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EXHIBIT 10.1
CALL OPTION AGREEMENT
CALL OPTION AGREEMENT made as of February 5, 2001, by and among
SUNSHINE INTERNATIONAL MINING, INC., a Delaware corporation ("GRANTOR"),
SUNSHINE MINING AND REFINING COMPANY, a Delaware corporation (the "COMPANY"),
SUNSHINE ARGENTINA, INC., a Delaware corporation ("SAI"), (each a "SUNSHINE
COMPANY" and collectively, the "SUNSHINE COMPANIES"), XXXXXXX INTERNATIONAL,
L.P., a Cayman Islands limited partnership ("EILP"), THE LIVERPOOL LIMITED
PARTNERSHIP, a Bermuda limited partnership ("TLLP" and, together with EILP, the
"XXXXXXX HOLDERS") and STONEHILL INSTITUTIONAL PARTNERS, L.P. ("SIP") and
STONEHILL OFFSHORE PARTNERS LIMITED ("SOPL" and, together with SIP, the
"STONEHILL HOLDERS")(collectively, the "HOLDERS").
WHEREAS, in connection herewith, the Company, SAI, together with
Sunshine Precious Metals Inc., a Delaware corporation, have filed a Joint
Chapter 11 Plan of Reorganization in the United States Bankruptcy Court for the
District of Delaware (the "BANKRUPTCY COURT") which shall have been co-proposed
by the Xxxxxxx Holders and the Stonehill Holders (the "PLAN") and related
statements, motions and applications and the agreements and instruments to be
entered into by the Sunshine Companies pursuant to the Plan and attached as
exhibits thereto (the "TRANSACTION DOCUMENTS") and among other things, provide
for the restructuring of the Company (the "RESTRUCTURING");
WHEREAS, in connection with the Restructuring, the Company and the
Holders are entering into that certain Registration Rights Agreement of even
date herewith (the "REGISTRATION RIGHTS AGREEMENT");
WHEREAS, upon the completion of the Restructuring, assuming that there
have been no stock splits, dividends, combinations, reorganizations,
recapitalizations and similar capital structure changes ("CAPITAL STRUCTURE
CHANGES") with respect thereto, the Xxxxxxx Holders will have received, or be
entitled to receive, a total of 50.98% of outstanding shares ("XXXXXXX'X
INTEREST") of the Company's common stock, par value $.01 (the "COMMON STOCK")
and the Stonehill Holders will have received or be entitled to receive a total
of 39.01% of the outstanding shares of Common Stock ("STONEHILL'S INTEREST");
WHEREAS, the Company owns 100% of the capital stock of the Grantor;
WHEREAS, Grantor owns 100% of the capital stock in SAI;
WHEREAS, pursuant to the Transaction Documents, the parties hereto
desire that Grantor issue a call option to each Holder (each a "CALL OPTION"
and, collectively, the "CALL OPTIONS") to purchase, collectively, up to 100% of
the shares of capital stock of SAI (the "SAI SHARES") and to grant each Holder a
first priority perfected security interest in such SAI Shares in connection
therewith;
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NOW, THEREFORE, in consideration of the premises, and for such other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. GRANT OF CALL OPTIONS.
(a) Subject to Section 1(b) below and the terms and conditions
herein, Grantor hereby grants to each Holder a Call Option to purchase
up to a certain maximum number of SAI Shares (as adjusted for Capital
Structure Changes) at a certain purchase price per SAI Share (the
"PURCHASE PRICE"), all as set forth in Schedule 1 annexed hereto.
(b) In the event that the Xxxxxxx Holders sell more than 50%
of their shares of Common Stock initially received in the Restructuring
(as adjusted for Capital Structure Changes) or the Stonehill Holders
sell more than 50% of their shares of Common Stock initially received
in the Restructuring (as adjusted for Capital Structure Changes), then
the number of SAI Shares that the Xxxxxxx Holders or the Stonehill
Holders, respectively, are entitled to purchase as set forth in
Schedule 1 hereto shall be reduced ratably to the extent that such
Holders sold in excess of such amounts. For example, if the Xxxxxxx
Holders were to sell 55% of their shares of Common Stock initially
received in the Restructuring, then the maximum number of SAI Shares
that the Xxxxxxx Holders could purchase, in the aggregate, upon the
exercise of their Call Options would be reduced by a percentage equal
to (55% - 50% ) x 2, or 10%. Schedule 1 shall be amended and
redistributed to the parties hereto and the Pledge Agent (as defined in
Section 4) shall be directed to reflect any such reductions.
2. TERM. The term of each Call Option (the "TERM") shall commence on
the date upon which the Plan approved by the Bankruptcy Court goes effective
(the "CLOSING DATE") and shall expire upon the earlier of the following:
(a) the exercise in full of such Call Option,
(b) The market capitalization of the Company shall exceed $150
million for at least 60 consecutive calendar days, and
(c) The ten year anniversary of the effective date of the Plan
of Reorganization
; provided, however, that, with respect to (b) above, all of the Common Stock is
registered and freely tradeable during such 60-day-period (e.g., among other
things, (x) no Interfering Event has occurred, without giving effect to any
Suspension Grace Period (each as defined in the Registration Rights Agreement),
(y) the Holders are not restricted from trading because the Holders are in
possession of material, non-public information and (z) none of the events set
forth in Section 3(a) below shall have occurred.
3. EXERCISE OF CALL OPTIONS.
(a) Right to Exercise. The Call Option shall become
exercisable upon the occurrence of any one of the following:
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(i) the Common Stock is delisted from, or not
approved for trading on, the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market System,
the Nasdaq Small-Cap Market or the Nasdaq OTC Bulletin Board
(each, an "APPROVED MARKET");
(ii) the Common Stock is suspended from listing or is
no longer approved for trading on an Approved Market for at
least seven (7) consecutive calendar days;
(iii) the market capitalization of the Company is
less than $15 million for at least fifteen (15) consecutive
calendar days; provided, however, that such market
capitalization shall not have subsequently gone above $15
million for at least 30 calendar days (but if the market
capitalization thereafter drops below $15 million for at least
15 consecutive calendar days, then the Call Option shall again
become exercisable);
(iv) a bankruptcy proceeding has occurred with
respect to a Sunshine Company or any other direct or indirect
subsidiary of the Company;
(v) the Company fails to comply with its obligations
set forth in this Agreement;
(vi) unless waived by all of the Holders, (A) any
person not designated by the Holders, other than management
directors, is serving as a member of the board of directors of
the Grantor or (B) any person designated by the Holders in
accordance with Section 6(j) hereof to serve as a member of
the board of directors of the Grantor is not serving in such
capacity as a result of any action or omission on the part of
any Sunshine Company;
(vii) any Interfering Event (as defined in the
Registration Rights Agreement) has occurred which causes the
Call Options to become immediately exercisable pursuant to the
Registration Rights Agreement;
(viii) any representation or warranty of the Sunshine
Companies made in this Agreement, the Pledge Agreement or any
other Transaction Document shall be false or misleading; or
(ix) any of the Sunshine Companies otherwise fails to
comply with or breaches any other provision of any Transaction
Document or the by-laws or charter of any Sunshine Company.
The Company and the Grantor shall provide the Holders with immediate
written notice of the occurrence of any of the events described in (i),
(ii), (iv), (v), (vi), (vii), (viii) or (ix).
(b) Exercise Notice. If any of the conditions to exercise set
forth in Section 3(a) above shall have been met, then the Call Options
may be exercised, at any time and from time to time, by each Holder in
full or in part by the tendering of a written notice (the "EXERCISE
NOTICE") to the Grantor and the Pledge Agent (as defined in Section
4(b) below) at the address set forth in Section 9(c) herein. The
Exercise Notice shall specify:
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(i) the date on which the purchase is to take place
(the "PURCHASE DATE"), which may be the same date as the
Exercise Notice;
(ii) the number of SAI Shares with respect to which
the Holder is then exercising its Call Option (the "CALL
AMOUNT");
(iii) the aggregate purchase price for the Call
Amount (determined by multiplying the Purchase Price set forth
in Schedule 1 hereto by the Call Amount); and
(iv) whether the exercising Holder elects to pay the
aggregate purchase price in cash or by delivering shares of
Common Stock (pursuant to Section 3(c) and 3(d)(ii) below) in
lieu of cash.
Upon receipt of the Exercise Notice as a result of which the Holders
shall have acquired, in the aggregate, a majority of the SAI Shares,
the Company and Grantor shall cause each officer and director of SAI to
offer his or her resignation in writing to the Holder(s), which such
resignation shall become effective upon the Purchase Date unless
otherwise agreed to by the officer or director and the Holder(s).
(c) Cashless Exercise. If the exercising Holder elects to pay
for the Call Amount by delivering shares of Common Stock, the number of
shares of Common Stock to be delivered by the Holder(s) shall be
computed using the following formula:
X = Y x B
------
A
where: X = the number of shares of Common Stock to
be delivered
Y = the number of SAI Shares included in the
Call Amount
A = the Market Value (defined below) per share
of Common Stock
B = the Purchase Price
For the purposes of the foregoing, "MARKET VALUE" shall mean the price
of one share of Common Stock determined as follows:
(i) if the Common Stock is listed on the New York
Stock Exchange or on the American Stock Exchange, the closing
price on such exchange on the date prior to the Purchase Date;
(ii) if (i) does not apply and the Common Stock is
listed on the NASDAQ National Market System, the NASDAQ
Small-Cap Market or the NASDAQ OTC Bulletin Board, the last
reported bid price on the day preceding the Purchase Date;
(iii) if neither (i) nor (ii) apply but the Common
Stock is quoted in the over-the-counter market, another
recognized exchange or on the pink sheets, the closing bid
price on the day preceding the Purchase Date; and
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(iv) if neither clause (i), (ii) or (iii) above
applies, the fair market value of the Common Stock as
reasonably determined in good faith by the Company's board of
directors with the concurrence of an investment banker
acceptable to the Holders and with the concurrence of the
Holders.
(d) Purchase Date.
(i) On the Purchase Date, the Grantor shall deliver
beneficial ownership of the Call Amount to the Holder by
delivering, or causing the Pledge Agent (as defined in Section
4 below) to deliver, the certificates therefore together with
duly executed "stock powers". In the event that the Call
Amount is not delivered to the Holder in accordance with the
foregoing on a timely basis, the Holder may, by written
notice, rescind its exercise of the Call Option, in whole or
in part, reserving all rights to damages for breach of this
Agreement or any other Transaction Document.
(ii) On the Purchase Date, SAI agrees to register the
transfer of the shares of capital stock of SAI included in the
Call Amount to the name of the exercising Holder or its
designee. This obligation of SAI is and shall at all times be
valid and enforceable and SAI absolutely, unconditionally and
irrevocably waives any and all rights to assert any defense or
other objection to this obligation.
(iii) On the Purchase Date, provided that as a result
of the exercise of the Call Option, the Holders shall have
acquired, in the aggregate, a majority of the outstanding SAI
Shares, the written resignation of each director and officer
of SAI shall be delivered to the Holders and shall become
effective unless otherwise agreed to by the director or the
officer and the Holder(s) pursuant to Section 3(b) above.
(iv) In exchange for the above, on the Purchase Date,
the exercising Holder shall deliver (A) the aggregate purchase
price set forth in the Exercise Notice to the Grantor by wire
transfer in immediately available funds to an account
designated on Schedule 2 annexed hereto or such other account
as may be designated in writing by the Grantor from time to
time or (B) if the Holder opted for a cashless exercise in the
Exercise Notice, (1) the physical stock certificates
representing the Common Stock deliverable upon such cashless
exercise (as determined in accordance with Section 3(c) above)
or (2) in lieu thereof, provided the transfer agent of such
Holder is participating in the Depository Trust Company
("DTC") Fast Automated Securities Transfer ("FAST") program,
upon request of the Grantor, the Holder shall use its best
efforts to cause its transfer agent to electronically transmit
such shares of Common Stock to the Grantor on the Purchase
Date by crediting the account of Grantor's prime broker with
DTC through its Deposit Withdrawal Agent Commission ("DWAC")
system. The parties agree to coordinate with DTC to accomplish
this objective.
(e) Transfer Tax. Transfers of the Call Amounts upon exercise
of the Call Options shall be made without charge to the Holders for any
transfer tax or other costs in respect thereof.
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4. SECURITY INTEREST.
(a) Generally. In order to secure the observance and
performance of the Grantor's obligations under this Agreement, the
Grantor hereby transfers, assigns and grants to the Pledge Agent for
the ratable benefit of the Holders a first priority perfected and
continuing security interest in the SAI Shares.
(b) Perfection of Security Interest. The security interest and
lien granted to the Holders hereunder shall constitute valid, perfected
and first priority security interests and liens in and to the SAI
Shares, in each case enforceable against third parties and securing the
obligations purported to be secured thereby, upon:
(i) the execution of this Agreement and that certain
Pledge Agreement of even date among the Grantor, the Holders
and Xxxxx Fargo Bank Minnesota, N.A. (the "PLEDGE AGENT")
attached hereto as Exhibit 1 (the "PLEDGE AGREEMENT");
(ii) (A) the pledge of the SAI Shares by the Grantor
to the Pledge Agent for the ratable benefit of the Holders,
and (B) the delivery by the Grantor of the certificates
representing such SAI Shares together with duly executed
"stock powers" to the Pledge Agent in connection therewith;
and
(iii) the filing of certain UCC-1 financing
statements describing the SAI Shares with the appropriate
offices in Idaho and Delaware.
(c) Pledge of SAI Shares. In connection with the pledge and
delivery of SAI Shares to the Pledge Agent pursuant to the Pledge
Agreement, Grantor will grant the Pledge Agent the right (and the
obligation) to vote such SAI Shares as instructed by the Holders in
accordance with the Pledge Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE SUNSHINE COMPANIES. Each of
the Sunshine Companies, severally and jointly, hereby makes the following
representations and warranties to Holders as of the date hereof:
(a) Representations and Warranties. Each of the
representations and warranties of the Sunshine Companies contained in
the other Transaction Documents are true and accurate.
(b) Due Organization. Each Sunshine Company is a corporation
duly organized and in good standing under the laws of the State of
Delaware. Each Sunshine Company is duly qualified as a foreign
corporation in each jurisdiction where the nature and conduct of its
business or the location of its assets so requires.
(c) Power and Authority. Each Sunshine Company has full power
and authority to enter into and perform this Agreement and the Pledge
Agreement and the Grantor has full power and authority to sell, create
a security interest in, and pledge the SAI Shares in accordance
herewith. This Agreement (i) has been duly authorized, executed and
delivered by each Sunshine Company and (ii) is legal, valid and binding
and enforceable against such
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Sunshine Company in accordance with its terms, subject as to
enforceability to general principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement
of applicable creditors' rights and remedies.
(d) No Other Consents. Other than the approval of the
Bankruptcy Court, no consent is required to be received by any Sunshine
Company from any governmental authority or any other person in
connection with the execution or delivery by each such Sunshine Company
of this Agreement or the exercise of the Call Options or the Pledge
Agreement, or the sale, creation of a security interest in, or pledge
of, the SAI Shares.
(e) No Violations. The execution and delivery of this
Agreement and the Pledge Agreement by the Sunshine Companies, the
consummation by each Sunshine Company of the transactions contemplated
herein and therein and the compliance by each Sunshine Company with any
of the provisions hereof and thereof relating to the Sunshine Companies
will not (i) conflict with or result in any breach of any provision of
the certificate of incorporation, by-laws or other charter document of
the Sunshine Company, (ii) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of, any
material contract, agreement, note, indenture, mortgage, lease, license
or other arrangement or understanding to which such Sunshine Company is
a party or by which such Sunshine Company or any of its assets or
property is subject, (iii) result in the creation or imposition of any
material lien or encumbrance of any kind upon any of the asset of such
Sunshine Company or any subsidiary thereof or (iv) violate any
applicable provision of any U.S., state, local or foreign statute, law,
rule or regulation or any order, decision, injunction, judgment, aware
or decree to which such Sunshine Company or its assets or properties
are subject.
(f) Capitalization.
(i) SAI is a direct and wholly-owned subsidiary of
Grantor. The authorized capital stock of SAI consists of
10,000 shares of common stock. As of the date hereof, there
were 1,000 shares of common stock issued and outstanding, all
of which are owned legally and beneficially by Grantor, and no
shares of capital stock are reserved for issuance. All of the
outstanding shares of capital stock of SAI have been validly
issued and are fully paid and nonassessable. There are
currently no outstanding options, outstanding warrants nor
other rights to acquire SAI capital stock.
(ii) There are no other scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating
to, or securities or rights exchangeable or convertible into,
SAI Shares, or contracts, commitments, understandings, or
arrangements by which SAI is or may become bound to issue
additional shares of capital stock of SAI or options,
warrants, scrip, rights to subscribe to, or commitments to
purchase or acquire, any shares, or securities or rights
convertible into shares, of capital stock of SAI.
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(g) Subsidiaries. Except as disclosed in the Transaction
Documents, SAI has no subsidiaries.
(h) Due Authorization. The SAI Shares will be delivered by the
Grantor to the Pledge Agent in the manner set forth in the Pledge
Agreement free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on
voting rights, charges and other encumbrances whatsoever, except for
those created for the benefit of the Holders pursuant to the
Transaction Documents. The delivery by the Pledge Agent to the Holders
of the SAI Shares in the manner provided in this Agreement and the
Pledge Agreement will transfer to the Holders good and valid title to
the SAI Shares, free and clear of all security interests, liens and
encumbrances whatsoever, except for those created by the Holder or
those created for the benefit of the Holders pursuant to the
Transaction Documents.
(i) Indebtedness and Other Liabilities. Neither the Grantor
nor SAI has any Indebtedness (as defined below) except as disclosed in
the Plan or Schedule 5(i) hereto. Each of the Grantor and SAI has no
other liabilities or obligations (including, without limitation, claims
existing under environmental or similar laws) that are not disclosed in
the Plan or on Schedule 5(i) hereto other than those liabilities
incurred in the ordinary course of such Sunshine Company's respective
businesses since December 31, 1999, which liabilities, individually or
in the aggregate, do not or would not have a Material Adverse Effect
(as defined in the Transaction Documents) on such Sunshine Company.
There are no liens, security interests or other encumbrances on, or
with respect to, any asset of SAI other than a mortgage on the
Pirquitas Mine to secure financing made to SAI by Highwood Partners,
L.P. and Stonehill Capital Management, LLC..
"INDEBTEDNESS" means, with respect to any person or
entity, all obligations (s) which in accordance with the generally
accepted accounting principles in the U.S., shall be classified upon
the balance sheet of such person as liabilities, (t) for borrowed
money, (u) consisting of intercompany advances, (v) which have been
incurred in connection with the acquisition of any property (including
without limitation, all obligations evidenced by any indenture, bond,
note, commercial paper or other similar security, but excluding, in any
case, obligations arising from the endorsement in the ordinary course
of business of negotiable instruments for deposit or collection), (w)
obligations secured by any lien existing on property owned, even though
such person has not assumed or become liable for the payment of such
obligations, (x) obligations created or arising under conditional sale
or other title retention agreement with respect to property acquired by
such person, notwithstanding the fact that the rights and remedies of
the seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of such property, (y) for
capitalized leases, (z) for all guarantees, whether or not reflected in
the balance sheet of such person, and (aa) all reimbursement and other
payment obligations (whether contingent, matured or otherwise) of such
person in respect of acceptance or documentary credit. Notwithstanding
the foregoing, the definition of the term Indebtedness will not apply
to any of the following:
(i) trade debt to unaffiliated third parties incurred
in the ordinary course of business;
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(ii) hedging obligations incurred in connection with
the ordinary course of business to protect against currency
exchange rate risks or precious metal price risks;
(iii) performance bonds or surety or appeal bonds
entered into in the ordinary course of business; and
(iv) Indebtedness represented by lease obligations,
mortgage financings or purchase money obligations, in each
case incurred for the purpose of financing all or any part of
the purchase price or cost of construction or improvements of
property used in the business of the Company or such
subsidiary in an outstanding aggregate principal amount not to
exceed $25,000.
(j) SAI Ownership of Pirquitas Mine. SAI is the sole record
and beneficial owner of the silver mine in Argentina known as the
"Pirquitas Mine" (the "PIRQUITAS MINE"), all real property and personal
property relating to the mining operations thereon, and all rights and
permits to develop and operate the Pirquitas Mine.
6. COVENANTS OF SUNSHINE COMPANIES. During the Term of the Call Option,
each of the Sunshine Companies, severally and jointly, hereby covenants to the
Holders that:
(a) Corporate Existence. The Sunshine Companies shall maintain
and preserve their individual corporate existence unless otherwise
agreed to in writing by each of the Holders.
(b) Indebtedness. Neither the Grantor nor SAI shall incur
Indebtedness or pledge, hypothecate, grant any lien with respect to or
otherwise encumber any assets without the prior written approval of
each of the Holders.
(c) Transfers, Liens, Etc.
(i) Except as otherwise provided in any Transaction
Document to the contrary, neither the Grantor nor SAI shall
split, combine or reclassify, sell, assign, divide, transfer,
dispose of, or pledge, hypothecate or otherwise encumber the
SAI Shares or any securities convertible into or exchangeable
for such SAI Shares, without the written consent of each of
the Holders.
(ii) Neither Grantor nor SAI shall create, incur or
permit to exist any security interest, lien or other
encumbrance on or with respect to any SAI Shares other than in
accordance with the Transaction Documents.
(iii) Any attempted transfer of SAI Shares in
contravention of the provisions of this Section 6(c) shall be
void and ineffectual and shall not bind or be recognized by
any Sunshine Company.
(iv) Except as required by this Agreement, SAI shall
not issue any additional shares of capital stock.
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(d) Subsidiaries. The Grantor and SAI shall not create, own or
hold any interest in any subsidiary (other than the subsidiaries
disclosed in the Transaction Documents) without the written consent of
each Holder. Unless otherwise agreed to in writing by each of the
Holders, in the event that the Grantor or SAI shall create, own or hold
any interest in any subsidiary in accordance with the foregoing:
(i) the Grantor and SAI shall cause such subsidiary
to sign this Agreement as an additional party, at which time
all capital stock of the subsidiary ("SUBSIDIARY SHARES")
shall be treated the equivalent of SAI Shares for all purposes
hereunder;
(ii) the Grantor, SAI and such subsidiary shall
assume the equivalent obligations that the Grantor and SAI
have with respect to SAI Shares in connection with the
Subsidiary Shares (including, but not limited to, granting to
the Holders a first priority perfected security interest in
the Subsidiary Shares and perfecting such security interest in
accordance with Section 4(b) hereof); and
(iii) the Grantor, SAI and such subsidiary shall take
all such further actions and deliver all documents and
instruments as may be necessary to accomplish the foregoing.
(e) Transfer of Assets.
(i) Neither Grantor nor SAI shall transfer any asset,
or a controlling interest therein (including, but not limited
to, any amounts received, directly or indirectly, by such
Sunshine Company from one or more of the Holders pursuant to
the Transaction Documents) to any of the other Sunshine
Companies or any affiliates of the Sunshine Companies
(including any subsidiaries of such Sunshine Company) without
the prior written approval of each Holder.
(ii) Neither Grantor nor SAI shall transfer any asset
or a controlling interest therein outside the ordinary course
of business.
(iii) Any attempted transfer in contravention of the
provisions of this Section 6(e) shall be void and ineffectual
and shall not bind or be recognized by the Company or SAI.
(f) Obligations of SAI. On each Purchase Date, SAI shall (i)
register the transfer of the SAI Shares included in the Call Amount to
the name of the exercising Holder or its designee and (ii) if as a
result of the Call Option exercise, the Holders shall in the aggregate,
have acquired a majority of the SAI Shares, take all such actions as
are necessary to effectuate the resignation of each officer of SAI
unless otherwise agreed to by the officer and the exercising Holder(s)
pursuant to Section 3(b) above.
(g) No Conflicting Actions. No Sunshine Company shall take any
action which is inconsistent or in conflict with the terms and
provisions of this Agreement and the Pledge Agreement.
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(h) No Modification. The obligations of the Sunshine Companies
hereunder shall not be modified by any sale or issuance of each of
their capital stock to another person or entity.
(i) Accuracy of Representations and Warranties. The
representations and warranties of each Sunshine Company will be true
and correct in all material respects as of the date when made, except
for representations and warranties of an earlier date, which will be
true and correct in all material respects as of such date.
(j) Board of Directors. For so long as any Holder holds any
Call Option, the directors of Grantor, other than management directors,
shall be nominated solely by the Holders holding a Call Option, the
Company agrees to vote the capital stock of Grantor in favor of such
Holders' nominees and the Company agrees not to remove any director
without the consent of the Holders holding Call Options. Furthermore,
for so long as any Holder holds any Call Option, the Company agrees
that it shall make no stockholder proposals with respect to Grantor and
shall not nominate any directors (other than the nominees proposed by
the Holders other than the management director).
(k) No Dividends or Other Distribution. No Sunshine Company
shall, without the written consent of each of the Holders, declare or
pay any dividends, purchase, redeem, retire, defease or otherwise
acquire for value any of its capital stock or any warrants, rights or
options to acquire such capital stock, now or hereafter outstanding,
return any capital to its stockholders as such, make any distribution
of assets, capital stock, warrants, rights, options, obligations or
securities to its stockholders as such or issue or sell any capital
stock or any warrants, rights or options to acquire such capital stock,
or permit any of its subsidiaries to purchase, redeem, retire, defease
or otherwise acquire for value any capital stock of a Sunshine Company
or any warrants, rights or options to acquire such capital stock or to
issue or sell any capital stock or any warrants, rights or options to
acquire such capital stock.
(l) No Burdensome Agreements. No Sunshine Company shall become
a party to any agreement or arrangement, or otherwise undertake any
responsibility, that may prove to be materially burdensome on the
Sunshine Company or its ability to comply with the provisions hereof.
(m) Transactions With Affiliates. Each Sunshine Company agrees
that any transaction or arrangement between it or any of its
subsidiaries and any affiliate or employee of the Sunshine Company
shall be effected on an arms' length basis in accordance with customary
commercial practice and, except with respect to grants of options and
stock to service providers, including employees, shall receive the
prior written approval of each Holder holding a Call Option.
7. INDEMNIFICATION. Each of the Sunshine Companies, jointly and
severally, agrees to indemnify each Holder and hold it harmless from and against
(a) any loss, costs and damages (including reasonable attorney's fees) incurred
as of result of such party's breach of any representation, warranty, covenant or
agreement in this Agreement or incurred in connection with the enforcement of
this indemnity; (b) any and all injuries, claims, damages, judgments,
liabilities,
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costs and expenses (including, without limitation, reasonable fees and
disbursements of counsel whether involving a third party or a claim between the
parties), charges and encumbrances which may be incurred by or asserted against
a Holder in connection with or arising out of this Agreement other than those
resulting from Holder's breach of this Agreement; (c) any assertion, declaration
or defense of the Holders' rights or security interest under the provisions of
this Agreement or the Pledge Agreement in connection with the realization,
possession, safeguarding, insuring or other protection of the SAI Shares or in
connection with the collecting, perfecting or protecting of the Holders' liens
and security interests hereunder or under the Pledge Agreement.
8. MISCELLANEOUS.
(a) Further Assurances. Each of the Sunshine Companies and
each of the Holders shall promptly execute and deliver all further
instruments and documents and take all further action that may be
reasonably necessary or desirable to effect the purposes of this
Agreement.
(b) Amendment. This Agreement may not be amended, modified or
terminated except by written agreement of each of the Sunshine
Companies and each of the Holders.
(c) Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing by facsimile, mail
or personal delivery and shall be effective upon actual receipt of such
notice. The addresses for such communications shall be:
to the Sunshine Companies:
Sunshine Mining and Refining Company
Sunshine International Mining, Inc.
Sunshine Argentina, Inc.
0000 Xxxxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
with copies to:
Prager, Xxxxxxx & Xxxxxxx, PLLC
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
12
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to the Stonehill Holders:
c/o Stonehill Capital Management LLC
000 X. 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
to the Xxxxxxx Holders:
c/x Xxxxxxx Management Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxx
Facsimile: (000) 000-0000
with copies to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Any party hereto may from time to time change its address for notices
by giving written notice of such changed address to the other parties
hereto.
(d) Titles. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
(e) No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rule of strict construction will be
applied against any party.
(f) Successors and Assigns. This Agreement shall be binding
upon the inure to the benefit of the parties and their successors and
permitted assigns. Each Holder may assign this Agreement or any rights
or obligations hereunder without the consent of the Sunshine Companies,
but only if such transfer is made to an entity that, on the date
hereof, is an affiliate of such Holder.
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14
(g) Remedies Cumulative. Each Holder's rights and remedies
under this Agreement and the Pledge Agreement shall be cumulative and
non-exclusive of any other rights or remedies which it or he may have
under any other Transaction Document or any other agreement or
instrument, by operation of law or otherwise, and may be exercised
alternatively, successively or concurrently as each Holder may deem
expedient.
(h) Severability. Any provision of this Agreement that may be
determined by competent authority to be illegal, invalid, prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such illegality, invalidity, prohibition
or unenforceability without invalidating the remaining terms and
provisions hereof, and any such illegality, invalidity, prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable any terms and provisions hereof in any other
jurisdiction.
(i) Governing Law. This Agreement and the validity and
performance of the terms hereof shall be governed and construed in
accordance with the laws of the State of Delaware applicable to
contracts executed and to be performed entirely within such state.
(j) Jurisdiction. The Sunshine Companies and the Holders (i)
hereby irrevocably submit to the exclusive jurisdiction of the state
and federal courts in the State of Delaware for the purposes of any
suit, action or proceeding arising out of or relating to this Agreement
and (ii) hereby waive, and agree not to assert in any such suit, action
or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit, action
or proceeding is improper. To the fullest extent permitted by
applicable law, the Sunshine Companies and the Holders consent to
process being served in any such suit, action or proceeding by mailing
a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing in this
Section 8(j) shall affect or limit any right to serve process in any
other manner permitted by law.
(k) Specific Performance. The Sunshine Companies and the
Holders acknowledge and agree that irreparable damage would occur in
the event that any of the provisions of this Agreement or the Pledge
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and the Pledge Agreement
and to enforce specifically the terms and provisions hereof and
thereof, this being in addition to any other remedy to which any of
them may be entitled by law or equity.
(l) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL
BY JURY.
(m) No Third Party Beneficiaries. Nothing in this Agreement
shall confer any rights upon any person or entity other than the
parties hereto and their respective successors and assigns.
14
15
(n) Execution in Counterpart. This Agreement may be executed
in two or more counterparts, all of which shall be considered one and
the same agreement, it being understood that all parties need not sign
the counterpart.
15
16
IN WITNESS WHEREOF, the parties hereof have caused this Agreement to be
duly executed as of the date first above written.
THE SUNSHINE COMPANIES THE HOLDERS
SUNSHINE INTERNATIONAL MINING, INC. XXXXXXX INTERNATIONAL, L.P.
By: Xxxxxxx International Capital
Advisors, Inc. Attorney-in-Fact
By: By:
------------------------------- ---------------------------------
Name: Name: Xxxx X. Xxxxxx
Title: Title: President
SUNSHINE MINING AND REFINING THE LIVERPOOL LIMITED PARTNERSHIP
COMPANY By: Liverpool Associates, Ltd.
General Partner
By: By:
------------------------------- ---------------------------------
Name: Name: Xxxx X. Xxxxxx
Title: Title: President
SUNSHINE ARGENTINA, INC. STONEHILL INSTITUTIONAL
PARTNERS, L.P.
By: By:
------------------------------- ---------------------------------
Name: Name: Xxxx Xxxxxxxx
Title: Title: General Partner
STONEHILL OFFSHORE
PARTNERS LIMITED
By: Stonehill Advisors LLC
By:
---------------------------------
Name: Xxxx Xxxxxxxx
Title: Managing Member
16
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SCHEDULE 1
to the Call Option Agreement
XXXXXXX XXXXXXXXX
HOLDERS HOLDERS
------- ---------
SAI SHARES
(a) maximum # of SAI Shares 566 434
(b) Purchase Price $1,000 per share $1,000 per share
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18
SCHEDULE 2
to the Call Option Agreement
Wire Instructions for Grantor:
18
19
INDEX OF DEFINED TERMS
AS DEFINED ON PAGE
------------------
APPROVED MARKET...............................................................3
BANKRUPTCY COURT..............................................................1
CALL AMOUNT...................................................................4
CALL OPTION...................................................................1
CALL OPTIONS..................................................................1
CAPITAL STRUCTURE CHANGES.....................................................1
CLOSING DATE..................................................................2
COMMON STOCK..................................................................1
COMPANY.......................................................................1
DTC...........................................................................5
DWAC..........................................................................5
EILP..........................................................................1
XXXXXXX HOLDERS...............................................................1
XXXXXXX'X INTEREST............................................................1
EXERCISE NOTICE...............................................................3
FAST..........................................................................5
GRANTOR.......................................................................1
HOLDERS.......................................................................1
INDEBTEDNESS..................................................................8
MARKET VALUE..................................................................4
PIRQUITAS MINE................................................................9
PLAN..........................................................................1
PLEDGE AGENT..................................................................6
PLEDGE AGREEMENT..............................................................6
PURCHASE DATE.................................................................4
PURCHASE PRICE................................................................4
REGISTRATION RIGHTS AGREEMENT.................................................1
RESTRUCTURING.................................................................1
SAI...........................................................................1
SAI SHARES....................................................................1
SIP...........................................................................1
SOPL..........................................................................1
STONEHILL HOLDERS.............................................................1
STONEHILL'S INTEREST..........................................................1
SUBSIDIARY SHARES............................................................10
SUNSHINE COMPANIES............................................................1
SUNSHINE COMPANY..............................................................1
TERM..........................................................................2
TLLP..........................................................................1
TRANSACTION DOCUMENTS.........................................................1
19
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EXHIBIT 1 to Call Option Agreement
PLEDGE AGREEMENT
PLEDGE AGREEMENT (this "PLEDGE AGREEMENT"), dated as of February ___,
2001, by and among SUNSHINE INTERNATIONAL MINING, INC., a Delaware corporation
(the "GRANTOR"), THE LIVERPOOL LIMITED PARTNERSHIP, a Bermuda limited
partnership ("TLLP"), XXXXXXX INTERNATIONAL, L.P., a Cayman Islands limited
partnership ("EILP", and together with TLLP, the "XXXXXXX HOLDERS"), STONEHILL
INSTITUTIONAL PARTNERS, L.P. ("SIP") and STONEHILL OFFSHORE PARTNERS, LIMITED
("SOPL" and together with SIP, the "STONEHILL HOLDERS") and XXXXX FARGO BANK
MINNESOTA, N.A., as administrative and pledge agent (in such capacity, the
"PLEDGE AGENT") for the Xxxxxxx Holders and the Stonehill Holders (collectively,
the "Holders").
WHEREAS, contemporaneously with the execution and delivery of this
Pledge Agreement, the Grantor and the Holders are entering into that certain
Call Option Agreement dated as of the date hereof (as amended, modified or
supplemented from time to time, the "CALL OPTION AGREEMENT");
WHEREAS, unless otherwise defined herein, terms defined in the Call
Option Agreement are used herein as therein defined;
WHEREAS, under the Call Option Agreement, as of the date hereof, the
Grantor shall issue a call option to each Holder (each a "CALL OPTION" and
collectively, the "CALL OPTIONS") to purchase, collectively, up to 100% of the
shares (the "SAI SHARES") of capital stock of Sunshine Argentina, Inc. ("SAI")
and grant to each Holder a first priority perfected security interest in such
shares therewith;
WHEREAS, Schedule 1 to the Call Option Agreement sets forth among other
things, the maximum number of SAI Shares that each Holder may receive upon
exercise of its Call Option;
WHEREAS, the Pledge Agent has been provided with a copy of, has
reviewed, is familiar with and understands the Call Option Agreement and
Schedule 1 thereto;
WHEREAS, pursuant to the Call Option Agreement, the parties hereto
desire to more fully set forth their respective rights in connection with such
security interest and pledge; and
NOW, THEREFORE, for good and valuable consideration, the Grantor hereby
agrees with the Holders as follows:
SECTION 1. GRANT OF SECURITY AND PLEDGE.
(a) The Grantor hereby transfers, grants, bargains, sells, conveys,
hypothecates, assigns, pledges and sets over to the Pledge Agent for the ratable
benefit of the Holders and
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hereby grants to the Pledge Agent for the ratable benefit of the Holders, a
perfected pledge and security interest in all of the Grantor's right, title and
interest in and to the Collateral, which pledge and security interest in the
Collateral securing the Call Option made under the Call Option Agreement shall
have first priority. For the purposes hereof, "COLLATERAL" shall mean:
(i) all SAI Shares, whether currently issued or issued in the
future, and the certificates representing or evidencing all such shares
(the "PLEDGED SHARES");
(ii) all other securities which may be delivered to and held
by the Pledge Agent in respect of the Pledged Shares pursuant to the
terms hereof;
(iii) all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed, in respect
of, in exchange for or upon the conversion of the securities referred
to in clauses (i) and (ii) above; and
(iv) all rights and privileges of each Grantor, as applicable,
with respect to the securities and other property referred to in
clauses (i), (ii) and (iii).
(b) This Pledge Agreement and the Collateral secure the obligations of
the Grantor now or hereafter existing under the Call Option Agreement, and all
obligations of the Grantor now or hereafter existing under or in respect of this
Pledge Agreement (the "OBLIGATIONS").
SECTION 2. DELIVERY OF COLLATERAL.
(a) On the Closing Date (as defined in the Call Option Agreement), all
certificates or instruments representing or evidencing the Collateral shall be
delivered to and held by the Pledge Agent pursuant hereto and shall be
accompanied by duly executed instruments of transfer or assignment in blank
("BENEFICIAL OWNERSHIP"), all in form and substance satisfactory to the Pledge
Agent.
(b) All Collateral hereinafter received by the Grantor shall be
received in trust for the benefit of the Holders, shall be segregated by the
Grantor from the other property or funds of the Grantor and shall be forthwith
delivered to the Pledge Agent to hold as Collateral.
SECTION 3. VOTING AND OTHER RIGHTS
(a) So long as the SAI Shares are Collateral under this Agreement, the
Pledge Agent shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Collateral, or any part thereof, as
instructed by the Holders based upon each of their ratable interest in the SAI
Shares as set forth in Schedule 1 of the Call Option Agreement for any purpose
not inconsistent with the terms of this Pledge Agreement.
(b) The Grantor shall execute and deliver (or cause to be executed and
delivered) to the Pledge Agent all such proxies and other instruments as the
Pledge Agent may reasonably request for the purpose of enabling the Pledge Agent
to exercise the voting and other rights which it is entitled to exercise per the
instructions of the Holders pursuant to Section 3(a) above.
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SECTION 4. DEFAULT ON OBLIGATIONS; EXERCISE OF CALL OPTION. In the
event that: (i) as a result of a failure by the Grantor to perform an
Obligation, the Call Options shall have become exercisable or (ii) the Call
Options shall otherwise have become exercisable, then:
(a) Upon receipt of an Exercise Notice from a Holder, the Pledge Agent
shall take all steps necessary to prepare for the timely delivery to the
exercising Holder of the Call Amount (not to exceed the maximum number of SAI
Shares that the exercising Holder is entitled to receive as set forth on
Schedule 1). On the Purchase Date, the Pledge Agent shall deliver Beneficial
Ownership of such Call Amount and all other Collateral related thereto to such
Holder.
(b) On the Purchase Date, all rights of the Pledge Agent to vote or
otherwise act on behalf of the Holder with respect to the transferred SAI Shares
(including, but not limited to, the right to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise) shall cease
and all such rights shall thereupon become vested exclusively in the transferee,
who shall thereupon have the sole right to exercise such voting and other
consensual rights.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Grantor hereby
represents and warrants that each of the representations and warranties
contained in the Call Option Agreement are true and accurate.
SECTION 6. FURTHER ASSURANCES.
(a) The Grantor agrees that from time to time, at the expense of the
Grantor, it will promptly execute and deliver all further instruments and
documents and take all further action that may be necessary or that the Pledge
Agent may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Pledge Agent
and/or the Holders to exercise and enforce any of its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, the Grantor will execute and file such financing or continuation
statements or amendments thereto and such other instruments or notices as may be
necessary, or as the Pledge Agent may reasonably request, in order to perfect
and preserve the security interests granted or purported to be granted hereby.
(b) The Grantor hereby authorizes the Pledge Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of the Grantor where permitted
by law.
(c) Each Grantor will furnish to the Pledge Agent, from time to time,
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Pledge Agent may
reasonably request, all in reasonable detail.
SECTION 7. OTHER TRANSFERS, LIENS; ADDITIONAL SHARES. Each Grantor
shall not:
(a) Sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except for dispositions otherwise permitted by
the Call Option Agreement.
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(b) Create or suffer to exist any lien, security interest or other
charge or encumbrance upon or with respect to any of the Collateral to secure
any obligation of any person or entity, except for the security interest created
by this Pledge Agreement, or except as otherwise expressly provided in the
Transaction Documents.
(c) The Grantor agrees that it shall not cause SAI to issue any stock
or other securities in addition to or substitution for the SAI Shares and shall
pledge hereunder, immediately upon its acquisition (directly or indirectly)
thereof, any and all additional shares of stock or other securities of SAI or
the SAI Shares.
SECTION 8. PLEDGE AGENT APPOINTED ATTORNEY-IN-FACT. The Grantor hereby
irrevocably appoints the Pledge Agent the Grantor's attorney-in-fact (which
appointment shall be irrevocable and deemed coupled with an interest), with full
authority in the place and stead of the Grantor and in the name of the Grantor
or otherwise, from time to time in the Pledge Agent's discretion to take any
action and to execute any instrument which the Pledge Agent may deem necessary
or advisable to accomplish the purposes of this Pledge Agreement, including,
without limitation:
(a) to ask, demand, collect, xxx for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral,
(b) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (i) or (ii) above,
(c) to receive, endorse and collect all instruments made payable to the
Grantor representing any dividend or other distribution in respect of the
Collateral or any part thereof and to give full discharge for the same, and
(d) to file any claims or take any action or institute any proceedings
which the Pledge Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of the Pledge Agent with
respect to any of the Collateral.
SECTION 9. PLEDGE AGENT MAY PERFORM. If the Grantor fails to perform
any Obligation contained herein, the Pledge Agent may itself perform, or cause
performance of, such agreement, and the expenses of the Pledge Agent incurred in
connection therewith shall be payable by the Grantor under Section 11(b).
SECTION 10. AGREEMENT. The Grantor, the Holders and the Pledge Agent,
by execution and delivery of this Agreement, each agree to act with respect to
the Collateral and each other in accordance herewith and in the Call Option
Agreement. The Pledge Agent, by its execution and delivery of this Agreement,
hereby agrees to accept receipt of the Collateral and agrees to act with respect
thereto as set forth herein and in accordance with the Call Option Agreement.
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SECTION 11. INDEMNITY AND EXPENSES.
(a) The Grantor agrees to indemnify the Pledge Agent from and against
any and all claims, losses and liabilities growing out of or resulting from this
Pledge Agreement (including, without limitation, enforcement of this Pledge
Agreement), except claims, losses or liabilities directly arising from the
Pledge Agent's own gross negligence, willful misconduct or bad faith.
(b) The Grantor will upon demand pay to the Pledge Agent the amount of
any and all reasonable expenses, including the reasonable fees and disbursements
of its counsel and of any experts and agents, which the Pledge Agent may incur
in connection with (i) the administration of this Pledge Agreement, (ii) the
custody, preservation, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of the Pledge
Agent hereunder or (iv) the failure by the Grantor to perform or observe any of
the provisions hereof.
(c) The Grantor agrees that the Pledge Agent does not assume, and shall
have no responsibility for, the payment of any sums due or to become due under
any agreement or contract other than included in the Collateral or the
performance of any obligations to be performed under or with respect to any such
agreement or contract by any of the Grantor, and except as the same may have
resulted from the gross negligence or willful misconduct of the Pledge Agent,
the Grantor hereby agrees to indemnify and hold the Pledge Agent harmless with
respect to any and all claims by any person relating thereto.
SECTION 12. SECURITY INTEREST ABSOLUTE. All rights of the Pledge Agent
and security interests hereunder, and all obligations of the Grantor hereunder,
shall be absolute and unconditional, irrespective of any circumstances which
might constitute a defense available to, or a discharge of, any guarantor or
other obligator in respect of its Obligations.
SECTION 13. AMENDMENTS; ETC. No amendment or waiver of any provision of
this Pledge Agreement, nor any consent to any departure by the Grantor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the party against whom enforcement is sought, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 14. ADDRESSES FOR NOTICES. Any notice or other communication
required or permitted to be given hereunder shall be in writing by facsimile,
mail or personal delivery and shall be effective upon actual receipt of such
notice.
The address for all such communications to the Pledge Agent shall be:
Xxxxx Fargo Bank Minnesota, N.A.
Customized Fiduciary Services
Corporate/Legal Markets
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention:
-----------------
Facsimile:
-----------------
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All notices and other communications provided for hereunder shall be in
writing and shall be given in accordance with Section 8(c) of the Call Option
Agreement.
SECTION 15. CONTINUING SECURITY INTEREST. This Pledge Agreement shall
create a continuing security interest in the Collateral and shall (a) remain in
full force and effect until the expiration of the term of the Call Options
pursuant to Section 2 of the Call Option Agreement and all other Obligations
have been performed in full (the "TERMINATION DATE"), (b) be binding upon the
Grantor, and (c) inure to the benefit of each of the Holders and their
respective successors, transferees, and assigns. On the Termination Date, the
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the Grantor subject to any existing liens, security
interests or encumbrances on such Collateral. Upon any such termination, the
Pledge Agent will, at the Grantor's expense, execute and deliver to the Grantor
such documents as the Grantor shall reasonably request to evidence such
termination.
SECTION 16. GOVERNING LAW. This Pledge Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, except as
required by mandatory provisions of law and except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of New York and by federal law (including,
without limitation, Title 11, U.S. Code) to the extent the same has preempted
the law of the State of New York or such other jurisdiction.
SECTION 17. HEADINGS. Section headings in this Pledge Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Pledge Agreement for any other purpose.
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IN WITNESS WHEREOF, the Grantor, the Holders and the Pledge Agent have
caused this Pledge Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date first above
written.
GRANTOR:
SUNSHINE INTERNATIONAL MINING, INC.
By:
---------------------------------
Name:
Title:
THE LIVERPOOL LIMITED PARTNERSHIP
By: Liverpool Associates, Ltd.
General Partner
By:
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
XXXXXXX INTERNATIONAL, L.P.
By: Xxxxxxx International Capital
Advisors, Inc.
Attorney-in-fact
By:
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
STONEHILL INSTITUTIONAL PARTNERS, L.P.
By:
----------------------------------------
Name:
Title:
7
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STONEHILL OFFSHORE PARTNERS, LIMITED
By:
----------------------------------------
Name:
Title:
AGENT: XXXXX FARGO BANK MINNESOTA, N.A.
By:
--------------------------------
Name:
Title:
[Signature page to Pledge Agreement]
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INDEX OF DEFINED TERMS
AS DEFINED IN SECTION:
----------------------
"BENEFICIAL OWNERSHIP".............................................Section 2(a)
"CALL OPTION AGREEMENT"................................................Preamble
"CALL OPTION"..........................................................Preamble
"CALL OPTIONS".........................................................Preamble
"COLLATERAL".......................................................Section 1(a)
"XXXXXXX HOLDERS"......................................................Preamble
"GRANTOR"..............................................................Preamble
"HOLDERS"..............................................................Preamble
"OBLIGATIONS"......................................................Section 1(b)
"PLEDGE AGENT".........................................................Preamble
"PLEDGE AGREEMENT".....................................................Preamble
"PLEDGED SHARES"...................................................Section 1(a)
"SAI SHARES"...........................................................Preamble
"SAI"..................................................................Preamble
"SIP"..................................................................Preamble
"SOPL".................................................................Preamble
"STONEHILL HOLDERS"....................................................Preamble
"TERMINATION DATE"...................................................Section 15
"TLLP".................................................................Preamble
"WILP".................................................................Preamble
9
