AGREEMENT AND PLAN OF REORGANIZATION
dated as of January 24, 1996
by and among
AMAX GOLD INC.,
AMAX RUSSIA CORPORATION,
CYPRUS AMAX MINERALS COMPANY,
CYPRUS GOLD COMPANY
and
CYPRUS MAGADAN GOLD CORPORATION
TABLE OF CONTENTS
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This Table of Contents is not part of
the Agreement to which it is attached but is inserted for convenience
only.
Page
No.
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ARTICLE I
THE MERGER
1.01 The Merger. . . . . . . . . . . . . . . . . . . . . 2
1.02 Effective Time. . . . . . . . . . . . . . . . . . . 2
1.03 Conversion of Shares. . . . . . . . . . . . . . . . 2
1.04 Closing.. . . . . . . . . . . . . . . . . . . . . . 3
1.05 Certificate of Incorporation and Bylaws of the
Surviving Corporation.. . . . . . . . . . . . . . . 3
1.06 Directors and Officers of the Surviving
Corporation.. . . . . . . . . . . . . . . . . . . . 3
1.07 Effects of the Merger . . . . . . . . . . . . . . . 4
1.08 Closing Shares and Production Shares. . . . . . . . 4
1.09 Contingent Payment Shares; Additional Deposits. . . 4
1.10 Assignment of Right to Receive Additional
Consideration . . . . . . . . . . . . . . . . . . . 5
1.11 Adjustments to Consideration. . . . . . . . . . . . 5
1.12 Further Assurances. . . . . . . . . . . . . . . . . 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CYPRUS
2.01 Organization of Cyprus. . . . . . . . . . . . . . . 5
2.02 Authority . . . . . . . . . . . . . . . . . . . . . 6
2.03 Organization of Cyprus Gold . . . . . . . . . . . . 6
2.04 Organization of Magadan . . . . . . . . . . . . . . 6
2.05 Capital Stock . . . . . . . . . . . . . . . . . . . 6
2.06 Financial Statements of Magadan . . . . . . . . . . 7
2.07 Ownership of Magadan and Omolon Shares. . . . . . . 7
2.08 No Agreements Relating to Magadan Common Stock or
the Omolon Shares . . . . . . . . . . . . . . . . . 7
2.09 Brokers . . . . . . . . . . . . . . . . . . . . . . 7
2.10 No Conflicts. . . . . . . . . . . . . . . . . . . . 7
2.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . 8
2.12 Certain Information Supplied. . . . . . . . . . . . 8
2.13 Representations and Warranties with Respect to
Omolon. . . . . . . . . . . . . . . . . . . . . . . 8
2.14 Furnishing of Certain Documents . . . . . . . . . . 10
2.15 No Default. . . . . . . . . . . . . . . . . . . . . 11
2.16 Environmental Matters . . . . . . . . . . . . . . . 11
2.17 Accuracy of Information . . . . . . . . . . . . . . 12
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AMAX GOLD
3.01 Organization. . . . . . . . . . . . . . . . . . . . 12
3.02 Authority . . . . . . . . . . . . . . . . . . . . . 12
3.03 No Conflicts. . . . . . . . . . . . . . . . . . . . 13
3.04 Capital Stock . . . . . . . . . . . . . . . . . . . 13
3.05 Brokers . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV
COVENANTS OF CYPRUS AND AMAX GOLD
4.01 Regulatory and Other Approvals. . . . . . . . . . . 14
4.02 Investigation by Cyprus and Amax Gold . . . . . . . 15
4.03 Conduct of Business . . . . . . . . . . . . . . . . 15
4.04 Notice and Cure . . . . . . . . . . . . . . . . . . 16
4.05 Fulfillment of Conditions . . . . . . . . . . . . . 16
ARTICLE V
COVENANTS OF CYPRUS
5.01 Books and Records . . . . . . . . . . . . . . . . . 17
5.02 Consent to Issuance of Shares . . . . . . . . . . . 17
5.03 OPIC Insurance. . . . . . . . . . . . . . . . . . . 17
5.04 Taxes . . . . . . . . . . . . . . . . . . . . . . . 17
5.05 Contribution of Intercompany Debt . . . . . . . . . 18
ARTICLE VI
COVENANTS OF AMAX GOLD
6.01 Consent Solicitation Statement. . . . . . . . . . . 18
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF AMAX GOLD AND AMAX RUSSIA
7.01 Representations and Warranties. . . . . . . . . . . 19
7.02 Performance . . . . . . . . . . . . . . . . . . . . 19
7.03 Officers' Certificates. . . . . . . . . . . . . . . 20
7.04 Orders and Laws . . . . . . . . . . . . . . . . . . 20
7.05 Regulatory Consents and Approvals . . . . . . . . . 20
7.06 Third Party Consents. . . . . . . . . . . . . . . . 20
7.07 Opinions of Counsel . . . . . . . . . . . . . . . . 20
7.08 Good Standing Certificates. . . . . . . . . . . . . 21
7.09 Resignations of Directors and Officers. . . . . . . 21
7.10 Proceedings . . . . . . . . . . . . . . . . . . . . 21
7.11 Stockholders' Approval. . . . . . . . . . . . . . . 21
7.12 Financing Agreements. . . . . . . . . . . . . . . . 21
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No.
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7.13 OPIC Insurance. . . . . . . . . . . . . . . . . . . 22
7.14 Omolon Shares . . . . . . . . . . . . . . . . . . . 22
7.15 Exploration Funding under Financing Agreements. . . 22
7.16 Absence of Material Adverse Change. . . . . . . . . 22
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF CYPRUS AND MAGADAN
8.01 Representations and Warranties. . . . . . . . . . . 22
8.02 Performance . . . . . . . . . . . . . . . . . . . . 23
8.03 Officers' Certificates. . . . . . . . . . . . . . . 23
8.04 Orders and Laws . . . . . . . . . . . . . . . . . . 23
8.05 Regulatory Consents and Approvals . . . . . . . . . 23
8.06 Third Party Consents. . . . . . . . . . . . . . . . 23
8.07 Proceedings . . . . . . . . . . . . . . . . . . . . 23
8.08 Opinions of Counsel . . . . . . . . . . . . . . . . 24
ARTICLE IX
POST-CLOSING AGREEMENTS CONCERNING THE PROJECT
9.01 Intention of the Parties. . . . . . . . . . . . . . 24
9.02 Obligations of Amax Gold in Connection With the
Financing Agreements. . . . . . . . . . . . . . . . 24
9.03 Obligations of Cyprus in Connection With the
Financing Agreements. . . . . . . . . . . . . . . . 25
9.04 Additional Obligations Following Demand By The
Project Lenders . . . . . . . . . . . . . . . . . . 25
9.05 Project Liquidity Needs . . . . . . . . . . . . . . 27
9.06 Obligations of Omolon . . . . . . . . . . . . . . . 28
9.07 Termination of Rights and Obligations Under
Article IX. . . . . . . . . . . . . . . . . . . . . 28
ARTICLE X
SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS
10.01 Survival of Representations, Warranties, Covenants
and Agreements. . . . . . . . . . . . . . . . . . . 29
ARTICLE XI
INDEMNIFICATION
11.01 Other Indemnification . . . . . . . . . . . . . . . 30
11.02 Method of Asserting Claims. . . . . . . . . . . . . 30
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ARTICLE XII
TERMINATION
12.01 Termination . . . . . . . . . . . . . . . . . . . . 33
12.02 Effect of Termination . . . . . . . . . . . . . . . 34
ARTICLE XIII
DEFINITIONS
13.01 Definitions . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XIV
MISCELLANEOUS
14.01 Notices . . . . . . . . . . . . . . . . . . . . . . 44
14.02 Entire Agreement. . . . . . . . . . . . . . . . . . 45
14.03 Expenses. . . . . . . . . . . . . . . . . . . . . . 45
14.04 Public Announcements. . . . . . . . . . . . . . . . 45
14.05 Confidentiality . . . . . . . . . . . . . . . . . . 46
14.06 Further Assurances; Post-Closing Cooperation. . . . 46
14.07 Waiver. . . . . . . . . . . . . . . . . . . . . . . 48
14.08 Amendment . . . . . . . . . . . . . . . . . . . . . 48
14.09 No Third Party Beneficiary. . . . . . . . . . . . . 48
14.10 No Assignment; Binding Effect . . . . . . . . . . . 48
14.11 Headings. . . . . . . . . . . . . . . . . . . . . . 48
14.12 Invalid Provisions. . . . . . . . . . . . . . . . . 48
14.13 Governing Law . . . . . . . . . . . . . . . . . . . 49
14.14 Counterparts. . . . . . . . . . . . . . . . . . . . 49
14.15 Specific Enforcement. . . . . . . . . . . . . . . . 49
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This AGREEMENT AND PLAN OF REORGANIZATION dated as of
January 24, 1996 is made and entered into by and among Amax Gold Inc.,
a Delaware corporation ("Amax Gold"), Amax Russia
---------
Corporation, a Delaware corporation wholly-owned by Amax Gold ("Amax
Russia"), Cyprus Amax Minerals Company, a Delaware
-----------
corporation ("Cyprus"), Cyprus Gold Company, a Delaware
------
corporation and an indirect wholly-owned subsidiary of Cyprus ("Cyprus
Gold") and Cyprus Magadan Gold Corporation, a Delaware
-----------
corporation wholly-owned by Cyprus Gold ("Magadan").
-------
WHEREAS, Magadan has contributed 50% of the authorized
capital to, and owns 50% of the shares of common stock ("Omolon
------
Shares") of Omolon Gold Mining Company, a closed joint stock
------
company organized under the laws of the Russian Federation ("Omolon");
------
WHEREAS, since November 1993, when Cyprus Minerals Company
merged with AMAX Inc. and acquired its interest in Amax Gold, Cyprus
has anticipated rationalizing its ownership of gold prospects through
offering its gold prospects that became sufficiently attractive for
development to Amax Gold, and Amax Gold has included as part of its
growth strategy the possible acquisition of gold prospects held by
Cyprus;
WHEREAS, in furtherance of these strategies, Amax Gold and
Cyprus have cooperated in the recent development being conducted by
Omolon and have been in negotiations regarding a possible transaction
since August 1995, and in contemplation of such transaction, Amax
Gold, since February 1, 1995, has been actively engaged in the AGI
Activities in connection with the Project (as such terms are defined
herein);
WHEREAS, the debt financing anticipated to be necessary to
reach Project Completion has been arranged and Magadan is proposed to
be acquired by Amax Gold subject to the terms of such financing;
WHEREAS, the Board of Directors of Amax Gold, the Special
Committee thereof and the Board of Directors of Cyprus have each
determined that it is advisable and in the best interests of their
respective stockholders to consummate, and have approved, the
acquisition of Magadan by Amax Gold provided for herein, by means of a
merger of Amax Russia with and into Magadan pursuant to which Magadan
will become a wholly-owned subsidiary of Amax Gold (the "Merger"); and
------
WHEREAS, Amax Gold, Amax Russia, Cyprus, Cyprus Gold and
Magadan desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe various
conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for
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other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger. At the Effective Time (as defined in
----------
Section 1.02), upon the terms and subject to the conditions of this
Agreement, Amax Russia shall be merged with and into Magadan in
accordance with the General Corporation Law of the State of Delaware
(the "DGCL"). Magadan shall be the surviving
----
corporation in the Merger (the "Surviving Corporation"). Amax
---------------------
Russia and Magadan are sometimes referred to herein as the
"Constituent Corporations". As a result of the Merger, the
------------------------
outstanding shares of capital stock of the Constituent Corporations
shall be converted or cancelled in the manner provided in Section
1.03.
1.02 Effective Time. Immediately prior to the Closing
--------------
(as defined in Section 1.04), a certificate of merger (the
"Certificate of Merger") shall be duly prepared and executed by
---------------------
the Constituent Corporations and delivered to the Secretary of State
of the State of Delaware for filing, as provided in Section 251 of the
DGCL. The Merger shall become effective at the time of the filing of
the Certificate of Merger with the Secretary of State of Delaware (the
date and time of such filing being referred to herein as the
"Effective Time").
--------------
1.03 Conversion of Shares. At the Effective Time, by
--------------------
virtue of the Merger and without any action on the part of the holder
thereof:
(a) Capital Stock of Amax Russia. Each issued
----------------------------
and outstanding share of the common stock, par value $100 per share,
of Amax Russia ("Amax Russia Common Stock") shall be
------------------------
converted into and become one fully paid and nonassessable share of
common stock, par value $1.00 per share, of the Surviving Corporation
(the "Surviving Corporation Common Stock"). Each
----------------------------------
certificate representing outstanding shares of Amax Russia Common
Stock shall at the Effective Time represent an equal number of shares
of Surviving Corporation Common Stock.
(b) Magadan Common Stock. The 1,000 issued and
--------------------
outstanding shares of common stock, par value $1.00 per share, of
Magadan (the "Magadan Common Stock") shall be converted into, in
--------------------
the aggregate, the right to receive, on the dates, in the manner and
to the extent set forth in Sections 1.08 and 1.09, (i) the Closing
Shares (as defined in Section 1.08), to be delivered at Closing, (ii)
the Production Shares (as defined in Section 1.08), if any, to be
delivered following the Project Production Date,
- 2 -
and (iii) the Contingent Payment Shares (as defined in Section 1.09),
if any, to be delivered from time to time following each Contingent
Payment Event ((i), (ii) and (iii) collectively, the "Merger
Consideration").
--------------------
1.04 Closing. The closing of the Merger (the
-------
"Closing") will take place at the offices of Amax Gold Inc., 9100
-------
Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, or at such other place
as the parties hereto mutually agree, on a date and at a time to be
specified by the parties, which shall in no event be later than 10:00
a.m., local time, on the fifth business day following satisfaction of
the condition set forth in Section 7.11, provided that the other
closing conditions set forth in Articles VII and VIII have been
satisfied or, if permissible, waived in accordance with this
Agreement, or on such other date as the parties hereto mutually agree
(the "Closing Date"). At
------------
the Closing, to evidence the conversion of shares set forth in Section
1.03 and subject to procedures to be adopted by the parties to effect
a pledge of the Surviving Corporation Common Stock to the Project
Lenders, (a) Cyprus Gold shall deliver to Amax Gold the certificates
that prior to the Merger represented all of the shares of Magadan
Common Stock issued and outstanding immediately prior to the Effective
Time, in genuine and unaltered form, which certificates shall be
deemed cancelled at the Effective Time, and (b) upon receipt of the
certificates representing all of the shares of the Magadan Common
Stock, Amax Gold shall deliver to Cyprus Gold a certificate
representing the Closing Shares, duly registered in the name of Cyprus
Gold. At the Closing there also shall be delivered to Amax Gold, Amax
Russia, Cyprus, Cyprus Gold and Magadan the certificates and other
documents and instruments required to be delivered under Articles VII
and VIII.
1.05 Certificate of Incorporation and Bylaws of the
----------------------------------------------
Surviving Corporation. At the Effective Time, (i) the
---------------------
Certificate of Incorporation of Magadan shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as
provided by law and such Certificate of Incorporation, and (ii) the
Bylaws of Magadan as in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation until thereafter
amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such Bylaws.
1.06 Directors and Officers of the Surviving
---------------------------------------
Corporation. The directors and officers of Amax Russia
-----------
immediately prior to the Effective Time shall, from and after the
Effective Time, be the directors and officers of the Surviving
Corporation, until their successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws.
- 3 -
1.07 Effects of the Merger. Subject to the foregoing,
---------------------
the effects of the Merger shall be as provided in the applicable
provisions of the DGCL.
1.08 Closing Shares and Production Shares.
------------------------------------
(a) (i) The Closing Shares shall consist of 11,789,474 fully paid and
nonassessable shares of common stock, par value $.01 per share, of
Amax Gold (the "Amax Gold Common Stock") (such shares
----------------------
of Amax Gold Common Stock being the "Closing Shares").
--------------
(ii) The Production Shares shall consist of
4,210,526 fully paid and nonassessable shares of Amax Gold Common
Stock (the "Production Shares"), the issuance of which shall be
-----------------
subject to and conditioned upon the occurrence of the Project
Production Date.
(b) Immediately upon the determination by Amax Gold
that the Project Production Date has occurred, Amax Gold shall notify
Cyprus Gold in writing thereof and that Amax Gold has set a date for
delivery to Cyprus Gold of the Production Shares, which date shall be
no later than ten (10) days after the date of such notice. On such
date, Amax Gold will deliver to Cyprus Gold a certificate or
certificates representing the Production Shares, duly registered in
the name of Cyprus Gold.
1.09 Contingent Payment Shares; Additional Deposits.
----------------------------------------------
(a) In connection with each Additional Deposit for which Reserve
Ounces have been established (the later to occur of the Acquisition of
an Additional Deposit and such establishment of Reserve Ounces is
referred to herein as a "Contingent Payment
------------------
Event"), Cyprus Gold shall be entitled to receive, as part of the
-----
Merger Consideration, a number of fully paid and nonassessable shares
of Amax Gold Common Stock equal to (i) $10.00 times the product of
(A) the number of Reserve Ounces in each Additional Deposit times
(B) the percentage interest held by Amax Gold (directly or indirectly)
in such Additional Deposit (the "Reserve
-------
Value") (ii) divided by the Average Market Price as of the date
-----
of the delivery of the Contingent Payment Shares (such shares of Amax
Gold Common Stock being referred to herein as "Contingent
----------
Payment Shares"); provided that Amax Gold shall deliver
--------------
Contingent Payment Shares to Cyprus Gold only to the extent that the
Reserve Value of the Additional Deposit for which such shares are
being delivered, when added to the Reserve Value of all other
Additional Deposits in respect of which Contingent Payment Shares have
been issued, does not exceed $45,000,000, and, provided further, that
Amax Gold shall have no obligation to deliver Contingent Payment
Shares with respect to any Additional Deposit Acquired after June 30,
2004. Amax Gold shall use its Commercially Reasonable Efforts to
cause Omolon to identify and explore Additional Deposits.
(b) Immediately upon the determination by Amax Gold
that the Contingent Payment Event has occurred with respect
- 4 -
to any Additional Deposit, Amax Gold shall notify Cyprus Gold in
writing (i) that such Contingent Payment Event has occurred and (ii)
that Amax Gold has set a date for delivery to Cyprus of the Contingent
Payment Shares with respect to such Additional Deposit, which date
shall be no later than ten (10) days after the date of such notice
with respect to such Additional Deposit. On each such date with
respect to an Additional Deposit, Amax Gold will deliver to Cyprus
Gold a certificate or certificates representing the Contingent Payment
Shares with respect to such Additional Deposit, duly registered in the
name of Cyprus Gold.
1.10 Assignment of Right to Receive Additional
-----------------------------------------
Consideration. Cyprus Gold shall have the right, from time to
-------------
time, with written notice to Amax Gold, to assign to a Subsidiary of
Cyprus its right to receive Production Shares or Contingent Payment
Shares pursuant to Sections 1.08 and 1.09.
1.11 Adjustments to Consideration. In the event,
----------------------------
subsequent to the date of this Agreement and prior to any other
payment date pursuant to Sections 1.08 or 1.09, that any capital stock
or other securities are issued in respect of, in exchange for, or in
substitution of, any shares of Amax Gold Common Stock by reason of any
reorganization, recapitalization, reclassification, merger,
consolidation, spin-off, partial or complete liquidation, stock
dividend, split-up, distribution to stockholders or combination of the
shares of Amax Gold Common Stock or any other change in Amax Gold's
capital structure, or any assets (including but not limited to cash,
but excluding ordinary cash dividends) of Amax Gold are distributed to
the stockholders of Amax Gold, appropriate adjustments shall be made
to the consideration payable pursuant to Sections 1.08 and 1.09 so as
to fairly and equitably preserve, as far as practicable, the original
rights and obligations of the parties hereto.
1.12 Further Assurances. Each party hereto will
------------------
execute such further documents and instruments and take such further
actions as reasonably may be requested by one or more of the others to
consummate the Merger, to vest the Surviving Corporation with full
title to all assets, properties, rights, approvals, immunities and
franchises of either of the Constituent Corporations or to effect the
other purposes of this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CYPRUS
Cyprus hereby represents and warrants to Amax Gold as
follows:
2.01 Organization of Cyprus. Cyprus is a corporation
----------------------
duly organized, validly existing and in good standing under the Laws
of the State of Delaware. Cyprus has full corporate power
- 5 -
and authority to execute and deliver this Agreement and the Financing
Agreements to which it is a party and to perform its obligations
hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.
2.02 Authority. The execution and delivery by Cyprus,
---------
Cyprus Gold and Magadan of this Agreement, and the Project Agreements
and the Financing Agreements (to the extent any such Person is a party
thereto), and the performance by Cyprus, Cyprus Gold and Magadan of
their respective obligations hereunder and thereunder, have been duly
and validly authorized by their respective Boards of Directors and
stockholders, to the extent required by applicable law, and no other
corporate action on the part of Cyprus, Cyprus Gold, Magadan or their
stockholders is necessary to approve any such agreement. Each of this
Agreement, the Project Agreements and the Financing Agreements has
been duly and validly executed and delivered by Cyprus, Cyprus Gold
and Magadan and constitutes legal, valid and binding obligations of
Cyprus, Cyprus Gold and Magadan enforceable against Cyprus, Cyprus
Gold and Magadan in accordance with its terms, in each such case to
the extent they are parties thereto.
2.03 Organization of Cyprus Gold. Cyprus Gold is a
---------------------------
corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware, and has full corporate power
and authority to conduct its business as and to the extent now
conducted and to own, use and lease its Assets and Properties. Cyprus
Gold is duly qualified, licensed or admitted to do business as a
foreign corporation and is in good standing in the State of Colorado,
which is the only jurisdiction in which the ownership, use or leasing
of its Assets and Properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary.
2.04 Organization of Magadan. Magadan is a
-----------------------
corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware, and has full corporate power
and authority to conduct its business as and to the extent now
conducted and to own, use and lease its Assets and Properties. There
is no jurisdiction in which the ownership, use or leasing of its
Assets and Properties, or the conduct or nature of its business, makes
such qualification, licensing or admission as a foreign corporation
necessary. Magadan has engaged in no operations or activities and has
no assets or liabilities, other than in respect of or in connection
with the organization, activities and operations of Omolon and the
interest of Magadan in Omolon.
2.05 Capital Stock. The authorized capital stock of
-------------
Magadan consists solely of 1,000 shares of Magadan Common Stock. One
hundred shares of Magadan Common Stock have been issued and are
outstanding and no shares are held in the treasury of Magadan. All of
the issued and outstanding shares of Magadan
- 6 -
Common Stock are duly authorized, validly issued and outstanding,
fully paid, nonassessable and free of preemptive rights. Except for
this Agreement, there are no outstanding Options with respect to
Magadan.
2.06 Financial Statements of Magadan. The unaudited
-------------------------------
balance sheet of Magadan as at December 31, 1993, 1994 and 1995 and
statement of cash flows of Magadan for the years ending on
December 31, 1993, 1994 and 1995 (collectively, the "Magadan
-------
Financial Statements"), certified by a duly authorized financial
--------------------
officer of Magadan, fairly present the financial condition of Magadan
as of the respective dates thereof and were prepared in conformity
with GAAP in the United States. Magadan had, as of the respective
dates of such Magadan Financial Statements, no material contingent
obligations, liabilities for taxes or unusual forward or long term
commitments not disclosed by, or reserved against in, such Magadan
Financial Statements or the notes thereto. Since December 31, 1995,
Magadan has not suffered any change in its business, prospects or
financial condition, nor has it incurred any substantial or unusual
loss or liability or undertaken or agreed to undertake any substantial
or unusual obligation (except under the Financing Agreements and the
Project Agreements) that in any such case would have a Material
Adverse Effect.
2.07 Ownership of Magadan and Omolon Shares. Cyprus
--------------------------------------
Gold owns, beneficially and of record, all the shares of Magadan
Common Stock, free and clear of all Liens other than those created or
permitted by the Financing Agreements and Magadan owns, beneficially
and of record, 50% of all the Omolon Shares, free and clear of all
Liens other than those created or permitted by the Financing
Agreements.
2.08 No Agreements Relating to Magadan Common Stock or
-------------------------------------------------
the Omolon Shares. Except as set forth in the Financing
-----------------
Agreements, the OPIC Insurance Contracts (and the letter agreement,
dated November 9, 1985, between OPIC and Cyprus), the Omolon Charter
and the Foundation Agreement, none of Cyprus or any of its
Subsidiaries is a party to or is bound by any agreement, arrangement
or understanding relating to the Magadan Common Stock or the Omolon
Shares.
2.09 Brokers. All negotiations relative to this
-------
Agreement and the transactions contemplated hereby have been carried
out by Cyprus directly with Amax Gold without the intervention of any
Person on behalf of Cyprus in such manner as to give rise to any claim
by any Person against Amax Gold, Magadan or Omolon for a finder's fee,
brokerage commission or similar payment.
2.10 No Conflicts. The execution and delivery by
------------
Cyprus, Cyprus Gold and Magadan of this Agreement and the Project
Agreements and Financing Agreements to which they are a party do
- 7 -
not, and the performance by Cyprus, Cyprus Gold and Magadan of their
obligations under this Agreement and such Project Agreements and
Financing Agreements and the consummation of the transactions
contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach
of any of the terms, conditions or provisions of the certificate of
incorporation or by-laws (or comparable organizational documents) of
Cyprus, Cyprus Gold, Magadan or Omolon;
(b) except as disclosed in Section 2.10(b) of the
----------------------
Disclosure Schedule, (i) (A) conflict with or result in a
-------------------
violation or breach of, (B) constitute (with or without notice or
lapse of time or both) a default under, (C) require Cyprus, Cyprus
Gold, Magadan or Omolon to obtain any consent, approval or action of,
make any filing with or give any notice to any Person as a result or
under the terms of, or (D) result in the creation or imposition of any
Lien (except for Liens created or permitted by the Financing
Agreements) upon Magadan or Omolon or any of their respective Assets
or Properties (including, without limitation, the Omolon Shares and
the Magadan Common Stock), under any Contract or License to which
Cyprus, Cyprus Gold, Magadan or Omolon is a party or by which any of
their respective Assets and Properties is bound; or (ii) conflict with
or result in a violation or breach of any term or provision of any Law
or Order applicable to Cyprus, Cyprus Gold, Magadan or Omolon, or any
of their respective Assets and Properties.
2.11 Taxes. All Tax returns and reports of Magadan
-----
required by Law (as presently interpreted and in effect) to be filed
have been duly filed and all tax assessments, fees and other
governmental charges upon Magadan (including any Taxes reportable on
any Tax return), its properties and its income, which are due and
payable, have been paid, other than those currently payable without
penalty or interest.
2.12 Certain Information Supplied. None of the
----------------------------
information identified in Section 2.12 of the Disclosure
------------------------------
Schedule, which information was supplied in writing by Cyprus,
--------
Cyprus Gold or Magadan for inclusion in the consent solicitation
statement to be provided to the stockholders of Amax Gold with respect
to approval of this Agreement and related matters (the "Consent
Solicitation Statement"), contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
2.13 Representations and Warranties with Respect to
----------------------------------------------
Omolon. (a) Omolon is a closed joint stock company duly
------
organized and validly existing under the laws of the Russian
Federation and, as of the Closing, will be registered with all
- 8 -
relevant registration bodies in the Russian Federation and has full
power to own the properties which it owns and proposes to own for the
purposes of the Project and to carry out the business which it carries
out and proposes to carry out for the purposes of the Project. Omolon
has no subsidiaries.
(b) Omolon has an authorized capital of Rb.
388,480,000,000 (the equivalent of approximately U.S. $80,000,000 when
contributed) consisting of 80,000 shares with a nominal value of Rb.
4,856,000 each. The Fourth Amendment to the Omolon Charter and
Foundation Agreement accurately sets forth a list of the shareholders
in Omolon as of the date of this Agreement, together with the number
of Omolon Shares and the percentage of all Omolon Shares that are
owned by each of such shareholders. There are no Options relating to
the existing Omolon Shares or for the issuance of additional shares of
Omolon, except for the Foundation Agreement. No person has any right,
other than a shareholder or in respect of the Tranche 2 Loan and the
OPIC Tranche 2 Loan (as such terms are defined in the EBRD Loan
Agreement), to share in the profits of Omolon.
(c) The audited balance sheet of Omolon as at December
31, 1994 and the related audited statement of profit and loss of
Omolon for the fiscal year ending on that date, and the unaudited
balance sheet of Omolon as at September 30, 1995 and the related
unaudited statement of profit and loss of Omolon for the portion of
the fiscal year then ended (collectively, the "Omolon Financial
Statements"), certified by the General Manager
---------------------------
of Omolon, fairly present the financial condition of Omolon as of the
respective dates thereof and were prepared in conformity with GAAP in
the Russian Federation. Omolon had, as of the respective dates of
such Omolon Financial Statements, no material contingent obligations,
liabilities for taxes or unusual forward or long term commitments not
disclosed by, or reserved against in, such Omolon Financial Statements
or the notes thereto. To the Knowledge of Cyprus, since the
respective dates of such Omolon Financial Statements, Omolon has not
suffered any change in its business, prospects or financial condition
which has a Material Adverse Effect, nor has it incurred any
substantial or unusual loss or liability or undertaken or agreed to
undertake any substantial or unusual obligation (except under the
Financing Agreements and the Project Agreements) that, in any such
case, would have a Material Adverse Effect.
(d) Omolon owns, free of all Liens other than those
created or permitted by the Financing Agreements, all of its Assets
and Properties that have a book value in excess of $10,000 equivalent
each (including real property, personal property, intellectual
property and any other assets the ownership of which is reflected on
its most recent balance sheet referred to in Section 2.13(c) or which
are referred to in the Security Documents, and Omolon has the
exclusive right to use (as provided in the license referred to below)
the real property
- 9 -
owned by the Russian government that is the subject of the Omolon
License and the Lease Agreement D7E dated June 25, 1995 between the
Administration of the North Evensk District of the Magadan Region and
Omolon). Omolon's Assets and Properties are not subject to any Lien,
and Omolon is not subject to any contract, arrangement or statute,
whether conditional or unconditional, pursuant to which any such Lien
may be created, except for Liens created or permitted by the Financing
Agreements.
(e) Omolon is not in violation of any material Law or
Order (as presently interpreted and in effect) which is applicable to
Omolon or its Assets and Properties. To the best of Cyprus'
Knowledge, no Law or Order has been proposed or is expected which may
have a Material Adverse Effect. All Tax returns and reports of Omolon
required by Law (as presently interpreted and in effect) to be filed
have been duly filed and all tax assessments, fees and other
governmental charges upon Omolon (including any Taxes reportable on
any Tax return), its properties and its income, which are due and
payable, have been paid, other than those currently payable without
penalty or interest.
(f) Omolon is not engaged in nor, to the best of
Cyprus' Knowledge, threatened by, any litigation, arbitration or
administrative proceeding, the outcome of which reasonably may be
expected to have a Material Adverse Effect.
(g) The Financing Agreements and Project Agreements to
which Omolon or Magadan, as the case may be, is a party constitute
valid and legally binding obligations of Omolon or Magadan, as the
case may be, enforceable in accordance with their respective terms.
(h) Except as set forth on Section 2.10(b) of the
----------------------
Disclosure Schedule there are no Russian Government
-------------------
Authorizations required in connection with the Merger. As of the date
of this Agreement, Magadan or Omolon has obtained all Russian
Government Authorizations required under applicable Law (as presently
interpreted and in effect) in connection with the Project or the
execution, delivery or performance of any of the Financing Agreements
or Project Agreements, except for (i) Russian Government
Authorizations required under Environmental Law, referred to in
Section 2.16 and (ii) other construction and operating permits and
approvals which are not yet required to be obtained, which will be
routinely issued in the course of designing, constructing and
operating the Project and with respect to which there is no reason to
believe that Omolon will not be able to obtain such permits and
approvals at the time they are needed for the Project.
2.14 Furnishing of Certain Documents. Except for the
-------------------------------
Financing Agreements and Project Agreements, and the waivers granted
thereunder, and the other agreements, contracts,
- 10 -
instruments or other documents referred to below, each as listed in
Section 2.14 of the Disclosure Schedule, (a) neither Cyprus
---------------------------------------
Gold, Magadan nor Omolon is a party to or is bound by any agreement,
contract, instrument or other document under which it has incurred or
could reasonably be expected to incur liabilities or obligations
exceeding $100,000 (or the equivalent in other currencies) and (b)
none of Cyprus, Cyprus Gold, Magadan or Omolon is a party to or is
bound by any material agreement, arrangement or understanding with or
relating to Magadan or Omolon or the Russian Shareholders. Cyprus has
furnished or caused to be furnished to Amax Gold true and complete
copies of each of the Financing Agreements and the Project Agreements,
each as amended, supplemented and modified to and including, and as in
effect on, the date hereof.
2.15 No Default. (a) No event has occurred which
----------
would entitle the Project Lenders not to fund the Loans under the EBRD
Loan Agreement or the OPIC Finance Agreement or which would (or with
notice or passage of time would) entitle either Project Lender to
accelerate the maturity of such Loans, terminate the commitments
thereunder or exercise other remedies.
(b) Neither Omolon nor Magadan is, and no event has
occurred which would (or with notice or passage of time would) cause
either Omolon or Magadan to be, in default under the certificate of
incorporation of Magadan, the Omolon Charter, the Foundation Agreement
or the Omolon License.
(c) To the best of Cyprus' Knowledge, neither Magadan
nor Omolon is (or with notice or passage of time would be) in material
default under any other agreement, obligation or duty to which it is a
party or by which it or any of its Assets and Properties are bound.
2.16 Environmental Matters. To the Knowledge of
---------------------
Cyprus, there has been no release or threatened release prior to the
date hereof of any pollutants or hazardous materials at any site or
facility owned, operated or leased by Omolon (or any predecessor or
successor in interest to Omolon) which under applicable Environmental
Law could have a Material Adverse Effect. To the Knowledge of Cyprus,
Omolon and its businesses, operations, assets, equipment, property,
leaseholds and other facilities are in compliance with applicable
Environmental Law. As of the date of this Agreement, Omolon has been
issued all permits, licenses, certificates and approvals required
under applicable Environmental Law, except for environmental permits
and approvals which are not yet required to be obtained, which will be
routinely issued in the course of designing, constructing and
operating the Project and with respect to which there is no reason to
believe that Omolon will not be able to obtain such permits and
approvals at the time they are needed for the Project and, Omolon has
received no material complaint, order, directive,
- 11 -
claim, citation or notice from any governmental authority with respect
to any Environmental Law.
2.17 Accuracy of Information. Other than with respect
-----------------------
to facts already Known to Amax Gold as a result of the AGI Activities,
all material facts relating to the Business or Condition of Magadan
and Omolon have been disclosed to Amax Gold in or in connection with
this Agreement. No statement made or other information furnished by
Cyprus or on its behalf in this Agreement or in any other document
furnished by it or on its behalf to Amax Gold or any of its
representatives in connection therewith contains any untrue statement
of a material fact or omits to state (as of the date made or
furnished) any material fact necessary to make such statement or
information not misleading in light of the circumstances under which
it was made or furnished, provided that, to the extent that any such
statement or information was based upon estimates, forecasts or
professional opinions, such estimates, forecasts or opinions (except
as otherwise warranted herein or therein) were made in good faith and
based upon the best available information, but otherwise it does not
warrant that such estimates, forecasts or opinions will ultimately
prove to be correct.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AMAX GOLD
Amax Gold hereby represents and warrants to Cyprus as
follows:
3.01 Organization. Each of Amax Gold and Amax Russia
------------
is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware, and has full corporate power
and authority to conduct its business as and to the extent now
conducted and to own, use and lease its Assets and Properties. Amax
Gold is duly qualified, licensed or admitted to do business and is in
good standing in the states of Alaska, Colorado, Nevada, Utah and
Wisconsin, which are the only jurisdictions in which the ownership,
use or leasing of its Assets and Properties, or the conduct or nature
of its business, makes such qualification, licensing or admission as a
foreign corporation necessary. Amax Russia is not required to be
qualified, licensed or admitted as a foreign corporation in any
jurisdiction.
3.02 Authority. Amax Gold and Amax Russia have full
---------
corporate power and authority to enter into this Agreement and,
subject to obtaining the affirmative vote or consent of a majority of
the outstanding shares of Amax Gold Common Stock, to perform their
respective obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement by Amax Gold and Amax Russia
- 12 -
and the consummation by Amax Gold and Amax Russia of the transactions
contemplated hereby have been duly and validly approved by the
respective Boards of Directors of Amax Gold and Amax Russia and
approved by Amax Gold in its capacity as the sole stockholder of Amax
Russia, the Special Committee of the Board of Directors of Amax Gold
and the Board of Directors of Amax Gold (with those directors
affiliated with Cyprus abstaining) have recommended adoption of this
Agreement and the approval of the Merger by the stockholders of Amax
Gold and directed that this Agreement be submitted to the stockholders
of Amax Gold for their consideration, and no other corporate
proceedings on the part of Amax Gold, Amax Russia or their respective
stockholders are necessary, other than such approval by the
stockholders of Amax Gold. This Agreement has been duly and validly
executed and delivered by Amax Gold and Amax Russia and constitutes
legal, valid and binding obligations of Amax Gold and Amax Russia
enforceable against Amax Gold and Amax Russia in accordance with its
terms.
3.03 No Conflicts. The execution and delivery by Amax
------------
Gold and Amax Russia of this Agreement do not, and the performance by
Amax Gold and Amax Russia of their respective obligations under this
Agreement and the consummation of the transactions contemplated hereby
will not:
(a) conflict with or result in a violation or breach
of any of the terms, conditions or provisions of the certificate of
incorporation or by-laws of Amax Gold or Amax Russia;
(b) conflict with or result in a violation or breach
of any term or provision of any Law or Order applicable to Amax Gold,
Amax Russia or any of their respective Assets and Properties; or
(c) (i) conflict with or result in a violation or
breach of, (ii) constitute (with or without notice or lapse of time or
both) a default under, (iii) require Amax Gold or Amax Russia to
obtain any consent, approval or action of, make any filing with or
give any notice to any Person as a result or under the terms of, or
(iv) result in the creation or imposition of any Lien (except for
Liens created or permitted by the Financing Agreements) upon Amax
Gold, Amax Russia or any of their respective Assets or Properties
under, any Contract or License to which Amax Gold or Amax Russia is a
party or by which any of their respective Assets and Properties is
bound.
3.04 Capital Stock. The authorized capital stock of
-------------
Amax Gold consists solely of (i) 200,000,000 shares of Amax Gold
Common Stock, of which 96,413,272 shares are issued and outstanding as
of the date hereof and (ii) 10,000,000 shares of preferred stock, of
which 1,840,000 shares are issued and outstanding. The shares of Amax
Gold Common Stock comprising the
- 13 -
Closing Shares have been duly authorized by all necessary corporate
action and, when issued to Cyprus in accordance with this Agreement,
will be validly issued and outstanding, fully paid, nonassessable and
free of preemptive rights. The shares of Amax Gold Common Stock
comprising the Production Shares and the Contingent Payment Shares
have been duly authorized by all necessary corporate action and, if
and when issued to Cyprus in accordance with Sections 1.08 and 1.09,
respectively, will be validly issued and outstanding, fully paid,
nonassessable and free of preemptive rights.
3.05 Brokers. Except for Salomon Brothers, whose
-------
fees, commissions and expenses are the sole responsibility of Amax
Gold, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by Amax Gold directly with
Cyprus without the intervention of any Person on behalf of Amax Gold
in such manner as to give rise to any claim by any Person against
Cyprus, Magadan or Omolon for a finder's fee, brokerage commission or
similar payment.
ARTICLE IV
COVENANTS OF CYPRUS AND AMAX GOLD
Each of Cyprus and Amax Gold covenants and agrees with
respect to itself and, where applicable, its Transaction Subsidiaries,
that at all times from and after the date hereof through the Closing:
4.01 Regulatory and Other Approvals. Each of Cyprus
------------------------------
and Amax Gold will, and will cause its Transaction Subsidiaries to
(a) use all Commercially Reasonable Efforts and proceed diligently and
in good faith as promptly as practicable to obtain all consents,
acknowledgements, approvals or actions of, to make all filings with
and to give all notices to Governmental or Regulatory Authorities or
any other Person required of it or its Transaction Subsidiaries to
consummate the transactions contemplated hereby, (b) provide such
other information and communications to such Governmental or
Regulatory Authorities or other Persons as Amax Gold, Cyprus, or such
Governmental or Regulatory Authorities or other Persons reasonably may
request in connection therewith and (c) cooperate with the other
parties hereto as promptly as practicable in obtaining all consents,
approvals or actions of, making all filings with and giving all
notices to Governmental or Regulatory Authorities or other Persons
required of any other party hereto to consummate the transactions
contemplated hereby. Each of Cyprus and Amax Gold will provide prompt
notification to the other when any such consent, approval, action,
filing or notice referred to in clause (a) above is obtained, taken,
made or given, as applicable, and will advise the other of any
communications (and, unless precluded by Law, provide copies of any
such communications that
- 14 -
are in writing) with any Governmental or Regulatory Authority or other
Person regarding any of the transactions contemplated by this
Agreement.
4.02 Investigation by Cyprus and Amax Gold. Cyprus
-------------------------------------
will, and will cause Magadan and Omolon to, and Amax Gold to the
extent consistent with the AGI Activities will, (a) provide the other
and its officers, directors, employees, agents, counsel, accountants,
financial advisors, consultants and other representatives (together,
"Representatives") with full access,
---------------
upon reasonable prior notice and during normal business hours, to all
officers, employees, agents and accountants of Magadan and Omolon and
their Assets and Properties and Books and Records, and (b) furnish the
other and such other Persons with all such information and data
(including, without limitation, copies of Contracts and other Books
and Records) concerning the business and operations of Magadan and
Omolon as the other or any of such other Persons reasonably may
request in connection with such investigation.
4.03 Conduct of Business. Cyprus will cause Magadan
-------------------
and Omolon through Closing to conduct their business only in the
ordinary course consistent with the timely development of the Project.
Without limiting the generality of the foregoing, Cyprus will, and
Amax Gold will, to the extent consistent with the AGI Activities, use
its Commercially Reasonable Efforts to:
(a) cause Magadan and Omolon to use Commercially
Reasonable Efforts to (i) preserve intact the present business
organization and reputation of Magadan and Omolon, (ii) keep available
(subject to dismissals and retirements in the ordinary course of
business consistent with past practice) the services of the present
officers, employees and consultants of Magadan and Omolon,
(iii) maintain the Assets and Properties of Magadan and Omolon in good
working order and condition, ordinary wear and tear excepted,
(iv) maintain the good will of suppliers, lenders and other Persons
with whom Magadan or Omolon has significant business relationships and
(v) continue all current development activities relating to the
business and operations of Magadan and Omolon;
(b) except to the extent required by applicable Law
(i) cause the Books and Records to be maintained in the usual, regular
and ordinary manner, (ii) not permit any material change in (A) any
accounting, financial reporting or Tax practice or policy of Magadan
or Omolon, or (B) any method of calculating any contingency or other
reserve of Magadan or Omolon for accounting, financial reporting or
Tax purposes and (iii) not permit any change in the fiscal year of
Magadan or Omolon;
(c) (i) maintain, and cause Magadan and Omolon to use
Commercially Reasonable Efforts to maintain, in full force and effect
until the Closing substantially the same levels of
- 15 -
insurance coverage as currently in place, (ii) use Commercially
Reasonable Efforts to cause such insurance coverage held by any Person
(other than Magadan or Omolon) for the benefit of Magadan or Omolon to
continue to be provided at the expense of Magadan and Omolon for at
least sixty (60) days after the Closing on substantially the same
terms and conditions as provided on the date of this Agreement and
(iii) subject to the Financing Agreements, cause any and all benefits
under such Contracts paid or payable (whether before or after the date
of this Agreement) with respect to the business, operations, employees
or Assets and Properties of Magadan and Omolon to be paid to Magadan
and Omolon; and
(d) cause Magadan and Omolon to comply, in all
material respects, with all Laws and Orders applicable to the business
and operations of Magadan and Omolon and promptly following receipt
thereof to give Amax Gold or Cyprus, as the case may be, copies of any
notice received from any Governmental or Regulatory Authority or other
Person alleging any violation of any such Law or Order.
4.04 Notice and Cure. Each of Cyprus and Amax Gold
---------------
will notify the other in writing of, and contemporaneously will
provide the other with true and complete copies of any and all
information or documents relating to, and will use Commercially
Reasonable Efforts to cure before the Closing, any event, transaction
or circumstance, as soon as practicable after it becomes Known to such
party, occurring after the date of this Agreement that causes or will
cause any covenant or agreement of such party under this Agreement to
be breached or that renders or will render untrue any representation
or warranty of such party contained in this Agreement as if the same
were made on or as of the date of such event, transaction or
circumstance. Each of Cyprus and Amax Gold also will notify the other
in writing of, and will use Commercially Reasonable Efforts to cure,
before the Closing, any violation or breach, as soon as practicable
after it becomes Known to such party, of any representation, warranty,
covenant or agreement made by such party in this Agreement, whether
occurring or arising before, on or after the date of this Agreement.
No notice given pursuant to this Section 4.04 shall have any effect on
the representations, warranties, covenants or agreements contained in
this Agreement for purposes of determining satisfaction of any
condition contained herein or shall in any way limit Cyprus' or Amax
Gold's right to seek indemnity under Article XI.
4.05 Fulfillment of Conditions. Through the Closing,
-------------------------
each of Cyprus and Amax Gold will use all Commercially Reasonable
Efforts and proceed diligently and in good faith to satisfy each
condition to the obligations of the other contained in this Agreement
and will use all Commercially Reasonable Efforts not to permit Magadan
or Omolon to, take or fail to take any action that
- 16 -
could reasonably be expected to result in the nonfulfillment of any
such condition.
ARTICLE V
COVENANTS OF CYPRUS
Cyprus covenants and agrees with respect to itself and its
Transaction Subsidiaries that at all times from and after the date
hereof until the Closing and, with respect to any covenant or
agreement by its terms to be performed in whole or in part after the
Closing, for the period specified in Article X, it will comply with
all covenants and provisions of this Article V, except to the extent
Amax Gold may otherwise consent in writing.
5.01 Books and Records. On the Closing Date, Cyprus
-----------------
will, to the extent not already in the possession of Amax Gold,
deliver or make available to Amax Gold at the offices of Magadan and
Omolon all of the Books and Records, and if at any time after the
Closing Cyprus discovers in its possession or under its control any
other Books and Records, it will forthwith deliver such Books and
Records to Amax Gold.
5.02 Consent to Issuance of Shares. Cyprus will, with
-----------------------------
respect to all shares of Amax Gold Common Stock beneficially owned by
it, (and will cause its subsidiaries to, with respect to all such
shares owned by them) consent to the issuance of the Closing Shares,
the Production Shares and the Contingent Payment Shares pursuant to
the Merger and in accordance with this Agreement and will (and will
cause such subsidiaries to) deliver to the Secretary of Amax Gold a
signed and dated consent with respect to such shares in the form of
the consent attached to the Consent Solicitation Statement.
5.03 OPIC Insurance. Cyprus will assign to Amax Gold
--------------
at Closing the OPIC insurance contained in the Contracts of Insurance
No. D924 and E381 with OPIC, dated as of September 29, 1995 (the "OPIC
Insurance Contracts") or assist Amax Gold in
------------------------
obtaining OPIC insurance on substantially the same terms and
conditions as provided in the OPIC Insurance Contracts at or prior to
Closing.
5.04 Taxes. Cyprus will timely pay all Taxes relating
-----
to Magadan or its ownership interest in Magadan and Omolon, or to any
Affiliate of Cyprus or Magadan (other than Omolon), which are
attributable to any tax period, to the extent such tax period ends on
or prior to the Closing Date and for that portion of any Tax period
including and ending at the Closing Date, computed as if the books of
the relevant taxpayer had been closed on that date, and will reimburse
Magadan or Amax Gold for any of such Taxes paid by either of them.
Taxes other than taxes measured by gross or net income for which the
last day of the taxable period
- 17 -
is not the Closing Date will be allocated pro rata per day between the
period ending on the Closing Date and the period commencing after the
Closing Date.
5.05 Contribution of Intercompany Debt. If, as of the
---------------------------------
Closing Date, the Net Intercompany Debt (as defined below) shall
consist of a net indebtedness of Magadan to Cyprus or any of its
Affiliates (other than Omolon and Magadan), Cyprus shall, prior to or
simultaneously with the Closing, contribute or cause to be contributed
such Net Intercompany Debt to the equity of Magadan. If, as of the
Closing Date, the Net Intercompany Debt shall consist of a net
indebtedness of Cyprus and its Affiliates (other than Omolon and
Magadan) to Magadan, Cyprus shall, prior to or simultaneously with the
Closing, cause Magadan to cancel the obligations of Cyprus and its
Affiliates (other than Omolon and Magadan) under such indebtedness.
As used herein, the term "Net
---
Intercompany Debt" shall mean (a) all intercompany payables of
-----------------
Magadan to Cyprus and its Affiliates (other than Omolon and Magadan),
other than trade payables incurred in the ordinary course of business,
less (b) the sum of all intercompany receivables due to Magadan from
Cyprus and its Affiliates (other than Omolon and Magadan), other than
trade receivables incurred in the ordinary course of business. For
purposes of this Agreement, intercompany payables and intercompany
receivables shall be deemed to include any payables and receivables
relating to the inclusion of Magadan in the consolidated federal
income tax returns filed by Cyprus and its Affiliates for periods
through the Closing Date.
ARTICLE VI
COVENANTS OF AMAX GOLD
Amax Gold covenants and agrees with Cyprus that, at all
times from and after the date hereof through the Closing, Amax Gold
will comply with all covenants and provisions of this Article VI,
except to the extent Cyprus may otherwise consent in writing.
6.01 Consent Solicitation Statement. (a) Amax Gold
------------------------------
shall prepare and file with the SEC the Consent Solicitation Statement
as soon as reasonably practicable after the date hereof, and shall
diligently proceed to have the Consent Solicitation Statement cleared
by the SEC. If at any time prior to the Effective Time any event
shall occur that should be set forth in an amendment of or a
supplement to the Consent Solicitation Statement, Amax Gold shall
prepare and file with the SEC such amendment or supplement as soon
thereafter as is reasonably practicable. Cyprus, Magadan and Amax
Gold shall cooperate with each other in the preparation of the Consent
Solicitation Statement, and Amax Gold shall notify Cyprus of the
receipt of any comments of the SEC with respect to the Consent
- 18 -
Solicitation Statement and of any requests by the SEC for any
amendment or supplement thereto or for additional information, and
shall provide to Cyprus promptly copies of all correspondence between
Amax Gold or any representative of Amax Gold and the SEC with respect
to the Consent Solicitation Statement. Amax Gold shall give Cyprus
and its counsel the opportunity to review the Consent Solicitation
Statement and all responses to requests for additional information by
and replies to comments of the SEC before any such document is
provided to or filed with the SEC. Each of Amax Gold, Cyprus and
Magadan agrees, after consultation with the other parties hereto, to
respond promptly to all such comments of and requests by the SEC and
to cause the Consent Solicitation Statement to be mailed to the
holders of Amax Gold Common Stock entitled to take action with respect
thereto at the earliest practicable time.
(b) Amax Gold shall commence solicitation of consents
from its stockholders for the purpose of approving the issuance of the
Closing Shares, the Production Shares and the Contingent Payment
Shares pursuant to the Merger and in accordance with the terms of this
Agreement as soon as reasonably practicable after the date hereof, and
will notify Cyprus in writing of the results thereof promptly
following the Expiration Time (as defined in the Consent Solicitation
Statement).
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF AMAX GOLD AND AMAX RUSSIA
The obligations of Amax Gold and Amax Russia hereunder to
consummate the Merger are subject to the fulfillment, at or before the
Closing, of each of the following conditions (all or any of which may
be waived in whole or in part by Amax Gold in its sole discretion):
7.01 Representations and Warranties. Each of the
------------------------------
representations and warranties made by Cyprus in this Agreement (other
than those made with respect to a specified date earlier than the
Closing Date) shall be true and correct in all material respects on
and as of the Closing Date as though such representation or warranty
was made on and as of the Closing Date, and any representation or
warranty made with respect to a specified date earlier than the
Closing Date shall have been true and correct in all material respects
on and as of such earlier date.
7.02 Performance. Cyprus and Magadan shall have
-----------
performed and complied with, in all material respects, each agreement,
covenant and obligation required by this Agreement to be so performed
or complied with by such party at or before the Closing.
- 19 -
7.03 Officers' Certificates. Cyprus shall have
----------------------
delivered to Amax Gold a certificate, dated the Closing Date and
executed by the Chairman of the Board, the President or any Vice
President of Cyprus, substantially in the form and to the effect of
Exhibit A hereto, and a certificate, dated the Closing Date
---------
and executed by the Secretary or any Assistant Secretary of Cyprus,
substantially in the form and to the effect of Exhibit B
---------
hereto.
7.04 Orders and Laws. There shall not be in effect on
---------------
the Closing Date any Order or Law restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or which could reasonably
be expected to otherwise result in a material diminution of the
benefits of the transactions contemplated by this Agreement to Amax
Gold, and there shall not be pending or threatened on the Closing Date
any action or proceeding or any other action in, before or by any
Governmental or Regulatory Authority which could reasonably be
expected to result in the issuance of any such Order or the enactment,
promulgation or deemed applicability to Amax Gold, Magadan, Omolon or
the transactions contemplated by this Agreement of any such Law.
7.05 Regulatory Consents and Approvals. All consents,
---------------------------------
acknowledgments, approvals and actions of, filings with and notices to
any Governmental or Regulatory Authority necessary or desirable to
permit Amax Gold, Amax Russia, Cyprus and Magadan to perform their
obligations under this Agreement and to consummate the transactions
contemplated hereby (a) shall have been duly obtained, made or given,
(b) shall be in form and substance reasonably satisfactory to Amax
Gold, (c) shall not be subject to the satisfaction of any condition
that has not been satisfied or waived and (d) shall be in full force
and effect, and all terminations or expirations of waiting periods
imposed by any Governmental or Regulatory Authority necessary for the
consummation of the transactions contemplated by this Agreement shall
have occurred.
7.06 Third Party Consents. The consents and
--------------------
acknowledgments (or in lieu thereof waivers) listed in Section 2.10(b)
of the Disclosure Schedule, and all other
------------------------------------------
acknowledgments or consents (or in lieu thereof waivers) necessary to
permit the performance by Amax Gold, Amax Russia, Cyprus, Magadan and
Omolon of their obligations under this Agreement or to the
consummation of the transactions contemplated hereby under any
Contract to which Amax Gold, Amax Russia, Cyprus, Magadan or Omolon is
a party or by which any of their respective Assets and Properties are
bound (a) shall have been obtained and (b) shall be in form and
substance reasonably satisfactory to Amax Gold.
7.07 Opinions of Counsel. Amax Gold shall have
-------------------
received the opinion of Xxxxxx X. Xxxx, Esq., General Counsel of
- 20 -
Cyprus, dated the Closing Date and the opinion of Professor Sirodoev,
special Russian counsel to Cyprus and Omolon, dated the Closing Date,
in each case with respect to such matters as Amax Gold reasonably may
request.
7.08 Good Standing Certificates. Cyprus shall have
--------------------------
delivered to Amax Gold (a) copies of the certificates or articles of
incorporation (or other comparable corporate charter documents),
including all amendments thereto, of Magadan certified by the
Secretary of State or other appropriate official of the jurisdiction
of incorporation, (b) certificates from the Secretary of State or
other appropriate official of the respective jurisdictions of
incorporation to the effect that Magadan is in good standing or
subsisting in such jurisdiction, listing all charter documents of
Magadan on file and attesting to its payment of all franchise or
similar Taxes, and (c) a certificate from the Secretary of State or
other appropriate official in each jurisdiction in which Magadan is
qualified or admitted to do business to the effect that Magadan is
duly qualified or admitted and in good standing in such jurisdiction.
7.09 Resignations of Directors and Officers. Each of
--------------------------------------
the directors and officers of Magadan shall have resigned prior to the
Closing Date.
7.10 Proceedings. All proceedings to be taken on the
-----------
part of Cyprus, Cyprus Gold, Magadan and Omolon in connection with the
transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to Amax
Gold, and Amax Gold shall have received copies of all such documents
and other evidences as Amax Gold reasonably may request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
7.11 Stockholders' Approval. The affirmative vote or
----------------------
consent of a majority of the outstanding shares of Amax Gold Common
Stock shall have been obtained.
7.12 Financing Agreements. Each of the EBRD Loan
--------------------
Agreement and the OPIC Finance Agreement shall be in full force and
effect, the obligations of the respective Project Lenders to make
loans to Omolon thereunder shall not have been suspended or
terminated, and, except for waivers granted under the Financing
Agreements listed in Section 2.14 of the Disclosure Schedule,
---------------------------------------
Amax Gold shall have received original or certified copies of the
documents delivered to EBRD or OPIC pursuant to Sections 4.01 and 4.02
of the EBRD Loan Agreement and of the OPIC Financing Agreement (and
originals or certified copies of all amendments, supplements or other
modifications of such documents), any and all amendments, supplements
or modifications since the date of this Agreement to any of the
Financing Agreements or Project Agreements shall be satisfactory to
Amax Gold in form and
- 21 -
substance, and no event or condition shall have occurred or exist
which would prevent Omolon from satisfying any conditions precedent
for additional borrowings under the EBRD Loan Agreement or the OPIC
Financing Agreement. Conditions which have been waived by the Project
Lenders pursuant to certain waiver letters shall have been satisfied,
waived to a future time or waived permanently prior to the Merger.
7.13 OPIC Insurance. Amax Gold shall have been
--------------
assigned the rights and obligations of Cyprus and Magadan under the
OPIC Insurance Contracts in accordance with the terms thereof and of
the letter agreement, dated November 9, 1995, between OPIC and Cyprus,
or shall have obtained OPIC equity insurance on substantially the same
terms and conditions as provided in the OPIC Insurance Contracts and
such insurance shall be in full force and effect, and Amax Gold shall
have received evidence satisfactory to it that the pledge of the
Omolon Shares and the shares of Surviving Corporation Common Stock
under the Security Documents shall not interfere with the ability to
tender such shares under the OPIC Insurance Contracts.
7.14 Omolon Shares. All of the Omolon Shares referred
-------------
to in Section 2.13(b) shall have been duly authorized, validly issued,
fully paid and registered with the Ministry of Finance of the Russian
Federation and all state duties and taxes payable in connection with
such issuance and registration shall have been duly paid by Omolon.
7.15 Exploration Funding under Financing Agreements.
----------------------------------------------
Amax Gold shall have received evidence in form and substance
satisfactory to it that Omolon will be permitted under the terms of
the Financing Agreements to fund exploration activities as
contemplated by Section 1.09.
7.16 Absence of Material Adverse Change. There shall
----------------------------------
not have occurred between the date hereof and the Closing any event or
circumstance that has had or reasonably can be expected to have a
Material Adverse Effect.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF CYPRUS AND MAGADAN
The obligations of Cyprus and Magadan hereunder to
consummate the Merger are subject to the fulfillment, at or before the
Closing, of each of the following conditions (all or any of which may
be waived in whole or in part by Cyprus in its sole discretion):
8.01 Representations and Warranties. Each of the
------------------------------
representations and warranties made by Amax Gold in this Agreement
shall be true and correct in all material respects on
- 22 -
and as of the Closing Date as though such representation or warranty
were made on and as of the Closing Date.
8.02 Performance. Amax Gold and Amax Russia shall
-----------
have performed and complied with, in all material respects, each
agreement, covenant and obligation required by this Agreement to be so
performed or complied with by such party at or before the Closing.
8.03 Officers' Certificates. Amax Gold shall have
----------------------
delivered to Cyprus a certificate, dated the Closing Date and executed
by the Chairman of the Board, the President or any Vice President of
Amax Gold, substantially in the form and to the effect of Exhibit C
hereto, and a certificate, dated the Closing
---------
Date and executed by the Secretary or any Assistant Secretary of Amax
Gold, substantially in the form and to the effect of Exhibit D hereto.
---------
8.04 Orders and Laws. There shall not be in effect on
---------------
the Closing Date any Order or Law that became effective after the date
of this Agreement restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions
contemplated by this Agreement and there shall not be pending or
threatened on the Closing Date any Action or Proceeding or any other
action in, before or by any Governmental or Regulatory Authority which
could reasonably be expected to result in the issuance of any such
Order or the enactment, promulgation or deemed applicability to Cyprus
or the transactions contemplated by this Agreement of any such Law.
8.05 Regulatory Consents and Approvals. All consents,
---------------------------------
approvals and actions of, filings with and notices to any Governmental
or Regulatory Authority necessary to permit Cyprus, Magadan, Amax
Gold, Amax Russia and Omolon to perform their obligations under this
Agreement and to consummate the transactions contemplated hereby (a)
shall have been duly obtained, made or given, (b) shall not be subject
to the satisfaction of any condition that has not been satisfied or
waived and (c) shall be in full force and effect, and all terminations
or expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement shall have occurred.
8.06 Third Party Consents. All consents (or in lieu
--------------------
thereof waivers) necessary to permit the performance by Cyprus and
Magadan of their respective obligations hereunder and to the
consummation of the transactions contemplated hereby as are required
under the Contracts listed in Section 2.10(b) of the
----------------------
Disclosure Schedule shall have been obtained.
-------------------
8.07 Proceedings. All proceedings to be taken on the
-----------
part of Amax Gold and Amax Russia in connection with the
- 23 -
transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to
Cyprus, and Cyprus shall have received copies of all such documents
and other evidences as Cyprus reasonably may request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
8.08 Opinions of Counsel. Cyprus shall have received
-------------------
the opinion of Xxxxxxx X. Xxxxxxxx, Esq., General Counsel of Amax
Gold, dated the Closing Date, with respect to such matters as Cyprus
reasonably may request.
ARTICLE IX
POST-CLOSING AGREEMENTS CONCERNING THE PROJECT
9.01 Intention of the Parties. The consideration to
------------------------
be received by Cyprus for the transfer of Magadan to Amax Gold has
been negotiated in part on the basis that Magadan will be acquired
with the anticipated financing for the Project in place on the terms
and conditions set forth in the EBRD Loan Agreement and the OPIC
Finance Agreement and with credit support provided by Cyprus under the
Cyprus Amax Guaranty, the Cyprus Support Agreement and the Reclamation
Agreement. Cyprus and Amax Gold recognize (i) that, inasmuch as
Cyprus has provided such credit support for the obligations of Omolon
under the EBRD Loan Agreement and the OPIC Finance Agreement,
situations may arise in which Cyprus may be obligated to make payments
to the Project Lenders under the Cyprus Amax Guaranty and (ii) that
Amax Gold, under certain circumstances, will be entitled to look to
Cyprus to fund demands on Amax Gold or Magadan to pay the Project
Lenders. In the event Cyprus makes any such payment, provision will
need to be made for the repayment of such amounts by Omolon and, under
limited circumstances, Magadan or Amax Gold. Set forth below are the
arrangements for dealing with such obligations should they arise, as
well as certain related indemnities and agreements.
9.02 Obligations of Amax Gold in Connection With the
-----------------------------------------------
Financing Agreements.
--------------------
(a) Following the Closing Amax Gold shall use its
Commercially Reasonable Efforts: (i) to cause Omolon (through Magadan
pursuant to its status as the "Foreign Party" under the Foundation
Agreement) to comply with its obligations under the EBRD Loan
Agreement and the OPIC Finance Agreement including, without
limitation, obligations regarding Project Completion and maintenance
of the Loan Life Debt Service Coverage Ratio (as defined in the
Financing Agreements); (ii) to assume and perform, as the assignee of
Cyprus, the obligations of Cyprus under the Cyprus Support Agreement
and the Reclamation Agreement
- 24 -
(provided that Amax Gold's liability for any failure to perform such
obligations shall be limited as provided in Section 9.04(b)); and
(iii) to pledge the Surviving Corporation Common Stock under an
agreement reasonably satisfactory to the Project Lenders.
(b) Following the Closing, Amax Gold shall keep Cyprus
informed regarding the status of the Project (including liquidity
needs of the Project and progress toward Project Completion) and any
circumstances regarding the Project that Amax Gold believes may lead
to a demand for payment under the Cyprus Amax Guaranty. Upon the
request of Cyprus, Amax Gold shall provide Cyprus with access at all
reasonable times to the Project and such employees, documents and
information relating to the Project as Cyprus reasonably may request.
9.03 Obligations of Cyprus in Connection With the
--------------------------------------------
Financing Agreements. Following the Closing, Cyprus (i) shall
--------------------
continue to be obligated under and comply with the Cyprus Amax
Guaranty in the event any payment is due to the Project Lenders under
the Cyprus Amax Guaranty, whether or not such payment is due in
respect of the obligations (or defaults with respect thereto) under
the Financing Agreements that have been assumed by or assigned to Amax
Gold; (ii) shall use its Commercially Reasonable Efforts to prevent a
default from occurring with respect to actions or events with respect
to Cyprus or Cyprus Gold that would constitute a default under
Section 5.03(c) of the Cyprus Support Agreement or any of Sections
7.01(d), 7.01(f), 7.01(g) and 7.01(n) of the EBRD Loan Agreement or
the OPIC Finance Agreement, or under Section 7.01(o) of the EBRD Loan
Agreement or the OPIC Finance Agreement (solely to the extent that
such action or event referred to in Section 7.01(o) prevents, limits
or restricts Cyprus' ability to perform the Cyprus Amax Guaranty);
(iii) shall fund any payment required to be made to the Project
Lenders under the Cyprus Magadan Guaranty or the Cyprus Support
Agreement, unless such payment has already been made by Cyprus under
the Cyprus Amax Guaranty; and (iv) shall indemnify and hold harmless
Amax Gold from and against all Losses arising out of Cyprus' failure
to comply with this Section 9.03.
9.04 Additional Obligations Following Demand By The
----------------------------------------------
Project Lenders.
---------------
(a) In the event the Project Lenders make a demand for
payment under the Cyprus Amax Guaranty, then Amax Gold shall use its
Commercially Reasonable Efforts (through Magadan pursuant to its
status as the "Foreign Party" under the Foundation Agreement) to cause
Omolon to agree to repay Cyprus for any amounts so paid by Cyprus
(under an agreement with such terms as are reasonably acceptable to
Cyprus and Omolon and, if amounts remain outstanding under the
Financing Agreements after giving effect to such payment, the Project
Lenders). In the
- 25 -
event Cyprus makes payment under the Cyprus Amax Guaranty, Cyprus
shall be subrogated to the rights of the Project Lenders to the extent
of such payment and to the extent permissible under the Financing
Agreements, and Cyprus shall not, without the prior consent of Amax
Gold (which shall not be unreasonably withheld), declare a default or
exercise remedies under the Financing Agreements based on the events
or circumstances that gave rise to the demand for payment under the
Cyprus Amax Guaranty. The parties acknowledge that in such event the
circumstances surrounding the Project are likely to have changed
materially and agree to negotiate in good faith with each other and
Omolon an amendment to the Financing Agreements to avoid declaration
of a default or the exercise of remedies upon the occurrence of non-
material breaches.
(b) In the event that any default occurs under the
Financing Agreements resulting in a demand for payment under the
Cyprus Amax Guaranty or otherwise, and if such default is a result of
the gross negligence or willful misconduct by Amax Gold in the
performance of its obligations assumed under the Cyprus Support
Agreement and the Reclamation Agreement, then in addition to following
the procedures set forth in Section 9.04(a), Amax Gold shall reimburse
Cyprus for any portion of such payment that Omolon fails to reimburse
Cyprus for on a timely basis.
(c) In the event the Project Lenders have made (or
threatened to make) a demand for payment under the Cyprus Amax
Guaranty, and in the event Amax Gold determines that continuation of
the Project would have a material adverse effect on the business,
condition (financial or otherwise), results of operations, Assets and
Properties, liabilities or prospects of Amax Gold, Amax Gold shall
have the right to offer all of its right, title and interest in the
Surviving Corporation Common Stock to Cyprus and Cyprus shall have 30
days from receipt of notice of such offer to accept or reject such
offer. Any failure of Cyprus to respond within such time period shall
be deemed a rejection of such offer in accordance with
Section 9.04(c)(ii).
(i) If Cyprus accepts Amax Gold's interest in the
Surviving Corporation Common Stock, (A) Amax Gold shall deliver all of
its right, title and interest in such shares to Cyprus; (B) Cyprus
shall use its Commercially Reasonable Efforts to assume, and shall,
whether or not such assumption is permitted by the Project Lenders,
indemnify and hold harmless Amax Gold against any Losses suffered or
incurred by Amax Gold in connection with Amax Gold's obligations under
the Cyprus Support Agreement and the Reclamation Agreement and the
pledge by Amax Gold of the Surviving Corporation Common Stock; and
(C) Amax Gold and Cyprus shall indemnify and hold harmless each other
(the "Indemnified" and "Indemnifying" Party, as the case may be) with
respect to any Losses suffered or incurred by the Indemnified Party as
a result of the actions or omissions of the Indemnifying Party in
connection with the Indemnifying Party's operation of
- 26 -
the Project; provided that Amax Gold shall have no liability hereunder
to Cyprus with respect to any Losses arising out of obligations of
Amax Gold or Cyprus to the Project Lenders pursuant to the Financing
Agreements or this Agreement, except to the extent such liability
arises under Section 9.04(b) and Section 9.04(c)(ii); and provided
further that Cyprus shall have no liability hereunder to Amax Gold
with respect to any Losses arising out of payment or other obligations
of Cyprus or Amax Gold to the Project Lenders pursuant to the
Financing Agreements or this Agreement, except to the extent such
liability arises under Section 9.03, 9.04(c)(i)(B) or 9.04(c)(ii); or
(ii) if Cyprus rejects the Surviving Corporation
Common Stock, then Amax Gold shall retain its obligations under the
Reclamation Agreement but shall be released from (A) any obligation to
Cyprus under Section 9.02, including, without limitation, obligations
to continue to operate the Project, to obtain Project Completion or
otherwise perform under the Cyprus Support Agreement; and (B) any
obligations to reimburse Cyprus under Section 9.04(b) in connection
with any payments made under the Cyprus Amax Guaranty, unless such
obligation under Section 9.04(b) arose prior to Amax Gold's offer of
Surviving Corporation Common Stock to Cyprus under Section 9.04(c).
9.05 Project Liquidity Needs. If at any time Amax
-----------------------
Gold reasonably determines that the estimated liquidity needs of the
Project (including without limitation cost overruns in the
construction and operation of the Project) will exceed cash projected
to be available to the Project, it will promptly give Cyprus notice of
the estimated amount and timing of each such need for liquidity (a
"Liquidity Need"). In the event that Amax
--------------
Gold gives any such notice,
(a) Amax Gold shall use its Commercially Reasonable
Efforts to cause Magadan (in its capacity as "Foreign Party" under the
Foundation Agreement) to negotiate with (x) the Project Lenders or
other financial institutions to obtain additional loans on
commercially reasonable terms to cover such Liquidity Need, or (y) the
Russian Shareholders to obtain cash contributions by the Omolon
shareholders of paid-in capital or Subordinated Shareholder Loans to
cover such Liquidity Need. Amax Gold shall keep Cyprus informed of
the progress of such efforts.
(b) If the efforts of Magadan under clause (a) do not
result in obtaining funding sufficient to fund the Liquidity Need,
Amax Gold will use Commercially Reasonable Efforts to arrange for
funds to be made available to Omolon to cover such Liquidity Need on
terms reasonably acceptable to Amax Gold and Omolon. Amax Gold will
keep Cyprus informed of the progress of such efforts.
- 27 -
(c) If Amax Gold gives notice to Cyprus that it will
not be able to fund all or any portion of such Liquidity Need in a
timely fashion, then Cyprus will have the right, but not the
obligation, to fund such Liquidity Need (or portion thereof) by making
an advance to Omolon.
(i) In the event such advance or advances do not
exceed $5 million in the aggregate, each such advance shall be
repayable in six months and bear a commercially reasonable interest
rate for projects in the Russian Federation, and be unsecured and
subordinated in right of payment and collection to the obligations
owing to the Project Lenders; and
(ii) To the extent that such unsecured advances
exceed or have exceeded $5 million in the aggregate, or have been
outstanding more than six months, then Cyprus shall make or convert
such short term advances to a term loan on commercially reasonable
terms reasonably satisfactory to Cyprus, Omolon and Amax Gold (with
due regard to the amount thereof, the then current projections of
future revenues and operating costs of the Project, the period for the
repayment of the advance, the cost of funds to projects in the Russian
Federation, subordination in right of payment and collection to the
obligations owing to the Project Lenders, and other relevant factors).
Amax Gold will, subject to the requirements of its then existing
financing obligations and applicable law, guaranty to Cyprus the
payment when due of amounts owing in respect of any such advances.
Amax Gold shall be entitled, subject to its fiduciary duties,
contractual obligations and requirements of applicable law relating to
the issuance of stock, to satisfy its obligation to make any payment
under such guaranty either in cash or, with the consent of Cyprus, by
issuing to Cyprus shares of Amax Gold Common Stock valued at the
Average Market Price at the date payment is made under such guaranty.
In the event that Cyprus does not consent to the payment of guaranty
obligations in shares of Amax Gold Common Stock, Cyprus acknowledges
that Amax Gold may fund such guaranty payment through the public or
private sale of equity or debt securities.
9.06 Obligations of Omolon. Nothing in this
---------------------
Article IX shall be construed as limiting in any way the liability of
Omolon to pay and perform its obligations under the Financing
Agreements or the right of Cyprus to be subrogated to the rights of
the Project Lenders against Omolon to the extent of any payment by
Cyprus to the Project Lenders of amounts under the Cyprus Amax
Guaranty.
9.07 Termination of Rights and Obligations Under
-------------------------------------------
Article IX. Anything herein to the contrary notwithstanding, the
----------
rights and obligations of Cyprus and Amax Gold under Article IX shall
terminate automatically upon the termination in full of the Cyprus
Magadan Guaranty in accordance with Section 4.01 thereof, and after
such termination, Amax Gold shall indemnify Cyprus and
- 28 -
hold it harmless from and against any and all Losses that may be
suffered or incurred by Cyprus in relation to the Reclamation
Agreement; provided that the provisions of Sections 9.02(a)(ii),
9.03(ii), (iii) and (iv), 9.04(b), 9.04(c)(i)(C), 9.04(c)(ii), 9.05
and 9.07 shall survive such termination until 60 days following the
expiration of any applicable statute of limitations (including all
periods of extension, whether automatic or permissive).
ARTICLE X
SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS
10.01 Survival of Representations, Warranties,
----------------------------------------
Covenants and Agreements. Notwithstanding any right of Amax Gold
------------------------
(whether or not exercised) to investigate the affairs of Magadan and
Omolon or any right of any party (whether or not exercised) to
investigate the accuracy of the representations and warranties of the
other party contained in this Agreement, Cyprus and Amax Gold have the
right to rely fully upon the representations, warranties, covenants
and agreements of the other contained in this Agreement; provided,
however, that for purposes of Articles X and XI hereof, Amax Gold
shall be deemed to have waived the failure of any representation or
warranty of Cyprus to be true and correct in any material respect to
the extent Amax Gold had Knowledge arising from the AGI Activities of
such failure to be true and correct. The representations, warranties,
covenants and agreements of Cyprus and Amax Gold contained in this
Agreement will survive the Closing (a) until sixty (60) days after the
expiration of all applicable statutes of limitation (including all
periods of extension, whether automatic or permissive) with respect to
the representations and warranties contained in Sections 2.01, 2.02,
2.03, 2.04, 2.05, 2.09, 2.13(a) and (b), 3.01, 3.02, 3.04, 3.05 and
5.04 (relating to tax matters), and the covenants and agreements
contained in Section 14.03, (b) in the case of all other
representations and warranties and any covenant or agreement to be
performed in whole or in part on or prior to the Closing, until six
months following the Closing Date, and (c) with respect to each other
covenant or agreement contained in this Agreement, until sixty (60)
days following the expiration of the applicable statute of limitations
(including all periods of extension whether automatic or permissive)
with respect to any other such covenant or agreement; except that any
representation, warranty, covenant or agreement that would otherwise
terminate in accordance with clause (a), (b) or (c) above will
continue to survive (as to the applicable matter) if a Claim Notice or
Indemnity Notice (as applicable) shall have been timely given under
Article XI on or prior to such termination date, until the related
claim for indemnification has been satisfied or otherwise resolved as
provided in Article XI.
- 29 -
ARTICLE XI
INDEMNIFICATION
11.01 Other Indemnification.
---------------------
(a) Subject to paragraph (c) of this Section and the
other Sections of this Article XI, Cyprus shall indemnify the Amax
Gold Indemnified Parties in respect of, and hold each of them harmless
from and against, any and all Losses suffered, incurred or sustained
by any of them or to which any of them becomes subject, resulting
from, arising out of or relating to any misrepresentation, breach of
warranty or nonfulfillment of or failure to perform any covenant or
agreement on the part of Cyprus (with respect to itself, Cyprus Gold,
Magadan or Omolon) contained in this Agreement.
(b) Subject to paragraph (c) of this Section and the
other Sections of this Article XI, Amax Gold shall indemnify the
Cyprus Indemnified Parties in respect of, and hold each of them
harmless from and against, any and all Losses suffered, incurred or
sustained by any of them or to which any of them becomes subject,
resulting from, arising out of or relating to any misrepresentation,
breach of warranty or nonfulfillment of or failure to perform any
covenant or agreement on the part of Amax Gold (with respect to itself
and Amax Russia) contained in this Agreement.
(c) No amounts of indemnity shall be payable in
respect of a Loss arising under Section 11.01(a) or (b) in respect of
any breach of warranty by Cyprus or Amax Gold, as the case may be,
unless, until and then only to the extent that the Indemnified Party
thereunder has suffered, incurred, sustained or become subject to
Losses referred to in such Section in excess of $1,000,000 in the
aggregate; provided that the foregoing limitation shall not apply to a
misrepresentation or breach of warranty by Cyprus contained in
Sections 2.02, 2.05, 2.09, 2.10 and 2.14(a) and (b) or by Amax Gold
contained in Sections 3.02, 3.03 and 3.05. Notwithstanding that the
Loss is less than $1,000,000 and therefore not subject to
indemnification hereunder, the procedures set forth in this Article XI
shall nonetheless apply, but such procedures may be prosecuted only at
the time that claims for indemnification in the aggregate then exceed
$1,000,000.
11.02 Method of Asserting Claims. All claims for
--------------------------
indemnification by any Indemnified Party under Section 11.01 will be
asserted and resolved as follows:
(a) In the event any claim or demand in respect of
which an Indemnified Party might seek indemnity under Section 11.01 is
asserted against or sought to be collected from such Indemnified Party
by a Person other than Cyprus, Cyprus Gold,
- 30 -
Magadan, Omolon, Amax Gold or any Affiliate of Cyprus or Amax Gold (a
"Third Party Claim"), the Indemnified Party shall deliver
-----------------
a Claim Notice with reasonable promptness to the Indemnifying Party.
If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of
such Third Party Claim, the Indemnifying Party will not be obligated
to indemnify the Indemnified Party with respect to such Third Party
Claim to the extent that the Indemnifying Party's ability to defend
has been irreparably prejudiced by such failure of the Indemnified
Party. The Indemnifying Party will notify the Indemnified Party as
soon as practicable within the Dispute Period whether the Indemnifying
Party desires, at its sole cost and expense, to defend the Indemnified
Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the Indemnifying
Party desires to defend the Indemnified Party with respect to the
Third Party Claim pursuant to this Section 11.02(a), then the
Indemnifying Party will have the right to defend, with counsel
reasonably satisfactory to the Indemnified Party, at the sole cost and
expense of the Indemnifying Party such Third Party Claim by all
appropriate proceedings. Settlement of such Third Party Claim will be
at the discretion of the Indemnifying Party (but only with the consent
of the Indemnified Party in the case of any settlement that provides
for any relief other than the payment of monetary damages or that
provides for the payment of monetary damages as to which the
Indemnified Party will not be indemnified in full by reason of
Section 11.01(c)). If requested by the Indemnifying Party, the
Indemnified Party will, at the sole cost and expense of the
Indemnifying Party, provide reasonable cooperation to the Indemnifying
Party in contesting any Third Party Claim that the Indemnifying Party
elects to contest. The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this clause (i), and except as
provided in the preceding sentence, the Indemnified Party will bear
its own costs and expenses with respect to such participation.
(ii) If the Indemnifying Party fails to notify
the Indemnified Party within the Dispute Period that the Indemnifying
Party desires to defend the Third Party Claim pursuant to Section
11.02(a), then the Indemnified Party will have the right to defend, at
the sole cost and expense of the Indemnifying Party, the Third Party
Claim by all appropriate proceedings. The Indemnifying Party may
participate in, but not control, any defense or settlement controlled
by the Indemnified Party pursuant to this clause (ii), and the
Indemnifying Party will bear its own costs and expenses with respect
to such participation. If the Indemnifying Party has notified the
Indemnified Party within the Dispute Period that the Indemnifying
Party disputes its liability hereunder to the Indemnified Party
- 31 -
with respect to such Third Party Claim and if such dispute is resolved
in favor of the Indemnifying Party, the Indemnifying Party will not be
required to bear the costs and expenses of the Indemnified Party's
defense pursuant to this clause (ii) or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and the
Indemnified Party will reimburse the Indemnifying Party in full for
all reasonable costs and expenses incurred by the Indemnifying Party
in connection with such dispute.
(b) In the event any Indemnified Party should have a
claim under Section 11.01 against any Indemnifying Party that does not
involve a Third Party Claim, the Indemnified Party shall deliver an
Indemnity Notice with reasonable promptness to the Indemnifying Party.
The failure by any Indemnified Party to give the Indemnity Notice
shall not impair such party's rights hereunder except to the extent
that an Indemnifying Party demonstrates that it has been irreparably
prejudiced thereby. If the Indemnifying Party has within the Dispute
Period notified the Indemnified Party that the Indemnifying Party
disputes its liability with respect to such claim, the chief executive
officers of Amax Gold and Cyprus (or other executive officers
appointed by them) shall meet for the purpose of proceeding in good
faith to negotiate a resolution of such dispute, and if not resolved
through negotiations within 60 days following receipt by Indemnified
Party of such notice, such dispute shall be resolved by arbitration in
accordance with paragraph (c) of this Section 11.02.
(c) Any dispute submitted to arbitration pursuant to
this Article XI shall be determined in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in
effect, by a panel of three (3) arbitrators selected in accordance
with said Commercial Arbitration Rules (the "Board of Arbitration").
In the event of conflict between the provisions of this Agreement and
the provisions of said Commercial Arbitration Rules, the provisions of
this Agreement shall prevail. Any questions of whether a dispute
should be arbitrated under this Article XI shall be decided by the
Board of Arbitration. The Board of Arbitration shall meet in Denver,
Colorado or such other place as a majority of the members of the Board
of Arbitration determines more appropriate, and shall reach and render
a decision in writing (concurred in by a majority of the members of
the Board of Arbitration) with respect to the amount, if any, which
the Indemnifying Party is required to pay to the Indemnified Party in
respect of a claim filed by the Indemnified Party. To the extent
practical, decisions of the Board of Arbitration shall be rendered no
more than thirty (30) days following commencement of proceedings with
respect thereto. Each party may pursue any method of discovery
permitted by the Federal Rules of Civil Procedure, notwithstanding
Rule 81(a)(3) thereof. The Board of Arbitration may issue a
protective order to reasonably protect a participant's competitive and
- 32 -
confidential information. The Board of Arbitration shall be bound to
enforce any applicable statute of limitations. Any decision made by
the Board of Arbitration shall be final and binding on the parties and
may be entered in any court of competent jurisdiction. If the parties
settle the dispute in the course of the arbitration, such settlement
shall be approved by the Board of Arbitration on request of either
party and become the award. Each party to any arbitration shall bear
its own expense in relation thereto, including but not limited to such
party's attorneys' fees, if any; provided, however, that the expenses
and fees of the members of the Board of Arbitration and any other
expenses of the Board of Arbitration not capable of being attributed
to any one member shall be borne in equal parts by the Indemnifying
Party and the Indemnified Party.
ARTICLE XII
TERMINATION
12.01 Termination. This Agreement may be terminated,
-----------
and the transactions contemplated hereby may be abandoned:
(a) at any time before the Effective Time, before or
after approval of the stockholders of Amax Gold, by mutual written
agreement of Cyprus and Amax Gold;
(b) at any time before the Effective Time, by Cyprus
or Amax Gold, upon notification of the non-terminating parties by the
terminating party that the satisfaction of any condition to the
terminating party's obligations under this Agreement becomes
impossible or impracticable with the use of Commercially Reasonable
Efforts, provided the failure of such condition to be satisfied is not
caused by a breach of this Agreement by the terminating party;
(c) At any time before the Effective Time (i) by
Cyprus if Amax Gold or Amax Russia shall have failed to comply in any
material respect with any of their respective covenants or agreements
contained herein, unless the breaching party cures such breach on or
before 15 days, or within such longer time as the parties reasonably
may agree, after Cyprus notifies the breaching party of such breach;
or (ii) by Amax Gold if Cyprus, Cyprus Gold or Magadan shall have
failed to comply in any material respect with any of their respective
covenants or agreements contained herein, unless the breaching party
cures such breach on or before 15 days, or within such longer time as
the parties reasonably may agree, after Amax Gold notifies the
breaching party of such breach; or
(d) at any time after September 30, 1996 by Cyprus or
Amax Gold upon notification of the non-terminating parties by the
terminating party if the Closing shall not have
- 33 -
occurred on or before such date and such failure to consummate is not
caused by a breach of this Agreement by the terminating party.
12.02 Effect of Termination. If this Agreement is
---------------------
validly terminated pursuant to Section 12.01, this Agreement will
forthwith become null and void, and there will be no liability or
obligation on the part of Cyprus or Amax Gold (or any of their
respective officers, directors, employees, agents or other
representatives or Affiliates), except as provided in the next
succeeding sentence and except that the provisions with respect to
expenses in Section 14.03 and confidentiality in Section 14.05 will
continue to apply following any such termination. Notwithstanding any
other provision in this Agreement to the contrary, upon termination of
this Agreement pursuant to Section 12.01(b), (c) or (d), Cyprus will
remain liable to Amax Gold for any willful breach of this Agreement by
Cyprus existing at the time of such termination, and Amax Gold will
remain liable to Cyprus for any willful breach of this Agreement by
Amax Gold existing at the time of such termination, and Cyprus or Amax
Gold may seek such remedies, including damages and fees of attorneys,
against the other with respect to any such breach as are provided in
this Agreement or as are otherwise available at Law or in equity.
ARTICLE XIII
DEFINITIONS
13.01 Definitions. (a) Defined Terms. As used in this
----------- -------------
Agreement, the following defined terms have the meanings indicated
below:
"Acquisition" means, with respect to any Additional
-----------
Deposit, the acquisition of the right to develop that deposit in
accordance with the Law "On the Subsoil" of the Russian Federation
(No. 2395-1 of February 21, 1992 as amended on March 3, 1995) or any
successor Law (and the terms "Acquire" and
-------
"Acquired" shall be construed accordingly).
--------
"Additional Deposit" means any mineral deposit located
------------------
in the territory of the Russian Federation that is Acquired by Amax
Gold (or any Person in which Amax Gold directly or indirectly holds an
Ownership Interest) other than (i) deposits any portion of which are
located within the boundaries described in the Omolon License (as from
time to time in effect) and (ii) deposits acquired pursuant to the
Exploration Joint Venture Agreement, between Amax Gold and Cyprus,
effective January 1, 1994, as amended.
"Affiliate" means any Person (but with respect to
---------
Cyprus and Cyprus Gold, excluding Amax Gold and any subsidiary of
- 34 -
Amax Gold; and with respect to Amax Gold and Amax Russia, excluding
Cyprus and any subsidiary of Cyprus which is not Amax Gold or a
subsidiary of Amax Gold) that directly, or indirectly through one of
more intermediaries, controls or is controlled by or is under common
control with the Person specified. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or
cause the direction of the management and policies of such Person
whether by Contract or otherwise and, in any event and without
limitation of the previous sentence, any Person owning ten percent
(10%) or more of the voting securities of another Person shall be
deemed to control that Person.
"AGI Activities" means all work performed by Amax Gold
--------------
commencing on February 1, 1995 pursuant to the Services Agreement and
with respect to the Project, as follows: (i) Amax Gold's assumption at
the request of Cyprus of primary management and direction of the
Project, including without limitation all day-to-day accounting,
personnel, engineering, construction, procurement, logistics, mining
and metallurgical functions; and (ii) Amax Gold's assumption of joint
responsibility with Cyprus for certain functions, including certain
accounting and tax matters, governmental and shareholder relations and
exploration; provided, however, that Cyprus retained primary
responsibility for all matters relating to financing and insurance and
all legal matters.
"Agreement" means this Agreement and Plan of
---------
Reorganization and the Exhibits, the Disclosure Schedule and the
certificates delivered in accordance with Sections 7.03 and 8.03, as
the same shall be amended from time to time.
"Amax Gold Common Stock" has the meaning ascribed to it
----------------------
in Section 1.08(a).
"Amax Gold Indemnified Parties" means Amax Gold and its
-----------------------------
officers, directors, employees, agents and Affiliates.
"Amax Russia Common Stock" has the meaning ascribed to
------------------------
it in Section 1.03(a).
"Assets and Properties" of any Person means all assets
---------------------
and properties of every kind, nature, character and description
(whether real, personal or mixed, whether tangible or intangible,
whether absolute, accrued, contingent, fixed or otherwise and wherever
situated), including the goodwill related thereto, operated, owned or
leased by such Person, including without limitation cash, cash
equivalents, investment assets, accounts and notes receivable, chattel
paper, documents, instruments, general intangibles, real estate,
equipment, inventory, goods and intellectual property.
- 35 -
"Average Market Price" means, on any date, the average
--------------------
of the daily closing sales prices of Amax Gold Common Stock as
reported on the Composite Transactions Tape of the NYSE reporting
system for the ten consecutive full trading days in which such shares
are traded on the NYSE ending two trading days prior to such date,
subject to appropriate adjustment if any event described in
Section 1.11 occurs, or any ex-dividend date with respect to any such
event occurs, between the beginning of such ten trading day period and
the date Contingent Payment Shares are delivered in connection with
such calculation of the Average Market Price.
"Average Metal Price" means, (i) with respect to gold
-------------------
as of any date, the one-year average London P.M. fixing ending on the
day immediately prior to such date, (ii) with respect to silver as of
any date, the one-year average Handy & Xxxxxx daily quote ending on
the day immediately prior to such date, (iii) with respect to copper
as of any date, the one-year average London Metals Exchange Grade "A"
Settlement quotation as published in Metals Week ending on the day
immediately prior to such date, and (iv) with respect to any other
metal as of any date, the one-year average of the daily closing sales
price of such metal ending on the day immediately prior to such date
published by a mutually agreed upon representative source establishing
the market price for such metals.
"Board of Arbitration" has the meaning ascribed to it
--------------------
in Section 11.02(c).
"Books and Records" means all files, documents,
-----------------
instruments, papers, books and records relating to the Business or
Condition of Magadan and Omolon, including without limitation
financial statements, Tax returns and related work papers and letters
from accountants, budgets, pricing guidelines, ledgers, journals,
deeds, title policies, minute books, stock certificates and books,
stock transfer ledgers, Contracts, Licenses, customer lists, computer
files and programs, retrieval programs, operating data and plans and
environmental studies and plans.
"Business or Condition of Magadan and Omolon" means the
-------------------------------------------
business, condition (financial or otherwise), results of operations,
Assets and Properties, liabilities or prospects of Magadan and Omolon,
taken as a whole.
"Certificate of Merger" has the meaning ascribed to it
---------------------
in Section 1.02.
"Claim Notice" means written notification of a Third
------------
Party Claim as to which indemnity under Section 11.02 is sought by an
Indemnified Party, enclosing a copy of all papers served, if any, and
specifying the nature of and basis for such Third Party Claim and for
the Indemnified Party's claim against the Indemnifying Party under
Section 11.02, together with the amount
- 36 -
or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of such Third Party Claim.
"Closing" has the meaning ascribed to it in
-------
Section 1.04.
"Closing Date" has the meaning ascribed to it in
------------
Section 1.04.
"Closing Shares" has the meaning ascribed to it in
--------------
Section 1.08(a).
"Commercially Reasonable Efforts" shall mean commercial
-------------------------------
actions by Amax Gold or Cyprus, as the case may be, that are
reasonable in light of the size of the Project and its financial
requirements, and in any event shall not require Amax Gold or Cyprus
to take any action that would have a material adverse effect on Amax
Gold's or Cyprus' other projects or financing arrangements. Any
obligation of a party to use Commercially Reasonable Efforts to cause
another Person to take action shall be subject to such party's
fiduciary duties, contractual obligations and requirements of
applicable law.
"Constituent Corporation" has the meaning ascribed to
-----------------------
it in Section 1.01.
"Contingent Payment Event" means, with respect to any
------------------------
Additional Deposit, the later of the date on which Amax Gold (or any
Person in which Amax Gold holds directly or indirectly an Ownership
Interest) shall have Acquired such Additional Deposit and the date on
which the existence and number of Reserve Ounces has been established
with respect to such Additional Deposit.
"Contingent Payment Shares" has the meaning ascribed to
-------------------------
it in Section 1.09.
"Contract" means any agreement, charter, lease,
--------
license, evidence of Indebtedness, mortgage, indenture, permit,
security agreement or other contract (whether written or oral) in
relation to any Person or Governmental Authority.
"Cyprus" has the meaning ascribed to it in the forepart
------
of this Agreement.
"Cyprus Amax Guaranty" means the guaranties, dated as
--------------------
of June 30, 1995, by Cyprus in favor of each of the Project Lenders.
"Cyprus Gold" has the meaning ascribed to it in the
-----------
forepart of this Agreement.
"Cyprus Indemnified Parties" means Cyprus and its
--------------------------
officers, directors, employees, agents and Affiliates.
- 37 -
"Cyprus Magadan Guaranty" means the guaranties, dated
-----------------------
as of June 30, 1995, by Magadan in favor of each of the Project
Lenders.
"Cyprus Support Agreement" means the agreement, dated
------------------------
as of August 30, 0000, xxxxx Xxxxxx, Xxxxxx, Magadan and the Project
Lenders.
"Development Plan" means the development plan for the
----------------
Project approved by the Project Lenders, as such development plan may
be amended from time to time.
"DGCL" has the meaning ascribed to it in Section 1.01.
----
"Disclosure Schedule" means the record delivered to
-------------------
Amax Gold by Cyprus herewith and dated as of the date hereof,
containing all lists, descriptions, exceptions and other information
and materials as are required to be included therein by Cyprus
pursuant to this Agreement.
"Dispute Period" means the period ending thirty (30)
--------------
days following receipt by an Indemnifying Party of either a Claim
Notice or an Indemnity Notice.
"EBRD" means the European Bank for Reconstruction and
----
Development.
"EBRD Loan Agreement" means the Loan Agreement dated as
-------------------
of June 30, 1995 between Omolon and EBRD, as amended from time to
time.
"Effective Time" has the meaning ascribed to it in
--------------
Section 1.02.
"Environmental Law" means any Law or Order relating to
-----------------
the regulation or protection of human health, safety or the
environment or to releases or threatened releases of pollutants or
hazardous materials or wastes into the environment.
"Financing Agreements" means those agreements set
--------------------
forth on Section 2.14 of the Disclosure Schedule under the
---------------------------------------
heading "Financing Agreements".
"Foundation Agreement" means the agreement, dated
--------------------
February 26, 1993, between Cyprus and the Russian Shareholders, as
amended.
"GAAP" means generally accepted accounting principles,
----
consistently applied throughout the specified period and in the
immediately prior comparable period.
"Governmental or Regulatory Authority" means any court,
------------------------------------
tribunal, arbitrator, authority, agency, commission, official or
- 38 -
other instrumentality of the United States, the Russian Federation,
any other foreign country or any domestic or foreign state, region,
county, city or other political subdivision.
"Indebtedness" of any Person means all obligations of
------------
such Person (i) for borrowed money, (ii) evidenced by notes, bonds,
debentures or similar instruments, (iii) for the deferred purchase
price of goods or services (other than trade payables or accruals
incurred in the ordinary course of business), (iv) under capital
leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
"Indemnified and Indemnifying Party" means any Person
----------------------------------
claiming or providing indemnification under any provision of Article
IX or XI.
"Indemnity Notice" means written notification pursuant
----------------
to Section 11.02(b) of a claim for indemnity under Article XI by an
Indemnified Party, specifying the nature of and basis for such claim,
together with the amount or, if not then reasonably ascertainable, the
estimated amount, determined in good faith, of such claim.
"Knowledge of" or "Known to" any party hereto, or any
------------ --------
party's "Knowledge" means the knowledge of any officer, director
---------
or management-level employee of such party or its Transaction
Subsidiaries and any other employee of such party listed on Section
13.01 of the Disclosure Schedule.
----------------------------------------
"Law" means all laws, statutes, decrees, rules,
---
regulations, ordinances and other pronouncements having the effect of
law of the United States, the Russian Federation, any other foreign
country or any domestic or foreign state, region, county, city or
other political subdivision or of any Governmental or Regulatory
Authority.
"Liabilities" means all Indebtedness, obligations and
-----------
other liabilities of a Person (whether absolute, accrued, contingent,
fixed or otherwise, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of
--------
authority, authorizations, approvals, registrations, franchises and
similar consents granted or issued by any Governmental or Regulatory
Authority.
"Liens" means any mortgage, pledge, assessment,
-----
security interest, lease, lien, adverse claim, levy, charge or other
encumbrance of any kind, or any conditional sale Contract, title
retention Contract or other Contract to give any of the foregoing.
- 39 -
"Liquidity Need" has the meaning ascribed to it in
--------------
Section 9.05.
"Loss" means any and all damages, fines, fees,
----
penalties, deficiencies, Liabilities, losses and expenses (including
without limitation interest, court costs, fees of attorneys,
accountants and other experts or other expenses of litigation or
arbitration or other proceedings or of any claim, default or
assessment).
"Magadan" has the meaning ascribed to it in the
-------
forepart of this Agreement.
"Magadan Common Stock" has the meaning ascribed to it
--------------------
in Section 1.03(b).
"Magadan Financial Statements" has the meaning ascribed
----------------------------
to such term in Section 2.06.
"Material Adverse Effect" means a material adverse
-----------------------
effect on: (a) the Project, taken as a whole, including, without
limitation, the effect on the costs of construction and operation of
the Project in accordance with the Development Plan, or the
anticipated cash flows or profits of the Project or (b) the Business
or Condition of Magadan and Omolon.
"Merger" has the meaning ascribed to it in the forepart
------
of this Agreement.
"Merger Consideration" shall have the meaning ascribed
--------------------
to it in Section 1.03.
"Net Intercompany Debt" shall have the meaning ascribed
----------------------
to it in Section 5.05.
"NYSE" means the New York Stock Exchange.
----
"Omolon" has the meaning ascribed to it in the forepart
------
of this Agreement.
"Omolon Financial Statements" has the meaning ascribed
---------------------------
to such term in Section 2.13(c).
"Omolon License" means the license for the right to use
--------------
the subsurface, series MAG, no. 10141, type B3, issued to Omolon by
the Committee of the Russian Federation for Geology and Use of the
Subsurface and the Magadan Regional Soviet of People's Deputies,
including all annexes thereto, and the license agreement between the
Magadan Oblast Duma and the Committee of the Russian Federation for
Geology and Use of the Subsurface and Omolon which is attached as
Annex 1 to such license, each as amended and in effect on the date
hereof.
- 40 -
"Omolon Shares" has the meaning ascribed to it in the
-------------
forepart of this Agreement.
"OPIC" means the Overseas Private Investment
----
Corporation, an agency of the United States of America.
"OPIC Insurance Contracts" shall have the meaning
------------------------
ascribed to it in Section 5.03.
"OPIC Finance Agreement" means the agreement, dated as
----------------------
of June 30, 1995, between Omolon and OPIC.
"Option" with respect to any Person means any security,
------
right, subscription, warrant, option, "phantom" stock right or other
Contract that gives the right to (i) purchase or otherwise receive or
be issued any shares of capital stock of such Person or any security
of any kind convertible into or exchangeable or exercisable for any
shares of capital stock of such Person or (ii) receive or exercise any
benefits or rights similar to any rights enjoyed by or accruing to the
holder of shares of capital stock of such Person, including any rights
to participate in the equity or income of such Person or to
participate in or direct the election of any directors or officers of
such Person or the manner in which any shares of capital stock of such
Person are voted.
"Order" means any writ, judgment, decree, injunction or
-----
similar order of any Governmental or Regulatory Authority (in each
such case whether preliminary or final).
"Ownership Interest" means shares of common stock or
------------------
any other form of ownership interest in any Person which entitles the
holder thereof directly or indirectly to participate in the profits of
such Person.
"Payment Demand" has the meaning ascribed to it in the
--------------
Cyprus Amax Guaranty as in effect on the date hereof.
"Person" means any natural person, corporation, general
------
partnership, limited partnership, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory
Authority.
"Production Shares" has the meaning ascribed to it in
-----------------
Section 1.08(a).
"Project" means the commercial development of the
-------
Kubaka gold and silver deposit located in the Magadan Region of the
Russian Federation, as further described in the Development Plan.
- 41 -
"Project Agreements" means those agreements set forth
------------------
on Section 2.14 of the Disclosure Schedule under the heading
---------------------------------------
"Project Agreements".
"Project Completion" has the meaning given to it in
------------------
Schedule Q to the EBRD Loan Agreement and the OPIC Finance Agreement,
each as in effect on the date hereof.
"Project Production Date" means the date upon which the
-----------------------
Project ceases (in the ordinary course and consistent with past
practice) to capitalize start-up costs and begins to expense operating
costs in accordance with GAAP in the United States and as determined
by Amax Gold in good faith.
"Project Lenders" means EBRD and OPIC, and may include
---------------
either or both.
"Reclamation Agreement" means the agreement, dated as
---------------------
of Xxxxxx 00, 0000, xxxxx Xxxxxx, Xxxxxx and Magadan and the Russian
Shareholders.
"Replenishment Fees" means fees for the reproduction of
------------------
the mineral base payable pursuant to Article 44 of the Law on the
Subsoil of the Russian Federation (No. 2395-1 of February 21, 1992 as
amended on March 31, 1995) and implementing regulations promulgated
thereunder (or substantially similar fees payable pursuant to any
successor Law).
"Representatives" has the meaning ascribed to it in
---------------
Section 4.02.
"Reserve Ounces" means, with respect to any Additional
--------------
Deposit, (a) the number of contained ounces of gold constituting
proven and probable reserves in any Additional Deposit, determined by
Amax Gold in accordance with the definitions of ore reserves set forth
in the Securities Act Industry Guide 7 promulgated by the SEC from
time to time, based on a feasibility study which is prepared in
accordance with industry standards by or under the supervision of Amax
Gold, and (b) the number of gold equivalent ounces for any other metal
that is the primary metal to be developed from such deposit, and
(c) the number of gold equivalent ounces for any other metal that can
be developed on a commercially reasonable basis in conjunction with,
and without materially impairing the profitable production of, the
primary metal to be developed from such deposit. Any number of
equivalent ounces shall be calculated by multiplying the number of
units of such metal (whether ounces, pounds, or some other measure)
which are so determined to be proven and probable, times the Average
Metal Price of such metal, and divided by the Average Metal Price for
gold.
"Reserve Value" shall have the meaning ascribed to it
-------------
in Section 1.09.
- 42 -
"Russian Government Authority" or "Russian Government"
---------------------------- ------------------
means any Governmental or Regulatory Authority of or in the Russian
Federation, or the Russian Federation or any political subdivision
thereof.
"Russian Government Authorizations" means the Omolon
---------------------------------
License and all other Licenses and other actions of any Russian
Government Authority relating to the Project or any of the Financing
Agreements or Project Agreements.
"Russian Shareholders" means the shareholders of Omolon
--------------------
(other than Magadan) listed in the Fourth Amendment to the Omolon
Charter and the Foundation Agreement.
"SEC" means the Securities and Exchange Commission.
---
"Security Documents" means those documents listed as
------------------
Financing Agreements on Section 2.14 of the Disclosure Schedule
---------------------------------------
under the sub-heading "Security Documents".
"Services Agreement" means the agreement dated
------------------
January 1, 1994 between Cyprus and Amax Gold relating to certain
services to be provided by the parties to each other from time to time
as they may agree.
"Subordinated Shareholder Loans" has the meaning
------------------------------
ascribed to it in the EBRD Loan Agreement as in effect on the date
hereof.
"Subsidiary" means, with respect to any party, any
----------
corporation or other organization, whether incorporated or
unincorporated, of which at least fifty percent (50%) of either the
equity interests in, or the voting control of, such corporation or
other organization is, directly or indirectly through Subsidiaries or
otherwise, beneficially owned by such party.
"Surviving Corporation" has the meaning ascribed to it
---------------------
in Section 1.01.
"Surviving Corporation Common Stock" has the meaning
----------------------------------
ascribed to it in Section 1.03(a).
"Tax" means any income, gross receipts, property,
---
sales, use, capital gain, transfer, excise, license, production,
franchise, employment, social security, occupation, payroll,
registration, governmental pension or insurance, withholding, royalty,
severance, stamp or documentary, value added, or other tax, charge,
assessment, duty, levy, compulsory loan, or other direct or indirect
impost of any nature whatsoever (including any interest, additions to
tax, or civil or criminal penalties thereon) of the United States or
any jurisdiction therein, or of any other nation or any jurisdiction
therein.
- 43 -
"Third Party Claim" has the meaning ascribed to it in
-----------------
Section 11.02(a).
"Transaction Subsidiaries" with respect to (a) Cyprus,
------------------------
means Cyprus Gold, Magadan and Omolon and (b) Amax Gold, means Amax
Russia and, with respect to and to the extent of its performance of
the AGI Activities, Omolon.
(b) Construction of Certain Terms and Phrases.
-----------------------------------------
Unless the context of this Agreement otherwise requires, (i) words of
any gender include each other gender; (ii) words using the singular or
plural number also include the plural or singular number, respec-
tively; (iii) the terms "hereof," "herein," "hereby" and derivative or
similar words refer to this entire Agreement; (iv) the terms "Article"
or "Section" refer to the specified Article or Section of this
Agreement; (v) the phrases "ordinary course of business" and "ordinary
course of business consistent with past practice" refer to the
business and practice of Magadan or Omolon; and (vi) unless otherwise
indicated herein, any reference to an agreement shall refer to that
agreement as the same may have been amended or modified and as it is
then in effect. Whenever this Agreement refers to a number of days,
such number shall refer to calendar days unless NYSE trading days are
specified. All accounting terms used herein and not expressly defined
herein shall have the meanings given to them under GAAP.
ARTICLE XIV
MISCELLANEOUS
14.01 Notices. All notices, requests and other
-------
communications hereunder must be in writing and will be deemed to have
been duly given only if delivered personally or by facsimile
transmission or mailed (first class postage prepaid) to the parties at
the following addresses or facsimile numbers:
If to Amax Gold or Amax Russia, to:
Amax Gold Inc.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: President
with a copy to:
Amax Gold Inc.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: General Counsel
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If to Cyprus or Magadan, to:
Cyprus Amax Minerals Company
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: General Counsel
with a copy to:
Cyprus Amax Minerals Company
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Director of Finance
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section, be
deemed given upon delivery, (ii) if delivered by facsimile
transmission to the facsimile number as provided in this Section, be
deemed given upon receipt, and (iii) if delivered by mail in the
manner described above to the address as provided in this Section, be
deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other Person
to whom a copy of such notice, request or other communication is to be
delivered pursuant to this Section). Any party from time to time may
change its address, facsimile number or other information for the
purpose of notices to that party by giving notice specifying such
change to the other party hereto.
14.02 Entire Agreement. This Agreement supersedes all
----------------
prior discussions and agreements between the parties with respect to
the subject matter hereof between the parties, and contains the sole
and entire agreement between the parties hereto with respect to the
subject matter hereof.
14.03 Expenses. Except as otherwise expressly pro-
----------------
vided in this Agreement (including without limitation as provided in
Section 12.02), whether or not the transactions contemplated hereby
are consummated, each party will pay its own costs and expenses, and
Cyprus shall pay the costs and expenses of Magadan and Omolon and Amax
Gold shall pay the costs and expenses of Amax Russia, incurred in
connection with the negotiation, execution and closing of this
Agreement and the transactions contemplated hereby.
14.04 Public Announcements. At all times at or before
--------------------
the Closing, Cyprus, Cyprus Gold, Magadan, Amax Gold and Amax Russia
will not issue or make any reports, statements or releases to the
public with respect to this Agreement, the Closing or the transactions
contemplated hereby without the consent of the other, which consent
shall not be withheld unreasonably. If
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either party is unable to obtain the approval of its public report,
statement or release from the other party and such report, statement
or release is, in the opinion of legal counsel to such party, required
by Law in order to discharge such party's disclosure obligations, then
such party may make or issue the legally required report, statement or
release and promptly furnish the other party with a copy thereof.
14.05 Confidentiality. Each party hereto will hold,
---------------
and will use its Commercially Reasonable Efforts to cause its
Affiliates and their respective Representatives to hold, in strict
confidence from any Person (other than any such Affiliate or
Representative), unless (i) compelled to disclose by judicial or
administrative process (including without limitation in connection
with obtaining the necessary approvals of this Agreement and the
transactions contemplated hereby of Governmental or Regulatory
Authorities) or by other requirements of Law or (ii) disclosed in an
Action or Proceeding brought by a party hereto in pursuit of its
rights or in the exercise of its remedies hereunder, all documents and
information concerning the other party or any of its Affiliates
furnished to it by the other party or such other party's
Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or
information can be shown to have been (a) previously known by the
party receiving such documents or information, (b) in the public
domain (either prior to or after the furnishing of such documents or
information hereunder) through no fault of such receiving party or (c)
later acquired by the receiving party from another source if the
receiving party is not aware that such source is under an obligation
to another party hereto to keep such documents and information
confidential; provided that following the Closing the
--------
foregoing restrictions will not apply to Amax Gold's use of documents
and information concerning Magadan and Omolon furnished by Cyprus
hereunder.
14.06 Further Assurances; Post-Closing Cooperation.
--------------------------------------------
(a) At any time or from time to time after the Closing, Cyprus and
Magadan shall execute and deliver to Amax Gold such other documents
and instruments, provide such materials and information and take such
other actions as Amax Gold reasonably may request more effectively to
vest title to the Magadan Common Stock in Amax Gold and, to the full
extent permitted by Law, to put Amax Gold in actual possession and
operating control of Magadan and Omolon and their Assets and
Properties and Books and Records, and otherwise to cause Cyprus and
Magadan to fulfill their obligations under this Agreement.
(b) Following the Closing, each party will afford the
other party, its counsel and its accountants, during normal business
hours, reasonable access to the books, records and other data relating
to the Business or Condition of Magadan and Omolon in its possession
with respect to periods prior to the
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Closing and the right to make copies and extracts therefrom, to the
extent that such access may be reasonably required by the requesting
party in connection with (i) the preparation of Tax returns, (ii) the
determination or enforcement of rights and obligations under this
Agreement, (iii) compliance with the requirements of any Governmental
or Regulatory Authority, (iv) the monitoring of the progress toward
Project Completion and compliance with the Development Plan, (v) the
determination or enforcement of the rights and obligations of any
Indemnified Party or (vi) in connection with any actual or threatened
Action or Proceeding. Further, each party agrees for a period
extending six (6) years after the Closing Date not to destroy or
otherwise dispose of any such books, records and other data unless
such party shall first offer in writing to surrender such books,
records and other data to the other party and such other party shall
not agree in writing to take possession thereof during the ten (10)
day period after such offer is made.
(c) If, in order properly to prepare its Tax returns,
other documents or reports required to be filed with Governmental or
Regulatory Authorities or its financial statements or to fulfill its
obligations hereunder, it is necessary that a party be furnished with
additional information, documents or records relating to the Business
or Condition of Magadan and Omolon not referred to in paragraph (b)
above, and such information, documents or records are in the
possession or control of the other party, such other party shall use
its Commercially Reasonable Efforts to furnish or make available such
information, documents or records (or copies thereof) at the
recipient's request, cost and expense. Any information obtained by any
party hereto in accordance with this paragraph shall be held
confidential by such party in accordance with Section 14.05.
(d) Notwithstanding anything to the contrary contained
in this Section, if the parties are in an adversarial relationship in
litigation or arbitration, the furnishing of information, documents or
records in accordance with any provision of this Section solely with
respect to the subject matter of such litigation or arbitration shall
be subject to applicable rules relating to discovery.
(e) From time to time following the Closing Date, at
Amax Gold's request, Cyprus shall, pursuant to the Services Agreement,
provide certain transition services to Amax Gold, Magadan and Omolon,
including without limitation loan administration services and treasury
services. Amax Gold shall be obligated to reimburse Cyprus for the
costs of such services in accordance with the Services Agreement.
(f) From time to time following the date of this
Agreement, Cyprus shall assist Amax Gold in soliciting and securing
the employment services of certain Cyprus employees identified to
Cyprus by Amax Gold prior to the date of this
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Agreement (and thereafter to the extent consented to by Cyprus, which
consent shall not be withheld unreasonably).
14.07 Waiver. Any term or condition of this Agreement
------
may be waived at any time by the party that is entitled to the benefit
thereof, but no such waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the party waiving
such term or condition. No waiver by any party of any term or
condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by Law or otherwise afforded, will be
cumulative and not alternative.
14.08 Amendment. This Agreement may be amended,
---------
supplemented or modified only by a written instrument duly executed by
or on behalf of each party hereto.
14.09 No Third Party Beneficiary. The terms and pro-
--------------------------
visions of this Agreement are intended solely for the benefit of each
party hereto and their respective successors or permitted assigns, and
it is not the intention of the parties to confer third-party
beneficiary rights upon any other Person other than any Person
entitled to indemnity under Article XI.
14.10 No Assignment; Binding Effect. Neither this
-----------------------------
Agreement nor any right, interest or obligation hereunder may be
assigned by any party hereto without the prior written consent of the
other party hereto and any attempt to do so will be void, except (a)
for assignments and transfers by operation of Law and (b) that Amax
Gold may assign any or all of its rights, interests and obligations
hereunder (including without limitation its rights under Article XI)
to a wholly-owned subsidiary, provided that any such subsidiary agrees
in writing to be bound by all of the terms, conditions and provisions
contained herein, but no such assignment shall relieve Amax Gold of
its obligations hereunder. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable
by the parties hereto and their respective successors and assigns.
14.11 Headings. The headings used in this Agreement
--------
have been inserted for convenience of reference only and do not define
or limit the provisions hereof.
14.12 Invalid Provisions. If any provision of this
------------------
Agreement is held to be illegal, invalid or unenforceable under any
present or future Law, and if the rights or obligations of any party
hereto under this Agreement will not be materially and adversely
affected thereby, (a) such provision will be fully severable, (b) this
Agreement will be construed and enforced as if such illegal, invalid
or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this
- 48 -
Agreement will remain in full force and effect and will not be
affected by the illegal, invalid or unenforceable provision or by its
severance herefrom and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part
of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be
possible.
14.13 Governing Law. This Agreement shall be governed
-------------
by and construed in accordance with the Laws of the State of Delaware
applicable to a Contract executed and performed in such State, without
giving effect to the conflicts of laws principles thereof.
14.14 Counterparts. This Agreement may be executed in
------------
any number of counterparts, each of which will be deemed an original,
but all of which together will constitute one and the same instrument.
14.15 Specific Enforcement. The parties agree that
--------------------
irreparable damage would occur in the event that any of the covenants
and agreements contained in this 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 breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of Colorado or the
State of Delaware or in Delaware state court; this relief shall be in
addition to any other remedy to which they are entitled at law or in
equity.
- 49 -
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by the duly authorized officer of each party hereto as
of the date first above written.
AMAX GOLD INC.
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President and Chief Operating
Officer
AMAX RUSSIA CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President
CYPRUS AMAX MINERALS COMPANY
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President and
Chief Financial Officer
CYPRUS GOLD COMPANY
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
CYPRUS MAGADAN GOLD CORPORATION
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
- 50 -
