STOCKHOLDERS AGREEMENT
Dated February __, 2001
The parties to this agreement are The Liverpool Limited Partnership and
Xxxxxxx International, L.P. (together, the "Xxxxxxx Holders") and Stonehill
Institutional Partners, L.P. and Stonehill Offshore Partners Limited (together,
the "Stonehill Holders").
Sunshine Mining and Refining Company, a Delaware corporation ("Sunshine"),
Sunshine Argentina, Inc. and Sunshine Precious Metals, Inc. (together, the
"Sunshine Companies") have filed a Joint Chapter 11 Plan of Reorganization (the
"Plan") in the United States Bankruptcy Court for the District of Delaware,
which Plan was co-proposed by the Xxxxxxx Holders and the Stonehill Holders, and
which Plan provides for a restructuring of Sunshine (the "Restructuring").
Upon completion of the Restructuring, the Xxxxxxx Holders will own
approximately 50.98% of the outstanding shares of Sunshine's Common Stock (the
"Shares") and the Stonehill Holders will own approximately 39.01% of the Shares.
The parties wish to provide for certain matters with respect to the Shares
owned by the Xxxxxxx Holders and the Stonehill Holders.
It is therefore agreed as follows:
1. Directors.
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1.1 Election. During the period commencing on the date that the Plan
is consummated and the Shares are issued to the Xxxxxxx Holders and the
Stonehill Holders and, except as provided in section 3, ending on the date that
the Xxxxxxx Holders or the Stonehill Holders (and their affiliates) own less
than 10% of the then outstanding Shares, the Xxxxxxx Holders and the Stonehill
Holders shall vote (or shall cause to be voted) all Shares beneficially owned by
them or their affiliates (including any Shares acquired after the consummation
of the Plan), and shall take all other action necessary, to cause the board of
directors of each of Sunshine, Sunshine International Mining, Inc., a newly
formed subsidiary of Sunshine ("Newco") and Sunshine Argentina, Inc., all of the
stock of which will be owned by Newco ("Argentina"), to consist of five
directors and to cause the election to the board of directors of each of
Sunshine, Newco and Argentina of two nominees of the Xxxxxxx Holders, two
nominees of the Stonehill Holders and one member of management of Sunshine
designated by the Chairman of the Board of Sunshine.
1.2 Removal; Vacancies.
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(a) If, during the period that the Xxxxxxx Holders or the
Stonehill Holders are entitled to nominate directors pursuant to section 1.1,
the Xxxxxxx Holders or the Stonehill Holders give notice to the other Holders of
their wish to remove a director previously nominated by them and elected in
accordance with section 1.1, the other Holders shall vote all Shares
beneficially owned by them (or their afffiliates) in favor of removing that
director and shall take all other action incidental to that vote as the Xxxxxxx
Holders or the Stonehill Holders, as the case may be, reasonably request to
cause that director to be removed.
(b) If, during the period that the Xxxxxxx Holders or the
Stonehill Holders are entitled to nominate directors pursuant to section 1.1,
any director previously nominated and elected pursuant to section 1.1 ceases to
hold office, the Holders that nominated the director who ceased to hold office
promptly shall nominate an individual to fill the vacancy so created for the
unexpired term, and each of the other Holders shall vote all Shares beneficially
owned by them to cause the individual so nominated to be elected to fill the
vacancy and shall take all other action incidental to that vote that the Xxxxxxx
Holders or the Stonehill Holders, as the case may be, reasonably request to
elect that director.
2. Extraordinary Transactions. The Xxxxxxx Holders and the Stonehill
Holders shall take all action necessary to require that any of the following
actions (the "Extraordinary Actions") shall only be approved by Sunshine, Newco
or Argentina if approved by at least 66- 2/3% of the total number of directors
of Sunshine, Newco or Argentina, as the case may be:
(a) a merger or consolidation involving Sunshine, Newco or Argentina,
or the sale of all or substantially all of the assets of Sunshine, Newco or
Argentina;
(b) the appointment of the Chief Executive Officer, Chief Financial
Officer or Chief Operating Officer of Sunshine, Newco or Argentina;
(c) the issuance of any shares of common stock of Sunshine, Newco or
Argentina or any options, warrants or rights to purchase, or any securities
convertible into, shares of common stock of Sunshine, Newco or Argentina;
(d) a change in the number of the members of the board of directors
of Sunshine, Newco or Argentina;
(e) any transaction between Sunshine, Newco or Argentina and any
affiliate of Sunshine, Newco or Argentina or any affiliate of any Xxxxxxx
Xxxxxx or Stonehill Holder (other than transactions between Sunshine and
any wholly-owned subsidiary of Sunshine other than Newco or Argentina);
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(f) any borrowing by Sunshine, Newco or Argentina in excess of U.S.
$3,000,000 (excluding the $5 million exit facility from the Elliot Holders and
the Sunshine Holders and any refinancing thereof);
(g) any material agreement with a material impact on the value or the
marketability of the Pirquitas Mine located in Jujuy, Argentina; or
(h) any amendment of the certificate of incorporation or by-laws of
Sunshine, Newco or Argentina.
3. Assignment. Any transferee (or group of related transferees) of any
Shares from any Xxxxxxx Xxxxxx or any Stonehill Holder, and the Shares owned by
any such transferee, shall not be subject to the terms of this agreement, except
that this agreement shall inure to the benefit of, and be binding upon, (a) any
transferee that is an affiliate of any Xxxxxxx Xxxxxx or any Stonehill Holder,
and (b) any transferee (or group of related transferees or transferees acting in
concert) that acquires, directly or indirectly, in one or a series of
transactions, from one or more of the Xxxxxxx Holders or one or more of the
Stonehill Holders, 50% or more of the Shares originally owned by the Xxxxxxx
Holders or the Stonehill Holders, as the case may be. Any such transferee shall
execute an agreement to become a party to this agreement in form and substance
reasonably satisfactory to Newco and the other Holders, and all references to
the Xxxxxxx Holders or the Stonehill Holders, as the case may be, shall include
such transferee(s).
4. Miscellaneous.
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4.1 Governing Law. This agreement shall be governed by and construed
in accordance with the laws of the state of New York applicable to agreements
made and to be performed wholly in New York.
4.2 Notices. Any notice or other communication under this agreement
shall be in writing and shall be considered given when delivered personally or
mailed by registered mail, return receipt requested, at the following address
(or at such other address as a party may designate by notice given to the
others):
If to the Xxxxxxx Holders, to them at:
c/x Xxxxxxx Management Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx Xxxxxxx
with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
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Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxx, Esq.
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If to the Stonehill Holders, to them at:
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxx
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxx, Esq.
4.3 Counterparts. This agreement may be executed in counterparts,
each of which shall be considered an original, but all of which together shall
constitute the same instrument.
4.4 Equitable Relief. The parties acknowledge that the remedy at law
for breach of this agreement would be inadequate and that, in addition to any
other remedy a party may have for a breach of this agreement, that party shall
be entitled to an injunction restraining any such breach or threatened breach,
or a decree of specific performance, without the necessity of showing actual
damages and without any bond or other security being required. The remedy
provided in this section 4.4 is in addition to, and not in lieu of, any other
rights or remedies a party may have.
4.5 Separability. If any provision of this agreement is invalid or
unenforceable, the balance of this agreement shall remain in effect, and, if any
provision is inapplicable to any person or circumstances, it shall nevertheless
remain applicable to all other persons and circumstances.
4.6 Entire Agreement . This agreement contains a complete statement of
all the arrangements among the parties with respect to its subject matter,
supersedes all existing agreements among them with respect to that subject
matter and may not be changed or terminated orally.
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4.7 Affiliate, etc. As used in this agreement, an affiliate of any
person means any person that, directly or indirectly, controls, is controlled
by, or is under common control with, the specified person, and beneficial
ownership shall be determined in accordance with the rules under the Securities
Exchange Act of 1934.
THE LIVERPOOL LIMITED PARTNERSHIP
By:__________________________________
Name:
Title:
WESTGATE INTERNATIONAL, L.P.
By:__________________________________
Name:
Title:
STONEHILL INSTITUTIONAL PARTNERS, L.P.
By:__________________________________
Name:
Title:
STONEHILL OFFSHORE PARTNERS LIMITED
By:__________________________________
Name:
Title:
ACKNOWLEDGED:
SUNSHINE MINING AND REFINING COMPANY
By:__________________________________
Name:
Title:
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