Exhibit 10.1
Amendment Agreement
In relation to the Unincorporated Association Contract ("the Contract") executed
by and between Minera Santa Xxxx X. de X. X. de C.V. ("MSR"), represented by
Xxxx Xxxxxx Xxxxxxx and Xxxxx Xxxxxx Xxxxxx, on one hand, as the active partner,
and Grupo Xxxxxx XX S.A. de C.V. ("FG"), represented by Xxxxxx Xxxxxx Xxxxxx, on
the other hand, as the silent partner, on February 23 (twenty three) 2002 (two
thousand and two), in regards to the development of the "El Chanate" project
("the Project"), comprising certain mining lots, covered by concessions owned or
held by Oro de Altar S.A. de C.V., located in the Municipality of Altar, Sonora,
MSR and FG agree as follows:
1. Phase I of the Project was satisfactorily completed. Therefore, FG
earned a 31% (thirty-one percent) interest in the Project, which is
reduced to a 30% (thirty percent) interest by mutual agreement of
the Participants pursuant to this covenant.
2. The date of completion of Phase II of the Project is modified, so
that it shall be considered automatically completed (i) on the day
on which MSR or any Affiliate of MSR receives from Royal Gold Inc.
or any other lender ("the Lender") the first delivery of funds
resulting from the financing or loan agreement or agreements (the
"Loan Agreement") presently being discussed or subsequently agreed
to between MSR or any Affiliate of MSR and the Lender or (ii) on the
business day following the day on which the Lender communicates MSR
that it will not finance the Project, whichever occurs first.
MSR's and FG's payments associated with Phase II shall be governed
by the first, second, penultimate, and last paragraphs of subsection
(T) of Clause 7 (seven) of the Contract, as amended by Clause 15
(fifteen) of this Amendment Agreement.
3. There shall be no Phase III in the Project's execution.
Consequently, all references in the Contract to "the Project's five
stages" or Phase III of the Project shall be deemed as non-existing.
The equipment and machinery required for the execution of Phase V of
the Project shall be acquired or leased with financed resources or
with Additional Contributions of the Participants.
4. Phase IV of the Project shall automatically initiate on the day
immediately following the date on which MSR receives from the Lender
the first delivery of funds resulting from the Loan Agreement.
5. Phase V of the Project shall initiate from the date an Optimal Level
of Production is achieved. Prior the beginning of Phase V, FG and
MSR shall determine which shall be the Optimal Level of Production.
6. At the execution hereof, FG has not delivered to MSR the approximate
amount of US$106,401 (one hundred six thousand four hundred one
dollars of the United States of America) for its proportional
contribution for the execution of the extended Phase II of the
Project. MSR (i) , in relation to the specific omission mentioned in
the first five lines of this Clause, irrevocably waives its right to
dilute FG'S participation in the Project, which is referred to in
Clauses 3 (three) subsection (B), 8 (eight) and others of the
Minera Santa Xxxx X. de X.X. de C.V. and
Grupo Xxxxxx XX S.A. de C.V.
Amendment Agreement
January 7, 2004
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Contract; (ii) irrevocably releases FG of its obligation of
contributing the sum stated in this Clause; (iii) irrevocably
releases FG of its obligation to transfer to MSR the ownership and
possession of the Equipment, as set forth in Clause 3 (three)
subsection (C) of the Contract; (iv) irrevocably waives the right to
purchase FG'S 30% (thirty percent) interest in the Project, which
right is stated in subsection (F) of Clause 4 (four) of the Contract
and which is exercisable by virtue of FG's failure to deliver to MSR
the amount set out in the first five lines of this Clause; (v)
irrevocably waives its right that FG pay 50% (fifty percent) of the
amount referred to in Clause 18 (eighteen) hereof and accepts that
FG pay only 30% (thirty percent) of said sum; and (vi) irrevocably
accepts to suppress, and therefore, to deprive subsection (F) of
Clause 4 (four) of the Contract of all legal effects.
7. In exchange for MSR's waivers, releases and acceptances and the
suppression which are provided in the immediately foregoing Clause,
FG irrevocably waives (i) its additional 1% (one percent) interest
in the Project, which corresponds to it pursuant to the fourth
paragraph of Clause 4 (four) subsection (A) of the Contract; (ii)
the right to pay to MSR the sum stated in the first paragraph of
subsection (B) of Clause 4 (four) of the Contract and therefore, the
right to receive an additional 2% (two percent) interest in the
Project, as set forth in the second paragraph of subsection (B) of
Clause 4 (four) of the Contract; (iii) the right to make the Fourth
Contribution set forth in Clause 3 (three) subsection (C) of the
Contract; and therefore, the right to receive an additional 4% (four
percent) interest in the Project, as set forth in subsection (C) of
Clause 4 (four) of the Contract; (iv) the right to receive an
additional 3% (three percent) interest in the Project, as set forth
in subsection (D) of Clause 4 (four) of the Contract; and (v) the
right to receive an additional 5% (five percent) interest in the
Project, as set forth in subsection (E) of Clause 4 (four) of the
Contract. FG's waivers made in this Clause 7 (seven), do not
constitute a deprivation of its interest in the Project as regards
the purposes of Clause 15 (fifteen) subsection (A) of the Contract,
since they have been made unanimously, without defects in will and
consent by the Participants and since FG has been fairly compensated
therefor through the benefits specified in Clause 6 (six) hereof.
8. Consequently of what has been stipulated herein, FG's participation
in the Project is presently set at 30% (thirty percent) and MSR's
participation in the Project is presently set at 70% (seventy
percent), both subject to all the remaining stipulations stated
herein and in the Contract.
9. In compliance of what has been accepted by MSR in Clause 6 (six)
subsection (vi) hereof, subsection (F) of Clause 4 (four) of the
Contract is suppressed and deprived of all legal effects.
10. Subsection (C) of Clause 5 (five) of the Contract is amended, to be
worded and to bind the Participants as follows:
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Minera Santa Xxxx X. de X.X. de C.V. and
Grupo Xxxxxx XX S.A. de C.V.
Amendment Agreement
January 7, 2004
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(C) If the financing that is the subject matter of this Clause
is not obtained at the latest on March the 31st (thirty-first)
of 2004 (two thousand and four), the Project shall dissolve as
provided in Clause 14 (fourteen) Section (A)(8), or else the
Project shall be carried out with Additional Contributions, as
defined in this contract.
11. Subsection (B) of Clause 6 (six) of the Contract is amended, to be
worded and to bind the Participants as follows:
(B) Santa Xxxx shall execute the Project's phases, and, in
general, shall operate the mine, as active partner, subject to
this contract and the Loan Agreement.
12. In order to comply with what may be agreed in the Loan Agreement, a
Person designated by the Lender may form part of and partake in the
Technical Committee's meetings, subject to what has been agreed in
the Contract.
13. References to "Equipment Effectively Contributed" in Clauses 3
(three) subsection (C), 6 (six) subsections (I) and (J) and others
in the Contract shall be deemed suppressed and, consequently,
without any legal effects and shall not be binding.
14. Subsection (J) of Clause 7 (seven) of the Contract is amended, to be
worded and bind the Participants as follows:
(J) Prior to the distribution of profits to the Participants,
Santa Xxxx shall perform the obligations Chanate acquired in
relation to the Stock Purchase Option Agreement described in
subsection (D) of Clause 10 (ten) of this contract and those
which it shall acquire through the Loan Agreement.
15. Subsection (T) of Clause 7 (seven) of the Contract, shall be worded
and bind the Participants as follows:
(T) The budget for expenses and investments (before and hereinafter
"the Budget for the Period") can be annual or for a lesser period,
as resolved by the Meeting of Participants. Santa Xxxx shall deliver
or send to FG a draft Budget for the Period, at least 15 (fifteen)
calendar days before the date on which it shall be discussed and
approved. The Project shall not pay charges of the Participants'
shareholders other than those agreed herein or other than those
expressly and previously authorized by the Meeting of Participants.
Unless otherwise resolved by the Meeting of Participants, from the
date of this Amendment Agreement and until the beginning of Phase IV
of the Project, the Participants shall make their contributions in
cash or in works or services, at their respective election,
proportionally to their respective participations in the Project, in
order to pay expenses and costs included in any Budget for the
Period approved by the Meeting of Participants pursuant to this
contract or to pay expenses and costs incurred or to be
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Minera Santa Xxxx X. de X.X. de C.V. and
Grupo Xxxxxx XX S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 4
incurred in excess of what has been budgeted in the Budget for the
Period approved by the Meeting of Participants.
Unless otherwise resolved by the Meeting of Participants, from the
beginning of Phase IV of the Project and until the beginning of
Phase V of the Project, FG shall pay only in cash 30% (thirty
percent) of all budgeted and approved expenditures and costs and 30%
(thirty percent) of all approved expenditures and costs incurred in
excess of those budgeted if those expenditures and costs cannot be
covered with money borrowed from the Lender. MSR shall pay only in
cash the 70% (seventy percent) of all the said expenditures and
costs.
Unless otherwise resolved by the Meeting of Participants, from the
beginning of Phase V of the Project, FG shall pay only in cash 30%
(thirty percent) of all budgeted and approved expenditures and costs
and 30% (thirty percent) of all approved expenditures and costs
incurred in excess of those budgeted if those expenditures and costs
cannot be covered with income generated in the operation of the
mine. MSR shall pay only in cash the 70% (seventy percent) of all
the said expenditures and costs.
Contributions that must be made in cash and that were not made
within the term agreed to in any Budget for the Period or, if such a
term was not agreed to in any Budget for the Period, within a 30
(thirty) calendar day term following the date on which they should
have been made pursuant to a resolution of the Meeting of
Participants, shall automatically dilute the Waiving Participants'
interest in the Project. Contributions that must be made in work or
services and that were not made within the term agreed to in any
Budget for the Period or, if such a term was not agreed to in any
Budget for the Period, within a 30 (thirty) calendar day term
following the date on which they should have been carried out or
rendered pursuant to a resolution of the Meeting of Participants,
shall accrue an annual conventional interest on delayed payments at
the LIBOR rate plus 5.45 (five point forty five) percentile points
that shall inure to the benefit of the Participant that has
contributed instead of the defaulting Participant. The amount not
contributed for purposes of the dilution of interests or shares in
the Project set forth in Clause 8 (eight) of this contract, shall be
added to the interest generated pursuant hereto. The Participants'
interest dilution provisions contained in this contract shall bind
the parties during Phases II, IV, and V and for the duration of the
same.
Santa Xxxx shall give FG a right of first refusal to carry out the
works and to render the services which FG may elect to carry out and
render pursuant to this Contract, and Santa Xxxx shall give the
contract or contracts to FG if FG's proposal at least matches the
best bid among the bids received from other bidders in terms of
price, time, and quality. The construction of those works and the
rendering of those services shall not turn FG into a labor or
service partner of the Project.
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Minera Santa Xxxx X. de X.X. de C.V. and
Grupo Xxxxxx XX S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 5
16. The last sentence of subsection (B) of Clause 8 (eight) of the
Contract, shall be worded and bind the Participants as follows:
The interest of the Waiving Participant in the Project
shall be deemed diluted in a percentage equal to the
percentage that on each occasion corresponds to the sum
that it failed to contribute in relation to the sum
total which in the same occasion was contributed by the
non-waiving Participant.
17. Subsection (D) of Clause 8 (eight) of the Contract, all references
to "Make-Up Amount" (in singular or in plural) in the Contract, and
all provisions of the Contract giving the Waiving Participant the
right to reacquire the interest share that it has lost as a
consequence of a dilution are hereby suppressed, removed, and
deprived of all legal effects. As a consequence of that suppression,
removal, and deprivation of legal effects, the Waiving Participant
shall not be entitled to reacquire the interest share that it has
lost as a consequence of a dilution.
18. FG shall pay 30% (thirty percent) of the US$36,165 (thirty six
thousand one hundred sixty five dollars of the United States of
America) which Capital Gold Corporation ("CGC") lent or transferred
to MSR in order that MSR pay the corresponding items for the
execution of Phase II of the Project, in accordance with CGC invoice
number 139-H32 (one hundred thirty-nine, dash, letter "H", thirty
two), known and approved by FG. FG shall make said payment in cash
to MSR, so that the latter may remit it to CGC, within 15 (fifteen)
calendar days following the date of execution and delivery hereof.
FG's failure to pay to MSR the amount provided in this Clause as and
when agreed herein shall cause FG's interest in the Project to be
automatically diluted pursuant to last sentence of subsection (B) of
Clause 8 (eight) of the Contract, as amended by Clause 16 (sixteen)
hereof.
Nothing of what has been stipulated in this and other Clauses of
this Amendment Agreement makes CGC a Participant in the Project or a
party to the Contract or a party to this Amendment Agreement.
The US$36,165 (thirty six thousand one hundred sixty five dollars of
the United States of America) mentioned in this Clause 18 (eighteen)
were spent by MSR with FG's approval beyond the approved budget for
Phase II.
19. The words beginning with capital letters herein, shall have the
meaning attributed to them in the Contract or herein. "Meeting of
the Participants" in this agreement and in the clauses of the
Contract amended by the same means the meeting that is provided in
Clause 7 (seven) of the Contract and that is mentioned as the
"Participants' meeting" or with an equivalent expression in that
Clause (seven) and in other clauses of the Contract.
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Minera Santa Xxxx X. de X.X. de C.V. and
Grupo Xxxxxx XX S.A. de C.V.
Amendment Agreement
January 7, 2004
Page 6
"Affiliate" and "Subsidiary" in this agreement respectively mean the
same as "affiliate" and "subsidiary" pursuant to Subsection (B) of
Clause 2 (two) of the Contract.
20. This Amendment Agreement does not constitute a novation to, nor
supersede, or substitute the Contract. It solely modifies said
Contract, pursuant to the specific terms stipulated herein.
21. All other Clauses of the Contract shall remain in full force,
subject to what has been agreed herein and, therefore, bind and
authorize the parties pursuant to their specific terms.
22. If this Amendment Agreement is executed in the English and Spanish
languages, the Spanish language version shall prevail in case of
discrepancy.
23. This Amendment Agreement was not negotiated nor executed under undue
influence, or determination of fraud, bad faith, violence,
illegality, lesion, error, reverential fear or disability, or any
other defect in will or consent.
Being well-informed of the legal scope and content hereof, the parties execute
it in full agreement and make it binding in all legal respects, in a sole
document or in counterparts, each of which shall be deemed an original and shall
be equally valid, on January 7 (seven), 2004 (two thousand and four).
For Grupo Xxxxxx XX S.A. de C.V.
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Xxxxxx Xxxxxx Xxxxxx,
Sole Administrator
For Minera Santa Xxxx X. de X. X. de C.V.
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Xxxx Xxxxxx Xxxxxxx and Xxxxx Xxxxxx Xxxxxx
Legal Representatives
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Xxxxxx Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxxx
Witness Witness
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