contemplated by Section 6.11 hereof, the Buyer shall not be required to
provide the Guarantee in respect of such Continuing Support Obligations;
provided, that the Buyer has provided to the Seller written acknowledgements
from the beneficiaries of such Continuing Support Obligations confirming the
release of the Seller from such Continuing Support Obligations, or evidence of
termination of such Continuing Support Obligations, acceptable to Seller.
Section 8.4 Certificates. The Buyer shall have furnished the Seller
with such certificates to evidence its compliance with the conditions set forth
in Sections 8.1, 8.2 and 8.3 hereof as the Seller may reasonably request.
23
Section 8.5 No Injunction or Proceeding. No statute, rule, regulation,
executive order, decree, preliminary or permanent injunction or restraining
order shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits or restricts the consummation of the
transactions contemplated hereby.
ARTICLE IX
CONDITIONS TO THE BUYER'S OBLIGATIONS
The obligation of the Buyer to effect the transactions contemplated
hereby shall be subject to the fulfillment, or written waiver by the Buyer, at
or prior to the Closing, of each of the following conditions:
Section 9.1 Representations and Warranties of the Seller True. The
representations and warranties of the Seller contained herein qualified as to
materiality shall be true and correct and those not so qualified shall be true
and correct in all material respects as of the date hereof and at and as of the
Closing Date as though such representations and warranties were made at and as
of such date unless limited by their terms to a prior date.
Section 9.2 Performance by the Seller. The Seller shall have performed
and complied in all material respects with all agreements, obligations,
covenants and conditions required by this Agreement to be performed or complied
with by the Seller on or prior to the Closing.
Section 9.3 Certificates. The Seller shall have furnished the Buyer
with such certificates to evidence its compliance with the conditions set forth
in Sections 9.1 and 9.2 hereof as the Buyer may reasonably request.
Section 9.4 No Injunction or Proceeding. No statute, rule, regulation,
executive order, decree, preliminary or permanent injunction or restraining
order shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits or restricts the consummation of the
transactions contemplated hereby.
Section 9.5 Officer and Director Resignations. Effective as of the
Closing Date, each officer and director of each of the Companies shall submit
their resignations to Buyer.
ARTICLE X
TERMINATION AND ABANDONMENT; INDEMNIFICATION
Section 10.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual consent of the Buyer and the Seller;
(b) by the Buyer or the Seller if the Closing shall not have occurred
on or before December 2, 2002; provided that the right to terminate this
Agreement pursuant to this Section 10.1(b) shall not be available to a party
whose failure to perform any of its obligations under this Agreement resulted in
the failure of the Closing to be consummated by such date;
24
(c) by the Buyer or the Seller if any of the Transaction Regulatory
Approvals, the receipt of which is a condition precedent to consummate the
Closing, shall have been denied (and a petition for rehearing or refiling of an
application initially denied without prejudice shall also have been denied); or
(d) by the Buyer or the Seller, if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting any of the transactions contemplated hereby
and such order, decree, ruling or other action shall have become final and
nonappealable.
Section 10.2 Procedure and Effect of Termination. In the event of a
termination of this Agreement pursuant to Section 10.1 hereof by one party,
written notice thereof shall forthwith be given to the other party, and, except
as set forth below, this Agreement shall terminate and be void and have no
effect and the transactions contemplated hereby shall be abandoned. If this
Agreement is terminated as provided herein:
(a) the Buyer shall redeliver, and shall cause its agents (including,
without limitation, attorneys and accountants) to redeliver, all documents, work
papers and other material of the Seller relating to the transactions
contemplated hereby, whether obtained before or after the execution hereof or
certify the destruction thereof;
(b) all information received by the Buyer with respect to the
business, operations, assets or financial condition of the Seller and each of
the Companies shall remain subject to the Confidentiality Agreement; and
(c) except as otherwise expressly set forth herein, no party to this
Agreement shall have any liability hereunder to any other party, except (i) for
any breach by such party of the terms and provisions of this Agreement, (ii) as
stated in paragraphs (a) and (b) of this Section 10.2 and (iii) as provided in
the Confidentiality Agreement.
Section 10.3 Survival of Representations and Warranties. (a) (a) The
representations and warranties contained in Section 3.2 (relating to title to
the Common Stock) shall survive the Closing and remain in full force and effect
indefinitely. All other representations and warranties contained in Articles III
and IV, other than the representations and warranties contained in Section 3.10
(relating to Taxes), shall survive the Closing and remain in full force and
effect until two years after the Closing Date, at which time they shall
terminate.
(b) After the Closing, the sole and exclusive remedy for any breach of
any representation, warranty, covenant or agreements shall be pursuant to
Section 10.4 hereof, except in the case of fraud or unless this Agreement
provides otherwise. Under no circumstances shall any party be liable to any
other party for consequential, incidental or punitive damages.
Section 10.4 Indemnification. (a) (a) From and after the Closing, the
Seller shall indemnify and hold harmless, subject to the limitations set forth
in this Section 10.4, the Buyer, its Affiliates and Representatives
(collectively, the "Buyer Indemnified Parties") from and against any Damages
arising from or in connection with (i) any inaccuracy in any representation or
the
25
breach of any warranty of the Seller under this Agreement or (ii) the failure of
the Seller to duly perform or observe any term, provision, covenant or agreement
to be performed or observed by the Seller pursuant to this Agreement.
(b) From and after the Closing, the Buyer shall indemnify and hold
harmless, subject to the limitations set forth in this Section 10.4, the Seller,
its Affiliates and Representatives (collectively, the "Seller Indemnified
Parties") from and against any Damages to the extent they are the result of (i)
any inaccuracy in any representation or the breach of any warranty of the Buyer
under this Agreement or (ii) the failure of the Buyer to duly perform or observe
any term, provision, covenant or agreement to be performed or observed by the
Buyer pursuant to this Agreement.
(c) Notwithstanding anything herein to the contrary (other than with
respect to the Midnight Mine Indemnification, the Elephant Property
Indemnification, the Reclamation Indemnification or the Continuing Support
Obligation Indemnification, which shall not be limited by this Section 10.4,
including Section 10.4(d)), no indemnification shall be available to the Buyer
Indemnified Parties under Section 10.4(a) hereof or to the Seller Indemnified
Parties under Section 10.4(b) hereof unless and until the aggregate amount of
Damages that would otherwise be subject to indemnification, exceeds $50,000 (the
"Deductible Amount"), in which case the party entitled to such indemnification
shall be entitled to receive only the amounts in excess of the Deductible
Amount.
(d) Notwithstanding anything herein to the contrary, the maximum
aggregate liability of the Seller to the Buyer Indemnified Parties under this
Agreement shall not exceed $1,000,000 the maximum aggregate liability of the
Buyer to the Seller Indemnified Parties under this Agreement shall not exceed
$1,000,000.
(e) Notwithstanding anything herein to the contrary, none of the Buyer
Indemnified Parties shall be entitled to indemnification by Seller for any
Damages arising from any matter of which the Buyer had Knowledge at or prior to
Closing, including, without limitation, any such matter known to the Buyer by
reason of the Seller having delivered written notice thereto, either in a
disclosure schedule or a supplemented disclosure schedule or an officer's
certificate, at or prior to Closing.
(f) Any calculation of Damages for purposes of this Section 10.4 shall
be (i) net of any insurance recovery made by the Indemnified Party (whether paid
directly to such Indemnified Party or assigned by the Indemnified Party to such
Indemnified Party) and (ii) reduced to take account of any net Tax benefit
realized by the Indemnified Party arising from the deductibility by the
Indemnified Party of any such Damages (or the expenses or losses that are
attributable or relate to the creation of such Damages) or any Tax (together,
"Additional Deductions"). Any indemnification payment hereunder shall initially
be made without regard to this Section 10.4(f) and shall be reduced to reflect
any such net Tax benefit only after the Indemnified Party actually realized such
benefit. For purposes of this Agreement, an Indemnified Party shall be deemed to
have "actually realized" a net Tax benefit to the extent that, and at such time
as, the amount of Taxes payable by such Indemnified Party (and/or any Person
with which the Indemnified Party joins in filing tax returns, or such Persons
collectively) is
26
reduced below the amount of Taxes that such Indemnified Party (and/or any Person
with which the Indemnified Party joins in filing tax returns, or such Persons
collectively) would have been required to pay but for the deductibility of any
Additional Deductions. The amount of any reduction hereunder shall be adjusted
to reflect any final determination (including the execution of Form 870-AD or
successor form) with respect to the Indemnified Party's liability for Taxes and,
if necessary, the Seller or the Buyer, as the case may be, shall make payments
to the other to reflect such adjustment. Any indemnity payment under this
Agreement shall be treated as an adjustment to the Purchase Price for Tax
purposes, unless a final determination (including the execution of Form 870-AD
or successor form) with respect to the Indemnified Party or any of its
Affiliates causes any such payment not to be treated as an adjustment to the
Purchase Price for U.S. federal income Tax purposes.
(g) No action, claim or setoff for Damages subject to indemnification
under this Section 10.4 shall be brought or made with respect to claims for
Damages resulting from a breach of any representation or warranty contained in
this Agreement after the date on which such representation or warranty shall
terminate pursuant to Section 10.3; provided, however, that any claim made with
reasonable specificity by the party hereto or its Affiliates or Representatives
seeking indemnification (the "Indemnified Party") to the party from which
indemnification is sought (the "Indemnifying Party") within the time periods set
forth above shall survive (and be subject to indemnification) until it is
finally and fully resolved.
(h) An Indemnified Party shall give notice to an Indemnifying Party
promptly after such Indemnified Party has actual Knowledge of any claim which
might give rise to a claim for Damages, and shall permit the Indemnifying Party
to assume the defense of any such claim or any litigation resulting therefrom;
provided that the Indemnified Party may participate in such defense at its own
expense (unless the Indemnified Party shall have reasonably concluded, based
upon a written opinion of outside counsel, that there is a reasonable likelihood
of a conflict of interest between the Indemnifying Party and the Indemnified
Party in such action, in which case the fees and expenses of one separate firm
of counsel shall be at the expense of the Indemnifying Party); and provided
further that the failure of the Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations hereunder
unless the Indemnifying Party is actually and materially prejudiced thereby. An
Indemnifying Party, in the defense of any such claim or litigation, shall not,
except with the consent of the Indemnified Party (which consent shall not
unreasonably be withheld), consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a full and unconditional
release from all liability in respect of such claim or litigation. An
Indemnified Party shall furnish such information regarding itself or the claim
in question as such Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
(i) Any claim for Taxes shall be provided for exclusively in Article
V.
27
ARTICLE XI
MISCELLANEOUS
Section 11.1 Waivers and Amendments. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by each of the parties or, in the case of a
waiver, by the party or parties waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege, nor any single or partial exercise of any such right, power
or privilege preclude any further exercise thereof or the exercise of any other
such right, power or privilege.
Section 11.2 Representations and Warranties; Etc. (a) The Buyer hereby
acknowledges and agrees that the Seller is not making any representation or
warranty whatsoever, express or implied, including without limitation in respect
of the Seller, each of the Companies or their respective assets, liabilities and
businesses, except for those representations and warranties of the Seller
explicitly set forth in this Agreement, together with the Seller Disclosure
Schedule or supplement thereto or in any certificate contemplated hereby and
delivered by the Seller in connection herewith (notwithstanding the delivery or
disclosure to the Buyer or its Representatives of any other documents or
information).
(b) Other than pursuant to this Agreement, neither the Buyer or any of
its officers, directors, partners, employees, Affiliates, Representatives or
agents, (collectively, the "Buying Group") nor the Seller or any of its
officers, directors, partners, employees, Affiliates, Representatives or agents,
(collectively, the "Selling Group") shall have any liability or responsibility
to any Person, including, without limitation, the Buyer or the Seller for (and
each of them unconditionally releases the Selling Group and the Buying Group
from) any liability or obligation, whether contingent or absolute, whether
arising prior to, on or after, and whether determined or indeterminable on, the
Closing Date, and whether or not specifically referred to in this Agreement, (i)
relating to this Agreement and the transactions contemplated hereby, (ii)
arising out of or due to any inaccuracy of any representation or warranty or the
breach of any covenant, undertaking or other agreement of the Buyer or the
Seller contained in this Agreement, the Seller Disclosure Schedule or in any
certificate contemplated hereby and delivered by the Buyer or the Seller in
connection herewith and (iii) relating to any information (whether written or
oral), documents or materials furnished by the Seller or any of its Affiliates
or any of its respective Representatives, including the Information Memorandum
dated March 2002 prepared by XxXxxxxxx Xxxxx & Co., LLC and any information,
documents or material made available to the Buyer in "data rooms," management
presentations or any other form in expectation of the transactions contemplated
by this Agreement.
Section 11.3 Entire Agreement; Assignment. This Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, among the parties or any of them with respect to the subject matter hereof
(other than the Confidentiality Agreement). This Agreement may not be assigned
by a party hereto without the consent of the other parties.
28
Section 11.4 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
Section 11.5 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile or similar
writing) and shall be given:
(a) If to the Seller, to:
The Goldfield Corporation
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, President
Facsimile: (000) 000-0000
with a copy to:
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
(c) if to the Buyer, to:
Imagin Minerals, Inc.
00 Xxxxxx'x Xxxxx Xxxx
Xxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, President
Facsimile: (000) 000-0000
with a copy to:
J. Xxxxxx Xxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxx Xxxx XxXxxxx Xxxxx & Love PLLC
000 Xxxxxxxx Xxxxxx
Post Xxxxxx Xxx 0000
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
or such other address or facsimile number as a party may hereafter specify by
like notice to the other party. Each such notice, request or other communication
shall be effective (i) if given by facsimile, when such facsimile is transmitted
to the facsimile number specified herein and the appropriate confirmation is
provided, (ii) if given by United States mail, three days after such notice is
deposited in the mail in a postage pre-paid envelope or (iii) if given by any
other means, when delivered at the address specified herein.
29
Section 11.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of laws.
Section 11.7 Publicity. Except as otherwise may be required by law,
for so long as this Agreement is in effect, neither the Seller nor the Buyer
shall issue or cause the publication of any press release or other public
announcement with respect to the transactions contemplated by this Agreement
without the express prior written approval of the other party which shall not be
unreasonably withheld. The parties shall cooperate in preparing any such
announcements, including upon execution hereof.
Section 11.8 Jurisdiction; Forum.(a) By the execution and delivery of
this Agreement, the Buyer and the Seller submit to the personal jurisdiction of
any state or federal court in the State of New York in any suit or proceeding
arising out of or relating to this Agreement.
(b) The parties hereto agree that the appropriate and exclusive forum
for any disputes between any of the parties hereto arising out of this Agreement
or the transactions contemplated hereby shall be in any state or federal court
in the State of New York. The parties hereto further agree that the parties will
not bring suit with respect to any disputes arising out of this Agreement or the
transactions contemplated hereby in any court or jurisdiction other than the
above specified courts; provided, however, that the foregoing shall not limit
the rights of the parties to obtain execution of judgment in any other
jurisdiction. The parties hereto further agree, to the extent permitted by law,
that final and unappealable judgment against a party in any action or proceeding
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the fact
and amount of such judgment.
Section 11.9 WAIVER OF JURY TRIAL. EACH OF THE SELLER AND THE BUYER
HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE SELLER AND THE BUYER
ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR
THIS WAIVER, BE REQUIRED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL BY THE COURT.
30
Section 11.10 Indemnification Provisions. (a) If and only to the
extent that Section 56-7-1, NMSA 1978, is applicable, no agreement to indemnify
(including, without limitation, an agreement to remedy damage or loss caused in
whole or in part by the negligence, act or omission of the indemnitee, the
agents or employees of the indemnitee, or any legal entity for whose negligence,
act or omission any of the foregoing may be liable) contained herein purports to
indemnify, and shall not be construed or applied to indemnify, the indemnitee
against liability, claims, damages, losses or expenses, including attorney fees,
arising out of (i) the preparation or approval of maps, drawings, opinions,
reports, surveys, change orders, designs or specifications by the indemnitee, or
the agents or employees of the indemnitee, or (ii) the giving of or the failure
to give directions or instructions by the indemnitee, or the agents or employees
of the indemnitee, where such giving or failure to give directions or
instructions is the primary cause of bodily injury to persons or damage to
property.
(b) If and only to the extent that Section 56-7-2, NMSA 1978, is
applicable, no agreement to indemnify contained herein purports to indemnify,
and shall not be construed or applied to indemnify, the indemnitee against loss
or liability for damages arising from the sole or concurrent negligence of the
indemnitee or the agents or employees of the indemnitee or any independent
contractor who is directly responsible to the indemnitee, or from any accident
which occurs in operations carried on at the direction or under the supervision
of the indemnitee or an employee or representative of the indemnitee or in
accordance with methods and means specified by the indemnitee or employees or
representatives of the indemnitee.
Section 11.11 Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
Section 11.12 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
Section 11.13 Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, and except as otherwise expressly set forth
herein, all legal and other costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
Section 11.14 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and their successors
and permitted assigns and, except as expressly set forth in Section 10.4,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other Person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement. Any Person who is a beneficiary of such
Section 10.4 shall be entitled to enforce its rights thereunder; provided,
however, that, prior to the Closing, no action to enforce such rights may be
commenced by any such Person without the prior written consent of the Seller.
Section 11.15 Interpretation. No reference in this Agreement to
"commercially reasonable efforts" shall require a Person obligated to use such
efforts to incur unreasonable out-
31
of-pocket expenses or indebtedness or, except as expressly provided herein, to
institute litigation or to consent generally to service of process in any
jurisdiction where it is not already subject.
Section 11.16 Other Acknowledgments and Disclaimers. Except as set
forth in Article III, THE SELLER HEREBY DISCLAIMS ALL OTHER WARRANTIES AND
REPRESENTATIONS, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OR
REPRESENTATION AS TO FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY,
DESIGN, QUALITY, LAYOUT, FOOTAGE, PHYSICAL CONDITION, OPERATION, COMPLIANCE WITH
SPECIFICATION, ABSENCE OF UNKNOWN PHYSICAL DEFECTS OR DAMAGE, OR ANY OTHER
MATTER AFFECTING OR RELATED TO THE PROPERTIES OWNED BY THE COMPANIES. WITHOUT
LIMITING THE FOREGOING, AND EXCEPT AS SET FORTH HEREIN, THE SELLER DOES NOT MAKE
AND HAS NOT MADE ANY REPRESENTATION OR WARRANTY REGARDING THE PRESENCE OR
ABSENCE OF ANY HAZARDOUS MATERIALS ON, UNDER OR ABOUT THE PROPERTIES OWNED BY
THE COMPANIES OR THE COMPLIANCE OR NON COMPLIANCE OF ANY OF SUCH PROPERTIES WITH
ANY ENVIRONMENTAL LAWS. SUBJECT TO THE FOREGOING AND, EXCEPT AS SET FORTH
HEREIN, THE BUYER ACKNOWLEDGES THAT THE BUYER HAS INSPECTED AND WILL INSPECT
FURTHER, THE PROPERTIES OWNED BY THE COMPANIES AND ACCEPTS SUCH PROPERTIES "AS
IS", "WHERE IS" AND "WITH ALL FAULTS." EXCEPT AS SET FORTH HEREIN, THE SELLER
SHALL NOT BE LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS,
REPRESENTATIONS, OR INFORMATION PERTAINING TO SUCH PROPERTIES FURNISHED BY ANY
AGENT, EMPLOYEE, SERVANT, AFFILIATE OR OTHER PERSON, UNLESS THE SAME ARE
SPECIFICALLY SET FORTH OR REFERRED TO HEREIN, AND THE SELLER SHALL NOT BE LIABLE
OR BOUND IN ANY MANNER BY ANY STATEMENT OR INFORMATION CONTAINED IN ANY STUDIES
OR REPORTS PROVIDED TO THE BUYER PURSUANT TO ANY PROVISIONS OF THIS AGREEMENT OR
OTHERWISE, OR ANY OMISSION WITH RESPECT TO ANY SUCH STUDIES OR REPORTS.
32
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE GOLDFIELD CORPORATION
By: /s/ Xxxx X. Xxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
IMAGIN MINERALS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
33
