Exhibit 6.4
STOCK PURCHASE AND NET PROFITS INTEREST AGREEMENT
This Stock Purchase and Net Profits Interest Agreement ("Agreement") is
made and entered into to be effective the 20th day of November, 1995, by and
between XXXXXXX MINING COMPANY (the "Company") and THE SUNDAY SCHOOL BOARD OF
THE SOUTHERN BAPTIST CONVENTION, a Tennessee non-profit corporation, by its
authorized agent K. XXXXX XXXXX ("Xxxxx").
WITNESSETH:
WHEREAS, Xxxxx desires to purchase 250, 000 shares of restricted
preferred stock and a Net Profits Interest by payment to the Company of $375,
000 all as set forth in this Agreement; and
WHEREAS, the Company desires to issue to Xxxxx 250, 000 shares of
restricted preferred stock and a Net Profits Interest all as set forth in this
Agreement; and
WHEREAS, this Agreement supersedes and replaces that certain letter
agreement between the parties dated September 1, 1995; and
WHEREAS, American Consolidated Mining Co. ("American") has agreed to
lease (or otherwise convey) certain real and personal property at Gold Hill,
Utah to the Company as the site for the construction by the Company of a milling
facility to process approximately 500 tons per day (the "Mill") alt as set forth
in a separate agreement; and
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties hereto hereby agree that the foregoing recitals
are incorporated into this Agreement by this reference and further agree as
follows:
1. Purchase of Preferred Stock and Net Profits Interest. Xxxxx hereby agrees to
purchase from the Company, and the Company hereby agrees to issue and sell to
Xxxxx an aggregate of 250, 000 shares of restricted 1993 Series Preferred A
Stock, par value $0. 001 (the "Preferred Stock"), and a Net Profits Interest as
defined and described in this Agreement (uNet Profits Interest. ") The aggregate
purchase price of $375, 000 for Xxxxx'x purchase of Preferred Stock and the Net
Profits Interest was paid by wire transfer of $210, 000 on or about September ],
1995 and the balance of $165, 000 was wire transferred on or about October 19,
1995. A certificate representing 125, 000 shares of Preferred Stock was
delivered to Xxxxx on or about October 21, 1995, and a certificate representing
an additional 125, 000 shares of Preferred Stock will be delivered upon
execution of this Agreement.
2, Payment of Net Profits Interest. Except as provided in paragraphs 3 and 5,
the Company hereby agrees to pay to Xxxxx 20% of Net Profits (the "Net Profit
Interest") tor all ores and minerals mined or otherwise recovered and removed
from the Company's mining claims, (as such are presently constituted), that are
milled in the Mill and thereafter sold by or for the account of the Company
after processing, smelting or refining ("Ores and Minerals"). "Net Profits"
means the amount actually received by the Company from the sale of Ores and
Minerals less, but only to the extent actually incurred and born by the Company
(and its subsidiaries, if any): (1) charges and costs, if any, for mining, [1]
extraction,
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[1] Mining costs shall mean costs and expenses accrued or incurred in accordance
with generally accepted accounting principals by the Company in exploring for,
developing, mining, extracting, removing, and transporting to the Mill Ores and
Minerals. Such costs and expenses shall include, without limitation, those
incurred for labor,
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milling, [2] treatment, processing, or other beneficiation, including but not
limited to crushing and screening; (2) charges and costs, if any, for
exploration and development; (3) charges and costs, if any, for transportation
to places where Ores and Minerals are milled, treated, processed or otherwise
beneficiatcd, smelted, refined and sold; (4) charges, costs and penalties, if
any, for smelting, refining and marketing; (5) operating costs of the Company,
including general and administrative expenses, 3 relative to and not otherwise
covered by the foregoing described items; (6) depreciation; (7) sales, use,
gross receipts, severance and other taxes, if any, payable with respect to
severance, production, removal, sale or disposition of Ores and Minerals, but
excluding any taxes on net income; and (8) real and personal property taxes.
The Net Profits Interest shall be paid by the Company to Xxxxx on or before the
45th day after the last day of the Company's fiscal quarter in which the Company
receives payment for sale of the Ores and Minerals. The Company agrees to keep
full, true, and accurate records and books of account of all transactions
connected with its business and particularly with respect to its calculation of
the Net Profits Interest. Xxxxx shall have the right to examine and inspect such
of the records and books of account of the Company at any reasonable time during
normal business hours as are reasonably necessary to verify the accuracy of
payments made or payable by the Company.
3. Termination of Net Profits Interest. The Company shall pay to Xxxxx the 20%
Net Profits Interest as described in paragraph 2 above until such time as the
Company shall have paid to Xxxxx the aggregate amount of $1, 200, 000 (whether
from Net Profits Interest payments or otherwise) at which time the payment
obligations of the Company shall cease. The Company agrees to use its best
efforts to continue to operate the Mill until it shall have paid to Xxxxx the
aggregate amount of $1, 200, 000 (whether from Net Profits Interest payments or
otherwise) which best efforts shall not require continued operations if the Mill
is operating at a loss or the Company is otherwise financially unable to
continue operation of the Mill; provided further that at any time after the
Company has paid to Xxxxx the aggregate amount of $1, 200, 000, at which time
the payment obligations of the Company shall cease, the Company may terminate
the operation of the Xxxx tor any reason or may continue to operate the Mill in
its sole discretion without any liability to Xxxxx; provided further that if the
Company terminates the operation of the Mill at any time prior to the payment to
Xxxxx of $1, 200, 000, the Net Profits Interest shall then be transfered and
attach to any other mill then owned and operated by the Company to the extent
that the Company has at that time an unallocated interest in the net profits of
such other mill in the amount of at least 20% and such payment obligations shall
then continue until the aggregate amount paid to Xxxxx
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machinery operation, fuel, explosives and other materials, exploration drilling,
developmental or ore delineation drilling, a reasonable allowance for
depreciation and amortization of mining equipment and machinery (regardless of
when acquired), a reasonable allowance for depletion and a reasonable allowance
for future costs anticipated to be incurred by the Company in reclaiming the
property in accordance with applicable laws and regulations The Company agrees
that exploration and development costs shall not exceed $4. 00 per ton and
reclamation costs shall not exceed $1. 50 per ton.
[2] Milling costs shall mean costs and expenses incurred by the Company in
milling or processing Ores and Minerals at the Mill. The Company shall be
entitled to a reasonable allowance for depreciation of Mill facilities and
equipment.
[3] General and administrative costs shall mean costs and expenses incurred by
the Company and properly allocable to the production of Ores and Minerals from
the mining claims of the Company. General and administrative costs shall also
include interest costs incurred in any bona fide financing transaction directly
related to the development, operation, or commercialization of the mining claims
of the Company with a view to process the mined material through the Mill, or in
connection with the construction or operation of the Mill. The Company agrees
that general and administration costs shall not exceed $4. 50 per ton.
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with respect to both the Mill and the other mill totals $1, 200, 000 at which
time the payment obligations of the Company shall cease.
4. Other Production Royalties. Xxxxx acknowledges that the Company intends to
issue Net Profits Interests to other persons such that the aggregate of such Net
Profits Interests, including those held by Xxxxx, may be up to approximately 61%
thus leaving to the Company a remaining interest in the Met Profits of
approximately 39%. Xxxxx also acknowledges that American previously received and
continues to hold a 2. 5% net smelter return from all ores and minerals mined or
otherwise recovered and removed from the Company's mining claims, regardless of
the location of processing of such ore and minerals, and that such net smelter
return payment is higher in priority of payment than the Net Profits Interest
created by this and other agreements the holders of which net profits interest
have equal priority as between themselves.
5. Assignment. The Net Profits Interest held by Xxxxx pursuant to this Agreement
may be assigned and transferred by Xxxxx in whole or in part; provided, however,
that Xxxxx shall notify the Company in advance of its desire to assign and
transfer such interest and shall cooperate with the Company in all efforts
necessary for Xxxxx and the Company to comply with state and federal securities
laws which may be applicable to such assignment.
6. Mill Not Constructed. Xxxxx acknowledges that the Company is currently
constructing the Mill on site and has purchased the majority of equipment and
facilities needed to operate the Mill but is relying on receipt of funds from
others to use in completing construction of the Mill and conducting mining,
extraction, milling and other operations. If the Company is not able to
successfully complete and operate the Mill or is otherwise not able to commence
or continue mining operations for Ores and Minerals to be processed at the Mill
or any other mill owned and operated by the Company, as a result of force
majeure or otherwise, no net profits would be generated as defined by this
agreement. Because of the existing relationship between Xxxxx and the Company
resulting from Xxxxx'x appointment to the board of directors as set forth in
paragraph 7, stock ownership and current discussions with the Company, Xxxxx is
aware of the current status of fund raising by the Company and the prospects for
successful completion thereof.
7. Appointment to Board of Directory. The Company hereby agrees to increase the
size of its board of directors and to name K. Xxxxx Xxxxx to one of the
vacancies created by such increase within thirty days of the execution hereof.
8. Xxxxx'x Representations and Warranties. Xxxxx hereby represents and warrants
to the Company as follows:
8. 1 Authority. The execution of this Agreement has been duly
authorized by all necessary action by Xxxxx. Further, this Agreement is a valid
and binding agreement of Xxxxx which is enforceable in accordance with its terms
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or affecting
enforcement of creditors' rights and by general equitable principles.
8.2 Accreditation and Experience. Xxxxx is an "accredited investor" as
that term is defined in Regulation D promulgated under the Securities Act of
1933, as amended (the "Act") in that Xxxxx is a Tennessee non-profit corporation
that has total assets in excess of $5,000,000 and was not formed for the
specific purpose of acquiring the Preferred Stock and Net Profits Interest.
Xxxxx has such knowledge and experience in business and financial matters that
it is capable of evaluating the merits and risks of its
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investment hereunder and protecting its own interests in connection with this
transaction. Xxxxx has adequate means of providing for its current needs and
possible contingencies and has no need in the foreseeable future for liquidity
of an investment in the Company.
8.3 Investment. Xxxxx is acquiring the Preferred Stock and Net Profits
Interest for investment for its own account, and not with the view to, or for
resale in connection with, any distribution thereof or with any present
intention of distributing or selling the Units. Xxxxx understands that the
Preferred Stock and Net Profits Interest will not be registered under the Act,
by reason of a specific exemption from the registration provisions of the Act
which depends upon, among other things, the bona fide nature of Xxxxx'x
investment intent as expressed herein.
8.4 Restrictive Legend. Each certificate representing the Company's
Preferred Stock and Net Profits Interest shall be stamped or otherwise imprinted
with a legend in the following form (in addition to any legend required under
applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT THEREFOR OR AN OPINION OF COUNSEL FOR THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT
OF 1933.
8.5 Rule 144. Xxxxx acknowledges that the Preferred Stock and Net
Profits Interest must be held indefinitely unless subsequently registered under
the Act or an exemption from such registration is available. Xxxxx is aware of
the provisions of Rule 144 promulgated under the Act ("Rule 144") which permit
limited resale of securities purchased in a private placement (I) by
non-affiliates of the Company not less than three years after a party has
purchased and paid for the security to be sold or (ii) subject to the
satisfaction of certain conditions, including, among other things, the existence
of a public market for the securities, the availability of certain current
public information about the Company, the resale occurring not less than two
years after a party has purchased and paid for the security to be sold, the sale
being effected through a "broker's transaction" or in transactions directly with
a "market maker" (as provided by Rule 144(f)) and the number of securities being
sold during any three-month period not exceeding specified limitations.
8.6 No Public Market/Finder's Fee. Xxxxx understands that no public
market now exists for any of the securities issued by the Company. Xxxxx has
been informed that a finder's fee of $25, 000 and a 5% of net profits interest
is being paid in connection with Xxxxx' investment.
8.7 Access to Data. Xxxxx (a) has received and reviewed the Company's
Business Plan which contains a description of the Company's business, management
and financial affairs, (b) has discussed such information with the Company's
management, (c) has reviewed the Company's books, records and other documents to
the extent desired, and (d) has obtained any additional information requested
(to the extent the Company possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify the accuracy of any
information furnished to it or to which it had access.
8.8 State of Residence. Xxxxx hereby represents and acknowledges that
Mr. K. Xxxxx Xxxxx holds discretionary authority for Xxxxx, that ail
negotiations with the Company have been conducted with Mr. K. Xxxxx Xxxxx as
agent for Xxxxx at his place of business in Georgia, and that the state of
Georgia
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shall be considered the state of residence of Xxxxx and shall be relied on by
the Company in complying with the state securities laws of such state of
residence. Certificates representing shares shall be sent to Mr. K. Xxxxx Xxxxx
but shall be registered in the name of Xxxxx' account trustee as follows:
HOW & CO.
Northern Trust Company
Physical Receipt
00 Xxxxx Xxxxxx 00xx Xxxxx
Sunday School Board [26-03683]
Xxx Xxxx, Xxx Xxxx 00000
9. Use of Proceeds. The Company intends to apply the Xxxxx proceeds from the
issuance of the Preferred Stock and Net Profits Interest to the construction of
the Mill, Mining Costs, Milling Costs and General and Administrative Costs
(including salary expenses) of the Company, as those terms are defined in the
recitals and paragraph 2 of this agreement.
XXXXXXX MINING COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx 11/21/95
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Xxxxxxx X. Xxxxxxx, President Date
THE SUNDAY SCHOOL BOARD OF
THE SOUTHERN BAPTIST CONVENTION
c/o K. Xxxxx Xxxxx & Associates, Inc.
0000 Xxxx Xxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
By: /s/ K. Xxxxx Xxxxx 11-20-95
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K. Xxxxx Xxxxx, Authorized Agent Date
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