FOURTH AMENDMENT TO
ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
THIS FOURTH AMENDMENT TO ACQUISITION AGREEMENT AND AGREEMENT AND PLAN OF
MERGER (this "Amendment") is dated as of May 31, 2005, and entered into by and
among KINROSS GOLD CORPORATION, a corporation existing under the laws of the
Province of Ontario, Canada ("Parent"), CROWN MERGER CORPORATION, a Washington
corporation and a wholly owned subsidiary of Parent ("Purchaser"), and CROWN
RESOURCES CORPORATION, a Washington corporation ("Crown," and together with
Purchaser, the "Constituent Corporations").
A. Parent, Purchaser, and Crown are parties to the Acquisition
Agreement and Agreement and Plan of Merger, dated November 20, 2003, as
previously amended April 7, 2004, September 15, 2004, and December 30, 2004 (the
"Acquisition Agreement"), pursuant to which Purchaser will merge with and into
Crown and Crown will become a wholly owned subsidiary of Parent. The parties
wish to amend the Acquisition Agreement as set forth herein. Defined terms
contained in this Amendment shall have the meaning ascribed to them in the
Acquisition Agreement.
B. This Amendment is entered into in conformance with Section 9.4
of the Acquisition Agreement which requires that any modification of the
Acquisition Agreement be set forth in writing and signed by all parties.
C. On or before June 20, 2005, Parent proposes to cause an
affiliate to purchase from Crown a Convertible Debenture, in the principal
amount of U.S. $10 million, convertible into shares of Crown's common stock,
substantially in the form attached hereto as Exhibit A. Certain of the changes
in this Amendment are made in contemplation of such purchase.
NOW, THEREFORE, in consideration of the mutual agreements contained in
this Amendment, and for other good and valuable consideration, the value,
receipt and sufficiency of which are acknowledged, the parties agree as follows:
1. AMENDMENT TO SECTION 1.7.1. Section 1.7.1 is amended to read, in
its entirety, as follows:
CONVERSION OF CROWN COMMON STOCK. Each share of Crown Common Stock
(other than Crown Common Stock held by Parent or Purchaser or by a
Dissenter) issued and outstanding immediately prior to the Effective
Time will be converted into the right to receive 0.34 Kinross Common
Shares (the "Exchange Ratio"). Notwithstanding the foregoing, in the
event that the value for the total number of Kinross Common Shares to be
issued in exchange for, or on exercise or conversion of, all Crown
Common Stock, Warrants, or other instruments or securities convertible
into shares of Crown Common Stock outstanding as of the Closing Date
(including Kinross Common Shares that would
be issued to Dissenters if they had not asserted their right to dissent,
but excluding Kinross Common Shares that would be issued for any Crown
Common Stock held by Parent or Purchaser) shall be less than $77.5
million or more than $110 million, the Exchange Ratio shall be adjusted.
In the event that the total value is less than $77.5 million, the
Exchange Ratio shall be increased so that the value of the total number
of Kinross Common Shares issuable shall be equal to $77.5 million. In
the event that the total value is greater than $110 million, the
Exchange Ratio shall be decreased so that the value of the total number
of Kinross Shares issuable shall be equal to $110 million. For purposes
of the foregoing calculations, the value of the Kinross Common Shares
issuable shall be determined based on the weighted average closing price
of the Kinross Common Shares as reported by the New York Stock Exchange
(or such other principal United States trading market as the Kinross
Common Shares may then be traded on) for the 20 trading day period ended
on the day prior to the Closing Date. All outstanding shares of Crown
Common Stock as of the Effective Time will automatically be cancelled
and will cease to exist. The certificates formerly representing shares
of Crown Common Stock to be converted into Kinross Common Shares as
described above (each a "Certificate" and, collectively, the
"Certificates") will thereafter represent that number of Kinross Common
Shares determined by the Exchange Ratio. Such certificates held by
Dissenters shall represent the right to pursue such rights as the
Dissenter may have under the Washington Act. Such certificates held by
Parent or Purchaser shall be cancelled and retired and shall cease to
exist and no Kinross Common Shares or other consideration shall be
delivered in exchange therefor.
2. AMENDMENT TO SECTION 8.1.2.1. Section 8.1.2.1 is amended to
read, in its entirety, as follows:
The consummation of the Merger has not occurred by (i) March 31, 2006,
so long as Kinross has filed audited financial statements for the year
ended December 31, 2004 with the Securities and Exchange Commission by
December 31, 2005, or (ii) December 31, 2005, if such financial
statements have not been filed; provided, in each case, that the party
seeking to terminate this Agreement pursuant to this clause has not
breached in any Material respect its obligations under this Agreement in
any manner that has contributed to the failure of the consummation of
the Merger on or before such date;
3. CONSENT TO SALE OF CONVERTIBLE DEBENTURE. For the purpose of
Section 5.1 of the Acquisition Agreement, Parent consents to the sale of the
Convertible Debenture, and the issuance of Crown Common Stock upon conversion
thereof, as described in Exhibit A.
4. CONSENT TO PAYMENT OF DIVIDEND. For the purposes of Section 5.1
of the Acquisition Agreement, Parent consents to allow the Crown Board, in its
sole discretion, to declare and authorize the payment by Crown of a dividend
(the "Contemplated Dividend") to the holders of Crown Common Stock, in an amount
not to exceed $0.21 per outstanding share of Crown Common Stock, as of the
record date for such dividend, to be paid on or before September 30, 2005.
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5. TAX CONSEQUENCES. Parent and Crown acknowledge that if Crown
declares and pays the Contemplated Dividend, the provisions of the Acquisition
Agreement tax treatment of the Merger, including, without limitation, Sections
6.8, 6.11, and 7.2.4 of the Acquisition Agreement, will not apply. Accordingly,
Sections 6.8, 6.11, and 7.2.4 and any other provisions of the Acquisition
Agreement apply to the originally contemplated tax treatment, shall be of no
further force or effect in the event that the Contemplated Dividend is paid.
6. PAYMENT OF THIRD-PARTY PERMITTING COSTS. If the Contemplated
Dividend is paid, Parent agrees to pay for all third-party permitting costs
pertaining to the permitting of the Buckhorn Mountain project, including
invoices for past permitting costs, received by Crown after June 1, 2005.
7. TOLL MILLING AGREEMENT. The parties confirm that, in the event
that the merger (as contemplated in the Acquisition Agreement) has not closed
prior to March 31, 2006, or such later date as may be mutually agreed to by the
parties, the Toll Milling Agreement between Crown and Echo Bay Minerals Company,
a wholly-owned subsidiary of Parent, dated November 11, 2003, shall not
terminate solely as a result of the merger not being consummated (although,
depending on the circumstances, the parties may have the right to terminate the
agreement, all as otherwise provided in the Toll Milling Agreement) and that the
Toll Milling Agreement will remain in full force and effect, subject to the
terms thereof.
8. DIRECTORS' FEES AND EXECUTIVE OFFICER COMPENSATION. Parent
acknowledges and consents to the matters set forth in the Crown Board Consent
Resolution dated May 3, 2005, that has previously been provided to Parent
pertaining to 2005 Crown Board fees and Executive Officer compensation.
9. RATIFICATION OF ACQUISITION AGREEMENT. Except as specifically
provided in Sections 1 through 8 hereof, the parties specifically ratify,
confirm, and adopt as binding and enforceable, all of the terms and conditions
of the Acquisition Agreement.
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IN WITNESS WHEREOF, Parent, Purchaser, and Crown have caused this
Amendment to be signed as of the date first written above by their respective
officers or representatives thereunto duly authorized.
Parent:
KINROSS GOLD CORPORATION
By
----------------------------------------
Xxxx Xxxxx, Duly Authorized Officer
Purchaser:
CROWN MERGER CORPORATION
By
----------------------------------------
Xxxx Xxxxx, Director
Crown:
CROWN RESOURCES CORPORATION
By
----------------------------------------
Xxxxxxxxxxx Herald, President and CEO
SIGNATURE PAGE TO FOURTH AMENDMENT TO ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
CONVERTIBLE DEBENTURE
U.S. $10,000,000 Dated: May 31, 2005
The undersigned, CROWN RESOURCES CORPORATION, a Washington corporation
("Borrower"), promises to pay to KINROSS GOLD U.S.A., INC., a corporation
existing under the laws of the Province of Ontario (hereinafter, together with
any subsequent holder of this Debenture, referred to as "Lender"), at 52nd Floor
Scotia Plaza, 40 King Street West, Toronto, Ontario Canada M5H 3Y2, or at such
other place as Lender may designate, in lawful money of the United States, the
principal sum of TEN MILLION DOLLARS AND NO/100 ($10,000,000), together with
interest from the date hereof on the unpaid principal represented by this
Debenture, payable as hereinafter provided.
1. Borrower shall pay to Lender the principal amount of this
Debenture five (5) years from the date hereof (the "Repayment Date"). On the
Repayment Date, the entire then-remaining unpaid principal balance, plus any
accrued and unpaid interest and all other fees and amounts required by this
Debenture, shall be due and payable in full.
2. The outstanding principal balance of this Debenture shall bear
interest for each day from the date hereof, including the date such principal
and interest accrued thereon is repaid in full, or converted as provided in
Section 3 below, at a rate per annum equal to four percent (4%). Interest shall
accrue based upon a year of 360 days. Interest shall be payable on the unpaid
principal balance of this Debenture yearly on the anniversary dates of the date
hereof, beginning one year from the date hereof, and continuing on each
successive anniversary date of the date hereof until the Repayment Date.
Notwithstanding the foregoing, however, Borrower may defer the required interest
payments hereunder due on the first and second anniversaries of the date hereof,
and in such case, all accrued and unpaid interest due for the first three years
under this Debenture shall be due and payable on the date that is three years
from the date hereof.
3. The outstanding principal balance hereof, plus any accrued and
unpaid interest thereon (the "Conversion Value"), or any portion thereof, shall
be convertible into shares of common stock of Borrower (the "Common Stock"), on
the basis of one share of Common Stock per each 1.72414 dollars ($1.72414) of
the Conversion Value, at any time subsequent to September 30, 2005, at the sole
option of the Lender. Notwithstanding the foregoing, the outstanding principal
balance hereof, plus any accrued and unpaid interest thereon shall be
automatically converted into the Common Stock as of the day immediately prior to
the closing of the transactions contemplated by that certain Acquisition
Agreement and Agreement and Plan of Merger, dated as of November 20, 2003, as
amended, entered into by, among others, the Lender and the Borrower (the "Merger
Agreement"). In the event the Merger Agreement is terminated other than on the
default of Borrower, and provided Borrower is not in default hereunder, Borrower
shall have the right to cause the conversion of this Debenture to common stock
of Borrower on the terms set forth above by delivering 30 days prior written
notice to Lender.
4. The number and character of Borrower's common shares issuable
upon conversion of this Debenture shall be adjusted upon the occurrence of any
of the following events: (i) in the event that Borrower shall fix a record date
for the determination of holders of securities affected by any stock split,
stock dividend, stock consolidation, reclassification, recapitalization or other
similar event that will affect the number of outstanding shares of Borrower's
capital stock without additional amounts being paid to Borrower, then, and in
each such case, Lender, upon conversion of this Debenture at any time after such
record date for such event, shall receive that number of shares of Borrower's
common stock (or other securities into which the common stock may have been
converted) to which Lender would have been entitled if it had converted this
Debenture immediately prior to such record date; and (ii) in the event that
Borrower, after the date hereof, shall reorganize, consolidate with, or merge
into another entity or convey all or substantially all of its assets to another
entity, then Lender, upon the conversion of this Debenture at any time after the
consummation of such transaction, shall be entitled to receive, in lieu of the
securities and property receivable upon the conversion of this Debenture prior
to such consummation, the stock or other securities or property to which Lender
would have been entitled to receive upon the consummation of such transaction if
it had converted this Debenture immediately prior thereto, and the successor or
purchasing corporation in such transaction shall duly execute and deliver to
Lender an acknowledgement of its obligations hereunder.
5. Each payment under this Debenture shall be applied first to the
payment of Lender's costs, fees and expenses as provided herein, second, to
accrued but unpaid interest due under this Debenture, and third, to the
reduction of unpaid principal owing under this Debenture.
6. Borrower is purchasing the Debenture for its own account and not
with a view to distribution or resale. Until the termination or consummation of
the Acquisition Agreement and Agreement and Plan of Merger dated November 20,
2003, as amended, entered into by, among others, Kinross Gold Corporation and
Lender, Borrower agrees not to transfer this Debenture or the shares of common
stock issuable on conversion of the Debenture to any person other than an entity
controlled by, controlling or under common control with Borrower.
7. If one or more of the following events (each an "Event of
Default") shall have occurred and be continuing:
(a) Borrower shall fail to pay any principal of this
Debenture when due, or interest thereon or any fees or any other amounts
payable hereunder within 10 days after the due date thereof;
(b) Borrower shall fail to pay its debts generally as they
become due, or shall file a petition, proceeding, case or action for
relief under any bankruptcy, reorganization, insolvency or moratorium
law, rule, regulation, statute or ordinance (each a "Law"), or any other
Law for the relief of, or related to, debtors; or
(c) Any involuntary petition is filed under any bankruptcy
or similar Law against Borrower, or a receiver, trustee, liquidator,
assignee, custodian, sequestrator or other similar official is appointed
to take possession of any of the assets or properties of Borrower;
then, and in every such event, without notice to Borrower or any other act by
Lender, the entire unpaid principal balance hereunder, together with all accrued
but unpaid interest and all fees and charges required by this Debenture, shall,
at the option of Lender, at once become due and payable without presentment,
demand, protest or notice of any kind, all of which are hereby waived by
Borrower (time being the essence hereof). The failure of Lender to exercise any
right or remedy upon the occurrence or continuance of an Event of Default shall
not constitute or be construed to constitute a waiver of any right or remedy of
Lender.
8. Notwithstanding any other provision contained in this Debenture
or in any agreement, document or instrument related to the transaction of which
this Debenture is a part: (a) the rates of interest
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and charges and the payments provided for herein and therein shall in no event
exceed the rates and charges and the payments which would result in interest
being charged at a rate equaling the maximum allowed by law; and (b) if, for any
reason whatsoever, Lender ever receives as interest (or as a charge in the
nature of interest) in connection with the transaction of which this Debenture
is a part an amount which would result in interest being charged at a rate
exceeding the maximum allowed by law, such amount or portion thereof as would
otherwise be excessive interest shall automatically be applied toward reduction
of the unpaid principal balance then outstanding hereunder. Any such amount
shall not be applied toward payment of interest (or toward payment of a charge
in the nature of interest).
9. In the event that (a) any payment under this Debenture is not
made at the time and in the manner required hereunder, (b) Lender incurs any
costs of collection or other costs reasonably necessary for the protection of
the interest of Lender with respect to this Debenture, or (c) Lender exercises
its right to accelerate the maturity of the obligations hereunder, Borrower
agrees to pay any and all costs and expenses (regardless of the particular
nature thereof and whether incurred before or after the initiation of suit or
before or after judgment) which may be incurred by Lender in connection with the
enforcement of any of its rights under this Debenture, including court costs and
attorneys' fees.
10. The undersignedhereby waives presentment for payment and notice
or dishonor of this Debenture.
11. Lender may assign this Debenture and/or any interest therein
without the approval, consent or permission of Borrower.
12. Except as expressly set forth to the contrary in this Debenture,
all notices, requests, or consents provided for or permitted to be given under
this Debenture must be in writing and shall be deemed delivered: (i) upon
delivery if delivered in person or by telecopy with confirmation of receipt;
(ii) three business days after deposit in the United States or Canadian mail,
addressed to the recipient, postage prepaid, and registered or certified with
return receipt requested; or (iii) one business day after deposit with a
national overnight courier. Such notices, demands, and other communications
shall be sent to each party at the address or telecopy number indicated below:
If to Lender:
Kinross Gold Corporation
52nd Floor Scotia Plaza
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxx X. Xxxx
Xxxx Xxxxxxxx Xxxxx Xxx & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Borrower:
Crown Resources Corporation
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxx X. Xxxxx
Xxxxx Xxxxx LLP
000 X.X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address or telecopy number of such other person as the
recipient party has specified by prior written notice to the sending party.
13. Except for matters governed by federal law, all other issues and
questions concerning the construction, validity, enforcement and interpretation
of this Debenture and the exhibits and schedules hereto shall be governed by,
and construed in accordance with, the laws of the State of Washington, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Washington or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Washington.
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IN WITNESS WHEREOF, Borrower has caused this Debenture to be signed in
its name as of the date first above written.
"BORROWER"
CROWN RESOURCES CORPORATION
a Washington corporation
By: ______________________________________
Name: ____________________________________
Its: _____________________________________
