Exhibit 2
INMET MINING CORPORATION
- AND -
LEUCADIA NATIONAL CORPORATION
- AND -
MK RESOURCES COMPANY
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SHARE PURCHASE AGREEMENT
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May 2, 2005
TABLE OF CONTENTS
ARTICLE 1 - INTERPRETATION......................................................2
1.1 Definitions...........................................................2
1.2 Headings.............................................................13
1.3 Extended Meanings....................................................13
1.4 Currency.............................................................13
1.5 Schedules............................................................13
ARTICLE 2 - PURCHASE AND SALE..................................................14
2.1 Purchase and Sale....................................................14
2.2 Closing..............................................................15
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES.....................................16
3.1 Representations and Warranties of the Seller Parties Pertaining to
Leucadia, MK Resources and the Las Cruces Companies...............16
3.2 Additional Representations and Warranties of the Seller Parties
Pertaining to the Las Cruces Companies............................22
3.3 Representations and Warranties of Inmet..............................35
3.4 Survival of the Representations, Warranties and Covenants............40
ARTICLE 4 - CONDITIONS.........................................................41
4.1 Conditions for the Benefit of Inmet..................................41
4.2 Conditions for the Benefit of the Seller Parties.....................44
4.3 Procedure for Satisfaction of the Conditions.........................47
4.4 Termination; Effect of Termination...................................47
ARTICLE 5 - COVENANTS..........................................................48
5.1 Conduct of Business During the Interim Period........................48
5.2 MK Resources Stockholder Meeting.....................................52
5.3 Covenants of Inmet...................................................52
5.4 Costs of Consents, Etc...............................................52
5.5 Regulatory Approvals.................................................53
5.6 Compliance Verification and Continued Access.........................53
5.7 Related Party Contracts..............................................53
5.8 Name Change and Use of Trade Marks...................................54
5.9 Ibex.................................................................54
5.10 Rio Tinto Royalty....................................................54
5.11 Continued Securities Compliance......................................54
5.12 Tax Status...........................................................54
5.13 Supplementation and Amendment of Schedules...........................54
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ARTICLE 6 - INDEMNIFICATION....................................................54
6.1 Seller Parties' Indemnities..........................................54
6.2 Indemnity of Inmet...................................................55
6.3 Commissions..........................................................55
6.4 Exclusive Remedies...................................................55
6.5 Limitation of Liability of the Seller Parties........................55
6.6 Limitation of Liability of Inmet.....................................56
6.7 Notice of and Defence of Third Party Claims..........................56
6.8 Calculation of Damages...............................................58
6.9 Mitigation...........................................................58
6.10 No Duplication.......................................................58
6.11 Tax Treatment of Indemnity Payments..................................58
ARTICLE 7 - GENERAL............................................................58
7.1 Public Announcements and Confidential Information....................58
7.2 Transaction Protections..............................................59
7.3 Information for Reporting Requirements...............................64
7.4 Further Assurances...................................................64
7.5 Time of the Essence..................................................65
7.6 Dispute Resolution...................................................65
7.7 Fees and Expenses....................................................65
7.8 Benefit of the Agreement.............................................65
7.9 Invalidity of Provisions.............................................65
7.10 Entire Agreement.....................................................65
7.11 Amendments and Waiver................................................66
7.12 Assignment...........................................................66
7.13 Notices..............................................................66
7.14 Governing Law........................................................68
7.15 Attornment...........................................................68
7.16 Counterparts and Faxed Signatures....................................68
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THIS AGREEMENT made the 2nd day of May, 2005;
BETWEEN:
INMET MINING CORPORATION, a corporation incorporated under the
laws of Canada ("Inmet"),
- and -
LEUCADIA NATIONAL CORPORATION, a corporation incorporated under
the laws of the State of New York, United States of America
("Leucadia"),
- and -
MK RESOURCES COMPANY, a corporation incorporated under the laws
of the State of Delaware, United States of America ("MK
Resources"),
WHEREAS MK Resources is the holder of all of the shares in MK
Netherlands (as defined below), and MK Netherlands is the registered and
beneficial owner of all of the shares of CLC (as defined below), which holds the
mining concession for the Las Cruces copper deposit in the autonomous region of
Andalusia, Spain;
AND WHEREAS Leucadia is the owner of approximately 72% of the stock of
MK Resources, and has entered into a merger agreement with MK Resources, subject
to stockholder approval, pursuant to which it will acquire the stock of MK
Resources that it does not currently own at or prior to Closing pursuant to the
Reorganization (as defined below);
AND WHEREAS MK Resources desires to sell and Inmet desires to purchase
the Purchased Shares (as defined below), upon and subject to the terms and
conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and the covenants and agreements herein contained the Parties agree as
follows:
Article 1 - INTERPRETATION
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1.1 Definitions
In this Agreement, unless something in the subject matter or context
is inconsistent therewith:
"Acquisition Proposal" has the meaning attributed to such term in Section
7.2(1)(a);
"Affiliate" means as to any Person, any other Person which, directly or
indirectly, Controls, is Controlled by, or is under common Control with, such
Person;
"Agreement" means this agreement and all schedules attached to this agreement
and all amendments, restatements or replacements made hereto by written
agreement between the Parties;
"Alternative Transaction" has the meaning attributed to such term in section
4.1(4);
"Applicable Law" in respect of any Person, property, transaction or event, means
all laws, statutes, regulations, common law, judgments, notices, approvals,
orders and decrees applicable to that Person, property, transaction or event
and, whether or not having the force of law, all applicable official directives,
rules, consents, approvals, authorizations, guidelines, orders and policies of
any Governmental Body having or purporting to have authority over that Person,
property, transaction or event (and (i) where used in respect of a
representation or warranty, as in effect as of the date of the representation or
warranty and (ii) where used in respect of a covenant, as in effect from time to
time, in each case unless otherwise noted);
"Assay Data" means the drill hole assay data upon which the Feasibility Study is
based;
"Assets" means:
(a) the Mining Equipment;
(b) the Mining Concessions;
(c) the Land;
(d) the Water Rights;
(e) the Confidential Information; and
(f) all assets, property, interests, or rights of, held by or owned by any
of the Las Cruces Companies, including all personal property (whether
tangible or intangible) and real property, including chattels and
fixtures;
"Benefit Plans" means all written and all material unwritten plans,
arrangements, agreements, programs or policies, whether funded or unfunded and
whether or not mandated by any Governmental Body, relating to the employees of
the Las Cruces Companies to which any of the Las Cruces Companies is a party or
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by which any of them are bound or under which any of them has any liability or
contingent liability and relating to (i) retirement savings or pensions, (ii)
employee welfare benefits, including hospitalization, health, disability, life,
termination, past service or severance pay benefits or insurance, or (iii) bonus
or other incentive compensation, stock options, profit sharing or deferred
compensation, or relating to any similar subject matter, but excluding any such
plan, arrangement, agreement, program or policy relating to the employees of the
Las Cruces Companies that is administered by a Governmental Body and that does
not require any of the Las Cruces Companies to make any monetary contribution;
"Books and Records" means all technical, financial, business, tax and employee
books, records, files, papers, regulatory filings and returns and other books,
records, files, papers and regulatory filings of the Las Cruces Companies in any
form whatsoever (including written, printed, electronic or computer printout
form), including lists of present customers, suppliers, consultants and
employees, financial books and records of account, actuarial, tax and accounting
information, recordings of geological and metallurgical data, reports, files,
lists, drawings, plans, logs, briefs, customer and agency records, computer
program documentation, medical records, data bases, employee data and records,
deeds, certificates, contracts, surveys, title and legal opinions, records of
payment, loan histories, investment asset documentation, evidences of mortgage
insurance, written employment manuals and employment policies;
"Business" means the business and activities of exploration, evaluation, and
project development carried on by the Las Cruces Companies, including the
ownership, development and operation of the Project and the exploration and
evaluation activities on the Faralaes Concessions;
"Business Day" means a day other than a Saturday, Sunday or statutory holiday in
Toronto, Canada; New York, New York; Amsterdam, the Netherlands, or Salt Lake
City, Utah;
"Canadian GAAP" means the accounting principles generally accepted in Canada,
including, for all principles stated in the Handbook of the Canadian Institute
of Chartered Accountants, such principles so stated;
"Canadian Securities Laws" means the applicable securities laws of each of the
provinces and territories of Canada, the respective regulations and rules made
under those securities laws and the published policy statements of the Canadian
securities regulatory authorities;
"CFC" has the meaning attributed to such term in section 3.3(14)(h) of this
Agreement;
"Claim" means any claim for money damages or equitable relief arising out of a
legal proceeding, and includes any cause of action, suit, proceeding, judgment,
award, assessment, reassessment or notice of determination of loss;
"CLC" means Cobre Las Cruces, S.A., a company incorporated under the laws of
Spain;
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"Closing" means the completion of the Transaction in accordance with this
Agreement at the Time of Closing;
"Closing Date" means the fifth Business Day immediately following the date on
which a Condition Satisfaction Period commences, provided that if that Condition
Satisfaction Period terminates prior to such fifth Business Day, then the
Closing Date shall be determined with reference to the Condition Satisfaction
Period next occurring, or such earlier or later date as may be agreed upon in
writing by the Parties;
"Code" means the Internal Revenue Code of 1986, as amended;
"Condition Satisfaction Period" means any period of time commencing on the date
on which each of the conditions set out in Sections 4.1 or 4.2 of this Agreement
has been and continues to remain satisfied or, if not satisfied, has been waived
by the Party or Parties for whose benefit such unsatisfied condition exists, and
terminating on the date on which any of such conditions not so waived ceases to
be satisfied (unless prior to the time such condition ceases to be satisfied, it
has been waived by the Party benefiting therefrom);
"Confidential Information" means all information, regardless of its form,
relating to the Project, the Las Cruces Companies or the Assets, including
reports, results, maps, charts, strategic plans and other data, whether in oral,
written or electronic form and whether or not stated or noted to be
confidential, other than information which is or becomes available to the public
without breach of the provisions of this Agreement;
"Consent Required Contracts" means those Material Contracts which, as a result
of the completion of the transactions contemplated by this Agreement without
obtaining consent, (i) would be violated, breached, terminated or modified, with
or without notice; or (ii) would require payment or performance by any of the
Las Cruces Companies of a fine, penalty or other additional cost or obligation,
except, in the case of clause (i) or (ii), for any such violations, breaches,
terminations, modifications, fines, penalties or additional costs or obligations
that individually or in the aggregate would not reasonably be expected to result
in a Material Adverse Change in respect of the Las Cruces Companies;
"Contract" means any written or oral contract, agreement, lease, arrangement or
commitment, including any Benefit Plan, to which any of the Las Cruces Companies
is a party or by which any of them is or their respective assets are bound;
"Control" means:
(a) when applied to the relationship between a Person and a Corporation,
the beneficial ownership by such Person at the relevant time of shares
of such Corporation carrying either at least 50% of the voting rights
ordinarily exercisable at meetings of shareholders of such Corporation
or the percentage of voting rights ordinarily exercisable at meetings
of shareholders of such Corporation that are sufficient to elect a
majority of the directors of such Corporation; and
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(b) when applied to the relationship between a Person and a partnership or
joint venture, the beneficial ownership by such Person at the relevant
time of more than 50% of the ownership interests of the partnership or
joint venture in circumstances where it can reasonably be expected
that such Person directs the affairs of the partnership or joint
venture;
and the words "Controlled by", "Controlling" and similar words have
corresponding meanings; provided that a Person (the "first-mentioned Person")
who Controls a Corporation, partnership or joint venture (the "second-mentioned
Person") shall be deemed to Control: (i) a Corporation, partnership or a joint
venture (the "third-mentioned Person") which is Controlled by the
second-mentioned Person, (ii) a Corporation, partnership or joint venture which
is controlled by the third-mentioned Person and (iii) so on;
"Corporation" means a corporation, an incorporated company, a limited liability
company, a besloten vennootschap met beperkte aansprakelijkheid or naamloze
vennootschap under Dutch law, or a Sociedad Anonima, Sociedad Limitada or
asociacion under Spanish law;
"Credit Agreements" means the Credit Agreement, dated as of March 1, 1998, as
amended, between MK Resources and Leucadia, and the Credit Agreement, dated as
of Xxxxx 0, 0000, xxxxxxx XX Xxxxxxxxxxx and Leucadia;
"Declaration of Environmental Impact" means the statement of the Seville
Provincial Delegation of the Regional Ministry of the Environment issued on May
9, 2002 providing initial environmental approval of the Project and setting out
environmental conditions for development regarding protective measures,
mitigation and monitoring;
"Director" means, with respect to a Corporation, a member of the board of
directors or managing board of the Corporation and includes, where permitted
under Applicable Law at the relevant time, any alternate who is duly authorized
to represent such member at meetings of the board of directors;
"Environmental Laws" means any Governmental Approval, any Applicable Law, or
other requirement of any Governmental Body and any judicial or administrative
interpretation thereof, regulating, relating to or imposing liability or
standards of conduct concerning: (i) the environment, human health or safety, or
emissions, discharges, releases or threatened releases into the environment
(including, air, water, noise and land), (ii) the manufacture, processing,
smelting, distribution, use, treatment, storage, disposal, transport or handling
of waste (including solid or hazardous waste), waste water, pollutants,
contaminants, chemicals or any Hazardous Materials, (iii) the reclamation or
remediation of disturbed land, or (iv) the protection of archaeological sites,
national or natural monuments and protected areas such as natural parks as
defined in the Applicable Laws of the relevant jurisdiction;
"Excess Value" has the meaning attributed to such term in Section 7.2(5)(b);
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"Faralaes Concessions" means the investigation permits listed in Schedule
1.1(1), as amended or renewed through the date of this Agreement;
"Feasibility Study" means the November 2003 Feasibility Study prepared by DMT -
Montan Consulting GmbH and Outokumpu Technology Group;
"Financial Statements" means the audited financial statements of CLC for the
fiscal years ended December 31, 2004, December 31, 2003 and December 31, 2002,
consisting of balance sheets of CLC as at December 31, 2004, December 31, 2003
and December 31, 2002, and statements of income and statements of cash flows for
the years ended December 31, 2004, December 31, 2003 and December 31, 2002,
together with the notes thereto, copies of which are set out in Schedule 1.1(2);
"Governmental Approval" means any authorization, consent, approval, licence,
ruling, permit, concession, certification, exemption, filing, variance, order,
judgment, decree, publication, assessment, notice to, declaration of or with or
registration by or with any Governmental Body including any extension or renewal
thereof, but excluding Subsidies;
"Governmental Body" means the European Union or any agency thereof, or any
national, state, regional, municipal or local governmental department,
commission, board, bureau, agency, authority or instrumentality of Spain, the
Netherlands, Canada, the United States or any political subdivision thereof, and
any Person exercising or purporting to exercise executive, legislative,
judicial, regulatory or administrative functions of or pertaining to any of the
foregoing entities, including all tribunals, commissions, boards, bureaus,
arbitrators and arbitration panels, and any authority or other Person controlled
by any of the foregoing;
"Hazardous Materials" means any substance or material defined or regulated
pursuant to any of the applicable Environmental Laws or in the Declaration of
Environmental Impact or the IPPC Authorization, including any materials defined
as hazardous, toxic, corrosive, flammable, or dangerous waste;
"Ibex" means Iberia Exploraciones, S.A., a company incorporated under the laws
of Spain;
"Ibex Agreement" means the farm-in and joint venture agreement between Ibex and
Riomin Iberica S.A. dated February 24, 2000, as amended;
"Ibex Interests" means the rights and interests of Ibex set out in Schedule
1.1(3);
"Inmet Common Share Reorganization" has the meaning attributed to such term in
Section 2.1(3);
"Inmet Consideration Shares" means the Inmet common shares to be issued to MK
Resources as consideration for the Purchased Shares;
"Inmet Counter-Proposal" has the meaning attributed to such term in Section
7.2(3)(b);
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"Inmet Public Record" on any date, means all documents filed by Inmet with the
Ontario Securities Commission or any other Canadian securities regulatory
authorities which would be required to be incorporated by reference in a
short-form prospectus of Inmet filed on that date pursuant to National
Instrument 44-101 of the Canadian securities regulatory authorities;
"Intellectual Property" has the meaning given to such term in Section 3.2(8)(b);
"Interim Period" means the period between the close of business on the date of
this Agreement and the Time of Closing;
"Interim Period Development Plan" means the schedule and budget prepared by MK
Resources and CLC for operations during the Interim Period attached as Schedule
1.1(4);
"IPPC Authorization" means the authorization granted to CLC under EU Directive
96/61 on Integrated Pollution Prevention and Control;
"Knowledge of Inmet" means the knowledge, after due inquiry, of the officers and
senior management of Inmet;
"Knowledge of the Seller Parties" means the knowledge, after due inquiry, of any
of: (i) the directors, officers, and senior management of the Las Cruces
Companies, (ii) the officers and directors (other than independent directors) of
MK Resources, (iii) Xxxxxx X. Xxxx, and (iv) Xxxx Xxxxx.
"Land" means all right, title or interest, including surface rights and
leasehold interests, of the Las Cruces Companies in real property, excluding
rights encompassed by mining concessions or exploration permits but including
all buildings, erections, structures, improvements and fixtures now and
hereafter thereon (a description of such real property being set out in Schedule
1.1(5));
"Las Cruces Companies" means MK Netherlands and CLC;
"Leucadia Loan" means the loan provided by Leucadia to MK Netherlands pursuant
to the Credit Agreement dated March 4, 2005;
"Leucadia Counter-Proposal" has the meaning attributed to such term in Section
7.2(3)(a);
"Lien" means (i) any security interest, mortgage, pledge, prohibition,
injunction, lien, charge or other encumbrance of any kind, or any prior
assignment, option, claim, promise to contract, or interest of any kind, upon
any property or assets, or upon the income or profits therefrom, including any
right, regardless of origin, to participate in net profits, royalties, rents or
other income in any way derived from or attributable to the Mining Concessions
or any rights arising therefrom; (ii) any acquisition of or option to acquire
any property or assets upon conditional sale or other title retention agreement,
device or arrangement (including any capital lease); or (iii) any sale,
assignment, pledge or other transfer for security of any accounts, general
intangibles or chattel paper, with or without recourse;
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"Loss" means any loss, liability, damage, cost or expense suffered or incurred,
including the costs and expenses of any assessment, judgment, settlement or
compromise relating thereto and, fees and expenses of lawyers and other
professionals acting on behalf of the Party recovering its Loss, net of
recoveries and associated tax benefits, and excluding any incidental, indirect,
special or punitive damages; for greater certainty, in respect of any Loss
claimed by Inmet, no Claim for consequential damages or lost profits may be
asserted in respect of any matter other than the Project, and in respect of the
Project must be limited to the reduction of the net present value of the Project
at the relevant times;
"Loss Payment" means the amount of any Loss required to be paid by an
Indemnifying Party under this Agreement;
"Management Committee" has the meaning attributed to such term in Section
5.1(1);
"Material Adverse Change" means a material adverse change in, or a material
adverse effect upon, the business, operations, prospects, assets, liabilities or
financial condition of the Las Cruces Companies, taken as a whole, or Inmet on a
consolidated basis, as the case may be, excluding any change or effect caused by
or resulting from or attributable to (i) conditions in the global economy or
securities markets in general; (ii) developments affecting the worldwide base
metal mining industry in general which do not have a materially disproportionate
effect on the Las Cruces Companies, taken as a whole, or Inmet on a consolidated
basis, as the case may be; (iii) changes in the price of copper; or (iv) changes
in currency exchange rates;
"Material Contracts" has the meaning given to such term in Section 3.2(3)(a);
"Material Inmet Mining Properties" means the Cayeli, Troilus and Pyhasalmi
mines;
"Material Inmet Subsidiaries" means Cayeli Bakir Isletmeleri A.S., Pyhasalmi
Mine Oy, and Inmet Finland Oy;
"Members of the Inmet Group" means Inmet and its Affiliates from time to time
(which Affiliates will include the Las Cruces Companies from and after the Time
of Closing) and also includes OTML;
"Members of the Leucadia Group" means Leucadia and its Affiliates from time to
time, including MK Resources (which Affiliates will include the Las Cruces
Companies until the Time of Closing);
"Merger Agreement" means the Agreement and Plan of Merger, dated as of the date
hereof, among Leucadia, Marigold Acquisition Corp. and MK Resources;
"Mining Concessions" means the Project Concession and the Faralaes Concessions;
8
"Mining Equipment" means all drilling, loading, haulage and ancillary equipment
used in operations relating to the Project, including the equipment listed in
Schedule 1.1(6);
"Minority Stockholders" has the meaning attributed to such term in Section
7.2(2);
"MK Netherlands" means MK Gold Exploration B.V., a besloten vennootschap met
beperkte aansprakelijkheid under the laws of the Netherlands;
"Notification Date" has the meaning attributed to such term in Section
7.2(2)(a).
"Ordinary Course of Business" means actions that are consistent with the general
past operating practices of the Business and, during the Interim Period, also
includes actions that are consistent with the Interim Period Development Plan or
directives of the Management Committee or this Agreement.
"OTML" means Ok Tedi Mining Limited;
"Parties" means the parties to this Agreement and "Party" means any one of them;
"Party Group" means, respectively, Inmet and the Seller Parties;
"Permitted Encumbrances" means, in respect of any of the Assets: (a) the
security granted thereon by the Las Cruces Companies in respect of the
Syndicated Loan; (b) inchoate liens thereon; and (c) liens or any other
encumbrances arising by operation of Applicable Law in respect of Taxes,
assessments or governmental charges or levies (i) not yet due and payable or
(ii) which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the Las Cruces
Companies' books; (d) zoning, entitlement, building and land use regulations,
customary covenants, defects of title, easements, rights-of-way, restrictions
and other similar charges or encumbrances not interfering with the conduct of
the Business in the Ordinary Course of Business or the development of the
Project in accordance with the Feasibility Study; and (e) liens created by
bonding requirements set out in Schedule 3.2(5)(c);
"Person" means an individual, a partnership, a limited partnership, a joint
venture, a syndicate, a Corporation, a Governmental Body, a trustee, any
unincorporated organization and the heirs, executors, administrators or other
legal representatives of an individual and words importing "Person" have similar
meaning;
"PFIC" has the meaning attributed to such term in Section 3.3(14)(g) of this
Agreement;
"Pledge" means the Agreement and Deed of Pledge, dated March 7, 2005, whereby MK
Resources pledged to Leucadia 65% of the issued shares of MK Netherlands;
"Project" means the Las Cruces high-grade copper deposit identified by the
Project Concession and located in the autonomous region of Andalusia, Spain,
where CLC proposes to build an open-pit copper mine and processing facility as
set out in the Feasibility Study;
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"Project Concession" means the mining concession relating to the Project listed
in Schedule 1.1(7);
"Purchased Business Balance Sheet" means the balance sheet of MK Netherlands, on
a consolidated basis, dated March 31, 2005, a copy of which is attached as
Schedule 1.1(8);
"Purchased Shares" means shares which constitute, at the Time of Closing, 70% of
the issued shares of MK Netherlands or 70% of the equity interests of such other
entity mutually acceptable to Inmet and the Seller Parties owning, directly or
indirectly, 100% of the Las Cruces Companies;
"Registration Rights Agreement" means the agreement to be entered into as of the
Closing Date between Inmet, Leucadia and MK Resources providing certain
registration rights with respect to the Inmet Consideration Shares substantially
in the form attached as Schedule 1.1(9);
"Related Party Contracts" has the meaning given to such term in Section
3.2(3)(e);
"Related Party Transactions" has the meaning given to such term in Section
3.2(3)(e);
"Reorganization" means a reverse triangular merger transaction in which a
subsidiary of Leucadia will merge with and into MK Resources, Leucadia will
acquire the approximately 28% of the shares of MK Resources it does not
currently own for consideration consisting of shares of Leucadia, as further
described in Schedule 4.1(1)(c);
"Rio Tinto Royalty" means the royalty right granted by MK Resources to Rio Tinto
Metals Limited under the Sale and Purchase Agreement, dated September 1, 1999,
between MK Gold Company (now known as MK Resources Company) and Rio Tinto Metals
Limited;
"SEC" means the U.S. Securities and Exchange Commission;
"Seller Parties" means Leucadia and MK Resources;
"Shareholders Agreement" means the agreement to be entered into as of the
Closing Date between Inmet, Leucadia, MK Resources and the issuer of the
Purchased Shares providing for their respective rights and obligations in
relation to the Las Cruces Companies, the Project and the Business,
substantially on the terms set out in the term sheet attached as Schedule
4.1(1)(e);
"Spanish GAAP" means generally accepted accounting principles in Spain;
"Shareholder Loan Agreements" means the loan agreements to be entered into
between MK Netherlands and each of Inmet and Leucadia on the Closing Date, in
each case together with all related guarantees and security documentation;
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"Subsidies" means all subsidies, grants, loans or other financial assistance
(including tax privileges) provided, or to be provided, by any Governmental
Body, including the subsidies listed in Schedule 3.2(2)(c);
"Superior Proposal" has the meaning attributed to such term in Section 7.2(2);
"Syndicated Loan" means the loan agreements and related security documents and
agreements with respect to the third-party financing for the Project;
"Tax Authority" means any Governmental Authority responsible for the
administration of any Taxes;
"Taxes" means (i) all taxes, levies, duties, imposts, mining licenses, fees,
deductions, charges or withholdings of any kind whatsoever including national
and municipal patents, sales, gross or net income, receipts, value added, use,
ad valorem, transfer, franchise, payroll, capital, excise, goods and services,
property or windfall profit taxes, stamp or similar documentary charges, customs
duties, health and social security contributions, employment insurance premiums
and any other withholdings or deductions relating to employees and all
liabilities with respect thereto, including any interest, fines, penalties,
surtaxes, charges, additions to tax or additional amounts and loss of relief in
respect of any of the foregoing, imposed by any taxing or social security
authority, body or instrumentality (whether Spanish, Dutch or foreign) upon the
Las Cruces Companies or Inmet, as the case may be, and/or (ii) any liability of
the Las Cruces Companies or Inmet, as the case may be, for the payment of any
amounts of the type described in the immediately preceding clause (i) as a
result of being a member of an affiliated or combined tax group;
"Tax Reassessment Period" means the period ending on the last day on which any
assessment, reassessment or other document assessing liability for tax, interest
or penalties may be issued to any of the Las Cruces Companies or Inmet, in
respect of any taxation year or other period ending prior to the Closing Date,
or in respect of any taxation period within which the Closing Date occurs,
pursuant to any applicable tax legislation;
"Tax Returns" means all reports, returns and other documents filed or required
to be filed by the Las Cruces Companies or Inmet, as the case may be, in respect
of Taxes;
"Termination Date" means December 31, 2005;
"Third Party" means any Person other than a Party and its Affiliates;
"Third Party Claim" means any Claim asserted by a Third Party against Inmet or
the Seller Parties, as the case may be;
"Time of Closing" means 10:00 a.m. (Eastern Standard Time) on the Closing Date
or such other time as shall be mutually agreed to among the Parties;
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"Transaction" means the sale of the Purchased Shares by MK Resources to Inmet in
exchange for the Inmet Share Consideration pursuant to the terms of this
Agreement;
"Transaction Documents" means: (i) this Agreement, (ii) the Shareholders
Agreement, (iii) the Registration Rights Agreement, (iv) the Shareholder Loan
Agreements, (v) the Voting Agreement; (vi) all agreements and instruments
entered into or to be entered into pursuant to this Agreement, and (vii) all
agreements and instruments entered into or to be entered into by one or more of
the Parties with any Member of the Inmet Group or any Member of the Leucadia
Group relating to the transactions contemplated by this Agreement, and excludes
the Merger Agreement;
"U.S. Dollars" and the symbol "$" means lawful money of the United States of
America;
"U.S. GAAP" means the accounting principles generally accepted in the United
States;
"U.S. Securities Act" means the United States Securities Act of 1933, as
amended;
"U.S. Securities Laws" means United States federal securities laws;
"Voting Agreement" means the agreement between Inmet and Leucadia dated the date
hereof with respect to the voting of Leucadia's shares of MK Resources;
"Water Rights" means: (i) all registered and non-registered concessions,
easements and other rights held by or contracted to the Las Cruces Companies to
remove or divert from its natural source and to use water granted by any Persons
to the Las Cruces Companies, including those rights pursuant to the permits,
licenses or other authorizations listed in Schedule 1.1(10) and (ii) all rights
and approvals related thereto, such as rights and approvals to access water and
rights and approvals to locate equipment and other hydrological works necessary
to access and transport water.
1.2 Headings
The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section or other portion hereof and
include any agreement supplemental hereto. Unless something in the subject
matter or context is inconsistent therewith, references herein to Articles and
Sections are to Articles and Sections of this Agreement.
1.3 Extended Meanings
In this Agreement words importing the singular number only shall
include the plural and vice versa, words importing the masculine gender shall
include the feminine and neuter genders and vice versa. The term "including" as
used herein means "including without limiting the generality of the foregoing".
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1.4 Currency
Unless otherwise indicated, all references to currency herein are to
U.S. Dollars.
1.5 Schedules
(1) The following are the Schedules annexed hereto and incorporated by
reference and deemed to be part hereof:
Schedule 1.1(1) -- Faralaes Concessions;
Schedule 1.1(2) -- Financial Statements;
Schedule 1.1(3) -- Ibex Interests;
Schedule 1.1(4) -- Interim Period Development Plan;
Schedule 1.1(5) -- Land;
Schedule 1.1(6) -- Mining Equipment;
Schedule 1.1(7) -- Project Concession;
Schedule 1.1(8) -- Purchased Business Balance Sheet;
Schedule 1.1(9) -- Form of Registration Rights Agreement;
Schedule 1.1(10) -- Water Rights;
Schedule 3.1(11) -- Shareholder Loans;
Schedule 3.1(13) -- Non-Violation;
Schedule 3.1(14) -- Litigation;
Schedule 3.1(19) -- Assets and Liabilities of MK Netherlands;
Schedule 3.2(1)(b) -- Indebtedness;
Schedule 3.2(1)(c) -- Defaults;
Schedule 3.2(1)(f) -- Undisclosed Liabilities of the Las Cruces Companies;
Schedule 3.2(1)(g) -- Las Cruces Companies Tax Matters;
Schedule 3.2(2)(a) -- Governmental Approvals;
Schedule 3.2(2)(c) -- Subsidies;
Schedule 3.2(3)(a) -- Material Contracts;
Schedule 3.2(3)(b) -- Breach of Contracts;
Schedule 3.2(3)(c) -- Consent Required Contracts;
Schedule 3.2(3)(d) -- Expenditure Commitments;
Schedule 3.2(3)(e) -- Related Party Contracts;
Schedule 3.2(4)(a) -- Rights on Mining Concessions;
Schedule 3.2(4)(b) -- Mining Rights and Licences;
Schedule 3.2(4)(d) -- Feasibility Study Issues;
Schedule 3.2(5)(a) -- Hazardous Materials;
Schedule 3.2(5)(b) -- Environmental Reports;
Schedule 3.2(5)(c) -- Reclamation and Other Bonds;
Schedule 3.2(6) -- Employment;
Schedule 3.2(7) -- Insurance;
Schedule 3.2(8)(b) -- Intellectual Property;
Schedule 3.2(8)(d) -- Powers of Attorney;
Schedule 3.3(9) -- Obligations to Issue Inmet Securities;
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Schedule 4.1(1)(b) -- Governmental Approvals Required for Closing;
Schedule 4.1(1)(c) -- Reorganization;
Schedule 4.1(1)(e) -- Shareholder Agreement Term Sheet; and
Schedule 4.1(1)(l) -- Releasing Members of the Leucadia Group.
(2) Capitalized terms used, but not otherwise defined, in the Schedules
have the respective meanings ascribed thereto in the body of this
Agreement.
ARTICLE 2 - PURCHASE AND SALE
-----------------------------
2.1 Purchase and Sale
(1) Subject to the acquisition by Leucadia of 100% of the outstanding stock
of MK Resources pursuant to the Reorganization, Leucadia agrees to cause MK
Resources to sell the Purchased Shares to Inmet, and MK Resources agrees to
sell and Inmet agrees to purchase the Purchased Shares at the Time of
Closing, in both cases free and clear of all Liens.
(2) In consideration for the Purchased Shares, Inmet shall issue from
treasury to MK Resources 5,600,000 Inmet common shares (as such amount may
be adjusted pursuant to Section 2.1(4)), the "Inmet Consideration Shares").
(3) If at any time prior to the Time of Closing, Inmet shall:
(a) subdivide the Inmet common shares into a greater number of shares;
(b) consolidate the Inmet common shares into a lesser number of shares;
(c) make a distribution to the holders of all or substantially all of the
Inmet common shares of additional Inmet common shares or securities
exchangeable for or convertible into Inmet common shares (excluding
shares issued in the ordinary course pursuant to employment
compensation plans);
(d) otherwise change the number of Inmet common shares outstanding by
reason of a reclassification, recapitalization, exchange of shares or
similar event;
(any such event being herein called an "Inmet Common Share
Reorganization"), the number of Inmet Consideration Shares shall be
adjusted in accordance with Section 2.1(4).
(4) If an Inmet Common Share Reorganization occurs, and each time an Inmet
Common Share Reorganization occurs, the number of Inmet Consideration
Shares provided for by this Agreement immediately prior to giving effect to
the Inmet Common Share Reorganization shall be multiplied by a fraction of
which:
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(a) the numerator shall be the number of Inmet common shares that are (or
will be) outstanding immediately after giving effect to the Inmet
Common Share Reorganization (ignoring for this purpose the Inmet
Consideration Shares), including in the case of a distribution of
securities exchangeable for or convertible into Inmet common shares,
the number of Inmet common shares that would be outstanding if such
securities had been exchanged or converted into Inmet common shares;
and
(b) the denominator shall be the number of Inmet common shares outstanding
immediately prior to giving effect to the Inmet Common Share
Reorganization.
2.2 Closing
(1) Except as provided in Section 2.2(2)(i) below, the sale and purchase of
the Purchased Shares shall be completed at the Time of Closing at the
offices of Torys LLP in Xxxxxxx, Xxxxxxx.
(2) At Closing, (i) MK Resources shall transfer the Purchased Shares to
Inmet by means of a notarial deed executed in the Netherlands before a
Dutch civil law notary, and Inmet shall deliver to MK Resources share
certificates representing the Inmet Consideration Shares registered in the
name of MK Resources, and (ii) Inmet shall acquire 70% of the Leucadia Loan
from Leucadia for consideration equal to 70% of the outstanding amount of
the Leucadia Loan at the Time of Closing, including accrued interest.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
------------------------------------------
3.1 Representations and Warranties of the Seller Parties Pertaining to
Leucadia, MK Resources and the Las Cruces Companies.
In order to induce Inmet to enter into this Agreement, each of the
Seller Parties jointly and severally represents and warrants to Inmet (and
acknowledges that Inmet is relying on these representations and warranties in
connection with the execution of this Agreement and the transactions
contemplated hereby) that:
(1) Due Incorporation. Each of the Seller Parties and the Las Cruces
Companies has been duly incorporated and organized under the laws of the
respective jurisdictions in which it is incorporated, validly exists
thereunder and is in good standing, if applicable, under the Applicable Law
governing its existence.
(2) Due Authorization. Each of the Seller Parties and the Las Cruces
Companies has the necessary corporate power and authority to execute and
deliver the Transaction Documents to which it is or will be a party and to
perform its obligations thereunder. The execution and delivery of the
Transaction Documents to which it is a party by each of the Seller Parties
and the Las Cruces Companies and the performance of its obligations
thereunder have been duly authorized by all necessary corporate actions on
its part, other than the affirmative vote of the holders of a majority of
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the outstanding stock of MK Resources. Such execution, delivery and
performance by each of the Seller Parties and the Las Cruces Companies, do
not require any consent of, or notification to, any Person, or any action,
consent or notification under any Applicable Law which has not already
been, or will not by the Time of Closing have been, obtained or made, other
than the affirmative vote of the holders of a majority of the then
outstanding stock of MK Resources.
(3) Enforceability. The Transaction Documents have been, or will be on or
prior to the Time of Closing, duly executed and delivered by each of the
Seller Parties and the Las Cruces Companies and, assuming due
authorization, execution and delivery thereof by the other parties thereto
other than any Seller Party or Las Cruces Company, constitute, or will
constitute, valid and binding obligations of each of the Seller Parties and
the Las Cruces Companies, as the case may be, enforceable against each of
the Seller Parties and the Las Cruces Companies (to the extent that they
are, respectively, parties thereto) in accordance with their respective
terms, except as such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization or other Applicable Law, now or later in effect,
affecting the enforcement of creditors' rights generally and (ii) is
subject to general principles of equity, whether considered in a proceeding
at law or in equity.
(4) Absence of Investments. Except for the ownership of the shares of CLC
by MK Netherlands, none of the Las Cruces Companies owns any shares or
other securities in any Person and none of them has any obligation to
acquire any interest in any Person.
(5) No Bankruptcy. There has not been any petition or application filed by
a Seller Party, a Las Cruces Company or, to the Knowledge of the Seller
Parties, a Third Party, or any proceeding commenced which has not been
discharged, by or, to the Knowledge of the Seller Parties, against the
Seller Parties or the Las Cruces Companies or with respect to any assets of
MK Resources or the Las Cruces Companies under any Applicable Law, relating
to bankruptcy, insolvency, readjustment of debt or creditors' rights; none
of the Seller Parties or the Las Cruces Companies is unable to meet its
obligations as they generally become due, and no assignment has been made
by any of such companies for the benefit of creditors.
(6) No Dissolution. No meeting has been convened or resolution or petition
proposed or order made for any of the Seller Parties or the Las Cruces
Companies to be wound up or dissolved.
(7) Capital of MK Netherlands. The authorized share capital of MK
Netherlands is (euro)90,000, consisting of 90,000 shares of (euro)1 each.
The issued share capital of MK Netherlands is (euro)18,200, and all 18,200
issued shares are held by MK Resources. The Purchased Shares have been, and
at the Time of Closing will be, validly issued and are, and at the Time of
Closing will be, fully paid. None of the Purchased Shares has been issued
16
in violation of any pre-emptive or other rights of others. MK Netherlands
has not declared any dividend or other distribution and is not under any
obligation to redeem or repurchase any shares or other securities issued by
it. Except for CLC, MK Netherlands does not have any direct or indirect
subsidiaries nor any agreement of any nature to acquire any subsidiary or
other business operation.
(8) Capital of CLC. The share capital of CLC amounts to 101,745,150 Euros,
fully subscribed and paid-in, divided into 2,034,903 registered shares of
50 Euro face value each, all of which are legally and beneficially owned by
MK Netherlands. No person has any agreement or option or any right or
privilege (whether by law, pre-emptive or contractual) capable of becoming
an agreement or option for the purchase of any of the shares of CLC. The
shares of CLC and all recordable corporate resolutions have been properly
registered with the Commercial Registry in Seville, Spain.
(9) Right to Transfer Purchased Shares. MK Resources is the sole holder of
all of the Purchased Shares and has good and marketable title thereto. The
Purchased Shares are not subject to any Lien (other than the Pledge), and
at the Time of Closing will not be subject to any Lien, except as may be
contemplated by the Shareholder Loan Agreements or the Syndicated Loan.
Except for the Pledge, there are no agreements or restrictions which in any
way limit the transfer to Inmet of the Purchased Shares. At the Time of
Closing, MK Resources will have full legal right, power and authority to
transfer the Purchased Shares to Inmet free of Liens, except as may be
contemplated by the Shareholder Loan Agreements or the Syndicated Loan.
(10) No Options. There is no:
(a) outstanding subscription, right, option, warrant, call, commitment or
agreement (other than this Agreement, the Credit Agreements and the
Pledge) which obliges Leucadia or MK Resources to sell, transfer,
assign, pledge, charge, mortgage or in any other way dispose of or
encumber any of the Purchased Shares, the shares of CLC or the shares
of Ibex or any interest therein or obliges any of the Las Cruces
Companies to issue any of its capital stock;
(b) right of pre-emption, right or obligation to acquire, redeem or
convert, over or affecting the Purchased Shares, the shares of CLC or
the shares of Ibex;
(c) shareholders' agreement, voting trust, voting agreement, pooling
agreement, proxy or other arrangement relating to the voting or other
rights attached to any of the Purchased Shares, the shares of CLC or
the shares of Ibex; or
17
(d) outstanding right, option, warrant, call, commitment or agreement
(other than the Rio Tinto Royalty) which obliges the Seller Parties or
the Las Cruces Companies to sell, transfer, assign, pledge, charge,
mortgage or in any other way dispose of or encumber any of the Assets
or the Governmental Approvals (other than rights of Governmental
Bodies affecting the Mining Concessions, the Water Rights and the
Subsidies),
and the Seller Parties have not agreed to give, create or enter into
any of the foregoing.
(11) Shareholder Loans. Schedule 3.1(11) sets out the amount of the
Leucadia Loan. No Person has any agreement or option or any right or
privilege (whether by law or contract) capable of becoming an agreement or
option for the acquisition of any interest in the Leucadia Loan (other than
Inmet pursuant to this Agreement).
(12) Status of Las Cruces Companies. The Las Cruces Companies are duly
qualified and have full corporate power and authority to carry on the
Business and to own, hold valid title to, or have rights to their Assets
and to hold the Governmental Approvals and have made all necessary filings
and registrations under Applicable Law, except where the failure to be so
qualified or to make such filings or registrations, individually or in the
aggregate, has not resulted in, and would not reasonably be expected to
result in, a Material Adverse Change in respect of the Las Cruces
Companies.
(13) Non-Violation. The execution and delivery by each of the Seller
Parties and the Las Cruces Companies of the Transaction Documents to which
they are a party and the consummation of the transactions contemplated by
the Transaction Documents do not or will not, as applicable, (i) conflict
with, violate, result in a breach of, or constitute a default under any
provision of the certificate of incorporation or articles, by-laws or other
organizational documents of the Seller Parties or the Las Cruces Companies,
(ii) violate, conflict with or result in the breach, termination or
modification of, or otherwise give any other Person the right to terminate,
or constitute a default under, with or without notice, the lapse of time or
both, or cause the acceleration of any obligation under, the terms of any
agreement or instrument other than the Consent Required Contracts listed in
Schedule 3.2(3)(c) to which any of the Seller Parties or the Las Cruces
Companies is a party or by which any of them or any of their respective
properties or other assets may be bound or, with respect to the Las Cruces
Companies, give any other Person the right to increase the obligations of
the Las Cruces Companies, (iii) result in the creation of any Lien upon the
Purchased Shares or the Assets, (iv) except as disclosed in Schedule
3.1(13), violate any Applicable Law applicable to the Seller Parties, the
Las Cruces Companies, the Purchased Shares, the Assets or the Governmental
Approvals, provided that the Transaction must be approved by the
affirmative vote of the holders of a majority of the then outstanding stock
of MK Resources, (v) result in the loss of or failure to renew or require
the repayment of any Subsidy or (vi) except as disclosed in Schedule
18
3.1(13), result in the loss of any material Asset or Governmental Approval,
other than, in the cases of clauses (ii), (iii), (iv), (v) and (vi), any
such violations, conflicts, breaches, defaults, terminations,
modifications, accelerations, obligations, liens, losses or impairments
that individually or in the aggregate have not, and would not reasonably be
expected to, result in a Material Adverse Change in respect of the Las
Cruces Companies.
(14) Litigation. Except as set forth in Schedule 3.1(14), to the Knowledge
of the Seller Parties, there are (i) no ongoing or threatened Claims,
notices, investigations, mediations or arbitrations, or any matters under
discussion with any Governmental Body or other Third Party, which
individually or in the aggregate may reasonably be expected to result in a
Material Adverse Change in respect of the Las Cruces Companies, whether at
law or in equity or before or by any Governmental Body, and (ii) no
outstanding judgments, orders, decrees, writs, injunctions, decisions,
rulings or awards against, with respect to, or in any manner affecting the
Business, the Purchased Shares, the Assets, the Governmental Approvals, or
the Las Cruces Companies, which individually or in the aggregate have
resulted or may reasonably be expected to result in a Material Adverse
Change in respect of the Las Cruces Companies. Neither of the Las Cruces
Companies is in default of any material judgment, order, decree, writ,
injunction, decision, ruling or award to which it is subject, and neither
of the Seller Parties is in default of any material judgment, order,
decree, writ, injunction, decision, ruling or award which relates to or
adversely affects the interest of MK Resources in MK Netherlands, the
interest of Leucadia in the Leucadia Loan, the Purchased Shares, the Las
Cruces Companies, the Business, the Assets or the Governmental Approvals.
(15) Corporate Records. The minute books of each of the Las Cruces
Companies contain true, correct and complete copies of the minutes of every
meeting of its board of Directors and of its shareholders and every written
resolution of its Directors and shareholders during the periods covered by
such minute books, and have been made available to Inmet or its advisors
for the periods requested by Inmet. Full and complete copies of the
constating documents of the Las Cruces Companies have been provided to
Inmet. All corporate proceedings and actions reflected therein have been,
in all material respects, conducted or taken in compliance with Applicable
Law and with the respective constating documents of the Las Cruces
Companies.
(16) The Reorganization. Following the completion of the Reorganization, MK
Resources will be a wholly-owned subsidiary of Leucadia. The terms of the
Reorganization comply with Applicable Law. An opinion has been delivered by
Xxxxxxx Xxxxx Ltd., financial advisor to the independent directors of MK
Resources, to the effect that the Reorganization is fair, from a financial
perspective, to stockholders of MK Resources other than Leucadia. The Board
of Directors and Audit Committee of MK Resources, which committee is
comprised entirely of independent directors, have unanimously approved the
Reorganization.
19
(17) Acquisition of Inmet Consideration Shares. Each of the Seller Parties
understands and acknowledges that the issuance and sale of the Inmet
Consideration Shares has not been registered under the U.S. Securities Act
and, unless an exemption from registration is available, none of the Inmet
Consideration Shares may be offered or sold within the United States. MK
Resources is an Accredited Investor (as that term is defined in Rule
501(a)(3) of Regulation D of the U.S. Securities Act) and is acquiring the
Inmet Consideration Shares as principal for its own account, not for the
benefit of any other person, for investment purposes only and not with any
current view to any resale, distribution, or other disposition thereof in
violation of any U.S. Securities Laws or Canadian Securities Laws. Each of
the Seller Parties agrees that it will not offer, sell or otherwise
transfer or pledge any of the Inmet Consideration Shares (other than
pursuant to an effective registration statement under the U.S. Securities
Act) unless (i) the sale is to Inmet, (ii) the sale is made outside the
United States in accordance with the requirements of Rule 904 of Regulation
S under the U.S. Securities Act and in compliance with applicable local
laws and regulations, or (iii) the sale is made pursuant to the exemption
from registration under the U.S. Securities Act provided by Rule 144
thereunder or is otherwise exempt from registration. Each of the Seller
Parties understands and acknowledges that the Inmet Consideration Shares
are "restricted securities" as defined in Rule 144 of the U.S. Securities
Act, and upon the original issuance thereof, and until such time as the
same is no longer required under applicable requirements of U.S. Securities
Laws, the certificates representing the Inmet Consideration Shares and all
certificates issued in exchange therefor or in substitution thereof, shall
bear on the face of such certificates a restrictive legend to such effect.
Each of the Seller Parties acknowledges that (a) it has reviewed the Inmet
Public Record and has been afforded the opportunity (i) to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of Inmet concerning the terms and conditions of the
offering of the Inmet Consideration Shares and (ii) to obtain such
additional information which Inmet possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy and
completeness of the information contained in the Inmet Public Record and
that it has considered necessary in connection with its decision to acquire
the Inmet Consideration Shares (and for that purpose has requested and
received the representations and warranties of Inmet provided in this
Agreement) and (b) it is not acquiring the Inmet Consideration Shares as a
result of any general solicitation or general advertising, as those terms
are used in Regulation D under the U.S. Securities Act including, without
limitation, advertisements, articles, notices and other communications
published in any newspaper, magazine or similar media or broadcast over
television or radio or any seminar or meeting whose attendees have been
invited by general solicitation or general advertising.
(18) Public Disclosure Record. The public documents filed by each of the
Seller Parties with the SEC since January 1, 2002 complied in all material
respects, at the time of their filing, with the applicable requirements of
U.S. Securities Laws. As of their respective dates, the public documents
20
filed by the Seller Parties with the SEC since January 1, 2002 did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances in which they
were made, not misleading, except that information as of a later date (but
before the date hereof) shall be deemed to modify information as of an
earlier date and except (in the case of Leucadia) where such statement or
omission would not impair the ability of Leucadia to complete the
transactions contemplated by this Agreement or to obtain the Syndicated
Loan. There is no disclosure required by U.S. Securities Laws with respect
to the Seller Parties which has not been made, except, in the case of
Leucadia, where such failure to disclose would not impair the ability of
Leucadia to complete the transaction contemplated by this Agreement or to
obtain the Syndicated Loan.
(19) MK Netherlands. Except for its investment in CLC and as disclosed in
Schedule 3.1(19), MK Netherlands has no assets, liabilities or obligations
whatsoever (whether accrued, absolute, contingent or otherwise). MK
Netherlands has been funded by either equity or debt, and such equity and
debt has been properly registered with all appropriate Governmental Bodies
and in connection therewith MK Netherlands has obtained all Governmental
Approvals, investment contracts or other similar rights available under
Applicable Law which are necessary or desirable to conduct its business
(including to own the shares of, and to make loans to, CLC). MK Netherlands
has complied with all foreign investment filing requirements in Spain in
respect of CLC. MK Netherlands has no operations or activities other than
its interest in CLC.
(20) CLC. CLC has not declared any dividend or other distribution since it
was acquired from Rio Tinto Metals Limited in 1999 and to the Knowledge of
the Seller Parties is not under any obligation to redeem or repurchase any
shares or other securities issued by it. CLC has obtained all Governmental
Approvals, investment contracts or other similar rights available under
Applicable Law which are necessary to operate in Spain as a subsidiary of a
non-Spanish company.
3.2 Additional Representations and Warranties of the Seller Parties Pertaining
to the Las Cruces Companies.
The Seller Parties jointly and severally represent and warrant to
Inmet as follows (and acknowledge that Inmet is relying on these representations
and warranties in connection with the execution of this Agreement and the
transactions contemplated hereby):
(1) Financial and Other Information.
(a) Purchased Business Balance Sheet. The Purchased Business Balance Sheet
has been prepared in accordance with U.S. GAAP (except for the absence
of footnotes), and presents fairly in all material respects the
assets, liabilities and financial position of MK Netherlands as of
March 31, 2005 on a consolidated basis.
21
(b) Indebtedness. Except for: (i) any trade payables and accrued Taxes in
an aggregate amount less than $500,000 owing by the Las Cruces
Companies incurred in the Ordinary Course of Business; or (ii) as
disclosed in Schedule 3.2(1)(b), the Las Cruces Companies do not have
any indebtedness other than the Leucadia Loan.
(c) No Default of Indebtedness. Except as disclosed in Schedule 3.2(1)(c),
the Las Cruces Companies are not in default under any guarantee, bond,
debenture, note or other instrument evidencing any indebtedness or
under the terms of any instrument pursuant to which any of the
foregoing has been issued or made and delivered, and, to the Knowledge
of the Seller Parties, there exists no state of facts which after
notice or lapse of time or both or otherwise would constitute such a
default.
(d) Financial Statements. The Financial Statements were prepared in
accordance with Spanish GAAP consistently applied, and present fairly
in all material respects the financial position, results of operations
and changes in the cash flow of CLC as at or for the applicable dates
or periods. Except as disclosed in the Purchased Business Balance
Sheet, there has been no Material Adverse Change in respect of the Las
Cruces Companies since December 31, 2004 (except for expenditures in
accordance with the Feasibility Study and the Interim Period
Development Plan and any change caused by or resulting from changes in
currency exchange rates).
(e) Books and Records. All transactions of the Las Cruces Companies have
been properly and accurately recorded in the appropriate Books and
Records of the Las Cruces Companies and such Books and Records are
correct and complete in all material respects and have been maintained
and retained in accordance with Applicable Law, including Tax and
corporate laws and regulations, accounting requirements and good
business practice in the jurisdictions where the Las Cruces Companies
operate.
(f) Absence of Undisclosed Liabilities. Except as disclosed in Schedule
3.2(1)(f), the Las Cruces Companies have no liabilities or obligations
of any nature or kind (whether accrued, absolute, contingent or
otherwise), other than (i) those reflected in the fiscal 2004
Financial Statements and (ii) those incurred since December 31, 2004
in the Ordinary Course of Business;
(g) Tax Matters. Except as disclosed in Schedule 3.2(1)(g):
(i) the Las Cruces Companies have timely filed all Tax Returns
required to be filed under all applicable Tax laws, and such Tax
Returns are true and complete in all material respects;
22
(ii) all material Taxes due and payable by the Las Cruces Companies
have been timely paid and all material deficiencies asserted or
assessments made against the Las Cruces Companies as a result of
any examination by any Tax Authority of Tax Returns filed in
previous years have been fully paid or have been accrued for in
accordance with the generally accepted accounting principles of
the jurisdiction of incorporation of each Las Cruces Company;
(iii) the Las Cruces Companies have not given any waiver of any
statute of limitations relating to the payment of any Taxes with
respect to their Business or operations;
(iv) the Tax accruals reflected on the Purchased Business Balance
Sheet are adequate to cover all material Tax liabilities payable
by the Las Cruces Companies for the periods prior to March 31,
2005;
(v) all material Tax liabilities of the Las Cruces Companies in
respect of any period ending on or prior to the date hereof and
that are not yet due and payable have been accrued in the books
and accounts of the Las Cruces Companies or have been paid and
such payments are reflected in such books and accounts;
(vi) there are no notices of assessment or reassessment of unpaid Tax
liabilities issued by any Tax Authority which have been received
by the Las Cruces Companies;
(vii) to the Knowledge of the Seller Parties, except as a result of
the transactions contemplated by this Agreement, all Tax credits
and allowances of any kind or Tax loss carry forwards reflected
in the Tax Returns filed by the Las Cruces Companies are
available to be offset against future Tax liabilities (except for
Tax credits or Tax losses that have expired due to elapse of time
or any statute of limitation in accordance with applicable Tax
Law);
(viii) the Las Cruces Companies are not liable for any Taxes of a
Third Party under any contract or agreement, or transferee of
such Third Party, or by any Applicable Law (except for value
added, sales and similar Taxes that are customarily paid by a
customer under a sales or service contract and collected by a
seller); and
(ix) the Las Cruces Companies have sufficient records relating to past
events, including any elections made, to calculate the Tax
liability or relief which would arise on any disposal or
realization of any Assets.
(h) Withholdings. Each of the Las Cruces Companies has withheld from all
material payments to Persons with respect to whom it is required by
Applicable Law to withhold any amounts, the amount of all material
23
Taxes and other deductions required to be withheld therefrom and has
paid the same to the relevant Tax Authorities within the time required
under Applicable Law. Each of the Las Cruces Companies has collected
all material Taxes and other amounts which it is required by
Applicable Law to collect and has paid the same to the relevant Tax
Authorities within the time required by Applicable Law.
(i) No Other Business. The Las Cruces Companies have not conducted any
operations other than the Business and do not have any assets or
liabilities unrelated to the Project, the Faralaes Concessions or the
Ibex Interests.
(j) No Payments. None the Seller Parties nor the Las Cruces Companies nor,
to the Knowledge of the Seller Parties, any of their officers,
directors, agents, advisors or employees has agreed to make any
payment or other use of the Assets: (i) except in compliance with all
Applicable Law, to or on behalf of any official of any Governmental
Body or for any purpose related to political activity; (ii) for any
purpose that is illegal under Applicable Law, or (iii) for the
establishment of any concealed fund or concealed bank account.
(2) Governmental Approvals.
(a) Governmental Approvals. Schedule 3.2(2)(a) sets out: (i) all
Governmental Approvals held by the Las Cruces Companies; (ii) all
Governmental Approvals which have been applied for by the Las Cruces
Companies but have not yet been obtained; and (iii) to the Knowledge
of the Seller Parties, all material Governmental Approvals identified
in the Feasibility Study which have not yet been applied for. The
Seller Parties have no reason to believe that the Governmental
Approvals disclosed pursuant to clauses (ii) and (iii) of the
preceding sentence cannot be obtained on terms satisfactory for the
development and operation of the Project in accordance with the
Feasibility Study; provided, that the Seller Parties do not warrant
that such Governmental Approvals will be obtained or that, if
obtained, they will be obtained on terms and conditions satisfactory
to CLC. The Las Cruces Companies have all Governmental Approvals
required to carry on the Business as of the date of this Agreement.
Except as disclosed in Schedule 3.2(2)(a), all Governmental Approvals
which have been obtained are valid and subsisting (except for those
Governmental Approvals specified in Schedule 3.2(2)(a) which expire in
accordance with their terms and for which applications for renewals or
extensions have been made) and the Las Cruces Companies are in
compliance with such Governmental Approvals, have satisfied all
conditions pertaining thereto required to be satisfied at the current
stage of development of the Project, and have filed in a timely manner
all statements and reports required by such Governmental Approvals,
except for any such failures to comply, satisfy or timely file that
individually or in the aggregate would not reasonably be expected to
result in a Material Adverse Change in respect of the Las Cruces
24
Companies. Except as disclosed in Schedule 3.2(2)(a), neither of the
Las Cruces Companies is a party to a proceeding to revoke, restrict or
suspend any such material Governmental Approval, nor is there (i) any
pending proceeding or Claim against the Las Cruces Companies or, to
the Knowledge of the Seller Parties, involving the Project, or (ii) to
the Knowledge of the Seller Parties, any proceeding or Claim
threatened against the Las Cruces Companies or involving the Project,
which could reasonably be expected to have such an effect.
(b) Absence of Restrictions. Except for restrictions imposed pursuant to
the terms of the Mining Concessions, Subsidies provided or pledged to
CLC in connection with the Project and Governmental Approvals held by
the Las Cruces Companies, to the Knowledge of the Seller Parties, none
of the Las Cruces Companies is subject to any restriction, judgment,
writ, injunction, decree, award, rule or regulation which materially
adversely affects (or in the future, assuming that the Business is
conducted as set out it the Feasibility Study, is reasonably likely to
materially adversely affect) the Project, the Business, its
operations, prospects, properties, assets or condition, financial or
otherwise, or its ability to perform its obligations under the
Transaction Documents.
(c) Subsidies. Schedule 3.2(2)(c) sets out a complete list of all
Subsidies provided or pledged to CLC in connection with the Project,
together with the terms and conditions of each Subsidy in the form of
the letters granting such Subsidies. Except as disclosed in Schedule
3.2(2)(c), CLC is not in default of the conditions of any Subsidy.
(3) Contracts.
(a) Material Contracts. Schedule 3.2(3)(a) sets out a complete list of all
Contracts except for:
(i) contracts or agreements which may be terminated by the relevant
Las Cruces Company without penalty on not more than 90 days'
notice, or
(ii) contracts or agreements with any Person who is at arm's length to
the Las Cruces Companies for the supply of goods or services
requiring aggregate payments per annum of less than $50,000.
(Contracts to which neither of the foregoing exceptions applies are
herein referred to as "Material Contracts".)
(b) No Breach of Contracts. Except as set out in Schedule 3.2(3)(b), the
Las Cruces Companies are not in default or breach of any provision of
any Material Contract (nor, to the Knowledge of the Seller Parties,
are any of the other parties thereto) and all the Material Contracts
are in good standing and in full force and effect. Other than as
25
specified in Schedule 3.2(3)(a), there are no amendments thereto, the
Las Cruces Companies are entitled to all benefits thereunder and, to
the Knowledge of the Seller Parties, except as disclosed in Schedule
3.2(3)(b), there exists no condition, event or act which, with the
giving of notice or lapse of time or both would constitute a default
or breach of any Material Contract.
(c) Consent Required Contracts. Schedule 3.2(3)(c) sets out a complete
list of the Consent Required Contracts.
(d) Expenditure Commitments. Schedule 3.2(3)(d) sets out all expenditure
commitments (whether operational or capital) to which any of the Las
Cruces Companies is bound with respect to any single expenditure or
series of related expenditures in an amount equal to or greater than
$50,000.
(e) Related Party Contracts and Transactions. Schedule 3.2(3)(e) sets out
all Contracts which were not fully performed on or before December 31,
2004 and transactions which occurred on or after January 1, 2005
between any of the Las Cruces Companies and one or more Members of the
Leucadia Group (collectively, the "Related Party Contracts" or
"Related Party Transactions", as applicable). No Member of the
Leucadia Group is entitled to a Claim of any nature against any of the
Las Cruces Companies other than Claims in respect of the Leucadia Loan
and Related Party Contracts and Claims disclosed on Schedule 3.2(3)(e)
or has assigned to any Person the benefit of a Claim against any of
the Las Cruces Companies to which the Member would otherwise be
entitled.
(f) Sales Contracts. There are no sales, marketing, agency or other
distribution contracts or arrangements (whether written or otherwise),
to which any of the Las Cruces Companies is bound or which provide for
the sale or marketing of product of the Project.
(g) Equipment Leases. The consummation of the transactions contemplated by
the Transaction Documents will not entitle any lessor to (i) terminate
any Contract under which any of the Las Cruces Companies leases the
Mining Equipment, (ii) require any of the Las Cruces Companies to
purchase any leased Mining Equipment; or (iii) require the payment of
any additional fee, except for any such terminations or required
purchases or payments which individually or in the aggregate are not
material to the Business.
(4) Mining, the Project and the Land.
(a) Concessions. The Mining Concessions have been duly granted by the
relevant Governmental Bodies and have been validly granted to and
registered in the name of CLC, are held by it and are in full force
and effect. Except as set forth in Schedule 3.2(4)(a), no Person other
26
than CLC has any right, title or interest in, to or under the Mining
Concessions and there are no adverse or competing Claims in respect
thereof. No Person has any written or oral agreement, option,
understanding or commitment or any right or privilege capable of
becoming an agreement, for the purchase or reconveyance by CLC of the
Mining Concessions. The Mining Concessions, under Spanish law as
currently in effect, have the duration specified in Schedule
3.2(4)(a). There are no royalties payable by either the Seller Parties
or the Las Cruces Companies in respect of the use or exploitation of
the Project, except pursuant to the Rio Tinto Royalty.
(b) Mining Rights and Licenses. Schedule 3.2(4)(b) sets out: (i) all
material rights and licenses held by or on behalf of CLC from any
Person; (ii) all material rights and licenses which have been applied
for but have not yet been obtained; and (iii) to the Knowledge of the
Seller Parties, all other material rights and licenses identified in
the Feasibility Study which have not yet been applied for. The Seller
Parties have no reason to believe that the rights and licenses
disclosed in clauses (ii) and (iii) of the preceding sentence cannot
be obtained on terms satisfactory for the development and operation of
the Project in accordance with the Feasibility Study; provided, that
the Seller Parties do not warrant that such rights and licenses will
be obtained or that, if obtained, they will be obtained on terms and
conditions satisfactory to CLC. Except as disclosed in Schedule
3.2(4)(b), all such rights and licenses which have been obtained
are in full force and effect (except for those rights or licenses
specified in Schedule 3.2(4)(b) which expire in accordance with their
terms and for which applications for renewals or extensions have been
made), and, to the Knowledge of the Seller Parties, no event has
occurred that is reasonably likely to result in the revocation or
withdrawal of such rights and licenses such as would reasonably be
expected to result in a Material Adverse Change in respect of the Las
Cruces Companies.
(c) Compliance with Approvals. The Project complies with and is being
developed, and all activities on the Mining Concessions are being
carried out, in all material respects, in accordance with all
covenants, conditions, restrictions, requirements and reservations in
the Governmental Approvals applicable thereto including, in the case
of the Project, the Declaration of Environmental Impact and the IPPC
Authorization.
(d) Feasibility Study. Except as disclosed in Schedule 3.2(4)(d), neither
of the Seller Parties has received any written notice that any:
(i) permits, consents or authorizations contemplated by the
Feasibility Study will not be obtained on the terms applied for
or will be revoked; or
27
(ii) Person will oppose or contest the granting of, or seek the
revocation of, any permits, consents, authorizations or
authorities contemplated by the Feasibility Study.
To the Knowledge of the Seller Parties, the reserve estimates
contained in the Feasibility Study (with the modifications reflected
in the technical report dated July 8, 2004 prepared by Xxxxxxx, Xxxxx
& Xxxx) were prepared in accordance with National Instrument 43-101,
Standards of Disclosure for Mineral Projects of the Canadian
Securities Administrators.
In addition, no information material to the preparation of the
Feasibility Study was withheld from the person preparing it.
The Seller Parties and the Las Cruces Companies have provided or made
available to Inmet all material information, data, geological and
geophysical test results, maps and surveys in the possession of the
Seller Parties or the Las Cruces Companies requested by Inmet relating
to the Project, the Land, and the Business and the exploration and
drilling carried out therein by or on behalf of the Seller Parties or
the Las Cruces Companies, and the Seller Parties and the Las Cruces
Companies have not withheld from Inmet any such material information,
data or test results.
(e) Interim Period Development Plan. Substantially all of the work
proposed to be performed under the Interim Period Development Plan is
contemplated by the Feasibility Study.
(f) Compliance with Laws. The Seller Parties have owned, held valid title
to or had rights to the Assets and the Governmental Approvals and
developed the Project (to its current state of development) in
compliance in all material respects with Applicable Law. Neither the
Seller Parties nor the Las Cruces Companies has received any written
notice of non-compliance, and to the Knowledge of the Seller Parties,
there are no facts that could reasonably be expected to give rise to a
notice of non-compliance with Applicable Law, except for any such
non-compliance that individually or in the aggregate would not
reasonably be expected to result in a Material Adverse Change in
respect of the Las Cruces Companies.
(g) The Land. Except as set forth in Schedule 1.1(5), the Las Cruces
Companies have good freehold or leasehold title to the Land free and
clear of all encumbrances, other than Permitted Encumbrances, and
interests in the Land is duly recorded by CLC in the relevant property
registry. To the Knowledge of the Seller Parties, the Land and the
current and planned (as contemplated in the Feasibility Study) uses of
and development on the Land comply or are expected to comply with all
applicable planning legislation and building laws and any legislation
intended to control or regulate the use of land and any orders,
28
regulations, consents or permissions made or granted under any of the
same, except for any such failures to comply that individually or in
the aggregate have not had and would not reasonably be expected to
result in a Material Adverse Change in respect of the Las Cruces
Companies. The Las Cruces Companies are not in breach of any covenant,
restriction, stipulation or other obligation affecting the Land, other
than any such breaches that individually or in the aggregate have not
had and would not reasonably be expected to result in a Material
Adverse Change in respect of the Las Cruces Companies. Except as
disclosed on Schedule 1.1(5), there are no expropriation or similar
proceedings, actual or, to the Knowledge of the Seller Parties,
threatened, against any of the properties owned or leased by the Las
Cruces Companies or any part thereof.
(h) Assets. The Assets are not subject to any encumbrances, other than
Permitted Encumbrances. The assets of the Las Cruces Companies are all
of the assets, rights, interests, approvals and licenses and other
property used by the Seller Parties or the Las Cruces Companies in the
operation of the Business, other than assets used by Third Party
contractors.
(5) Environmental Matters.
(a) Hazardous Materials. Except as disclosed in Schedule 3.2(5)(a) or as
disclosed in any of the environmental reports set forth in Schedule
3.2(5)(b), to the Knowledge of the Seller Parties, there is no hazard,
source of pollution or condition that is having or may reasonably be
expected to result in a Material Adverse Change in respect of the Las
Cruces Companies or that is or has been in material violation of any
Environmental Law and neither the Las Cruces Companies nor, to the
Knowledge of the Seller Parties, any other Person under their
authority or control has generated, used, treated, stored, released or
disposed of, or permitted the generation, use, treatment, storage,
release or disposal of Hazardous Materials on or in the Land, the
Mining Concessions, the water inlet or discharge infrastructure for
the Project, or the natural environment, except in material compliance
with the Declaration of Environmental Impact, the IPPC Authorization
and applicable Environmental Laws.
(b) Environmental Reports. Attached as Schedule 3.2(5)(b) is a list of all
material reports concerning environmental matters relating to or
potentially affecting the Business, the Assets or the Governmental
Approvals that are in the possession or control of the Las Cruces
Companies or the Seller Parties, and the Seller Parties have provided
to Inmet or its advisors true and complete copies of all such reports.
(c) Reclamation and Other Bonds. Schedule 3.2(5)(c) identifies all bonds
and other surety arrangements required by the terms of any
Governmental Approval and, to the Knowledge of the Seller Parties, any
other bonds or surety arrangements required of the Seller Parties or
the Las Cruces Companies in connection with the Project, and further
indicates the terms and conditions of any bonds and surety
arrangements which have been obtained.
29
(d) Environmental Issues. There have not been any investigations,
proceedings, charges or convictions for material non-compliance with
any Environmental Laws in connection with the Governmental Approvals,
the Assets or the Business. There are no proceedings with respect to
the Governmental Approvals, the Assets or the Business which allege
the material violation of, or material non-compliance with, any
Environmental Laws. There is no pending or, to the Knowledge of the
Seller Parties, threatened investigation relating to any material
non-compliance or alleged material non-compliance with any
Environmental Law. Neither the Seller Parties nor the Las Cruces
Companies have caused or permitted the discharge of any substance in
connection with the Assets or the Business, other than in material
compliance with Environmental Laws. There are no orders, directives or
requests by a Governmental Body with respect to remedial or corrective
actions necessary to ensure compliance with any Applicable Law,
including Environmental Laws and Water Rights, nor are any remedial or
corrective actions contemplated, required or being currently
undertaken by the Las Cruces Companies. The Project and the Assets are
free of any Liens imposed pursuant to applicable Environmental Laws,
other than bonding requirements set out in Schedule 3.2(5)(c). No
written notice or other communication has been received by the Las
Cruces Companies from any Governmental Body in respect of the
Business or the Assets that remedial or corrective action is or may be
required pursuant to any Governmental Approval or Applicable Law.
(6) Employment.
(a) Collective Agreements and Benefit Plans. Except as disclosed in Part I
of Schedule 3.2(6), the Las Cruces Companies are not bound by or party
to any collective bargaining agreement. Except as disclosed in Part II
of Schedule 3.2(6), there has not been, for a period of 12 months
prior to the date hereof, nor is there existing, nor, to the Knowledge
of the Seller Parties, threatened, any strike, slowdown, picketing or
work stoppage with respect to the unionized employees of the Las
Cruces Companies. There are no ongoing, pending, or, to the Knowledge
of the Seller Parties, threatened proceedings against the Las Cruces
Companies alleging any unfair labour practice.
(b) Benefit Plans. Except as disclosed in Part III of Schedule 3.2(6),
(i) each Benefit Plan is and has been established, registered,
qualified, administered and invested, in material compliance with
Applicable Law and none of the Las Cruces Companies has received
any written notice from any Person alleging to the contrary;
30
(ii) all liabilities and obligations under the Benefit Plans (whether
pursuant to the terms thereof or Applicable Law) as of December
31, 2004 have been fully satisfied or funded or have been fully
provided for in the December 31, 2004 Balance Sheet that forms
part of the Financial Statements;
(iii) there have been no amendments, modifications or restatements of
any Benefit Plan made, or any improvements in benefits promised,
under the Benefit Plans since the December 31, 2004 Balance Sheet
that forms part of the Financial Statements;
(iv) all contributions or premiums required to be paid to or in
respect of each Benefit Plan have been paid in a timely fashion
in accordance with the terms thereof and Applicable Law, and no
Taxes, penalties or fees are owing under any Benefit Plan which
have not been provided for in the December 31, 2004 Balance Sheet
that forms part of the Financial Statements; and
(v) there are no stay bonus, supplementary retirement arrangements,
golden parachutes, incentive compensation, profit sharing or
deferred compensation arrangements, nor any other similar
arrangements nor any employment agreements with any executive
employee of CLC to which CLC is a party or by which it is bound,
nor any employment agreements with any other employee of CLC to
which CLC is party or by which it is bound, the terms of which
agreements would not be normal and customary for an employee of
similar position having regard to common business practices in
Spain in and in the mining industry.
(c) Employment Contracts. MK Netherlands has never had any employees. Part
IV of Schedule 3.2(6) lists all employees of CLC as of the date
hereof, together with:
(i) in respect of each Person named therein a brief job description,
length of service, term of employment, current compensation
(including rate of remuneration, salary, bonus and all other
forms of compensation, and including any compensation that is or
may become payable as a result of the completion of the
Transaction) and severance obligations; and
(ii) all written employment contracts and any amendments thereto,
including in each case a description of the terms of each such
contract.
31
(d) Trade Unions and Bargaining Agents. No trade union, council of trade
unions, employee bargaining agency or affiliated bargaining agent:
(i) holds bargaining rights with respect to any of the employees of
CLC by way of certification, interim certification, voluntary
recognition, designation, successor rights or otherwise; or
(ii) has applied to be certified as the bargaining agent of any of the
employees of CLC.
(e) Remuneration. Except as disclosed in Part V of Schedule 3.2(6) and
except for remuneration paid to employees in the Ordinary Course of
Business and at current rates of remuneration, no payments have been
made or authorized since December 31, 2004 by the Las Cruces Companies
to officers, Directors, consultants or employees of the Las Cruces
Companies.
(f) No Indebtedness of Non-Arm's Length Individuals. No Director, former
Director, officer, shareholder, consultant or employee of any of the
Las Cruces Companies or any Person not dealing at arm's length with
any such individual is indebted to the Las Cruces Companies.
(g) Workers' Compensation. Except as disclosed in Part VI of Schedule
3.2(6), CLC is in compliance with all applicable workers' compensation
or other similar legislation and has not been subject to any penalty
or special assessments and has not been subject to increased
assessments based on its experience rating.
(h) Compliance with Employment Legislation. Except as disclosed in Part
VII of Schedule 3.2(6), CLC is in compliance with all applicable
employment, human rights, equity and similar legislation and there are
no existing (or, to the Knowledge of the Seller Parties, contemplated)
complaints, proceedings or orders in respect thereof.
(i) Pension and Termination Funding. Except as disclosed in Part VIII of
Schedule 3.2(6), all liabilities and legal obligations of CLC in
respect of pension, retirement and other benefits, contractual
termination of employment payments or past service payments to
employees and officers of CLC are reflected in the Financial
Statements or are fully funded.
(j) Except as disclosed in Part IX of Schedule 3.2(6), since December 31,
2004, and except as required by Applicable Law or collective
bargaining agreements disclosed in Part I of Schedule 3.2(6), no
change has been made in terms of employment, including pension
commitments, by CLC, which would increase total payroll costs of CLC
by more than five (5) percent per annum, and no change has been made
in the terms of employment of any person employed by CLC who as of
December 31, 2004 was entitled to a salary at an annual rate exceeding
$75,000.
32
(k) Except as disclosed in Part X of Schedule 3.2(6), the Las Cruces
Companies have not made any employment commitments to any Governmental
Body in connection with the Project.
(7) Insurance Policies. Attached hereto as Schedule 3.2(7) is a true and
complete list of all insurance policies maintained by the Las Cruces
Companies including the insurer, the amount of the coverage, all deductible
amounts, the type of insurance, the policy number, any pending claims
thereunder, any claims in the three years prior to the date hereof in
excess of $100,000, and, in respect of each policy that will terminate or
expire prior to or at the Time of Closing (whether or not as a result of
the completion of the transactions contemplated hereby) a notation to such
effect. All such policies of insurance are in full force and effect and
none of the Las Cruces Companies, nor any of the Seller Parties is in
default of payment of any premium or other amount under the terms of any
such policy. The Las Cruces Companies have all insurance required, in the
relevant jurisdictions, by Applicable Law or the terms of any Governmental
Approval.
(8) General.
(a) Carrying on the Business in the Ordinary Course. Since January 1,
2005, the Las Cruces Companies have carried on the Business in the
Ordinary Course of Business in a manner generally consistent with the
Feasibility Study (other than entering into the Leucadia Loan, the
transactions contemplated by this Agreement and the transactions
contemplated by the Merger Agreement).
(b) Intellectual Property. Set out in Part I of Schedule 3.2(8)(b) is a
complete and accurate list of all material trade marks, service marks,
trade names, patents, inventions, trade secrets, domain names,
copyrights, industrial designs, applications for the registrations
thereof and other industrial and intellectual property (collectively
"Intellectual Property"), owned or used by the Las Cruces Companies in
order to carry on the Business as currently conducted. The Las Cruces
Companies have the right to use all such Intellectual Property as
required in order to carry on the Business as currently conducted.
Except for Intellectual Property that is licensed and identified as
such in Part II of Schedule 3.2(8)(b), the Las Cruces Companies are
the registered and beneficial owners of such Intellectual Property,
with good and valid title thereto. Except as disclosed in Part III of
Schedule 3.2(8)(b):
(i) the Las Cruces Companies are not required to pay any royalties,
fees or other consideration to any Person with respect to the use
by the Las Cruces Companies of such Intellectual Property;
(ii) all Intellectual Property for which registrations have been
obtained or sought is in good standing and has been duly
registered or applications to register the same have been duly
filed, other than any such failure to be in good standing,
33
registered or filed that individually or in the aggregate have
not had and would not reasonably be expected to result in a
Material Adverse Change in respect of the Las Cruces Companies;
(iii) neither of the Seller Parties has received notice that the
conduct of the Business by the Las Cruces Companies infringes
upon the Intellectual Property of any other Person; and
(iv) no Person has been granted any licence or other right to any
Intellectual Property used by the Las Cruces Companies.
(c) Use of Name. Except as disclosed on Schedule 3.2(8)(c), each of the
Las Cruces Companies has the right to use its name in the conduct of
the Business and as a corporate name. The use of their names does not
infringe on the rights of any other Person, and no Person other than
the Seller Parties has the right to require any of them to change its
name whether for corporate purposes or in connection with the conduct
of the Business.
(d) Powers of Attorney. Schedule 3.2(8)(d) sets out all powers of attorney
granted by any of the Las Cruces Companies which remain in effect as
of the date hereof.
3.3 Representations and Warranties of Inmet
In order to induce the Seller Parties to enter into this Agreement
Inmet represents and warrants to the Seller Parties (and acknowledges that each
of the Seller Parties is relying on these representations and warranties in
connection with the execution of this Agreement and the transactions
contemplated hereby) that:
(1) Due Incorporation. Inmet is duly incorporated and organized under the
laws of Canada and validly exists thereunder. Inmet is duly qualified to
carry on its business and is in good standing, if applicable, in each
jurisdiction in which the conduct of its business or the ownership, leasing
or operation of its property and assets requires such qualification, except
where the failure to be so qualified individually or in the aggregate, has
not resulted in, and would not reasonably be expected to result in, a
Material Adverse Change in respect of Inmet, and has all requisite power
and authority to carry on its business and to own, lease and operate its
property and assets.
(2) Due Authorization. Inmet has the necessary corporate power and
authority to execute and deliver the Transaction Documents to which it is
or will be a party and to perform its obligations thereunder. The execution
and delivery of the Transaction Documents to which it is a party by Inmet
and the performance of its obligations thereunder has been duly authorized
by all necessary corporate actions on its part. Such execution, delivery
and performance by Inmet do not require any consent of, or notification to,
any Person, or any action, consent or notification under any Applicable Law
which has not already been, or will not by the Time of Closing have been,
obtained or made.
34
(3) Enforceability. The Transaction Documents to which Inmet is a party
have been or will be, as applicable, duly executed and delivered by Inmet
and constitute, or will constitute when executed and delivered by Inmet and
by the other parties thereto, valid and binding obligations of Inmet
enforceable against Inmet in accordance with their respective terms, except
as enforceability (i) may be limited by bankruptcy, insolvency,
reorganization or other Applicable Law, now or later in effect, affecting
the enforcement of creditors' rights generally and (ii) is subject to
general principles of equity, whether considered in a proceeding at law or
in equity.
(4) No Bankruptcy. There has not been any petition or application filed by
any Member of the Inmet Group or any proceeding commenced which has not
been discharged, by Inmet or any of the Material Inmet Subsidiaries or, to
the Knowledge of Inmet, by OTML or, to the Knowledge of Inmet, against
Inmet, the Material Inmet Subsidiaries, OTML, or with respect to any assets
of Inmet, the Material Inmet Subsidiaries or OTML under any Applicable Law
relating to bankruptcy, insolvency, reorganization, fraudulent transfer,
compromise, arrangements, insolvency, readjustment of debt or creditors'
rights, and no assignment has been made by Inmet or any of the Material
Inmet Subsidiaries, or to the Knowledge of Inmet, OTML, for the benefit of
creditors.
(5) No Dissolution. No meeting has been convened or resolution proposed or
petition proposed or order made for Inmet or any of the Material Inmet
Subsidiaries or, to the Knowledge of Inmet, OTML, to be wound up or
dissolved.
(6) Non-Violation. The execution and delivery by Inmet of the Transaction
Documents to which it is a party and the consummation of the transactions
contemplated thereby do not or will not, as applicable, (i) conflict with,
violate, result in a breach of, or constitute a default under any provision
of the articles or by-laws of Inmet, (ii) violate, conflict with or result
in the breach or termination of or modification, or otherwise give any
other Person the right to terminate, or constitute a default, with or
without notice, the lapse of time or both, or cause the acceleration of any
obligation, under the terms of any agreement or instrument to which Inmet
is a party or by which its properties or other assets may be bound, or give
any Person the right to increase the obligations of Inmet or (iii) violate
any Applicable Law, other than, in the cases of clauses (ii) or (iii), any
such violations, conflicts, breaches, terminations, modifications,
defaults, accelerations or obligations that individually or in the
aggregate have not, and would not reasonably be expected to, result in a
Material Adverse Change in respect of Inmet.
(7) Subsidiaries. Each of the Material Inmet Subsidiaries, and, to the
Knowledge of Inmet, OTML is duly incorporated, organized and subsisting
under the laws of its respective jurisdiction of incorporation, is duly
qualified to carry on its business and is in good standing in each
35
jurisdiction in which the conduct of its business or the ownership, leasing
or operation of its property and assets requires such qualification, except
where the failure to be so qualified individually or in the aggregate, has
not resulted in, and would not reasonably be expected to result in, a
Material Adverse Change in respect of Inmet, and has all requisite
corporate power and authority to carry on its business, to own, lease and
operate its property and assets.
(8) Capital. The authorized capital of Inmet consists of an unlimited
number of common shares, an unlimited number of preference shares and an
unlimited number of subordinate voting participating shares, of which
41,723,782 common shares (and no preference shares or subordinate voting
participating shares) were issued and outstanding as fully paid and
non-assessable on May 2, 2005.
(9) No Obligations to Issue Securities. Except as disclosed in Schedule
3.3(9), no Person has any agreement, option, right or privilege (whether
pre-emptive, contractual or otherwise) capable of becoming an agreement for
the purchase, acquisition, subscription for or issuance of any of the
unissued shares or other securities of Inmet or any of its subsidiaries or,
to the Knowledge of Inmet, OTML, other than stock options, deferred share
units, or other rights granted pursuant to employment compensation plans.
(10) No Material Adverse Change. Except as disclosed in the Inmet Public
Record as of the date of this Agreement, there has been no Material Adverse
Change in respect of Inmet since January 1, 2005.
(11) Inmet Consideration Shares.
(a) All necessary corporate action and other necessary steps and
proceedings have been taken or will have been taken at or prior to the
Time of Closing by Inmet so as to validly issue the Inmet
Consideration Shares to MK Resources at the Time of Closing.
(b) Provided that neither of the Seller Parties is a Beneficial Owner
(within the meaning given to such term in section 1.1(d) of the Inmet
Shareholder Rights Plan) of any shares of Inmet, neither of the Seller
Parties shall, solely as a result of the Transaction, become an
Acquiring Person as defined in section 1.1(a) of the Inmet Shareholder
Rights Plan, including, in the case of Leucadia, as a result of the
transfer of any Inmet Consideration Shares to Leucadia or one or more
Members of the Leucadia Group.
(c) Upon issue, the Inmet Consideration Shares will be validly issued and
outstanding as fully paid and non-assessable shares registered in the
name of MK Resources, free and clear of all trading restrictions in
Canada (except for the four-month hold period imposed by the operation
of Canadian Securities Laws). MK Resources will have good and
registrable title to the Inmet Consideration Shares, free of Liens.
36
(d) Assuming the truth of the representations set forth in Section
3.1(17), the offer and sale of the Inmet Consideration Shares under
this Agreement are exempt from registration under U.S. Securities Laws
and exempt from the prospectus and registration requirements under
Canadian Securities Laws.
(12) Inmet Public Disclosure and Regulatory Compliance.
(a) Inmet is, and for more than four months preceding the date hereof, it
has been, a reporting issuer in good standing within the meaning of
the Securities Act (Ontario) and the other applicable Canadian
Securities Laws and, and Inmet is not, and for more than four months
preceding the date hereof, it has not been, in default of any
requirement of the Securities Act (Ontario) or the regulations
thereunder and the other applicable Canadian Securities Laws. Without
limiting the foregoing, Inmet has filed with the Canadian securities
regulatory authorities on a timely basis all forms, reports and
documents required to be filed by it under Canadian Securities Laws.
(b) The Inmet Public Record documents filed by Inmet with the Ontario
Securities Commission and the other Canadian securities regulatory
authorities complied, at the time of their filing, with the
requirements of the Securities Act (Ontario) and all other Canadian
Securities Laws and all the information and statements contained
therein were at the respective times of filing thereof true and
correct and contained no misrepresentation (as defined in the
Securities Act (Ontario). There is no disclosure required by Canadian
Securities Laws with respect to Inmet which has not been made, and no
confidential disclosure has been made by or on behalf of Inmet under
any Canadian Securities Laws.
(c) Inmet is in full compliance with all material requirements of the
Toronto Stock Exchange applicable to listed companies.
(d) The consolidated audited financial statements of Inmet contained in
its 2004 Annual Report, 2003 Annual Report and 2002 Annual Report,
including the notes thereto, were prepared in accordance with Canadian
GAAP consistently applied throughout the periods covered thereby and,
subject to annual year end adjustments in the case of the unaudited
interim financial statements, present fairly in all material respects
the financial position of Inmet as at the date thereof and the results
of its operations and cash flow for the periods covered thereby.
(e) No order suspending trading of Inmet securities has been issued or is
pending or, to the Knowledge of Inmet, threatened.
37
(13) Absence of Undisclosed Liabilities. Inmet has no liabilities or
obligations of any nature or kind (whether accrued, absolute, contingent or
otherwise), other than (i) those reflected in the Inmet Public Record, and
(ii) those incurred since December 31, 2004 in the ordinary course of
business.
(14) Tax Matters.
(a) Inmet has timely filed all Tax Returns required to be filed under all
applicable Tax laws, and such Tax Returns are true and complete in all
material respects;
(b) all material Taxes due and payable by Inmet have been timely paid and
all material deficiencies asserted or assessments made against Inmet
as a result of any examination by any Taxing Authority of Tax Returns
filed in previous years have been fully paid or contested in good
faith and have been accrued for in accordance with Canadian GAAP;
(c) Inmet has not given any waiver of any statute of limitations relating
to the payment of any Taxes with respect to its business or
operations;
(d) all material Tax liabilities of Inmet in respect of any period ending
on or prior to the date hereof and that are not yet due and payable
have been accrued in the books and accounts of Inmet or have been paid
and such payments are reflected in such books and accounts;
(e) there are no notices of assessment or reassessment of unpaid Tax
liabilities issued by any Tax Authority which have been received by
Inmet;
(f) Inmet is not liable for any Taxes of a Third Party under any contract
or agreement, or transferee of such Third Party, or by any Applicable
Law (except for value added, sales and similar Taxes that are
customarily paid by a customer under a sales or service contract and
collected by a seller);
(g) Inmet has not been advised and is not aware that it is a passive
foreign investment company ("PFIC") within the meaning of Section 1297
of the Code;
(h) Inmet has not been advised and is not aware that it is a controlled
foreign corporation ("CFC") with the meaning of Section 957 of the
Code; and
(i) Inmet has withheld from all material payments to Persons with respect
to whom it is required by Applicable Law to withhold any amounts, the
amount of all material Taxes and other deductions required to be
withheld therefrom and has paid the same to the relevant Tax
Authorities within the time required under Applicable Law. Inmet has
collected all material Taxes and other amounts which it is required by
Applicable Law to collect and has paid the same to the relevant Tax
Authorities within the time required under Applicable Law.
38
(15) Mining Rights and Licenses. All material mining rights, concessions
and licenses relating to the Material Inmet Mining Properties, and, to the
Knowledge of Inmet, those relating to Ok Tedi, are in full force and effect
and, to the Knowledge of Inmet, no event has occurred that could reasonably
be expected to result in the revocation or withdrawal of such concessions,
rights and licenses.
(16) Compliance with Approvals. Each of the Material Inmet Mining
Properties, and, to the Knowledge of Inmet, Ok Tedi, complies with and is
being developed, and all activities on the Material Inmet Mining
Properties, and, to the Knowledge of Inmet, Ok Tedi, are being carried out,
in all material respects in accordance with all covenants, conditions,
restrictions, requirements and reservations in the Governmental Approvals
applicable thereto. There are no terms, conditions or other requirements of
any Governmental Approvals which the relevant Members of the Inmet Group
have not been able to fulfill (or are not expected to be able to fulfill)
when required to do so, in order to allow lawful operation of the Material
Inmet Mining Properties, and, to the Knowledge of Inmet, Ok Tedi.
(17) Compliance with Laws. The Members of the Inmet Group have owned and
developed the Material Inmet Mining Properties, and, to the knowledge of
Inmet, Ok Tedi, in compliance in all material respects with Applicable Law.
Inmet has not received any notice of non-compliance and, to the Knowledge
of Inmet, there are no facts which could reasonably be expected to give
rise to a notice of non-compliance, with Applicable Law.
(18) Environmental Issues. Except as disclosed in Inmet's 2004 Annual
Report or its 2004 Annual Information Form (and to the Knowledge of Inmet,
in the case of Ok Tedi):
(a) there have not been any investigations, proceedings, charges or
convictions for material non-compliance with any Environmental Laws in
connection with the Material Inmet Mining Properties or Ok Tedi;
(b) there are no proceedings with respect to the Material Inmet Mining
Properties or Ok Tedi which allege the material violation of, or
material non-compliance with, any Environmental Laws;
(c) there is no pending or, to the Knowledge of Inmet, threatened
investigation relating to any material non-compliance or alleged
material non-compliance with any Environmental Law;
(d) neither Inmet nor any of its subsidiaries has caused or permitted the
discharge of any substance in connection with the Material Inmet
Mining Properties, other than in material compliance with
Environmental Laws;
(e) there are no orders, directives or requests by a Governmental Body
with respect to remedial or corrective actions necessary to ensure
compliance with any Applicable Law, including Environmental Laws, nor
are any remedial or corrective actions contemplated, required or being
currently undertaken by Inmet or its subsidiaries; and
39
(f) no written notice or other communication has been received by Inmet or
its subsidiaries from any Governmental Body in respect of the Material
Inmet Mining Properties or Ok Tedi that remedial or corrective action
is or may be required pursuant to any Governmental Approval or
Applicable Law.
3.4 Survival of the Representations, Warranties and Covenants
(1) The representations and warranties set forth in Sections 3.1, 3.2 and
3.3 shall each, from the Closing Date, survive the transactions herein
provided for as follows:
(a) the representations and warranties set out in Sections 3.1(1) to
3.1(10), 3.2(4)(a), 3.3(1) to 3.3(5), 3.3(8), 3.3(9) and 3.3(11) shall
survive indefinitely and shall be of unlimited duration;
(b) any representations or warranties that prove to be false as a result
of any fraudulent misrepresentation made by the Person giving such
representation or warranty shall survive indefinitely and shall be of
unlimited duration;
(c) the representations and warranties relating to the Tax liabilities set
out in Sections 3.2(1)(g), 3.2(1)(h) and 3.3(14) shall terminate at
the expiration of the Tax Reassessment Period;
(d) the remaining representations and warranties set forth in Sections
3.1, 3.2 and 3.3 shall continue in full force and effect for a period
of eighteen months from the Closing Date.
(2) The covenants of the Seller Parties and Inmet set out in this Agreement
shall survive the transactions herein provided for and notwithstanding such
completion shall continue in full force and effect in accordance with the
terms thereof to the extent necessary to give commercial effect thereto.
ARTICLE 4 - CONDITIONS
----------------------
4.1 Conditions for the Benefit of Inmet
(1) The sale by the Seller Parties and the purchase by Inmet of the
Purchased Shares is subject to the following conditions which are for the
exclusive benefit of Inmet to be performed or complied with at or prior to
the Time of Closing:
(a) no temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other
legal restraint or prohibition shall be in effect (i) preventing the
consummation of the transactions contemplated by this Agreement; or
40
(ii) preventing the Las Cruces Companies from developing or operating
the Project in all material respects as contemplated in the
Feasibility Study or otherwise materially impairing the value of the
Project;
(b) all required Governmental Approvals listed on Schedule 4.1(1)(b) shall
have been obtained on terms acceptable to Inmet, acting in a
commercially reasonable manner, and shall remain in effect, and all
required notices to Governmental Bodies listed on Schedule 4.1(1)(b)
shall have been made;
(c) the Reorganization shall have been completed in accordance with
Schedule 4.1(1)(c);
(d) a commitment letter containing all material terms (including
representations, warranties, covenants, conditions, events of default,
market flex provisions, material adverse change definition and
completion test) for fully-underwritten and committed project
financing of not less than $255 million and a 66 million Euro bridge
facility from third-party lenders, in form reasonably acceptable to
Inmet acting in good faith, shall have been executed and delivered by
the parties thereto other than Inmet;
(e) the Shareholders Agreement shall have been executed and delivered by
the parties thereto, other than Inmet, substantially on the terms set
out in the term sheet attached as Schedule 4.1(1)(e);
(f) the parties to the Consent Required Contracts listed in Schedule
3.2(3)(c) other than the Las Cruces Companies shall have delivered all
necessary consents, approvals or waivers, which consents, approvals
and waivers must be in form and substance satisfactory to Inmet acting
in a commercially reasonable manner;
(g) no Material Adverse Change in respect of the Las Cruces Companies,
taken as a whole, shall have occurred since December 31, 2004;
(h) each of the representations and warranties of the Seller Parties in
this Agreement (read without any materiality qualifications) shall be
true and correct as of the Time of Closing as though made at and as of
the Time of Closing (except to the extent such representations and
warranties speak as of an earlier date), other than such failures to
be true and correct that, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Change in
respect of the Las Cruces Companies;
(i) The Seller Parties and the Las Cruces Companies shall have performed
or complied with, in all material respects, all of the terms,
covenants and conditions of this Agreement to be performed or complied
with by them at or prior to the Time of Closing;
41
(j) Inmet shall be furnished with such certificates or other instruments
of the Seller Parties and the Las Cruces Companies or of officers of
any of such as Inmet or its counsel may reasonably think necessary in
order to establish that the conditions in Sections 4.1(h) and 4.1(i)
have been satisfied;
(k) all Directors and officers of each of the Las Cruces Companies
specified by Inmet (except any such Directors or officers who are
unaffiliated with the Seller Parties other than solely through the Las
Cruces Companies) shall have tendered their resignations to be
effective 30 days after the Time of Closing or such other date as
Inmet may reasonably specify;
(l) each of the Seller Parties and other Members of the Leucadia Group as
set out in Schedule 4.1(1)(l) shall have provided full releases
releasing each of the Las Cruces Companies from all claims arising
from any cause, matter or thing arising at or prior to the Time of
Closing (other than the Leucadia Loan) and terminating all Contracts
(other than the Leucadia Loan) with any of the Las Cruces Companies;
(m) all necessary steps and proceedings shall have been taken to permit
the Purchased Shares to be duly and regularly transferred to and
registered in the name of Inmet;
(n) the loans owing by MK Netherlands to MK Resources shall have been
assigned on a 70%/30% basis to Inmet and Leucadia, respectively and
the debt facilities provided by MK Resources to CLC shall have been
terminated;
(o) the Seller Parties shall have delivered to Inmet a favourable opinion
of Leucadia's counsel, as to matters governed by the laws of the
United States of America, and opinions of local counsel as to the laws
of the Netherlands and Spain, in form and substance acceptable to
Inmet, acting reasonably and in good faith; and
(p) Members of the Leucadia Group, other than the Las Cruces Companies,
shall, at their option, either (i) have delivered to the office of
Inmet or as directed by it, all original Books and Records, or copies
if originals are unavailable and all data, in each case, of the Las
Cruces Companies (or of the Seller Parties relating to the Project to
the extent the Seller Parties have records or data not also in the
possession of the Las Cruces Companies) relating to the Project, in
written or electronic form, in their possession or control consisting
of, or based on, Confidential Information (other than information
generated by the Seller Parties or received by the Seller Parties with
respect to evaluations of offers relating to the Project or the Las
Cruces Companies) and a senior officer of Leucadia shall have provided
to Inmet a certificate to this effect, or (ii) have undertaken in
42
writing and made arrangements satisfactory to Inmet, acting in a
commercially reasonable manner, to complete such deliveries no later
than thirty (30) days after the Closing Date (provided that Leucadia
may retain copies of any Books and Records which have been delivered
to Inmet).
(2) If any term, covenant or condition to be performed, satisfied or
complied with by the Seller Parties or the Las Cruces Companies for the
benefit of Inmet shall not have been performed, satisfied or complied with
in all material respects by the Termination Date, and such failure to
perform, satisfy or comply would give rise to the failure of any of the
conditions set forth in Section 4.1(1). Inmet may, without limiting any
other right that it may have, at its sole option:
(a) terminate this Agreement by notice to the Seller Parties and, in such
event, Inmet shall be released from all obligations hereunder; or
(b) waive compliance with any such term, covenant or condition in whole or
in part on such terms as may be agreed upon without prejudice to any
of its rights of termination in the event of non-performance of any
other term, covenant or condition in whole or in part.
(3) If, because a material term, covenant or condition was not performed,
satisfied or complied with in all material respects as a result of a
willful breach of this Agreement by, or the gross negligence of, a Seller
Party or a Las Cruces Company, (x) Inmet terminates this Agreement pursuant
to Section 4.1(2)(a) or this Agreement is terminated pursuant to Section
4.4(1) (in either case as the result of the failure of any of the
conditions set forth in Section 4.1(1) where such failure is solely
attributable to a willful breach of this Agreement by, or the gross
negligence of, a Seller Party or a Las Cruces Company), or (y) the
Agreement is terminated pursuant to Section 7.2(2) (it being understood
that (a) this Section 4.1(3) shall not apply to any termination pursuant to
Section 7.2 unless a Seller Party has willfully breached a material
provision of Section 7.2, and (b) the exercise of its fiduciary duties by
the Board of Directors of MK Resources cannot be a willful breach by or
gross negligence of a Seller Party or a Las Cruces Company), the Seller
Parties shall pay Inmet the amount, if any, by which (i) the total of any
amounts received pursuant to Section 7.2(5) of this Agreement, is less than
(ii) the sum of (a) $7,000,000 representing liquidated damages and not as a
penalty, and (b) up to $3,000,000 for reasonable fees and expenses incurred
by Inmet (such fees and expenses to be evidenced by invoices, receipts or
other evidence) during the due diligence process and in the negotiation and
preparation of the Agreement and any related legal or business documents
and not recovered by reason of such termination. Except as provided in
Section 4.1(4) to the extent such provision applies, any payment under this
Section 4.1(3) will be the exclusive remedy for, and in full satisfaction
of, any and all Claims that Inmet may have against the Seller Parties and,
following payment to Inmet, Inmet will have no other action or Claim which
it may assert against the Seller Parties.
43
(4) If this Agreement is terminated under the circumstances set out in
Section 4.1(3), and either of the Seller Parties enters into a written
agreement with respect to any of the transactions described in Section
7.2(1)(a) with a party other than Inmet within 6 months following the
termination of this Agreement which transaction is completed within 1 year
from the termination of this Agreement (an "Alternative Transaction"), then
Leucadia shall pay Inmet within 30 days following the completion of the
Alternative Transaction 100% of the amount of the Excess Value determined
pursuant to Section 7.2(5)(b). For that purpose, the expression
"Alternative Transaction" will be substituted for the expression "Superior
Proposal" in the definition of "Excess Value". For the avoidance of doubt,
if payments have been made under Section 7.2(5) and/or 4.1(3) and it is
determined that Inmet is entitled to payment under this Section 4.1(4), the
amounts previously paid under Section 7.2(5) and/or 4.1(3) (other than fees
and expenses paid under Section 4.1(3)) shall be deducted from any payment
otherwise due under this Section 4.1(4), and no other payment shall be
payable by the Seller Parties under any other provision of this Agreement.
4.2 Conditions for the Benefit of the Seller Parties
(1) The sale by MK Resources and the purchase by Inmet of the Purchased
Shares is subject to the following conditions which are for the exclusive
benefit of the Seller Parties to be performed or complied with at or prior
to the Time of Closing:
(a) no temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other
legal restraint or prohibition shall be in effect (i) preventing the
consummation of the transactions contemplated by this Agreement; or
(ii) preventing the Las Cruces Companies from developing or operating
the Project in all material respects as contemplated in the
Feasibility Study or otherwise materially impairing the value of the
Project;
(b) all required Governmental Approvals listed in Schedule 4.1(1)(b) shall
have been obtained and all required notices to Governmental Bodies
listed in Schedule 4.1(1)(b) shall have been made;
(c) the Reorganization shall have been completed in accordance with
Schedule 4.1(1)(c);
(d) a commitment letter containing all material terms (including
representations, warranties, covenants, conditions, events of default,
market flex provisions, material adverse change definition and
completion test) for fully-underwritten and committed project
financing of not less than $255 million and a 66 million Euro bridge
facility from third-party lenders in form reasonably acceptable to
Leucadia acting in good faith, shall have been executed and delivered
by the parties thereto other than the Seller Parties;
44
(e) Inmet shall have purchased 70% of the Leucadia Loan for 64.6% of the
face amount or if, prior to Closing, Leucadia forgives $2,700,000 of
indebtedness owed to it by MK Netherlands under the Leucadia Loan,
Inmet shall have purchased 70% of the Leucadia Loan for 70% of the
face amount;
(f) the Shareholders Agreement shall have been executed and delivered by
Inmet substantially on the terms set out in the term sheet attached as
Schedule 4.1(1)(e);
(g) the Toronto Stock Exchange shall have approved the listing of the
Inmet Consideration Shares, and at the Time of Closing, the Inmet
Consideration Shares shall be listed and posted for trading on the
Toronto Stock Exchange;
(h) no Material Adverse Change in respect of Inmet shall have occurred
since December 31, 2004;
(i) each of the representations and warranties of Inmet forth in this
Agreement (read without any materiality qualifications) shall be true
and correct as of the Time of Closing as though made at and as of the
Time of Closing (except to the extent such representations and
warranties speak as of an earlier date), other than such failures to
be true and correct that, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Change in
respect of Inmet;
(j) Inmet shall have performed or complied with, in all material respects,
all of the terms, covenants and conditions of this Agreement to be
performed or complied with by it at or prior to the Time of Closing;
(k) Inmet shall have provided to the Seller Parties such certificates,
affidavits or statutory declarations of Inmet or of officers of Inmet
as the Seller Parties or their counsel may reasonably think necessary
in order to establish that the conditions in Sections 4.2(1)(i) and
4.2(1)(j) have been satisfied;
(l) all necessary steps and proceedings shall have been taken to permit
the Inmet Consideration Shares to be duly issued to and registered in
the name of MK Resources; and
(m) Inmet shall have delivered to the Seller Parties a favourable opinion
of counsel to Inmet as to matters governed by the laws of Canada
(including, without limitation, as to the free tradability of the
Inmet Consideration Shares after the four-month hold period) and in
form and substance acceptable to the Seller Parties, acting reasonably
and in good faith;
45
(2) If any term, covenant or condition to be performed, satisfied or
complied with by Inmet for the benefit of the Seller Parties shall not have
been performed or complied with in all material respects by the Termination
Date, and such failure to perform, satisfy or comply would give rise to the
failure of any of the conditions set forth in Section 4.1(1), the Seller
Parties may, without limiting any other right that they may have, at their
sole option, either:
(a) terminate this Agreement by notice to Inmet and, in such event, each
of the Seller Parties shall be released from all obligations
hereunder; or
(b) waive compliance with any such term, covenant or condition in whole or
in part on such terms as may be agreed upon without prejudice to any
of their rights of termination in the event of non-performance of any
other term, covenant or condition in whole or in part.
(3) If, because a material term, covenant or condition was not performed,
satisfied or complied with in all material respects as a result of a
willful breach of this Agreement by, or the gross negligence of, Inmet, the
Seller Parties terminate this Agreement pursuant to Section 4.2(2)(a) or
the Agreement is terminated pursuant to Section 4.4(1) (in either case as a
result of the failure of one of the conditions set out in Section 4.2(1)
where such failure is solely attributable to a willful breach of this
Agreement by, or the gross negligence of, Inmet), Inmet shall pay the
Seller Parties (as directed by them) the sum of (a) $7,000,000
representing liquidated damages and not as a penalty, and (b) up to
$3,000,000 for reasonable fees and expenses incurred by the Seller Parties
(such fees and expenses to be evidenced by invoices, receipts or other
evidence) during the due diligence process and in the negotiation and
preparation of this Agreement and any related legal or business documents
and not recovered by reason of such termination. Any payment under this
Section 4.2(3) will be the exclusive remedy for, and in full satisfaction
of, any and all Claims that the Seller Parties may have against Inmet and,
following payment to the Seller Parties, the Seller Parties will have no
other action or Claim which they may assert against Inmet. For the
avoidance of doubt, if payments have been made under Section 4.4(2) and it
is determined that the Seller Parties are entitled to payment under this
Section 4.2(3), the amounts previously paid under Section 4.4(2) shall be
deducted from any payment otherwise due under this Section 4.2(3), and no
other payment shall be payable by Inmet under any other provision of this
Agreement.
4.3 Procedure for Satisfaction of the Conditions
(1) Subject to Section 7.2, each of the Parties undertakes to use all
commercially reasonable endeavours to ensure the satisfaction of the
conditions set out in Sections 4.1 and 4.2 over which it has control as
promptly as possible. If any Party becomes aware of a Contract not listed
in Schedule 3.2(3)(c) that meets the definition of a Consent Required
Contract, such Party shall promptly notify the other Parties of such
Contract, and such Contract shall be deemed a Consent Required Contract for
purposes the condition set forth in Section 4.1(1)(f).
46
(2) Subject to Section 7.2, the Parties shall co-operate one with the other
to obtain the satisfaction of the conditions in Sections 4.1(1)(b) and
4.2(1)(b) and, in connection therewith, each Party Group shall:
(a) not communicate or meet with any Governmental Body in connection with
obtaining the satisfaction of such condition without first consulting
with and obtaining the agreement of the other Party Group regarding
the contents of such communication or the questions to be asked or
information conveyed at such meeting and give the other Party Group
the opportunity to join in such communication or participate in such
meeting;
(b) deliver to the other Party Group copies of relevant communications
from such Governmental Body in a timely fashion; and
(c) submit to the other Party Group for comment and prior written consent
by the other Party Group drafts of any submissions to be made to and
agreements to be entered into with such Governmental Body.
4.4 Termination; Effect of Termination
(1) If the Closing Date does not occur on or before the Termination Date
this Agreement shall automatically terminate at 11:59 p.m. (Eastern
Standard Time) on the Termination Date.
(2) If Inmet enters into, or agrees to enter into any amalgamation, merger,
plan of arrangement, or other business combination or similar transaction
which would reasonably be expected to result in a Material Adverse Change
in respect of Inmet, the Seller Parties may, without limiting any other
right that they may have, at their sole option, terminate this Agreement by
notice to Inmet and, in such event, (a) each of the Seller Parties shall be
released from all obligations hereunder and (b) Inmet shall be liable to
the Seller Parties for reasonable fees and expenses incurred by them during
the due diligence process and in the negotiation and preparation of this
Agreement and any related legal or business documents up to a maximum of
$3,000,000 (such fees and expenses to be evidenced by invoices, receipts
and other evidence).
(3) In the event of the termination of this Agreement as provided under
this Section 4.4, Sections 4.1(2)(a) or 4.2(2)(a) or Section 7.2(2), this
Agreement shall forthwith become null and void, except for Sections 4.1(3),
4.1(4), 4.2(3), 7.1 (other than 7.1(1)), 7.2 and 7.7 of this Agreement,
which shall survive after the termination.
ARTICLE 5 - COVENANTS
---------------------
5.1 Conduct of Business During the Interim Period
(1) The Parties shall establish a management committee (the "Management
Committee") consisting of two (2) members appointed by the Seller Parties
and two (2) members appointed by Inmet. Each of the Seller Parties and
Inmet may appoint one or more alternates to act in the absence of a regular
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member of the Management Committee appointed by it. Any alternate so acting
shall be deemed a member. The Seller Parties and Inmet shall make or change
appointments to the Management Committee by notice to the other members.
The Seller Parties shall designate one member they appoint to serve as the
Chair of the Management Committee.
(2) During the Interim Period, the Management Committee shall determine:
(a) the manner in which CLC implements the Interim Period Development
Plan; and
(b) the procedures, methods and actions of CLC with respect to the
Business.
(3) All actions by the Management Committee shall be consistent with the
Interim Period Development Plan; provided, however, that the Seller Parties
and Inmet by mutual consent shall have the right, from time to time during
the Interim Period, to revise the Interim Period Development Plan.
(4) The Management Committee shall hold regular meetings at such time and
places agreed to by the members. The Chair shall give two (2) days notice
to the members of such meetings, which may be waived. In case of an
emergency or other situation requiring prompt action, the Chair may call a
special meeting on reasonable notice. Members may attend meetings in person
or by telephone.
(5) All decisions by the Management Committee shall require a unanimous
vote of the members in attendance at a regular or special meeting at which
there is a quorum. A quorum of the Management Committee shall exist if at
least one member appointed by the Seller Parties and one member appointed
by Inmet are present at the meeting in person or by telephone.
(6) During the Interim Period, subject to the availability of funds, the
Seller Parties will take commercially reasonable, good faith actions to
cause CLC to:
(a) carry on the Business as directed by the Management Committee;
(b) implement all directives of the Management Committee with respect to
the implementation of the Interim Period Development Plan;
(c) permit members of the Management Committee to be present at the
Project, to participate in management discussions regarding the
Project with senior management of CLC, including discussions relating
to continuing the development of the Project, conducting drilling
work, capital spending and development;
(d) use reasonable commercial efforts to preserve its business
organization, including the services of its officers and employees and
their business relationships with suppliers and others having business
dealings with them; and
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(e) permit the Management Committee to become fully and effectively
involved in all work relating to the development of the Project in
accordance with the Interim Period Development Plan and the
Feasibility Study.
(f) operate the Business and continue to develop the Project, in
accordance with the Interim Period Development Plan;
(g) bring all matters relating to the Business or the Project with a value
or cost of at least $50,000 before the Management Committee;
(h) do all acts and things necessary in order to ensure that the Mining
Concessions remain in good standing, including making any required
expenditures and conducting any necessary work;
(i) do all acts and things necessary in order to ensure that CLC remains
eligible to receive the Subsidies;
(j) maintain all its assets, whether owned or leased, in their current
condition, subject to normal course wear and tear, and maintain
insurance upon all of its assets comparable in amount, scope and
coverage to that in effect on the date of this Agreement; and
(k) maintain their books, records and accounts in the Ordinary Course of
Business.
(7) During the Interim Period, the Seller Parties shall use their
commercially reasonable, good faith efforts to ensure that the following
acts or matters, to the extent that they are in the control of the Seller
Parties, will not occur in relation to the Business or the Project or the
Las Cruces Companies without the prior written consent of Inmet:
(a) any development of any material aspect of the Project except as
disclosed to and approved by the Management Committee;
(b) any disposal, lease, or license of any material asset otherwise than
in the Ordinary Course of the Business;
(c) any change in the share or loan capital of any of the Las Cruces
Companies, except as contemplated by this Agreement or the Shareholder
Loan Agreements;
(d) any declaration, authorization, making or payment of a dividend in
cash, in specie or in kind by, or any reduction in paid-up capital of,
the Las Cruces Companies;
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(e) any creation, allotment or issue of, or any grant of any option or
other right to subscribe or purchase, or any redemption, purchase or
repurchase of any share of any of the Las Cruces Companies or
securities convertible into or exchangeable for such shares;
(f) the incurrence of any liabilities to the Seller Parties, other than
borrowings from time to time under the Credit Agreements as in effect
on the date of this Agreement and intercompany borrowings;
(g) the payment of any management charge or fee to any Member of the
Leucadia Group by the Las Cruces Companies;
(h) any creation or grant of a Lien (other than a Permitted Encumbrance)
on, over or affecting any of the outstanding securities of any of the
Las Cruces Companies, or on the whole or any substantial part of the
assets of any of the Las Cruces Companies, except as contemplated by
this Agreement or the Shareholder Loan Agreements;
(i) the making of any loan or granting of credit by any of the Las Cruces
Companies to any Person, except for intercompany loans to MK Resources
or any of the Las Cruces Companies;
(j) any amendment to the constitutional documents of any of the Las Cruces
Companies;
(k) any change to the accounting policies or practices of any of the Las
Cruces Companies, except where required by U.S. GAAP, Spanish GAAP or
by Applicable Law;
(l) the acquisition, whether by merger, consolidation, formation or
otherwise, of any body corporate or business, of all or substantially
all of the assets of any body corporate or business, or the entering
into of any partnership or joint venture arrangement;
(m) the expenditure of funds or the making of any expenditure commitment
pursuant to any binding agreement to make any single expenditure or
series of related expenditures (in each case, whether operational or
capital), except as required by or consistent with the Interim Period
Development Plan or as approved by the Management Committee;
(n) any modification, amendment, cancellation or termination of any
Material Contract other than a termination arising out of the
expiration of its term;
(o) the failure to renew on expiry or to pay any premium due in respect of
its insurance and/or the modification of any insurance policy held by
the Las Cruces Companies in any material respect and/or the allowance
of any such insurance to lapse or the doing of anything which would
render such insurance void or voidable;
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(p) the granting of any guarantees or indemnities by any of the Las Cruces
Companies;
(q) the appointment of any new Director of any of the Las Cruces
Companies;
(r) except in the Ordinary Course of Business, engaging any new employees
or dismissing or making any variation to the terms and conditions of
employment with any existing employees, including increasing or
agreeing to increase the remuneration, pension contributions, bonuses,
commission or benefits or providing or agreeing to provide any
gratuitous benefit or payment to any such person or their dependants
other than previously scheduled salary increases made in the Ordinary
Course of Business or as required by any collective agreements;
(s) incurring material liabilities not contemplated by the Interim Period
Development Plan, unless such action has been approved by the
Management Committee;
(t) undertaking any activities in connection with the marketing of the
future production of products; and
(u) settling any litigation to which any of the Las Cruces Companies is a
party.
(8) Notwithstanding the other provisions of this Section 5.1, in the event
of a disagreement among the members of the Management Committee, management
of the Las Cruces Companies, after giving reasonable consideration to the
position of Inmet, may take such actions to operate the Business and
develop the Project during the Interim Period as they reasonably believe in
good faith to be in accordance with the Interim Period Development Plan or
required by Applicable Law.
(9) Notwithstanding anything to the contrary in this Agreement, Inmet
agrees that neither any action taken by any of the Seller Parties or the
Las Cruces Companies, nor the conduct of the Business by any of the Seller
Parties or the Las Cruces Companies, in each case, in accordance with the
Interim Period Development Plan or any directive of (or other approval by)
the Management Committee, or with the approval of the Management Committee,
and no state of facts, effect, change or occurrence that is the consequence
of such action or conduct, shall constitute a breach of, or failure to
perform, satisfy or comply with, any representation, warranty, term,
covenant or condition by the Seller Parties under this Agreement, provided
in each case that the Seller Parties have submitted the matter to the
Management Committee if required by this Section 5.1.
5.2 MK Resources Stockholder Meeting
MK Resources agrees to hold a stockholder meeting to approve the
Reorganization as soon as possible.
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5.3 Covenants of Inmet
Inmet agrees that, during the period from the date of this Agreement
until the Time of Closing, except as expressly contemplated or permitted by this
Agreement or as required by Applicable Law, or unless the Seller Parties
otherwise agree in writing, Inmet shall, and shall cause each of the Material
Inmet Subsidiaries to, conduct its business operations and affairs in a manner
consistent with the objective of maximizing economic returns while giving the
highest regard to occupational health and safety, responsible environmental
practice and local community and stakeholder concerns and in compliance in all
material respects with all Applicable Laws, and shall use its commercially
reasonable efforts to preserve intact their material business organizations and
material relationships with Third Parties and shall not (subject to the exercise
by the directors of Inmet of their fiduciary duties) take any actions that would
adversely affect its ability to complete the Transaction or that would result in
a Material Adverse Change in respect of Inmet.
5.4 Costs of Consents, Etc.
Inmet, on the one hand, and the Seller Parties, on the other hand,
shall pay 70% and 30%, respectively, of all fees, costs or expenses charged or
applicable in connection with obtaining the consents required to assign the
Consent Required Contracts and the Governmental Approvals required in connection
with the Transaction, and shall share equally the fees, costs and expenses of
obtaining consent required to assign the Rio Tinto Royalty and the Ibex
Agreement. (For greater certainty, Inmet shall not be responsible for any costs
associated with the Reorganization.)
5.5 Regulatory Approvals
Each of the Seller Parties will, and will cause the Las Cruces
Companies to:
(1) Make or cause to be made all such filings under Applicable Law as may
be required to consummate the Transaction in accordance with this
Agreement.
(2) Use all reasonable efforts to obtain or make, or cause to be obtained
or made, all authorizations, approvals, consents and waivers from, and
notifications to, all persons required under Applicable Law in order to
consummate the Transaction in accordance with the terms of this Agreement.
5.6 Compliance Verification and Continued Access
(1) During the Interim Period, the Seller Parties shall cause the Las
Cruces Companies to permit Inmet, through its agents and representatives,
to have full access to the management and employees of the Las Cruces
Companies, the Assets and liabilities of the Las Cruces Companies and their
Books and Records, including geological block models, mine plans and
capital expenditure project documents, for the purposes of, among other
things, (i) verifying the compliance of the Seller Parties with their
respective representations, warranties and covenants hereunder, (ii)
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exercising Inmet's rights hereunder, and (iii) studying and making plans
for the development of the Project. The Seller Parties shall cause the Las
Cruces Companies to make available any and all documents and records of the
Las Cruces Companies (or other relevant Members of the Leucadia Group to
the extent they have documents relevant to the Las Cruces Companies and the
representations, warranties and covenants of the Seller Parties) to Inmet
and its agents and representatives. Such investigations and inspections
shall not, however, affect or mitigate the representations and warranties
of the Seller Parties hereunder, which shall continue in full force and
effect. Inmet agrees that all such access, investigations and inspection
shall be arranged exclusively through the Seller Parties, and not the Las
Cruces Companies, and Inmet shall endeavour to ensure that all such access,
investigations and inspections will be conducted in a commercially
reasonable manner, minimizing any disruption of the operation of the
Business or the ongoing development of the Project.
5.7 Related Party Contracts
The Seller Parties shall terminate, or procure the termination by
other Members of the Leucadia Group (as applicable), of any Related Party
Contracts specified by Inmet other than the Leucadia Loan, with the result that
all such contracts are terminated on or prior to the Closing Date. Any such
termination shall be without penalty, cost, liability or further obligation to
the Las Cruces Companies or Inmet.
5.8 Name Change and Use of Trade Marks
The Seller Parties shall not object to the continued use after the
Time of Closing of the name "MK Gold" by MK Netherlands; provided that as soon
as reasonably practical after the Closing Date, Inmet and MK Resources shall
cause MK Netherlands to change its name to a name not including "MK" or "MK
Gold" in any form and MK Netherlands shall not thereafter use any stationery,
invoices, business cards, advertising or other written materials containing any
such name.
5.9 Ibex
Prior to the Time of Closing, the Parties shall use their commercially
reasonable efforts to cause the Ibex Agreement to be assigned to CLC and
extended on terms reasonably acceptable to Inmet and the Seller Parties. If
consent to the assignment cannot be obtained prior to the Time of Closing, MK
Resources shall hold the agreement in trust for CLC and shall take any and all
action with respect thereto as Inmet may reasonably direct.
5.10 Rio Tinto Royalty
Prior to the Time of Closing, the Parties shall use their commercially
reasonable efforts to cause the obligation to pay the Rio Tinto Royalty to be
assigned by MK Resources to MK Netherlands or CLC or, if that is not possible,
shall make such arrangements as are acceptable to the Parties acting reasonably.
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5.11 Continued Securities Compliance
Inmet will use its commercially reasonable efforts to maintain its
status as a reporting issuer in good standing and not in default within the
meaning of the Securities Act (Ontario) and other applicable Canadian Securities
Laws, and to maintain the listing of the Inmet common shares on the Toronto
Stock Exchange, until Leucadia ceases to own, directly or indirectly, at least
5% of the Inmet common shares. (Nothing in this Section shall prohibit Inmet
from entering into a merger, reorganization, or other transaction which has been
approved by the Inmet Board in the exercise of its fiduciary duties.)
5.12 Tax Status
For as long as Leucadia or an Affiliate is a shareholder of Inmet, if
Inmet becomes aware that it is a PFIC or CFC, Inmet shall promptly notify
Leucadia. Inmet shall provide all information reasonably requested by Leucadia
from time to time in order to determine whether Inmet is a PFIC or a CFC.
5.13 Supplementation and Amendment of Schedules
The Seller Parties may, not less than five (5) days prior to the
Closing Date, by written notice to Inmet, supplement and amend the Schedules
with respect to any matter arising after the date of this Agreement that would
be required to be disclosed under Section 3.1 and 3.2 if in existence on the
date hereof. It is agreed that the Schedules, as supplemented and amended, shall
be deemed to amend this Agreement for all purposes hereunder; provided, however,
that the furnishing of such supplemental or amended information shall not be
deemed to amend this Agreement for purposes of determining the satisfaction of
the conditions set forth in Article 4, except to the extent such supplemental or
amended information reflects actions taken by any Seller Party or Las Cruces
Company consistent with, or pursuant to, the Interim Period Development Plan, a
directive of (or other approval by) the Management Committee or this Agreement
(including any state of facts, effect, change or occurrence that is the
consequence of such actions).
ARTICLE 6 - INDEMNIFICATION
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6.1 Seller Parties' Indemnities
Subject to the limitations set out in Sections 6.4 and 6.5, each of
the Seller Parties shall jointly and severally indemnify and save harmless Inmet
from and against all Losses directly or indirectly suffered by it resulting from
any breach of any covenant of the Seller Parties or the Las Cruces Companies
contained in this Agreement or from any inaccuracy or misrepresentation in any
representation or warranty set forth in Sections 3.1 or 3.2 at any time that
such covenant, representation or warranty, as the case may be, is in effect
hereunder provided that the claim for indemnification is asserted by written
notice during such period.
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6.2 Indemnity of Inmet
Subject to the limitations set out in Sections 6.4 and 6.6, Inmet
shall indemnify and save harmless the Seller Parties from and against all Losses
directly or indirectly suffered by either of them resulting from any breach of
any covenant of Inmet contained in this Agreement or from any inaccuracy or
misrepresentation in any representation or warranty set forth in Section 3.3 at
any time that such covenant, representation or warranty, as the case may be, is
in effect hereunder, provided that the claim for indemnification is asserted by
written notice during such period.
6.3 Commissions
The Seller Parties shall indemnify and save harmless Inmet from and
against any Claims whatsoever for any commission or other remuneration payable
or alleged to be payable to any Person in respect of the sale and purchase of
the Purchased Shares where such Person purports to act or has acted for either
of the Seller Parties in connection with the sale of the Purchased Shares. Inmet
shall indemnify and save harmless the Seller Parties from and against any Claims
whatsoever for any commission or other remuneration payable or alleged to be
payable to any Person in respect of the sale and purchase of the Purchased
Shares, where such Person purports to act or has acted for Inmet in connection
with the sale of the Purchased Shares.
6.4 Exclusive Remedies
Following the Closing, the rights of indemnification set out in this
Article 6 shall be the sole and exclusive remedies of the Parties under or in
connection with this Agreement and shall be exclusive of all other remedies to
which such parties would otherwise be entitled at law or in equity. (For greater
certainty, only the remedies set out in Article 4 and Article 7 will be
available, to the extent they apply, if the Closing does not occur.)
6.5 Limitation of Liability of the Seller Parties
(1) Neither of the Seller Parties shall have any liability in respect of
any Claim made by Inmet arising out of any breach of any covenant of the
Seller Parties contained in this Agreement or from any inaccuracy or
misrepresentation in any representation or warranty set forth in Sections
3.1 or 3.2 or any Claim for indemnification hereunder unless and until the
liability of the Seller Parties in respect of that Claim, when aggregated
with the liability of the Seller Parties in respect of all other such
Claims exceeds $2,000,000, in which event the Seller Parties shall be
liable for the full amount of such Claims.
(2) The aggregate liability of the Seller Parties in respect of all Claims
under this Agreement shall not in any circumstances exceed $70,000,000.
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6.6 Limitation of Liability of Inmet
(1) Inmet shall not have any liability in respect of any Claim made by the
Seller Parties arising out of any breach of any covenant of Inmet contained
in this Agreement or from any inaccuracy or misrepresentation in any
representation or warranty set forth in Section 3.3 or any Claim for
indemnification hereunder unless and until the liability of Inmet in
respect of that Claim, when aggregated with the liability of Inmet in
respect of all other such Claims, exceeds $2,000,000, in which event Inmet
shall be liable for the full amount of such Claims.
(2) The aggregate liability of Inmet in respect of all Claims under this
Agreement shall not in any circumstances exceed $70,000,000.
6.7 Notice of and Defence of Third Party Claims
(1) If an Indemnified Party receives written notice of the commencement or
assertion of any Third Party Claim in respect of which the Indemnified
Party believes the Indemnifying Party has liability under this Agreement,
the Indemnified Party shall give the Indemnifying Party reasonably prompt
written notice thereof, but in any event no later than thirty (30) days
after receipt of the initial notice of such Third Party Claim, unless a
shorter procedural period applies in respect of such Third Party Claim, in
which case notice shall be given before the expiry of one half of such
period. To the extent reasonable and practical given the information
readily available to the Indemnified Party, such notice to the Indemnifying
Party shall describe the Third Party Claim in reasonable detail and shall
indicate (without prejudice to the Indemnified Party's rights) the
estimated amount of the Loss that has been or may be sustained by the
Indemnified Party in respect thereof, provided that the failure to give
such notice within such time period shall not reduce the Indemnified
Party's rights hereunder, except to the extent of any actual prejudice
suffered as a result of such failure.
(2) The Indemnifying Party shall have the right, by giving notice to that
effect to the Indemnified Party not later than thirty (30) days after
receipt of such notice of such Third Party Claim and subject to the rights
of any insurer or other Third Party having potential liability therefor, to
elect to assume the defence of any Third Party Claim at the Indemnifying
Party's own expense and by the Indemnifying Party's own counsel, provided
that the Indemnifying Party shall not be entitled to assume the defence of
any Third Party Claim: (i) alleging any criminal or quasi-criminal
wrongdoing (including fraud), (ii) which impugns the reputation of the
Indemnified Party or (iii) where the Third Party making the Third Party
Claim is a Governmental Body.
(3) Prior to settling or compromising any Third Party Claim in respect of
which the Indemnifying Party has the right to assume the defence, the
Indemnifying Party shall obtain the consent of the Indemnified Party
regarding such settlement or compromise, which consent shall not be
unreasonably withheld or delayed by the Indemnified Party. In addition, the
Indemnified Party shall be entitled to participate in (but not control) the
defence of any Third Party Claim (and in so doing may retain its own
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counsel) at the cost and expense of the Indemnified Party. If the
Indemnified Party does not consent to a settlement or compromise in respect
of a Third Party Claim proposed by the Indemnifying Party, and the Losses
in respect of such Third Party Claim, as determined by a final,
non-appealable order or judgment, exceed the amount of Losses under the
proposed settlement or compromise (the "Settlement Amount"), then the
indemnification to which the Indemnified Party is entitled under this
Article 6 in respect of such Third Party Claim shall equal the Settlement
Amount.
(4) With respect to any Third Party Claim in respect of which the
Indemnified Party has given notice to the Indemnifying Party pursuant to
this Section 6.7 and in respect of which the Indemnifying Party is not
entitled to assume the defence or has not elected to do so, the
Indemnifying Party may participate in (but not control) such defence
assisted by counsel of its own choosing at the Indemnifying Party's sole
cost and expense and, prior to settling or compromising any such Third
Party Claim, the Indemnified Party shall obtain the consent of the
Indemnifying Party regarding such settlement or compromise, which consent
shall not be unreasonably withheld or delayed by the Indemnifying Party.
(5) At their own cost and expense, the Indemnifying Party and Indemnified
Parties shall use all reasonable efforts to make available to the Party
which is undertaking and controlling the defence of any Third Party Claim:
(a) those employees whose assistance, testimony or presence is necessary
to assist such Party in evaluating and in defending any Third Party
Claim; and
(b) all documents, records and other materials in the possession of such
Party reasonably required by such Party for its use in defending any
Third Party Claim,
and shall otherwise co-operate with the Party defending such Third Party
Claim.
(6) If the Indemnifying Party elects to assume the defence of any Third
Party Claim as provided in Section 6.7(2) and fails to take reasonable
steps necessary to defend diligently such Third Party Claim within 30 days
after receiving notice from the Indemnified Party that the Indemnified
Party bona fide believes on reasonable grounds that the Indemnifying Party
has failed to take such steps, the Indemnified Party may, at its option,
elect to assume the defence of and to compromise or settle the Third Party
Claim assisted by counsel of its own choosing and the Indemnifying Party
shall be liable for all reasonable costs and expenses paid or incurred in
connection therewith; provided, that prior to settling or compromising any
such Third Party Claim, the Indemnified Party shall have obtained the
consent of the Indemnifying Party regarding such settlement or compromise,
which consent shall not be unreasonably withheld or delayed by the
Indemnifying Party.
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(7) Upon making a full Loss Payment, the Indemnifying Party shall, subject
to the rights of any insurers and to the extent of such Loss Payment, be
subrogated to all rights of the Indemnified Party against any third party
in respect of the Loss to which the Loss Payment relates.
(8) Any Person providing indemnification pursuant to the provisions of this
Article 6 is referred to herein as an "Indemnifying Party", and any Person
entitled to be indemnified pursuant to the provisions of this Article 6 is
referred to herein as an "Indemnified Party".
6.8 Calculation of Damages
The Losses suffered by any Party hereto shall be calculated after
giving effect to the receipt by the Indemnified Party of any recoveries from
third parties, including insurance recoveries (it being understood and agreed
that the Indemnified Parties shall not be required to seek insurance recoveries
in respect of Losses to be indemnified hereunder), and shall take into account
any Tax effects. In the event any insurance proceeds are actually realized by an
Indemnified Party subsequent to the receipt by such Indemnified Party of a Loss
Payment hereunder in respect of the Claims to which such insurance proceeds
relate, appropriate refunds shall be made promptly to the Indemnifying Party
regarding the amount of such Loss Payment.
6.9 Mitigation
The Seller Parties and Inmet shall cooperate with each other with
respect to resolving any Claim or Loss with respect to which one Party is
obligated to indemnify the other Party hereunder, including by making
commercially reasonable efforts to mitigate or resolve any such Claim or Loss.
6.10 No Duplication
Notwithstanding anything in this Agreement, any amounts payable
pursuant to the indemnification obligations under this Article 6 shall be paid
without duplication, and in no event shall any Party be indemnified under
different provisions of this Agreement for the same Losses.
6.11 Tax Treatment of Indemnity Payments
The Seller Parties and Inmet agree to treat any indemnity payment made
pursuant to this Article 6 as an adjustment to the purchase price for all income
tax purposes.
ARTICLE 7 - GENERAL
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7.1 Public Announcements and Confidential Information
(1) No public announcement or press release concerning the sale and
purchase of the Purchased Shares shall be made by any of the Seller Parties
or Inmet except as may be required by Applicable Law or the rules of any
stock exchange on which their respective shares are listed. Each Party
Group will advise and consult with the other prior to any such required
announcement or disclosure.
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(2) Each Party Group will keep all confidential information confidential
and will not, without the prior written consent of the other Party Group,
disclose in any manner, in whole or in part, or use, directly or
indirectly, any confidential information for any purpose except in
connection with the transactions contemplated by this Agreement.
(3) Each of the Seller Parties agrees to use its best efforts: (i) to cause
all Persons (other than Members of the Inmet Group or the banks in
connection with the Syndicated Loan) who have entered into confidentiality
agreements with any of the Seller Parties relating to a possible sale,
re-financing or other similar transaction relating the Project, to destroy,
and to certify the destruction of, all confidential information provided to
such Persons under such confidentiality agreements, and (ii) to enforce at
all times, at the request and cost of Inmet, all rights under such
confidentiality agreements. Moreover, at the request of Inmet, the Seller
Parties shall advise Inmet of their efforts made pursuant to this Section.
(4) The Seller Parties and Inmet may disclose confidential information if
required by Applicable Law or requested by legal process or regulatory
authority to do so. If any of the Seller Parties or Inmet is required by
Applicable Law or requested by legal process or regulatory authority to
disclose any confidential information, such Party will give prompt notice
to the other Parties of that fact so that they may seek a protective order
or other remedy or waive compliance with this Agreement and, further, such
Party will co-operate in any efforts to obtain a protective order or other
remedy at the expense of the Party or Parties such protective order or
remedy. If a protective order or other remedy is not obtained or compliance
with this Agreement is waived, such Party will disclose only that portion
of the confidential information which is required or requested.
(5) Each of the Seller Parties and Inmet acknowledges that the other Party
Group may not have an adequate remedy at law for damages and would be
irreparably harmed if the covenants contained in this Section 7.1 are not
performed. Accordingly, the Parties agree that, in addition to any other
remedies they may have in law or equity, the other Party Group is entitled
to injunctive relief to prevent breaches of, and to specifically enforce,
this Section 7.1.
7.2 Transaction Protections
(1) Non-Solicitation. During the period commencing on the date hereof and
continuing until either the Closing Date or the date this Agreement is
terminated in accordance with its terms, each Seller Party agrees that it
will not, and will not authorize or permit any of its directors, officers
or representatives to, and will cause the Las Cruces Companies and their
directors, officers and representatives not to, directly or indirectly:
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(a) solicit, initiate, knowingly encourage, engage in or respond to (other
than to decline) any inquiries or proposals regarding any merger,
amalgamation, share exchange, business combination, take-over bid,
sale or other disposition of the assets of MK Resources or the Las
Cruces Companies, any recapitalization, reorganization, liquidation,
material sale or issue of treasury securities of MK Resources or the
Las Cruces Companies or rights or interests therein or thereto or
rights or options to acquire any material number of treasury
securities or any type of similar transaction which would or could, in
any case, constitute a transfer to any third party of any material
Asset (other than in accordance with the Feasibility Study, the
Interim Period Development Plan or a directive of the Management
Committee) or any of the capital stock of MK Resources or a Las Cruces
Company (each an "Acquisition Proposal"), other than pursuant to the
Transaction;
(b) knowingly encourage or participate in any discussions or negotiations
regarding any Acquisition Proposal;
(c) agree to, approve or recommend an Acquisition Proposal; or
(d) enter into any agreement related to an Acquisition Proposal;
provided, however, that subject as hereinafter provided, nothing shall
prevent MK Resources or its directors, officers or representatives from
furnishing non-public information to, or entering into a confidentiality
agreement and/or discussions and/or negotiations with, any person in
response to a bona fide unsolicited Acquisition Proposal that is submitted
by such person after the date hereof which is not withdrawn if:
(e) MK Resources promptly provides Inmet and Leucadia with written notice
of any such Acquisition Proposal or any request for non-public
information relating to MK Resources or the Las Cruces Companies and a
description of the material terms and conditions of any such proposal
and the identity of the person making such proposal or request for
non-public information and thereafter continues to promptly advise
Inmet and Leucadia of all material developments relating to such
Acquisition Proposal;
(f) the Board of Directors of MK Resources concludes in good faith, after
consultation with counsel, that such action is required in order for
them to comply with their fiduciary obligations under Applicable Law;
and
(g) prior to furnishing such non-public information to, entering into a
confidentiality agreement with, or entering into discussions and/or
negotiations with, such person, MK Resources gives written notice to
Inmet and Leucadia of its intention to do so.
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(2) Superior Proposals. The Board of Directors of MK Resources may approve,
or recommend that the stockholders of MK Resources approve, an Acquisition
Proposal received by them prior to the date of the stockholders meeting to
obtain the requisite stockholder approval for the Reorganization if prior
to such approval or recommendation:
(a) it has determined in good faith that such Acquisition Proposal
constitutes a Superior Proposal (as defined below) and has notified
Inmet and Leucadia of that fact and of its intention to approve or
recommend the approval of the Acquisition Proposal (the date of such
notification being the "Notification Date");
(b) Inmet and Leucadia have been provided with a copy of the document
containing such Superior Proposal;
(c) Leucadia and Inmet have not exercised their respective rights to
counter such Acquisition Proposal, as provided in Section 7.2(3), or
if such rights to counter have been exercised, they have not resulted
in approval of the Leucadia Counter-Proposal or the Inmet
Counter-Proposal; and
(d) MK Resources has notified Inmet and Leucadia in writing that it is
terminating this Agreement, in which case this Agreement shall be
terminated except as otherwise provided herein.
As used in this Section 7.2, "Superior Proposal" means a bona fide unsolicited
Acquisition Proposal in respect of a direct or indirect interest in not less
than 70% of MK Resources or the Las Cruces Companies received after the date
hereof in circumstances which do not constitute a breach of this Agreement: (A)
that is not conditional on obtaining financing for the acquisition (although,
for greater certainty, it may be conditional on obtaining financing for the
development of the Project) or, if conditional on such financing for the
acquisition, the independent directors of MK Resources have unanimously
determined by resolution that the party making the proposal has sufficient
financial resources to effect the transaction (and in the case of consideration
comprised of stock or debt of such party, such consideration is free of
restrictions on the issuance thereof), and (B) in respect of which the Board of
Directors of MK Resources have determined in good faith, after consultation
with, and receiving advice (which may include a written opinion) from, as
appropriate, their financial, legal and other advisors that such Acquisition
Proposal would, if consummated in accordance with its terms, result in a
transaction which would be more favourable, from a financial point of view, to
the holders of the common stock of MK Resources other than Leucadia and its
affiliates (the "Minority Stockholders"), than the Reorganization upon the
consummation of the Transaction.
(3) Right to Counter.
(a) If Leucadia so elects, in its sole discretion, during the one Business
Day period following the Notification Date, they may make a written
proposal (the "Leucadia Counter-Proposal") to adjust the consideration
payable to the Minority Stockholders under the Reorganization such
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that (i) the Minority Stockholders would receive or be deemed to
receive consideration with a value per MK Resources common share at
least equal to the value per MK Resources common share available to
them under the Superior Proposal, and (ii) the Board of Directors of
MK Resources would be able to approve or recommend in the exercise of
their fiduciary duties that the Minority Stockholders approve the
Leucadia Counter-Proposal on the basis of the consideration payable to
the Minority Stockholders, in which event the Board of Directors of MK
Resources shall approve or recommend the approval of the Leucadia
Counter-Proposal. Leucadia shall provide Inmet with a copy of any
Leucadia Counter-Proposal contemporaneously with it being delivered to
MK Resources.
(b) If Leucadia does not make a proposal during the period referred to in
(a) above, Inmet shall be entitled, during the five Business Day
period following the period referred to in (a) above, to make a
proposal (the "Inmet Counter-Proposal") to adjust the consideration
payable to MK Resources in respect of the Transaction such that (i)
the Minority Stockholders would receive or be deemed to receive
consideration with a value per MK Resources common share at least
equal to the value per MK Resources common share available to them
under the Superior Proposal, and (ii) the Board of Directors of MK
Resources would be able to approve or recommend in the exercise of
their fiduciary duties that the Minority Stockholders approve the
Inmet Counter-Proposal on the basis of the consideration payable to
the Minority Stockholders, in which event the Board of Directors of MK
Resources shall approve or recommend the approval of the Inmet
Counter-Proposal. It is acknowledged by the Parties that MK Resources
may postpone the MK Resources stockholder meeting with respect to the
Reorganization to the extent required to permit Inmet to exercise its
right to make a counter-proposal pursuant to this Section 7.2(3)(b);
and that it shall not be a breach of MK Resources' covenant in Section
5.2 for MK Resources to postpone the MK Resources stockholder meeting
for a period of time sufficient to allow Inmet to have the full period
provided by this Section 7.2(3)(b) plus two (2) Business Days. For
purposes of determining whether the Inmet Counter-Proposal is
equivalent to the Superior Proposal:
(i) Inmet is not required to change the percentage interest of the
Las Cruces Companies being sought by it;
(ii) in determining whether to approve or recommend the approval of
the Inmet Counter-Proposal, only the value of such proposal to
the Minority Stockholders is to be taken into account by the
Board of Directors of MK Resources (for greater certainty the
Board of Directors of MK Resources shall not consider any
additional consideration received by Leucadia) such that Inmet
would be required to pay only such additional consideration under
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the Inmet Counter-Proposal (in the form of common shares of Inmet
or cash or a combination of both, at its option) as would, when
used as a basis for paying additional consideration to the
Minority Stockholders on the Reorganization, provide the Minority
Stockholders with a value or deemed value per MK Resources common
share at least equal to the value per MK Resources common share
available to them under the Superior Proposal; and
(iii) in order to effect the payment of the value of all such
additional consideration to the Minority Stockholders, Leucadia
agrees to pay aggregate additional consideration to the Minority
Stockholders on the Reorganization (either in Leucadia shares or
cash or a combination of both, at its option) equal in value to
the additional consideration paid by Inmet under the Inmet
Counter-Proposal.
During the six Business Day period provided in Sections 7.2(3)(a) and
(b), MK Resources shall not enter into any agreement in respect of the
Superior Proposal with the party making the Superior Proposal.
(4) Voting Covenant of Leucadia. Concurrently herewith, Leucadia will enter
into a Voting Agreement pursuant to which it will agree to vote its shares
of common stock of MK Resources in favour of the Reorganization and against
any Acquisition Proposal so long as this Agreement shall not have been
terminated in accordance with its terms.
(5) Compensation Fee. If MK Resources terminates this Agreement under
Section 7.2(2), then Leucadia shall pay in immediately available funds to
an account designated by Inmet:
(a) within three Business Days of the termination of the Agreement, cash
in the amount of $3,000,000; and
(b) within three (3) Business Days of the completion of the transaction
resulting from the Superior Proposal, provided that such completion
occurs within twelve (12) months of the termination of this Agreement,
the amount, if any, by which 75% of the Excess Value exceeds
$3,000,000, where Excess Value means: (i) the value received or deemed
to have been received by Leucadia in the Superior Proposal, together
with the value of the interest in the Las Cruces Companies retained by
Leucadia (if any) under the Superior Proposal exceeds, (ii) the value
that would have been received or would have been deemed to have been
received by Leucadia in the Transaction, together with the value of
the interest in the Las Cruces Companies which would have been
retained by Leucadia under the Transaction, in each case ascribing a
present value to any future consideration to be received by Leucadia.
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The obligation to make any payment required by this paragraph shall survive
any termination of this Agreement.
(6) Nothing in this Section 7.2 shall prohibit the Board of Directors of MK
Resources from taking and disclosing to MK Resources' stockholders a
position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of
Regulation M-A promulgated under the Exchange Act if such Board determines
in good faith after consultation with outside counsel, that failure to so
disclose such position would constitute a violation of Applicable Law;
provided, however, that in no event shall MK Resources or its Board of
Directors or any committee thereof take, or agree to resolve to take, any
action prohibited by this Section 7.2.
7.3 Information for Reporting Requirements
(1) Following the Closing:
(a) Inmet shall use reasonable commercial effects to provide any
information with respect to Inmet that may be reasonably required by
Leucadia to enable it to comply with the accounting and disclosure
requirements of the SEC as in effect from time to time, which
information shall be provided to Leucadia promptly upon request
therefor (such information shall be provided without charge if it is
information prepared by Inmet in the ordinary course, and at
Leucadia's cost, if such information is not normally prepared by
Inmet, including reasonable compensation for management time). Inmet
will advise Leucadia prior to taking any changes to its capitalization
which reasonably could be expected to raise Leucadia's interest in
Inmet to 20% or more (or such lower percentage such that Leucadia
would be required to provide information as to Inmet in order for
Leucadia to be in compliance with the SEC requirements under
Applicable Law at the relevant time), and, prior to effecting or
agreeing to effect any such changes to Inmet's capitalization, Inmet
will permit Leucadia to reduce its interest in Inmet below the
relevant threshold or, to the extent such reduction is not possible at
the relevant time, delay the proposed change in Inmet's capitalization
until such time as the reduction of Leucadia's interest can be
completed.
(b) The Seller Parties shall provide (at Inmet's expense) the information
required to file a business acquisition report (which must be filed
within 75 days of the Time of Closing) and a technical report in
respect of the Project under National Instrument 43-101 (which must be
filed within 30 days of the date of this Agreement).
7.4 Further Assurances
Each of the Parties shall from time to time execute and deliver all
such further documents and instruments and do all acts and things as any other
Party may, either before or after the Closing Date, reasonably require to
effectively carry out or better evidence or perfect the full intent and meaning
of this Agreement.
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7.5 Time of the Essence
Time shall be of the essence of this Agreement.
7.6 Dispute Resolution
When any dispute arises, management of each of the Parties shall meet
and confer in a good faith effort to resolve the same. If the dispute cannot be
resolved within two weeks, the Chief Executive Officer of each of the Parties
shall meet and confer in a good faith effort to resolve the dispute. If the
dispute cannot be resolved within two weeks from the time it is referred to the
Chief Executive Officers, the Parties agree to try in good faith to settle the
dispute by mediation administered by the American Arbitration Association under
its Commercial Mediation Procedures before resorting to arbitration, litigation
or some other dispute resolution procedure.
7.7 Fees and Expenses
Each of the Parties shall pay their respective legal, accounting and
other costs and expenses incurred in connection with the preparation, execution
and delivery of this Agreement and all documents and instruments executed
pursuant hereto and any other costs and expenses whatsoever and howsoever
incurred.
7.8 Benefit of the Agreement
This Agreement shall enure to the benefit of and be binding upon the
respective successors and permitted assigns of the Parties.
7.9 Invalidity of Provisions
Each of the provisions contained in this Agreement is distinct and
severable and a declaration of invalidity or unenforceability of any such
provision or part thereof by a court of competent jurisdiction shall not affect
the validity or enforceability of any other provision hereof. To the extent
permitted by Applicable Law, the Parties waive any provision of law which
renders any provision of this Agreement invalid or unenforceable in any respect.
7.10 Entire Agreement
This Agreement, together with the Transaction Documents, constitute
the entire agreement between the Parties with respect to the subject matter
hereof and cancel and supersede any prior understandings and agreements between
the Parties with respect thereto. There are no representations, warranties,
terms, conditions, undertakings or collateral agreements, express, implied or
statutory, between the Parties other than as expressly set forth in this
Agreement.
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7.11 Amendments and Waiver
No modification of or amendment to this Agreement shall be valid or
binding unless set forth in writing and duly executed by the Parties and no
waiver of any breach of any term or provision of this Agreement shall be
effective or binding unless made in writing and signed by the Party purporting
to give the same and, unless otherwise provided, shall be limited to the
specific breach waived.
7.12 Assignment
This Agreement may not be assigned by a Party without the written
consent of the other Parties, except to an Affiliate of the assigning Party,
provided that such Affiliate enters into a written agreement with the other
Parties to be bound by the provisions of this Agreement in all respects and to
the same extent as the assigning Party is bound and provided that the assigning
Party shall continue to be bound by all the obligations hereunder as if such
assignment had not occurred and perform such obligations to the extent that such
Affiliate fails to do so. Notwithstanding the foregoing, Inmet shall not be
relieved of its obligation to issue the Inmet Consideration Shares following any
permitted assignment by Inmet hereunder.
7.13 Notices
Any demand, notice or other communication to be given in connection
with this Agreement shall be given in writing and shall be given by personal
delivery or by facsimile addressed to the recipient as follows:
To Leucadia:
Leucadia National Corporation
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx, 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
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To MK Resources (or to the Las Cruces Companies up to the Time of Closing):
MK Resources Company
Xxxxx Xxxx Xxxxx, Xxxxx 0000
00 Xxxx Xxxxx Temple
Salt Lake City, Utah
84111-1004
Attention: G. Xxxxx Xxxxxx
Chairman and CEO
Facsimile: (000) 000-0000
with a copy to:
Stoel Rives LLP
000 Xxxxx Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx
00000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
To Inmet (or to the Las Cruces Companies after the Time of Closing):
Inmet Mining Corporation
000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Astritis
Vice-President, General Counsel
Facsimile: (000) 000-0000
with a copy to:
Torys LLP
Suite 3000
00 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxx
Facsimile: (000) 000-0000
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or to such other address, individual or facsimile number as may be designated by
notice given by one Party to another. Any demand, notice or other communication
given by personal delivery shall be conclusively deemed to have been given on
the day of actual delivery thereof and, if given by electronic communication, on
the day of transmittal thereof if given during the normal business hours of the
recipient and on the Business Day during which such normal business hours next
occur if not given during such hours; provided, however, that any notice given
under Section 7.2(d) by electronic communication shall be deemed effective upon
transmittal.
7.14 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
7.15 Attornment
The federal courts sitting in New York County shall have jurisdiction
to entertain any action arising under this Agreement and each of the Parties to
this Agreement hereby attorns to the jurisdiction of the federal courts sitting
in New York County.
7.16 Counterparts and Faxed Signatures
This Agreement may be executed in two or more counterparts, all of
which, taken together, shall be regarded as one and the same Agreement.
Counterparts may be executed in faxed form and the Parties adopt any signatures
received by a receiving fax machine as original signatures of the Parties,
provided, however, that any Party providing its signature in such a manner shall
promptly forward to the other Parties an original of the signed signature page
of this Agreement which was so faxed.
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IN WITNESS WHEREOF the parties have executed this Agreement.
INMET MINING CORPORATION
Per: /s/ Xxxxxx X. Xxxx
-----------------------------------
/s/ Xxxxx Astritis
-----------------------------------
LEUCADIA NATIONAL CORPORATION
Per: /s/ Xxxxxx X. Xxxx
-----------------------------------
MK RESOURCES COMPANY
Per: /s/ G. Xxxxx Xxxxxx
-----------------------------------
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