Greenstone
Resources Ltd.
August 28, 1995
Xx. Xxxxxx Xxxxxxx
Chairman and Chief Executive Officer
Xxxxxxx-Xxxx Gold Company, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxx x'Xxxxx, Xxxxx 00000
Dear Xxxxxx:
This Agreement sets forth all of the terms and conditions whereby
Xxxxxxx-Xxxx Gold Company, Inc. ("FWG") irrevocably agrees to
purchase 100% of Greenstone Resources Ltd.'s ("GRE") wholly-owned
Colombian branch, Greenstone of Colombia ("GOC").
Commercial Terms
(1) FWG or its subsidiaries shall at closing convey to Greenstone
all rights and interests FWG holds in Minerales de Copan ("Copan
Interests"), including shares and options to acquire shares and
GRE shall at closing convey to FWG 100% of GOC and any other
shares of GOC or Compania Minera Oronorte S.A. ("Oronorte") owned
by GRE on any GRE subsidiary.
(2) FWG as of closing shall acquire all ownership rights of GOC.
The liabilities of GOC include the bank debt with certain
Colombian banks, the equipment lease obligations with Union
Leasing and Finevesa ("Lease Obligations"), the existing accounts
payable and accrued royalty obligations of GOC's majority owned
subsidiary, Oronorte. GRE shall at closing forgive any amounts
owed by GOC or Oronorte to GRE or any of it's subsidiaries.
(3) GRE shall as of closing forgive FWG of any amounts owed by
FWG to GRE or any of its subsidiaries.
(4) GRE shall as of closing indemnify FWG and its subsidiaries
from any and all financial obligations resulting from any legal
actions taken by Xxxxxx Xxxxxx, Xxxx Xxxxxx or their related
companies. GRE also agrees to pursue legal action against Xxxxxx
and Xxxxxx at its expense and any Colombian land or mineral
rights obtained from such action shall be offered to Oronorte at
GRE's cost, if any.
Representations and Warranties of FWG
FWG hereby represents and warrants that:
(5) Except for the liens in favour of GRE, there are no other
existing liens or encumbrances against the Copan shares. Any
additional Copan Interests which FWG may acquire after the date
of this Agreement shall be offered forthwith to GRE for purchase
by GRE at FWG's cost.
(6) Upon execution of this Agreement, FWG agrees to take
operating control of GOC and its subsidiaries and their
respective operations.
(7) FWG has obtained all the necessary corporate approvals to
enter into this transaction.
Representations and Warranties of GRE
GRE hereby represents and warrants that:
(8) GOC and its subsidiaries are validly existing corporate
entities under Colombian law.
(9) At the date of closing GOC shall not own not less than 94.9%
of the outstanding shares of Oronorte. At the date of closing
there will be no existing liens or encumbrances against such
shares, and there will be no outstanding rights to acquire equity
interests in Oronorte. At the date of closing GRE shall own 100%
of the outstanding shares of GOC, there will be no existing liens
or encumbrances against such shares, and there will be no
outstanding rights to acquire equity interests in GOC. Any
additional shares of Oronorte which GRE may acquire after the
date of closing shall be offered forthwith to FWG for purchase by
FWG at GRE's costs.
(10) The total liabilities of GOC and its subsidiaries as of
August 24, 1995, excluding the Lease Obligations, including any
contingent liabilities, shall not exceed US $1,000,000. The
amount of the Lease Obligations at the time of closing shall not
exceed US $375,000.
(11) The total of cash, accounts receivable and saleable gold in
inventory of GOC and it's subsidiaries, as of August 24, 1995
shall not be less than US $450,000. Expenditures after August
24, 1995 will follow the ordinary course of business.
(12) GRE has the corporate power and authority and has or will
obtain by the date of closing all necessary approvals to enter
into this transaction.
(13) Prior to Closing, GRE shall cause the officers and directors
of GOC and Oronorte to take direction from FWG and to do all
things necessary to ensure that FWG is able to exercise control
over GOC and Oronorte.
(14) GOC and Oronorte have and will have at closing, good and
marketable title, or valid leasehold rights in the case of
leasehold property, to all assets owned or leased by them or used
by them in the conduct of their business, free and clear of liens
or encumbrances.
(15) To the best of GRE's knowledge, this transaction does not
conflict with or result in a breach of any contractual legal or
regulatory obligation to which GOC, Oronorte, or any of their
assets are subject to and will not result in the acceleration of
any debt or other obligation to which GOC or Oronorte are
subject.
(16) The material terms of the relationship and contractual
obligations of GOC or Oronorte with Dual Resources is accurately
stated or summarized as follows: Dual resources owns 2.8 million
shares of Oronorte, Oronorte owes certain taxes to Dual
Resources, GRE will indemnify FWG for the US $300,000 payment to
Dual Resources.
Closing
(17) The parties hereto agree to effect a Closing of this
transaction as soon as possible and to execute any and all
documents required to give effect to this transaction.
Sincerely,
Greenstone Resources Ltd.
/s/ J. Xxxxx Xxxxxx
Senior Vice-President
Chief Operating Officer
/s/ Xxxxxx Xxxxxxx
Reviewed, Agreed and Accepted on August 28, 1995
Xxxxxxx-Xxxx Gold Company, Inc.
