EXHIBIT 4.11
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (the "Agreement") is executed and made
effective as of this 12th day of February, 2003, by and among GLAMIS de MEXICO,
S.A. DE C.V., a corporation organized and existing under the laws of Mexico
("Glamis"), RALEIGH MINING INTERNATIONAL LIMITED, a company organized and
existing under the laws of the Province of Ontario, Canada ("Raleigh"),
METALLICA RESOURCES INC., a Canadian federal corporation ("Metallica"), and
MINERA SAN XAVIER, S.A. de C.V., a company organized and existing under the laws
of Mexico ("MSX"). Glamis, Raleigh, Metallica and MSX are at times referenced in
this Agreement individually as a "Party" and collectively as the "Parties".
RECITALS
A. Glamis is the owner of fifty percent (50%) of all of the
issued and outstanding capital stock of MSX.
B. Raleigh is the owner of the other fifty percent (50%) of all
of the issued and outstanding capital stock of MSX.
C. Raleigh wishes to buy from Glamis, and Metallica, as the
parent company of Raleigh, wishes for Raleigh to buy from Glamis, all of the
issued and outstanding capital stock of MSX owned by Glamis (the "Shares"), all
on the terms and conditions hereinafter set forth, such that, following such
purchase, Raleigh shall own all of the issued and outstanding capital stock of
MSX.
D. Glamis is willing to sell the Shares to Raleigh on the terms
and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the Parties agree as follows:
1. Exhibits. The following Exhibits are attached to and by this reference
made a part of this Agreement:
Exhibit A - Properties and other MSX Assets
Exhibit A-1: Properties
Exhibit A-2: Other MSX Assets
Exhibit B - Escrow Instructions
Exhibit C - Promissory Note
Exhibit D - Royalty Deed (Net Smelter Return Production Royalty)
Exhibit E - Amended and Restated Shareholders Agreement
Exhibit F - Termination Agreement
Exhibit G - Guaranty
Exhibit H - List of Transferred Employees
2. Definitions. As used in this Agreement and in the Exhibits hereto, the
following terms shall have the meanings set forth below.
"ADDITIONAL SHARES" shall have the meaning assigned to it in Section
8(a).
"AFFILIATE" shall mean any person, partnership, joint venture,
corporation or other entity or form of enterprise that directly or indirectly
controls, is controlled by, or is under common control with, a Party. For
purposes of the preceding sentence, "control" means possession, directly or
indirectly, of the power to direct or cause direction of management and policies
through ownership of a majority of voting securities, contract, ability to
appoint a majority of a board of directors, voting trust or otherwise.
"AMENDED AND RESTATED SHAREHOLDERS AGREEMENT" shall mean the Amended
and Restated Shareholders Agreement attached to this Agreement as Exhibit E
pursuant to which the MSX Shareholders Agreement is amended and restated in its
entirety.
"CERRO SAN XXXXX PROJECT" shall mean the Cerro San Xxxxx gold and
silver mining project in San Xxxx Potosi, Mexico, that is owned and operated by
MSX.
"CLOSING" shall mean the completion of the purchase and sale of the
Shares as provided in Section 6.
"EFFECTIVE DATE" shall mean the date on which this Agreement has been
fully executed and delivered by each of the Parties and each of the Parties has
made the deliveries to the other Party required of it by Section 6 of this
Agreement.
"ESCROW AGENT" shall mean L. Xxxxx Xxxxxx, LLC.
"ESCROW DOCUMENTS" shall mean the documents to be delivered to the
Escrow Agent pursuant to Section 6(f) of this Agreement.
"ESCROW PERIOD" means the period commencing on the Effective Date and
ending on the date that all of the Escrow Documents have been delivered to the
Parties in accordance with Sections 6(g) and (h) of this Agreement and with the
Escrow Instructions.
"ESCROW INSTRUCTIONS" shall mean the Escrow Instructions to be
delivered by Glamis, Raleigh and MSX to the Escrow Agent at Closing pursuant to
Section 6(f) of this Agreement. The Escrow Instructions shall be in the form of
the attached Exhibit B.
"GUARANTY" shall mean the undertaking by Metallica to guarantee the
full and timely performance of all of Raleigh's and MSX's obligations under this
Agreement and under the terms of the Promissory Note, the Royalty Deed, the
Termination Agreement, and any other
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instruments executed and delivered to Glamis pursuant to this Agreement or the
Escrow Instructions. The Guaranty shall be in the form attached to this
Agreement as Exhibit G.
"INITIAL PAYMENT" shall mean the sum of Two Million Dollars
(US$2,000,000) plus fifty percent (50%) of the Working Capital of MSX as of
December 31, 2002, which shall be paid on the Effective Date.
"JOINT SEVERANCE OBLIGATIONS" means all severance pay, accrued benefits
and other consideration that are payable to the Transferred Employees upon the
termination of their employment with SSX pursuant to Section 7(c).
"MSX ASSETS" shall mean the Properties and all other real and personal
property, tangible and intangible, held or owned by MSX on the Effective Date,
including, but not limited to the MSX Assets described in Exhibit A-1 and
Exhibit A-2.
"MSX SHAREHOLDERS AGREEMENT" shall mean that certain Stock Acquisition
and Shareholders' Agreement effective as of January 21, 1998 among Glamis, as
the successor in interest to Cambior de Mexico, S.A. de C.V., Raleigh, and MSX.
"NET SMELTER RETURN PRODUCTION ROYALTY" shall mean the royalty on the
production of minerals from the Cerro San Xxxxx Project to be conveyed to Glamis
by Raleigh as partial consideration for the Shares, such royalty to be conveyed
by the Royalty Deed in accordance with Section 6. The Net Smelter Return
Production Royalty is more particularly defined in Exhibit D.
"PROMISSORY NOTE" shall mean the Promissory Note in the principal
amount of Sixteen Million Dollars (US$16,000,000) from Raleigh, as maker, and
Metallica, as guarantor, to Glamis, as holder, that is to be delivered by
Raleigh to the Escrow Agent pursuant to Section 6(f). The Promissory Note shall
be in the form attached to this Agreement as Exhibit C.
"PROPERTIES" shall mean those interests in the real property,
concessions, minerals, mineral rights, surface rights, water rights, easements
and related mining and other property rights described in the attached Exhibit
A-1 and/or that are acquired or held by MSX or any of its Affiliates for the
benefit of the Cerro San Xxxxx Project on or after the Effective Date, together
with all replacements, renewals or extensions of the foregoing.
"PURCHASE PRICE" means the price payable to Glamis for the Shares,
which price shall be Eighteen Million Dollars (US$18,000,000) under the
conditions set forth in Section 5 plus fifty percent (50%) of the Working
Capital of MSX as of the date of Closing.
"ROYALTY DEED" shall mean the Royalty Deed, in the form attached to
this Agreement as Exhibit D, by which the Net Smelter Return Production Royalty
shall be conveyed by MSX to Glamis pursuant to Section 4(a) and Section 6(f).
The term "Royalty Deed" also shall mean and include, when and as the context
requires, such additional instruments evidencing the Net Smelter Production
Royalty as may be necessary or desirable to properly transfer to Glamis and
register the Net Smelter Production Royalty under the laws of Mexico.
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"SHARES" means all of the issued and outstanding capital stock of MSX
owned by Glamis.
"SSX" means Servicio San Xavier, S.A. de C.V., an Affiliate of Glamis.
"SSX SERVICE AGREEMENT" means that certain Service Agreement dated
January 21, 1998, between MSX and SSX with regard to the provision by SSX of
certain services to MSX.
"TERMINATION AGREEMENT" means that certain Termination Agreement, in
the form of the attached Exhibit F, pursuant to which the SSX Service Agreement
shall be terminated.
"TRANSFERRED EMPLOYEES" shall mean those individuals who, prior to the
Effective Date, were employees of SSX who were assigned to and worked for the
benefit of MSX pursuant to the SSX Service Agreement and whom Raleigh has
notified Glamis that it wishes to hire from and after the Effective Date. The
Transferred Employees are specifically identified on the attached Exhibit H.
"WORKING CAPITAL" means the value of the current assets, including IVA
recoverables, of MSX less the following: (1) current liabilities of MSX,
calculated and determined as provided in Section 5(b), and (2) the Joint
Severance Obligations. As used in this Agreement, the term "IVA" means value
added taxes or similar or related taxes, levies, tariffs and assessments.
3. Representations and Warranties.
(a) Mutual Representations and Warranties. Each of
Raleigh and Metallica represent and warrant to Glamis, and Glamis represents and
warrants to Raleigh and Metallica, effective as of the Effective Date, as
follows: (i) it is a corporation duly incorporated, validly existing, and in
good standing in its jurisdiction of incorporation; (ii) it has the necessary
corporate power, authority and capacity to execute and deliver this Agreement
and to perform the transactions contemplated herein; (iii) the execution of this
Agreement and the completion of the transaction described herein will not
violate or result in the breach of any bylaw, agreement, covenant, law, rule,
regulation or administrative order or other legal restriction or requirement by
which either Party or its properties may be bound; and (iv) upon due execution
and delivery, this Agreement shall constitute its valid agreement, binding and
enforceable against it in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally, and except as may be limited by general
principles of equity.
(b) Glamis' Additional Representations and Warranties.
Glamis represents and warrants to Raleigh and Metallica, effective as of the
Effective Date, as follows: (i) Glamis is the lawful and registered owner of the
Shares, free and clear of all claims, liens, encumbrances, assessments and
rights of third parties, and no third party has subscribed to or has any right
to subscribe to the purchase or other acquisition of any of the Shares; and (ii)
neither Glamis nor MSX will be required to give any notice to or obtain any
consent from any person, entity or governmental authority in connection with the
execution and delivery of this Agreement, the
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transfer to Raleigh of the Shares or completion of any other actions by Glamis
contemplated herein.
(c) Raleigh's Additional Representations and Warranties.
Raleigh represents and warrants to Glamis, effective as of the Effective Date,
that Raleigh is the lawful and registered owner of fifty percent (50%) of all of
the issued and outstanding capital stock of MSX.
(d) Metallica's Additional Representations and
Warranties. Metallica represents and warrants to Glamis, effective as of the
Effective Date, as follows: (i) Metallica is the direct corporate parent of
Raleigh and owns all of the issued and outstanding capital stock of Raleigh;
(ii) as the direct corporate parent of Raleigh, Metallica will receive direct
and indirect benefits from Glamis' sale of the Shares to Raleigh and Raleigh's
purchase of the Shares from Glamis pursuant to this Agreement.
4. Purchase and Sale/Consideration. Glamis agrees to sell to Raleigh, and
Raleigh agrees to purchase from Glamis, all of Glamis' right, title and interest
in and to the Shares. In consideration of the sale of the Shares to Raleigh,
Raleigh shall pay to Glamis the Purchase Price and MSX shall convey and pay to
Glamis the Net Smelter Return Royalty. In consideration of the direct and
indirect benefits to be received by Metallica as a result of Glamis' sale of the
Shares to Raleigh, and as a material inducement to Glamis to enter into this
Agreement and sell the Shares to Raleigh, Metallica agrees to guarantee the
performance of the respective obligations of Raleigh and MSX under this
Agreement, the Promissory Note, the Royalty Deed, the Termination Agreement, the
Escrow Instructions and all other instruments executed by Raleigh or MSX
pursuant to this Agreement, all as more particularly provided in the Guaranty.
5. Calculation and Payment of Purchase Price.
(a) Payment of Purchase Price. The Purchase Price shall
be the sum of Eighteen Million Dollars (US$18,000,000) under the conditions set
forth in this Section 5 plus fifty percent (50%) of the Working Capital of MSX
as of the Effective Date and shall be payable as follows:
(i) Two Million Dollars (US$2,000,000) plus
fifty percent (50%) of the Working Capital of MSX as of
December 31, 2002 (the "Initial Payment"), shall be paid at
Closing as specified in Section 6. The Working Capital of MSX
as of December 31, 2002 was zero Dollars (US$0), hence the
Initial Payment shall be Eighteen Million Dollars
(US$18,000,000).
(ii) Five Million Dollars (US$5,000,000) shall be
paid at the earliest to occur of the following: (A) six (6)
months after the Effective Date or (B) three (3) business days
following the date on which Raleigh, MSX or Metallica both (X)
completes and receives the proceeds from a public or private
debt or equity financing which provides net proceeds to
Raleigh, MSX or Metallica of not less than Five Million
dollars (US$5,000,000) and (Y) receives all permits and
approvals necessary to commence development and construction
activities at the Cerro San Xxxxx Project.
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(iii) Six Million Dollars (US$6,000,000) shall be
payable twelve (12) months after the Effective Date, provided,
however, that if Raleigh and Metallica do not have the
financial ability to make such payment in cash, then Metallica
may make all or part of that payment by delivering to Glamis
fully registered and freely tradable common shares of
Metallica, together with such duly executed stock powers or
endorsements as are necessary to properly transfer the
Metallica shares from Metallica to Glamis under the laws of
Canada. The shares so delivered shall be priced at the
greatest allowable discount under applicable Canadian and/or
TSE rules from the average closing price of Metallica's shares
on the Toronto Stock Exchange for twenty (20) trading days
preceding the date on which the payment became due to Glamis.
In the event that Metallica elects to deliver common shares to
Glamis in lieu of cash as provided in this Section 5(a)(iii),
the following terms and covenants shall apply:
(A) In the event that Glamis wishes to
sell more than one hundred thousand (100,000) of
Metallica's shares during any ten (10) day trading
period, Glamis shall provide Metallica not less than
forty-eight (48) hours prior notice to afford
Metallica the opportunity to place the shares at the
then-prevailing market price. If Metallica is unable
to place the shares or fails to respond to Glamis
with the forty-eight (48) hour period, Glamis shall
be free to sell the shares in the open market;
(B) In the event that Metallica intends
to conduct any equity financing by way of public
issue or private placement while Glamis still holds
Metallica shares, Metallica shall notify Glamis of
the same and shall provide Glamis the opportunity,
exercisable at Glamis' sole discretion, to sell all
or a portion of its shares in the same transaction.
The maximum number of Glamis' shares to be included
in the equity financing shall be the same percentage
of the total shares to be issued as the Glamis'
shares represent of the total issued and outstanding
shares of Metallica prior to the equity financing;
and
(C) Metallica shall warrant to Glamis,
at the time of delivery of Metallica's shares, that:
(i) Metallica is the lawful and registered owner of
Metallica's shares, free and clear of all claims,
liens, encumbrances, assessments and rights of third
parties; (ii) no third party has subscribed to or has
any right to subscribe to the purchase or other
acquisition of Metallica's shares; and (iii) neither
Glamis nor Metallica is or will be required to give
any notice to or obtain any consent from any person,
entity or governmental authority in connection with
the transfer to Glamis of Metallica's shares.
(iv) Two Million Five Hundred Dollars
(US$2,500,000) payable five (5) business days following the
date on which MSX commences the commercial production of
minerals at the Cerro San Xxxxx Project. For purposes of this
Agreement, the commencement of commercial production shall be
deemed to
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have occurred on the date that a cumulative total of ten
thousand (10,000) gold-equivalent ounces of dore or mineral
concentrate from production from the Cerro San Xxxxx Project
has been delivered for refining to a commercial refiner.
(v) Two Million Five Hundred Dollars
(US$2,500,000) payable twelve (12) months following the date
on which MSX commences the commercial production of minerals
at the Cerro San Xxxxx Project.
(b) Adjustment to Purchase Price. The Parties acknowledge
and agree that the Purchase Price is to be the sum of Eighteen Million Dollars
(US$18,000,000) under the conditions set forth in this Section 5 plus fifty
percent (50%) of the Working Capital of MSX as of the Effective Date but that
the Working Capital of MSX as of the Effective Date has not yet been determined.
Therefore, the Parties agree that, within thirty (30) days following Closing,
Raleigh shall prepare and furnish to Glamis a full and complete accounting of
the Working Capital of MSX as of the Effective Date. Within ten (10) days
following Glamis' receipt of the accounting, any difference between the Working
Capital as of December 31, 2002 and the Working Capital as of the Effective Date
shall be settled and paid as follows: (i) if the Working Capital as of the
Effective Date exceeds the Working Capital as of December 31, 2002, Raleigh
shall pay one-half (1/2) of the difference to Glamis; and (ii) if the Working
Capital as of December 31, 2002 exceeds the Working Capital as of the Effective
Date, Glamis shall pay one-half (1/2) of the difference to Raleigh.
6. Closing: Delivery and Distribution of Documents.
(a) Place and Date. The Closing of the purchase and sale
of the Shares shall take place at the offices of Ducker, Montgomery, Xxxxx &
Xxxxxxxxx, P.C., 0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx, or at some other
mutually agreed place on the Effective Date, concurrent with the final execution
of this Agreement.
(b) Documents to be Delivered by Raleigh to Glamis. At
Closing, Raleigh shall deliver to Glamis the following:
(i) The Initial Payment by wire transfer in
immediately available funds;
(ii) A certified resolution of the Board of
Directors of Raleigh authorizing this Agreement and completion
of the transaction contemplated herein; and
(iii) A certificate duly executed by an authorized
officer of Raleigh confirming that the representations and
warranties of Raleigh provided in this Agreement remain true
and correct as of the date of final execution.
(c) Documents to be Delivered by Glamis to Raleigh. At
Closing, Glamis shall deliver to Raleigh the following:
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(i) A certified resolution of the Board of
Directors of Glamis authorizing this Agreement and completion
of the transaction contemplated herein; and
(ii) Duly executed resignations of Xxxxx
XxXxxxxx, Xxxxxxx Jeannes and Xxxxx Xxxxxxxx as officers and
members of the Board of Directors of MSX; and
(iii) The Termination Agreement, in the form
attached hereto as Exhibit E and duly executed by an
authorized officer of SSX, which Termination Agreement also
shall be executed by MSX; and
(iv) Possession of the MSX Assets, including the
offices, equipment and other personal property of MSX located
at the Cerro San Xxxxx Project site, and all MSX books and
records in the possession or under the control of Glamis,
wherever located.
(d) Documents to be Delivered by MSX to Glamis. At
Closing, MSX shall deliver to Glamis the following:
(i) A certified resolution of the Board of
Directors of MSX authorizing this Agreement and completion of
the transaction contemplated herein;
(ii) The Termination Agreement, in the form of
the attached Exhibit E duly executed by an authorized officer
of MSX, which Termination Agreement also shall be executed by
SSX.
(e) Documents to be Delivered by Metallica to Glamis. At
Closing, Metallica shall deliver to Glamis the following:
(i) A certified resolution of the Board of
Directors of Metallica authorizing this Agreement and
completion of the transaction contemplated herein; and
(ii) The Guaranty, duly executed by an authorized
officer of Metallica, in the form of Exhibit G.
(f) Documents to be Delivered into Escrow. At Closing,
Raleigh and Glamis shall execute and deliver, and Raleigh shall cause MSX to
execute and deliver, to the Escrow Agent the Escrow Instructions, duly executed
by an authorized officer of each of Raleigh, Glamis and MSX, and the Escrow
Documents as specified in this Section 6(f). The Escrow Instructions so
delivered shall be in the form attached to this Agreement as Exhibit A.
(i) Glamis shall deliver to the Escrow Agent the
Shares, along with such duly executed stock powers or
endorsements as are necessary to properly transfer the Shares
from Glamis to Raleigh under the laws of Mexico;
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(ii) Raleigh and Metallica shall deliver to the
Escrow Agent a Promissory Note executed by an authorized
officer of Raleigh, as Maker, and of Metallica, as Guarantor,
to Glamis, as Holder, in the amount of Sixteen Million Dollars
(US$16,000,000) payable in installments as specified in
Section 5(a)(ii)-5(a)(v). The Promissory Note shall be in the
form attached to this Agreement as Exhibit C;
(iii) MSX shall deliver to the Escrow Agent the
Royalty Deed, along with such additional instruments
evidencing the Net Smelter Production Royalty as may be
necessary or desirable to properly transfer to Glamis and
register the Net Smelter Production Royalty under the laws of
Mexico, all duly executed by an authorized officer of MSX. The
Royalty Deed shall be in the form attached to this Agreement
as Exhibit D;
(iv) Raleigh, Glamis and MSX shall deliver to the
Escrow Agent duplicate originals of an Amended and Restated
Shareholders Agreement, duly executed by an authorized officer
of each of Glamis, Raleigh and MSX. The Amended and Restated
Shareholders Agreement shall be in the form attached to this
Agreement as Exhibit E.
The Escrow Documents so delivered to the Escrow Agent shall be held and
distributed by the Escrow Agent as and when provided in Section 6(g) and Section
6(h).
(g) Escrow Instructions: Default in Payment. In the event
that the first installment due under the Promissory Note (being the same payment
required by Section 5(a)(ii) of this Agreement) is not made to Glamis at the
time such payment is due (or within the curative period as provided in the
Promissory Note), Glamis shall provide written notice to the Escrow Agent of
such non-payment. Upon receipt of such notice, and in accordance with the Escrow
Instructions, the Escrow Agent shall do the following:
(i) return to Glamis the Shares and other
documents described in Section 6.f(i); and
(ii) date both duplicate originals of the Amended
and Restated Shareholders Agreement as of the date on which
the Shares are returned to Glamis.
Upon receipt by the Escrow Agent from Glamis that Raleigh has delivered the
Additional Shares as required by Section 8(a) of this Agreement, and in
accordance with the Escrow Instructions, the Escrow Agent shall do the
following:
(iii) return to Raleigh the Promissory Note;
(iv) return to MSX the Royalty Deed; and
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(v) deliver to each of Glamis and Raleigh one
duplicate original of the Amended and Restated Shareholders
Agreement.
Upon and in connection with the distribution of the Escrow Documents pursuant to
this Section 6(g), the provisions of Section 8 below shall apply.
(h) Escrow Instructions: Non-Default in Payment. In the
event that the first installment due under the Promissory Note is made to Glamis
at the time such payment is due (or within the curative period as provided in
the Promissory Note), Glamis shall provide written notice to the Escrow Agent of
the fact of such payment. Upon receipt of such notice, and in accordance with
the Escrow Instructions, the Escrow Agent shall do the following:
(i) deliver to Raleigh the Shares and other
documents described in Section 6.f(i);
(ii) deliver to Glamis the Promissory Note and
Royalty Deed; and
(iii) xxxx each of the duplicate originals of the
Amendment to MSX Shareholders Agreement "VOID" and shall
return one of each voided original to Raleigh and Glamis.
(i) Mutuality of Obligations. The obligations of each
Party to deliver the items specified in this Section and to complete the
transactions contemplated in this Agreement shall be conditioned upon and
subject to the complete and timely performance by the other Parties of their
respective obligations hereunder.
7. Covenants of Parties Following Closing. Following Closing and the final
execution and delivery of this Agreement and the other instruments to be
executed and delivered at Closing, the Parties covenant and agree as follows:
(a) Adjustment to Working Capital and Purchase Price.
Glamis and Raleigh shall make the adjustments to the Working Capital and the
Purchase Price as required by Section 5(b).
(b) Payments to SSX. Raleigh and MSX shall take all
action necessary to ensure that SSX is paid promptly for all services rendered
to MSX through the Effective Date pursuant to the SSX Service Agreement.
(c) Transferred Employees. From and after the Effective
Date, the Transferred Employees shall be the employees of a service company to
be determined by Metallica, and Raleigh shall be responsible for and shall pay
to the Transferred Employees the following: (i) all salaries, wages and benefits
for the Transferred Employees; and (ii) all severance pay, accrued benefits, and
other consideration that may become payable to the Transferred Employees by
virtue of the termination of their employment with SSX, other than Joint
Severance Obligations, which are to be included in Working Capital and will be
shared by Raleigh and Glamis equally upon the making of the adjustments to
Working Capital as required by Section 5(b). All salaries, wages, benefits,
severance pay, accrued benefits and other
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consideration that may become payable to employees of SSX other than the
Transferred Employees shall remain the sole obligation of SSX.
(d) No Solicitation. With the exception of the
Transferred Employees, Raleigh and Metallica agree that for a period of one (1)
year following the Effective Date, neither shall make any offer of employment or
otherwise solicit for employment any person presently employed by Glamis or any
of its Affiliates, including, without limitation, SSX, without the prior written
consent of Glamis.
(e) Glamis Assets. The Parties acknowledge that, as of
the Effective Date, Glamis maintains books and records and other assets (the
"Glamis Assets") relating to SSX and other of its Mexican Affiliates at the
offices of MSX. For a period of sixty (60) days following the Closing and the
transfer of possession of the MSX offices to Raleigh, Glamis shall have access
to the MSX offices for the purposes of removing (including, but not limited to,
from electronic storage) the Glamis Assets.
(f) Further Assistance. For a period of up to six (6)
months following Closing, Glamis agrees to make available or cause to be made
available to MSX the services of SSX's employees, Xxxxxxx Xxxxx ("Dodge") and
Xxxx Xxxxxx Xxxxxx ("Xxxxxx"), for telephone and personal consultations as
reasonably necessary to MSX in connection with its permitting activities for the
Cerro San Xxxxx Project. Such consultations shall be limited so as not to
materially interfere with Dodge's or Xxxxxx'x activities for the benefit of SSX
and/or Glamis. All expenses incurred by Glamis, SSX, Dodge or Xxxxxx in
connection with Dodge's and/or Xxxxxx'x consultations shall be paid by MSX.
(g) Maintenance of MSX Assets - Affirmative Covenants.
During the Escrow Period Raleigh and MSX shall do the following:
(i) maintain the MSX Assets free and clear of
all claims, liens, encumbrances, assessments and rights of
third parties;
(ii) make all payments and perform all
obligations required by leases, licenses, permits,
concessions, contracts and other agreements related to or
included in Properties or the MSX Assets;
(iii) maintain the Properties and all leases,
licenses, permits, concessions, contracts and other agreements
related to or included in the Properties in full force and
effect; and
(iv) maintain the financial and operating
condition and status of MSX, the Properties and other MSX
Assets in no worse condition than existed on the Effective
Date.
In addition, during the same period Raleigh shall maintain the shares of MSX
free and clear of all claims, liens, encumbrances, assessments and rights of
third parties. Notwithstanding the foregoing, Raleigh and/or MSX, as the case
may be, may enter into agreements or commitments
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to encumber the MSX Assets and/or the MSX Shares, provided that such agreements
and commitments shall, expressly and in writing, become effective only upon
expiration of the Escrow Period by Raleigh's payment to Glamis of the
installment of the Purchase Price described in Section 5(a)(ii) and the
subsequent delivery to Glamis of the Royalty Deed and Promissory Note pursuant
to Section 6(h) of this Agreement, and that such agreements and commitments
shall be null and void ab initio in the event that the such payment is not made
timely and the Escrow Documents are distributed as provided in Section 6(g) of
this Agreement.
(h) Maintenance of MSX Assets - Negative Covenants.
During the Escrow Period Raleigh and MSX shall be prohibited from doing the
following:
(i) disposing of all or a substantial part of
the MSX Assets necessary to achieve the purposes of the
business of MSX;
(ii) commencing of the liquidation of the
business of MSX;
(iii) pledging, mortgaging, encumbering or
otherwise burdening any of the MSX Assets or the shares of
MSX;
(iv) issuing additional shares of MSX;
(v) incurring any material expenditures on
behalf of MSX other than in the ordinary course of business;
(vi) incurring on the part of MSX any new or
additional liabilities other than in the ordinary course of
business; and
(vii) incurring on the part of MSX any new
indebtedness.
In addition, during the same period, Raleigh shall not sell any of the shares of
MSX or enter into any commitment or agreement with respect to any such sale.
Notwithstanding the foregoing, Raleigh and/or MSX, as the case may be, may enter
into agreements or commitments to do any of the foregoing, provided that such
agreements and commitments shall, expressly and in writing, become effective
only upon expiration of the Escrow Period by Raleigh's payment to Glamis of the
installment of the Purchase Price described in Section 5(a)(ii) and the
subsequent delivery to Glamis of the Promissory Note and Royalty Deed pursuant
to Section 6(h) of this Agreement, and that such agreements and commitments
shall be null and void ab initio in the event such payment is not made timely
and the Escrow Documents are delivered as provided in Section 6(g) of this
Agreement.
(i) Liabilities. Raleigh shall be solely responsible for
all costs, expenses, liabilities and obligations associated with, arising out of
or relating to MSX or the Cerro San Xxxxx Project ("Claims") incurred from and
after the Effective Date; provided, however, that in the event that the Escrow
Period expires by the delivery to Glamis of the Escrow Documents as provided in
Section 6(g) ("Escrow Instructions: Default in Payment'), any Claims
("Pre-Existing Condition Liabilities") incurred or accruing during the Escrow
Period that arise solely out of conditions on the Property in existence on the
Effective Date, but excluding all Claims caused by
-12-
an exacerbation of those conditions occurring during the Escrow Period shall be
borne by MSX and funded equally by Raleigh and Glamis. Raleigh and Metallica
jointly and severally agree to hold harmless and indemnify Glamis and Glamis'
Affiliates, and their respective officers, directors, employees and shareholders
(collectively, the "Indemnified Parties"), from and against all Claims (other
than Pre-Existing Condition Liabilities if and only if MSX becomes responsible
for such Pre-Existing Condition Liabilities pursuant to the preceding sentence)
and from and against all costs and expenses (including, but not limited to,
reasonable attorneys' fees and court costs) incurred by the Indemnified Parties
in defending, settling, compromising, appealing and paying a final judgment on
any Claim.
(j) Further Assurances. At and after Closing, each of the
Parties shall execute and deliver to the others such additional documents as may
be necessary or desirable, in the reasonable opinion of any Party, to effectuate
and confirm the transactions contemplated by this Agreement. Raleigh agrees
that, following Closing, it shall cause MSX to execute and deliver to Glamis
such additional documents as may be necessary or desirable, in the reasonable
opinion of any Party, to effectuate and confirm the Royalty Deed and the Net
Smelter Production Royalty conveyed by the Royalty Deed.
8. Remedies of Glamis.
(a) Return of Shares. In the event that the payment
required by Section 5(a)(ii) of this Agreement is not timely made to Glamis as
provided in the Promissory Note, the provisions of this Section 8(a) shall
apply.
(i) Upon return of the Shares to it by the
Escrow Agent, as provided in Section 6(g) of this Agreement
and in the Escrow Instructions, Glamis shall retain the
Initial Payment as reasonable liquidated damages for the
breach of this Agreement;
(ii) Without further consideration but as
additional liquidated damages, Raleigh promptly shall transfer
to Glamis a number of shares of capital stock in MSX held by
it equal to one percent (1%) of the issued and outstanding
shares of MSX (the "Additional Shares"), such that upon the
return of the Shares and the transfer of the Additional
Shares, Glamis shall own fifty one percent (51%) of the issued
and outstanding shares of MSX. Glamis promptly shall give
written notice to the Escrow Agent of Glamis' receipt of the
Additional Shares, after receipt of which notice the Escrow
Agent shall return the Promissory Note to Raleigh and the
Royalty Deed to MSX as provided in Section 6(g) of this
Agreement and in the Escrow Instructions;
(iii) The Amended and Restated MSX Shareholders
Agreement shall become effective in accordance with its terms
as of the date on which the Shares are returned to Glamis; and
(iv) Raleigh and MSX shall take such further
action and deliver to Glamis such further documents (including
but not limited to duly executed stock
-13-
powers or endorsements) as are necessary to properly transfer
the Additional Shares to Glamis under the laws of Mexico and
to render the Amended and Restated MSX Shareholders Agreement
effective under the laws of Mexico.
(b) Other Remedies. Except with respect to a failure by
Raleigh and Metallica to make the payment required by Section 5(a)(ii), as to
which Glamis' remedies shall be limited to those specified in Section 8(a), all
other obligations of Raleigh, Metallica and MSX under this Agreement (including,
but not limited to, those obligations arising under Section 8(a)), the
Promissory Note, the Royalty Deed, the Termination Agreement and the Guaranty
are firm and unconditional and shall be enforceable by Glamis by way of all
available legal and equitable remedies, including but not limited to specific
performance, injunctive and declaratory relief, and damages. In the event that
Glamis brings suit to enforce such obligations of Raleigh, Metallica and MSX
under this Agreement, the Promissory Note, the Royalty Deed, the Termination
Agreement and/or the Guaranty, the prevailing Party in such action shall be
entitled to recover all reasonable costs and expenses of such suit (including
the costs and expenses of any appeals), including reasonable attorneys' fees.
9. Limitation on Claims. No claim or action thereon may be brought by a
Party for breach of any representation or warranty provided in this Agreement
unless written notice of the claim is provided to the other Party not later than
(1) year following the Effective Date of this Agreement. In the event that a
Party brings suit under this Section 10, the prevailing Party in such action
shall be entitled to recover all reasonable costs and expenses of such suit
(including the costs and expenses of any appeals), including reasonable
attorneys' fees.
10. Confidentiality. Any or all of the Parties or their Affiliates may be
required or otherwise choose to make a public release of the terms of this
Agreement following its final execution. Prior to any public release of the fact
or terms of this Agreement, the releasing Party agrees, for itself and its
Affiliates, to provide notice to the other Party and the text of any proposed
release. The other Party shall have not less than twenty-four (24) hours to
review and comment on the content of the release.
11. Notices. Any notice or other communication hereunder shall be given in
writing and delivered by hand, by overnight courier or by facsimile at the
following addresses:
If to Glamis: Glamis de Mexico, S.A. de C.V
Attn: Secretary
c/o Glamis Gold Ltd.
0000 Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
FAX: 000-000-0000
-14-
with copy to: Glamis Gold Ltd.
Attn: Sr. Vice-President and General Counsel
0000 Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
FAX: 000-000-0000
If to Raleigh: Raleigh Mining International Limited
c/o Metallica Management Inc.
Attn: President and CEO
00000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
FAX: 000-000-0000
If to Metallica: Metallica Resources Inc.
c/o Metallica Management Inc.
Attn: President and CEO
00000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
FAX: 000-000-0000
If to MSX: Minera San Xavier, S.A. de C.V
c/o Metallica Management Inc.
Attn: President and CEO
00000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
FAX: 000-000-0000
A Party may change its address hereunder by written notice to the other Parties
All notices shall be effective and shall be deemed delivered (i) if by hand, or
by overnight courier, on the date of delivery if delivered during normal
business hours, and, if not delivered during normal business hours on the next
business day following delivery, (ii) if by electronic communication, on the
next business day following receipt of electronic communication, and (iii) if by
mail, on the next business day after actual receipt. For the purposes of the
foregoing, "normal business hours" shall mean 8:00 a.m. to 5:00 p.m., local
time, and "business day" shall mean any day other than Saturday, Sunday or a
legal holiday in the local jurisdiction.
12. Entire Agreement. This Agreement contains the entire understanding of
the Parties with regard to the subject matter hereof and shall supersede all
prior agreements and understandings between the Parties, including without
limitation that certain Letter Agreement between Glamis Gold Ltd., for itself
and Glamis, its wholly owned subsidiary, and Metallica, for itself and Raleigh,
its wholly owned subsidiary, dated January 13, 2003. No representation,
warranty, covenant or agreement with regard to the subject matter hereof shall
be binding unless contained herein. No modification of this Agreement shall be
valid unless made in writing and duly executed by all of the Parties subsequent
to the execution of this Agreement.
-15-
13. Governing Law; Venue. This Agreement shall be governed and interpreted
in accordance with the laws of the State of Nevada, without regard to choice or
conflict of laws rules or principles. The exclusive venue for any action brought
to enforce or interpret this Agreement shall be Reno, Nevada. Such an action may
be brought in any federal or state court in Reno, Nevada and the Parties agree
to submit to the jurisdiction of such court. The Parties further agree that such
venue and jurisdiction is fair, reasonable, appropriate and convenient.
14. Successors and Assigns. This Agreement shall be binding upon and inure
the benefit of the respective successors and assigns of the Parties hereto.
15. Survival. To the extent necessary to effectuate the terms of this
Agreement and the intention of the Parties, this Agreement shall survive the
Closing and the execution and delivery of all instruments required to be
delivered at Closing or thereafter pursuant to the Escrow Instructions or this
Agreement. Without limiting the generality of the foregoing, the Parties agree
that the following Sections shall survive: 3 (Representations and Warranties),
5(b) (Adjustments to Purchase Price), 7 (Covenants of Parties Following
Closing), 8 (Remedies of Glamis), 9 (Limitations on Claims), and 10
(Confidentiality).
16. Counterparts. This Agreement may be executed in one or more original or
facsimile counterparts, all of which shall be deemed but one and the same
instrument.
N WITNESS WHEREOF, this Agreement has been executed and made effective
as of the day and year provided above.
"GLAMIS"
GLAMIS de MEXICO, S.A. de C.V.,
a Mexico company
By: /s/ Xxxxxxx X. Jeannes
Name: Xxxxxxx X. Jeannes
Title: Director
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Treasurer
-16-
"RALEIGH"
RALEIGH MINING INTERNATIONAL
LIMITED, an Ontario, Canada corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: Secretary
"METALLICA"
METALLICA RESOURCES INC.,
a Canadian federal corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: Secretary
"MSX"
Minera San Xavier, S.A. de C.V.,
a Mexico company
By: /s/ Xxxxxxx X. Jeannes
Name: Xxxxxxx X. Jeannes
Title: Director
-17-
EXHIBIT A
to Share Purchase Agreement dated February 12, 2003,
among Glamis de Mexico, S.A. de C.V., Raleigh Mining International Limited,
and Metallica Resources Inc.
PROPERTIES AND OTHER MSX ASSETS
Exhibit A consists of two Parts:
Exhibit A-1: The Properties
Concessions
MSX Surface Right with Legal Deed
MSX Surface Right with Legal Deed in Process
Exhibit A-2: Other MSX Assets
X-0
XXXXXXX X-0
to
Share Purchase Agreement
dated February 12, 2003, among
Glamis de Mexico, S.A. de C.V., Raleigh Mining International Limited,
Metallica Resources, Inc. and Minera San Xavier, S.A. de C.V.
THE PROPERTIES
The Properties are comprised of the following mineral concessions, surface
rights under legal deed and surface rights under legal deed in process:
Mineral Concessions
The mineral concessions comprising the Cerro San Xxxxx Property as of December
31, 2002 and February 14, 2003 are as follows:
CERRO SAN XXXXX MINERAL CONCESSIONS
GROUP CONCESSION NAME CONCESSION TYPE TITLE NUMBER HECTARES
--------------------------------------------------------------------------------------------------
GROUP 1. 100% Minera San Xavier
--------------------------------------------------------------------------------------------------
1. Xx Xxxxxxxx Xxxxxxxxxxxx 000000 5.5916
--------------------------------------------------------------------------------------------------
2. Xx Xxxxxxxx Xxxxxxxx Xxxxxxxxxxxx 000000 0.0076
--------------------------------------------------------------------------------------------------
3. Begonia Exploitation 181179 10.0000
--------------------------------------------------------------------------------------------------
4. Xxxxx Xxx Xxxxxxxxxxxx 000000 8.0000
--------------------------------------------------------------------------------------------------
5. Xxxxx Xxx Xxx Xxxxxxxxxxxx 000000 1.5076
--------------------------------------------------------------------------------------------------
6. Xxx Xxxxxxx Xxxxxxxxxxxx 000000 9.0394
--------------------------------------------------------------------------------------------------
7. Gorgorron Exploitation 180300 9.6250
--------------------------------------------------------------------------------------------------
8. Xxx Xxxxxxx Xxxxxxxxxxxx 000000 6.9788
--------------------------------------------------------------------------------------------------
9. Xxx Xxxxxxx Xxx Xxxxxxxxxxxx 000000 1.4896
--------------------------------------------------------------------------------------------------
10. San Nicolas Suroeste Exploitation 180609 0.1923
--------------------------------------------------------------------------------------------------
11. Los Riscos Exploitation 182282 4.3474
--------------------------------------------------------------------------------------------------
12. La Xxxxxxxxxx Exploitation 182281 4.0000
--------------------------------------------------------------------------------------------------
Subtotal 60.7793
--------------------------------------------------------------------------------------------------
GROUP 2. Optionor: Xxxxxxx Xxxxxxx Xxxxxx - Xxxxxxxx 2 Group
--------------------------------------------------------------------------------------------------
13. Xxxxxxxx 2 Exploitation 180938 0.5537
--------------------------------------------------------------------------------------------------
14. Gama Exploitation 179256 41.6391
--------------------------------------------------------------------------------------------------
15. La Canoa 3 Exploitation 184906 0.0051
--------------------------------------------------------------------------------------------------
16. Omega 2 Exploitation 180958 0.1687
--------------------------------------------------------------------------------------------------
17. La Canoa 2 Exploitation 180948 0.6649
--------------------------------------------------------------------------------------------------
A-1-1
18. Xxxxxxxx Exploitation 186321 93.6228
--------------------------------------------------------------------------------------------------
19. Xx Xxxxx Xxxxxxxxxxxx 000000 3.4799
--------------------------------------------------------------------------------------------------
20. Omega Exploitation 193390 2.0576
--------------------------------------------------------------------------------------------------
Subtotal 142.1918
--------------------------------------------------------------------------------------------------
GROUP 3. 100% Minera San Xavier
--------------------------------------------------------------------------------------------------
21. San Salvador Exploitation 186268 12.9399
--------------------------------------------------------------------------------------------------
22. Tribilin Exploitation 187088 18.2808
--------------------------------------------------------------------------------------------------
23. Xx Xxxxxxxx Xxxxxxxxxxxx 000000 10.3797
--------------------------------------------------------------------------------------------------
24. Xxxxxxx Exploitation 211849 18.0000
--------------------------------------------------------------------------------------------------
CERRO SAN XXXXX MINERAL CONCESSIONS
GROUP CONCESSION NAME CONCESSION TYPE TITLE NUMBER HECTARES
--------------------------------------------------------------------------------------------------
GROUP 3 (continued) Subtotal 59.6004
--------------------------------------------------------------------------------------------------
Group 4. 100% Minera San Xavier
--------------------------------------------------------------------------------------------------
25. Xxxxxxx Exploitation 179603 11.2359
--------------------------------------------------------------------------------------------------
Subtotal 11.2359
--------------------------------------------------------------------------------------------------
GROUP 5. 100% Minera San Xavier
--------------------------------------------------------------------------------------------------
26. Porvenir IV Fracc. A Exploration 201484 51.7965
--------------------------------------------------------------------------------------------------
27. Porvenir IV Fracc. B Exploitation 216926 1.3237
--------------------------------------------------------------------------------------------------
28. Porvenir V Exploitation 218428 11.7876
--------------------------------------------------------------------------------------------------
Subtotal 64.9078
--------------------------------------------------------------------------------------------------
GROUP 6. Optionor: Xxxxxxx Xxxxxxx Xxxx-Porvenir Group
--------------------------------------------------------------------------------------------------
29. Porvenir Exploitation 214835 4.4241
--------------------------------------------------------------------------------------------------
30. Porvenir I Exploitation 183925 12.0000
--------------------------------------------------------------------------------------------------
31. Porvenir II Exploitation 186269 2.9981
--------------------------------------------------------------------------------------------------
32. Xx Xxxxxxxx XXX Xxxxxxxxxxxx 000000 11.9902
--------------------------------------------------------------------------------------------------
Subtotal 31.4124
--------------------------------------------------------------------------------------------------
GROUP 7. 100% Minera San Xavier
--------------------------------------------------------------------------------------------------
33. Toro de Oro Exploitation 206548 99.5187
--------------------------------------------------------------------------------------------------
34. Xxxxxxxxxx Exploitation 205211 20.0000
--------------------------------------------------------------------------------------------------
Subtotal 119.5187
--------------------------------------------------------------------------------------------------
GROUP 9. 100% Minera San Xavier
--------------------------------------------------------------------------------------------------
36. Xxxxx Exploitation 217859 1969.5069
--------------------------------------------------------------------------------------------------
37. Xxxxx 0 Xxxxxxxxxxx 000000 421.4346
--------------------------------------------------------------------------------------------------
Subtotal 2390.9415
--------------------------------------------------------------------------------------------------
A-1-2
GROUP 10. 100% Minera San Xavier
--------------------------------------------------------------------------------------------------
38. La Loteria Exploitation 184377 3.8809
--------------------------------------------------------------------------------------------------
39. San Xxxxxx Exploitation 179722 1.5000
--------------------------------------------------------------------------------------------------
40. Xxxxx xxx Xxxxx Xxxxxxxxxxxx 000000 0.0049
--------------------------------------------------------------------------------------------------
41. El Campeon Exploitation 179257 0.2072
--------------------------------------------------------------------------------------------------
Subtotal 5.5930
--------------------------------------------------------------------------------------------------
OTHER. 100% Minera San Xavier
--------------------------------------------------------------------------------------------------
42 Gitano Exploration 208096 64.0000
--------------------------------------------------------------------------------------------------
43. Xx Xxxxxx Exploration 208466 10.000
--------------------------------------------------------------------------------------------------
44. Xxxx Exploration 210667 0.0529
--------------------------------------------------------------------------------------------------
45. Xxxxxxx Exploration 210668 9.3396
--------------------------------------------------------------------------------------------------
46. Davide Exploration 211606 0.0788
--------------------------------------------------------------------------------------------------
47. Xxxxx Sofia Exploration 215378 0.2470
--------------------------------------------------------------------------------------------------
48 Xxxxx Xxxxx Exploration 215499 1.0976
--------------------------------------------------------------------------------------------------
49. Xxxxx Exploration 215896 0.6660
--------------------------------------------------------------------------------------------------
Subtotal 85.4819
--------------------------------------------------------------------------------------------------
TOTAL 2,971.6627
--------------------------------------------------------------------------------------------------
Exhibit A-1 continued on next page
A-1-3
THE PROPERTIES
MSX Surface Rights with Legal Deeds
--------------------------------------------------------------------------------------------
DEED DATE OF
NUMBER AGREEMENT PLACE SELLER AMOUNT IN PESOS
--------------------------------------------------------------------------------------------
00 00-Xxx-00 X.X.X Xxxx xx Xxxxx xx Xxxx Xxxxxx 850,000.00
27 14-Aug-98 C.S.P Xxxxxx Xxxxxxxx Xxxxxxxxx 250,000.00
20 31-Mar-01 C.S.P Xxxxx Xxxxxx Xxxxxxx 225,000.00
46 10-Dec-96 C.S.P Xxxxxxx Xxxxxxxx Xxxxxx 180,000.00
43 20-Apr-99 C.S.P Xxxxxxx Xxxxxxxxx Xxxxxx 150,000.00
21 28-Jun-99 C.S.P Xxxxx Xxxxxx Xxxxxxx 150,000.00
24 11-Oct-99 C.S.P Xxxxxx Xxxxxxxx Xxxxxxx 110,000.00
44 20-Mar-97 C.S.P Xxxx de Xxxxx de Xxxx Xxxxxx 100,996.23
10 11-Sep-98 C.S.P Xxxxxxx Xxxxx Xxxxxxxx 75,000.00
42 20-Mar-97 C.S.P Xxxx de Xxxxx de Xxxx Xxxxxx 73,138.18
26 10-Aug-98 C.S.P Xxxxxx Xxxx Arista 58,000.00
26 14-Aug-98 C.S.P Xxxxxx Xxxxxxxxx Xxxxxxxx 49,725.00
43 20-Mar-97 C.S.P Xxxxxxx Xxxxxxxxx Xxxxxxx 45,660.31
28 7-Nov-97 C.S.P Xxxxxxx Xxxxxxxxx Xxxxxxx 40,000.00
38 21-Aug-97 C.S.P Xxxx Xxxxxx Xxxxxxxxx Xxxxxxxxx 35,000.00
27 27-Jun-97 C.S.P Xxxxxx Xxxxxx Tobias 32,000.00
44 3-Sep-99 C.S.P Xxxxxx Xxxxx Xxxxxxxxx 25,000.00
37 21-Aug-97 C.S.P Xxxxxx Xxxxxxxx Xxxxxxxxx 15,000.00
57 6-Apr-01 ZAPATILLA Acta Conjunta por la Zapatilla 3,184,345.05
39 20-Mar-97 ZAPATILLA Xxxxxxx Xxxxxxx xx Xxxx Xxxxx 188,117.72
40 20-Mar-97 ZAPATILLA Xxxxxxx Xxxxxxx xx Xxxx Xxxxx 188,117.72
43 3-Sep-99 ZAPATILLA Xxxxxxxx Xxxxx Xxxxxx y Xxxxxx Xxxxxx 131,040.00
41 20-Mar-97 ZAPATILLA Xxxx de Xxxxx xx Xxxx Xxxxx 101,269.84
11 14-Jan-99 ZAPATILLA Xxxxxxx Xxxx Xxxxxx 50,000.00
27 14-Mar-96 ZAPATILLA Xxxxx Xxxxxx Xxxxxx 40,000.00
47 18-Mar-97 ZAPATILLA Xxxxxxx Xxxxxxxxx Angeles 30,000.00
10 14-Jan-99 ZAPATILLA Xxxxxxx Xxxx Xxxxxx 10,000.00
3 4-Jun-97 ZAPATILLA Toro de oro 51,850.00
-------------------------------------------------------------------------------------------
TOTAL 6,439,260.05
Exhibit A-1 continued on next page
A-1-4
THE PROPERTIES
MSX Surface Rights with Legal Deeds in Process
-------------------------------------------------
SELLER AMOUNT IN PESOS
-------------------------------------------------
Xxxx Xxxx Xxxxxxx Xxxxx 225,000.00
Xxxxxxx Xxxxx Xxxxxx 35,000.00
Xxxxx Xxxxxxx Xxxxx 35,000.00
Xxxxxxx Xxxxxxxxx Xxxxxx 160,000.00
Xxxx Xxxx Xxxxxxxxx Xxxxxx 220,000.00
Xxxx Xxxxxxx Xxxxx Xxxxxx 40,000.00
Xxxxxxx Xxxxx Xxxxxx 10,000.00
Xxxx Xxxx Xxxxxx Xxxxx 13,500.00
Xxxxxxx Xxxxxxxx Xxxxxx 20,000.00
Xxxxxxxxx Xxxxxxxx Xxxxx 71,500.00
Xxxxxxxxx Xxxx Xxxxxxx 85,000.00
Xxxxx Xxxxx Xxxxxx Xxxxxx 90,000.00
Xxxx Xxxxxxxx Xxxxxx Xxxxxxxxx 85,000.00
Xxxx Xxxxxx Xxxxxx Xxxxxx 257,361.00
------------------------------------------------
TOTAL 1,347,361.00
X-0-0
XXXXXXX X-0
to
Share Purchase Agreement
dated February 12, 2003, among
Glamis de Mexico, S.A. de C.V., Raleigh Mining International Limited,
Metallica Resources, Inc. and Minera San Xavier, S.A. de C.V.
OTHER MSX ASSETS
The Other MSX Assets include the following vehicles, furniture and equipment:
Vehicles
---------------------------------------------------
LICENSE
TRADE MODEL PLATE SERIAL NUMBER
---------------------------------------------------
SUBURBAN 1997 UXE 8717 0XXXX00XXXX000000
SILVERADO 1998 UXH 1743 0XXXX00X0XX000000
SILVERADO 1998 UXH 1742 0XXXX00X0XX000000
NISSAN 1998 TD 53866 0X0XX00X0XX000000
NISSAN 1998 TD 93572 0X0XX00X0XX000000
CHEYENE 1997 TE 54033 0XXXX00X0XX000000
VOYAGER
VAN 1998 UXE 8664 WB 537316
---------------------------------------------------
Exhibit A-2 continued on next page.
A-2-1
OTHER MSX ASSETS
FURNITURE AND EQUIPMENT PHYSICAL INVENTORY
---------------------------------------------------------
DESCRIPTION QUANTITY
---------------------------------------------------------
FILING CABINETS 2 DRAWERS 5
FILING CABINETS 3 DRAWERS 11
FILING CABINETS 4 DRAWERS 13
SAFETY FILING CABINET 1
DRAWINGS METAL FASTENERS 2
DRAWINGS CABINET 1
KEY BOXES 2
DESK 4 DRAWERS 12
DESK WITH LATERAL EXTENTION 3
VERTICAL SHELVES 6
BOOKCASE 12
WOOD LARGE BOOKCASE 2
LOCKERS 4
TABLES (DIFERENT SIZES) 33
WHITEBOARDS 10
FLOAT BOARDS 8
CHAIRS BLACK 21
DESK CHAIRS SHORT BACK 32
DESK CHAIRS LONG BACK 9
CABINETS WITH CRISTAL DOORS 4
VIDEO CAMERA 8 SONY 1
DESK COMPUTERS (PENTIUM 5 YEARS OLD) 11
COMPUTERS LAPTOP (COMPAQ & SONY) 2
TYPE WRITER MACHINE 1
PLOTTER DESIGN JET 650 C 1
NO BRAKES BATTERIES 8
TELEPHONES PANASONIC 22
TV 1
VCR 2
PRINTERS 3
A-2-2
EXHIBIT B
ESCROW INSTRUCTIONS
February 12, 2003
TO: L. Xxxxx Xxxxxx, LLC
RE: Escrow Instructions for Escrow Account No. ______________
Gentlemen:
Glamis de Mexico, S.A. de C.V., a corporation organized and existing
under the laws of Mexico ("Glamis"), Raleigh Mining International Limited, a
company organized and existing under the laws of the Province of Ontario, Canada
("Raleigh"), Metallica Resources Inc., a Canadian federal corporation
("Metallica") and Minera San Xavier, S.A, de C.V., a company organized and
existing under the laws of Mexico ("MSX"), are parties to that certain Share
Purchase Agreement dated February 12, 2003 (the "Agreement") along with 8
exhibits, Exhibits A through H, a copy of which is attached as Attachment 1 to
this letter ("Escrow Instructions"). Pursuant to that Agreement Glamis, Raleigh
and MSX hereby request that L. Xxxxx Xxxxxx, LLC ("Escrow Agent") act as Escrow
Agent on the following terms and conditions:
I. DEFINITIONS
All capitalized terms used in these Escrow Instructions shall have the
meanings assigned to them in the Agreement unless otherwise defined in this
letter.
II. ESCROW DOCUMENTS AND INSTRUCTIONS
2.1 DELIVERY OF ESCROW DOCUMENTS. Glamis, Raleigh and MSX hereby
deliver to Escrow Agent with this letter the documents described in this Section
2.1, which documents (the "Escrow Documents") shall be held and distributed in
accordance with the instructions contained in Section 2.2.
(a) Glamis hereby delivers to Escrow Agent the Shares,
along with duly executed stock powers or endorsements necessary to properly
transfer the Shares from Glamis to Raleigh under the laws of Mexico.
(b) Raleigh hereby delivers to Escrow Agent a Promissory
Note executed by an authorized officer of Raleigh, as Maker, to Glamis, as
Holder, in the amount Sixteen Million Dollars (US$16,000,000);
(c) MSX hereby delivers to Escrow Agent a Royalty Deed
executed by an authorized officer of MSX, conveying to Glamis the Net Smelter
Production Royalty; and
(d) Glamis, Raleigh and MSX hereby deliver to the Escrow
Agent duplicate originals of an Amended and Restated Shareholders Agreement,
duly executed by an authorized officer of each of Glamis and Raleigh and MSX.
B-1
2.2 ESCROW INSTRUCTIONS. Escrow Agent shall hold and distribute
the Escrow Documents in accordance with the following instructions:
(a) In the event that the first installment due under the
Promissory Note is not made to Glamis at the time such payment is due or within
the curative period as provided in the Promissory Note, the following provisions
of this Section 2.2(a) shall apply.
(i) Glamis shall provide written notice to
Escrow Agent of the fact of such non-payment
and instructing Escrow Agent to proceed
under this Section 2.2(a)(i). Upon receipt
of such notice, Escrow Agent shall do the
following:
(A) return to Glamis the Shares and
other Escrow Documents described in Section
2.1(a) above; and
(B) date both duplicate originals of
the Amended and Restated Shareholders
Agreement described in Section 2.1(d) as of
the date on which the Shares and other
Escrow Documents described in Section 2.1(a)
are returned to Glamis.
(ii) Upon receipt by Glamis from Raleigh of the
Additional Shares as required by Section
8(a) of the Agreement, Glamis shall provide
written notice to Escrow Agent of the fact
of such non-payment and instructing Escrow
Agent to proceed under this Section
2.2(a)(ii). Upon receipt of such notice,
Escrow Agent shall do the following:
(A) return to Raleigh the Promissory
Note described in Section 2.1(b);
(B) return to MSX the Royalty Deed
described in Section 2.1(c); and
(C) deliver to each of Glamis and
Raleigh one duplicate original of
the Amended and Restated
Shareholders Agreement dated as
required in Section 2.2(a)(i)(B).
(b) In the event that the first installment due under the
Promissory Note is made to Glamis at the time such payment is due or is made
within the curative period as provided in the Promissory Note, Glamis shall
provide written notice to Escrow Agent of the fact of such payment and
instructing Escrow Agent to proceed under this Section 2.2(b). Upon receipt of
such notice, Escrow Agent shall do the following:
(i) deliver to Raleigh the Shares and other
Escrow Documents described in Section 2.1(a)
above;
(ii) deliver to Glamis the Promissory Note and
Royalty Deed described in Section 2.1(b);
and
B-2
(iii) xxxx each of the duplicate originals of the
Amended and Restated Shareholders Agreement
described in Section 2.1(d) "VOID" and shall
return one of each voided original to
Raleigh and Glamis.
III. GENERAL TERMS AND CONDITIONS
These Escrow Instructions are not binding upon Escrow Agent unless and
until they have been accepted in writing in the space provided for such purpose
below.
Escrow Agent is not a party and is not bound by any other agreement
which may be evidenced by outside events, or which arises out of these Escrow
Instructions, except as specifically set forth herein. Escrow Agent looks solely
to these Escrow Instructions for its duties and responsibilities.
Escrow Agent is to act under these Escrow Instructions as a depositary
only and is not responsible for or liable in any manner whatever for the
sufficiency, correctness, genuineness, or validity of any instrument deposited
with it, or for the form or execution of such instrument, or for the identity,
authority, or rights of any person executing or depositing it.
Escrow Agent shall not be required to take notice of any default or to
take any action with respect to such default involving any expense or liability,
unless notice in writing of such default is given to it, and unless it is
indemnified in a manner satisfactory to it against such expense or liability.
Escrow Agent shall be protected in acting upon any written notice,
request, waiver, consent, receipt, or other paper or document signed by the
property party or parties.
Escrow Agent may seek advice from and employ legal counsel in the event
of any lawsuit, dispute, or question as to the construction of any of the
provisions of these Escrow Instructions, or Escrow Agent's duties under these
Escrow Instructions. Escrow Agent shall incur no liability and shall be fully
protected when it acts in accordance with the opinion and instructions of
counsel. The parties hereto agree to reimburse Escrow Agent its reasonable
attorneys' fees if counsel is so employed.
If there is any disagreement between any of the parties to these Escrow
Instructions, or between them or any of them and any other person, that results
in adverse claims and demands being made on Escrow Agent in connection with or
for any property involved in or affected by these Escrow Instructions, Escrow
Agent shall be entitled, at its option, to refuse to comply with any claims or
demands on it as long as such disagreement shall continue. In so refusing,
Escrow Agent may make no delivery or other disposition of any money or documents
involved in or affected by these Escrow Instructions. Escrow Agent shall not be
or become liable in any way or to any person for its failure or refusal to
comply with conflicting or adverse demands.
Escrow Agent shall be entitled to continue so to refrain from acting
and so to refuse to act until (1) the right of adverse claimants shall have been
finally settled by arbitration or adjudicated in a court assuming and having
jurisdiction of the property involved in or affected by these Escrow
Instructions, or (2) all differences shall have been adjusted by agreement, and
(3)
B-3
after such resolution Escrow Agent has been notified in writing signed by all
interested persons. Escrow Agent shall have a right to file suit in the event
settlement of any dispute appears to be impossible, and, in such event, the
parties hereto agree to pay reasonable attorneys' fees and costs incurred. For
purposes of these Escrow Instructions, Raleigh and Glamis consent to
jurisdiction in the Denver District Court, State of Colorado. The laws of
Colorado shall apply to any questions or interpretation under these Escrow
Instructions.
These Escrow Instructions may be executed in one or more counterparts,
each of which shall be an original, but all of which shall constitute one and
the same instrument.
IV. NOTICES
All notices and other communications to any party shall be sufficiently
given if (i) delivered in person, (ii) sent by certified mail, return receipt
requested, (iii) sent by courier, or (iv) transmitted by facsimile or electronic
communication capable of producing a printed transmission. All notices shall be
effective and shall be deemed delivered (i) if by personal delivery, on the date
of delivery, (ii) if by mail, courier or facsimile, on the first day after
mailing, delivery to the courier, or transmission. Until a change of address is
communicated as indicated above, all notices shall be addressed as follows:
Escrow Agent: If by U.S. Mail If by Courier or Personal
Delivery
L. Xxxxx Xxxxxx, LLC L. Xxxxx Xxxxxx, LLC
X.X. Xxx 000 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000 Xxxxxxxx, Xxxxxxxx 00000
FAX: 000-000-0000 FAX: 000-000-0000
Glamis: Glamis de Mexico, S.A. de C.V
Attn: Secretary
c/o Glamis Gold Ltd.
0000 Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
FAX: 000-000-0000
with copy to: Glamis Gold Ltd.
Attn: Sr. Vice-President and General Counsel
0000 Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
FAX: 000-000-0000
B-4
Raleigh: Raleigh Mining International Limited
c/o Metallica Management Inc.
Attn: President and CEO
00000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
FAX: 000-000-0000
with copy to: Metallica Resources Inc.
c/o Metallica Management Inc.
Attn: President and CEO
00000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
FAX: 000-000-0000
MSX: Minera San Xavier, S.A, de C.V.
c/o Metallica Management Inc.
Attn: President and CEO
00000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
FAX: 000-000-0000
with copies to: Raleigh and Metallica at the addresses specified above.
V. FEES AND DISBURSEMENTS
Escrow Agent shall be entitled to receive the following fees:
Set-up fee $ 600
(first two parties)
Set-up fee $ 100
(each additional party)
Amendment fee $ 250
Annual fee $ 250
Account fee $ 100
Transaction fees $ 25
An additional closing fee of $60/hr will be charged for (1) closings
after normal business hours, (2) closings outside the business offices of Escrow
Agent and its officers or loan closers, or (3) for additional services beyond
normal escrow services, such as courier deliveries or additional services may be
approved by the parties.
A party is one or more persons, associations, or corporations having
identical interests in the escrow. For example, any number of persons who are
joint payees or to whom documents are to be distributed jointly constitute a
"party." If parties are added after the escrow has been set up, the additional
set-up fee will be applicable.
B-5
The amendment fee applies to each amendment of the escrow instructions.
If the amendment adds parties, the additional set-up fee will be applicable.
The account fee applies to the opening of a certificate of deposit,
money market fund, or other investment account, or the investment of funds
pursuant to these Escrow Instructions or the instructions of the parties.
A transaction is (1) the deposit in escrow of a document after the
escrow has been set up, and (2) the receipt of funds by Escrow Agent in excess
of one receipt per year, (3) the "roll-over" of funds held in a certificate of
deposit, money market fund, or other investment account or investment, (4) the
closing of a certificate of deposit, money market fund, or other investment
account, (5) the disbursement of funds by Escrow Agent in excess of one
disbursement per year (each check or other instrument being a separate
disbursement), (6) the recording or filing of a document, or (7) the giving of
any notice required or permitted by these Escrow Instructions or an Escrow
Agreement.
These fees are subject to reasonable adjustments from time to time
commensurate with (a) the duties and responsibilities performed by Escrow Agent,
as they may increase or decrease, (b) changing economic conditions, and (c) the
schedule of compensation established from time to time by Escrow Agent for the
administration of escrows of similar character. Escrow Agent will not institute
any such adjustments without first giving notice to the appropriate interested
party or parties at least thirty (30) days in advance of the date of the
proposed change.
The parties shall reimburse Escrow Agent for all fees, expenses, and
charges incurred by Escrow Agent in connection with the performance of any duty
under these Escrow Instructions, including recording fees, telephone, postage,
FAX, or courier charges, and commissions, fees, and charges incurred by Escrow
Agent in investing funds.
Escrow Agent shall send the bills for fees, expenses and charges as
follows:
- 0/0 - Xxxxxx, 0/0 - Xxxxxxx
- Xxxxxx with copy to Raleigh
- Raleigh with copy to Glamis
Regardless of any agreement between the parties, however, Raleigh and Glamis
shall be jointly and severally liable for Escrow Agent's fees, and Escrow Agent
shall be entitled to collect its fees out of funds held for disbursement. Escrow
Agent shall not be required to deliver any documents held by it until its fees
have been paid.
B-6
This instrument shall be binding upon the parties hereto, their heirs,
representatives, successors, and assigns.
"GLAMIS"
GLAMIS de MEXICO, S.A. de C.V.,
a Mexico company
By: /s/ Xxxxxxx X. Jeannes
Name: Xxxxxxx X. Jeannes
Title: Director
Tax ID #: _________________________________
"RALEIGH"
RALEIGH MINING INTERNATIONAL
LIMITED, an Ontario, Canada corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: Secretary
Tax ID #: _________________________________
ACCEPTED FOR ENTRY in the records of L. Xxxxx Xxxxxx, LLC, Brighton,
Colorado, this 20th day of February 2003.
"ESCROW AGENT"
L. XXXXX XXXXXX, LLC
By: /s/ L. Xxxxx Xxxxxx
Escrow Officer
B-7
EXHIBIT C
PROMISSORY NOTE
$16,000,000.00 February 12, 0000
Xxxxxx, Xxxxxxxx
FOR VALUE RECEIVED, the undersigned Raleigh Mining International
Limited, a company organized and existing under the laws of the Province of
Ontario, Canada ("Maker"), hereby promises to pay to the order of Glamis de
Mexico, S.A. de C.V., a corporation organized and existing under the laws of
Mexico, or any subsequent holder of this Note ("Holder"), the sum of Sixteen
Million Dollars and No Cents (U.S. $16,000,000.00), with no interest thereon
prior to default. The undersigned Metallica Resources Inc., a Canadian federal
corporation ("Guarantor"), is the direct corporate parent of Maker and is the
guarantor of Maker's obligations under this Note pursuant to that certain
Guaranty dated February 12, 2003, from Guarantor in favor of Holder.
1. Payment of Note. This Note shall be payable as follows:
(a) Five Million Dollars (US$5,000,000) shall be paid at
the earliest to occur of the following: (i) six (6) months from February 12,
2003, or (B) three (3) business days following the date on which Maker and/or
its subsidiary, Minera San Xavier, S.A. de C.V., a company organized and
existing under the laws of Mexico ("MSX") and/or Guarantor both (X) completes
and receives the proceeds from a public or private debt or equity financing
which provides net proceeds to Maker or MSX of not less than Five Million
Dollars (US$5,000,000) and (Y) receives all permits and approvals necessary to
commence development and construction activities at the Cerro San Xxxxx gold
mining project in San Xxxx Potosi, Mexico, that is owned and operated by MSX
(the "Cerro San Xxxxx Project.).
(b) Six Million Dollars (US$6,000,000) shall be paid
twelve (12) months from February 12, 2003, provided, however, that if Maker and
Guarantor do not have the financial ability to make such payment in cash, then
Guarantor may make all or part of that payment by delivering to Holder fully
registered and freely tradable common shares of Guarantor, together with such
duly executed stock powers or endorsements as are necessary to properly transfer
the Guarantor shares from Guarantor to Holder under the laws of Canada. The
shares so delivered shall be priced at the greatest allowable discount under
applicable Canadian and/or TSE rules from the average closing price of
Guarantor's shares on the Toronto Stock Exchange for twenty (20) trading days
preceding the date on which the payment became due to Holder. In the event that
Guarantor elects to deliver common shares to Holder in lieu of cash as provided
in this paragraph (b), the following terms and covenants shall apply:
(i) In the event that Holder wishes to sell more
than one hundred thousand (100,000) of
Guarantor's shares during any ten (10) day
trading period, Holder shall provide
Guarantor not less than forty-
C-1
eight (48) hours prior notice to afford
Guarantor the opportunity to place the
shares at the then-prevailing market price.
If Guarantor is unable to place the shares
or fails to respond to Holder within the
forty-eight (48) hour period, Holder shall
be free to sell the shares in the open
market;
(ii) In the event that Guarantor intends to
conduct any equity financing by way of
public issue or private placement while
Holder still holds Guarantor shares,
Guarantor shall notify Holder of the same
and shall provide Holder the opportunity,
exercisable at Holder's sole discretion, to
sell all or a portion of its shares in the
same transaction. The maximum number of
Holder's shares to be included in the equity
financing shall be the same percentage of
the total shares to be issued as the
Holder's shares represent of the total
issued and outstanding shares of Guarantor
prior to the equity financing; and
(iii) Guarantor shall warrant to Holder, at the
time of delivery of Guarantor's shares,
that: (i) Guarantor is the lawful and
registered owner of Guarantor's shares, free
and clear of all claims, liens,
encumbrances, assessments and rights of
third parties; (ii) no third party has
subscribed to or has any right to subscribe
to the purchase or other acquisition of
Guarantor's shares; and (iii) neither Holder
nor Guarantor is or will be required to give
any notice to or obtain any consent from any
person, entity or governmental authority in
connection with the transfer to Holder of
Guarantor's shares.
As used in this Note, "Guarantor" shall mean Metallica Resources Inc., a
Canadian federal corporation.
(c) Two Million Five Hundred Dollars (US$2,500,000)
payable five (5) business days following the date on which Minera San Xavier,
S.A. de C.V., a company organized and existing under the laws of Mexico ("MSX")
commences the commercial production of minerals at the Cerro San Xxxxx Project.
For purposes of this Note: (i) the commencement of commercial production shall
be deemed to have occurred on the date that a cumulative total of ten thousand
(10,000) gold-equivalent ounces of dore or mineral concentrate from production
from the Cerro San Xxxxx Project has been delivered for refining to a commercial
refiner; and (ii) "Cerro San Xxxxx Project" means and refers to the Cerro San
Xxxxx gold and silver mining project in San Xxxx Potosi, Mexico, that is
operated by MSX.
(d) Two Million Five Hundred Dollars (US$2,500,000)
payable twelve (12) months following the date on which MSX commences the
commercial production of minerals at the Cerro San Xxxxx Project.
2. Prepayment. This Note may be prepaid by Maker, in whole or in
part, without penalty. Any partial prepayment of any installment shall be
applied against the principal amount
C-2
of that installment but shall not postpone the due date of such installment or
any subsequent payments or change the amount of such payments.
3. Late Payment. Maker shall pay to Holder a late charge of five
percent (5%) of any payment not received by the Holder within ten (10) days
after the payment is due.
4. Default Interest. If any payment required by this Note is not
paid when due, the outstanding principal balance shall bear interest, at the
rate of the lesser of the prime rate announced from time to time by Xxxxx Fargo
Bank West, N.A., plus five percent (5%) per annum or the maximum rate allowed by
applicable law (the "Default Rate"), from the date of the default until paid. .
5. Right to Cure/Acceleration. If any payment required by this
Note is not paid when due, Holder shall give written notice of default to Maker.
Maker shall have ten (10) days from Maker's receipt of such notice in which to
cure such default by making the required payment together with late payment
charges under Section 3 of this Note (if the default is not cured within the
time specified in Section 3) and. together with interest as specified in Section
4 of this Note. Upon the failure of Maker to cure such default and at the option
of the Holder, the entire principal amount outstanding shall at once become due
and payable. The Holder shall be entitled to collect all reasonable costs and
expense of collection and/or suit, including, but not limited to reasonable
attorneys' fees
6. Waiver. Maker, Guarantor and all other makers, sureties,
guarantors, and endorsers hereby waive presentment, demand, dishonor, notice of
dishonor, protest, notice of protest, and all other procedural prerequisites to
enforcement of this Note. This Note shall be the joint and several obligation of
Maker and all other makers, sureties, guarantors and endorsers, and their
successors and assigns.
7. Notices and Payments. All payments under this Note and any
notice to Holder, Maker or Guarantor shall be given in writing and delivered by
hand, by overnight courier or by facsimile at the following addresses:
If to Holder: Glamis de Mexico, S.A. de C.V
Attn: Secretary
c/o Glamis Gold Ltd.
0000 Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
FAX: 000-000-0000
with copy to: Glamis Gold Ltd.
Attn: Sr. Vice-President and General Counsel
0000 Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
FAX: 000-000-0000
C-3
If to Maker: Raleigh Mining International Limited
c/o Metallic Management Inc.
ATTN: President and CEO
00000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
FAX: 000-000-0000
If to Guarantor: Metallica Resources Inc.
Attn: President and CEO
0000 X. Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
FAX: 000-000-0000
Maker, Holder and Guarantor may change its addresses hereunder by
written notice to the others. All notices shall be effective and shall be deemed
delivered (i) if by hand, or by overnight courier, on the date of delivery if
delivered during normal business hours, and, if not delivered during normal
business hours on the next business day following delivery, (ii) if by
electronic communication, on the next business day following receipt of
electronic communication, and (iii) if by mail, on the next business day after
actual receipt. For the purposes of the foregoing, "normal business hours" shall
mean 8:00 a.m. to 5:00 p.m., local time, and "business day" shall mean any day
other than Saturday, Sunday or a legal holiday in the local jurisdiction.
8. Governing Law/Venue. This Note shall be governed by the laws
of the State of Nevada, without regard to choice or conflict of laws rules or
principles. The exclusive venue for any action brought to enforce or interpret
this Note shall be Reno, Nevada. Such action may be brought in any federal or
state court in Reno, Nevada and the Maker and the Guarantor (i) agree to submit
to the jurisdiction of such court and (ii) agree that such venue and
jurisdiction is fair, reasonable, appropriate and convenient.
"MAKER"
RALEIGH MINING INTERNATIONAL
LIMITED, an Ontario, Canada corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: Secretary
C-4
"GUARANTOR"
METALLICA RESOURCES INC.,
a Canadian Federal corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: Secretary
C-5
EXHIBIT D
ROYALTY DEED
THIS ROYALTY DEED (this "Deed") is made effective this 12th day of
February, 2003, between Minera San Xavier, S.A. de C.V., a company organized and
existing under the laws of Mexico ("MSX"), as grantor, and Glamis de Mexico,
S.A. de C.V., a corporation organized and existing under the laws of Mexico
("Glamis"), as grantee. MSX and Glamis are at times referenced in this Deed
individually as a "Party" and collectively as the "Parties."
I. DEFINITIONS
In addition to the definitions contained elsewhere in this Deed, the
following terms shall have the meanings assigned to them in this Article I:
1.1 "AFFILIATE" shall mean any person, partnership, joint venture,
corporation or other entity or form of enterprise which directly or indirectly
controls, is controlled by, or is under common control with, a Party. For
purposes of the preceding sentence, "control" means possession, directly or
indirectly, of the power to direct or cause direction of management and policies
through ownership of a majority of voting securities, contract, ability to
appoint a majority of a board of directors, voting trust or otherwise.
1.2 "CERRO SAN XXXXX PROJECT" shall mean the Cerro San Xxxxx gold
and silver mining project in San Xxxx Potosi, Mexico. The Cerro San Xxxxx
Project encompasses the Properties and adjacent lands that now or hereafter are
operated with the Properties as a single mining operation.
1.3 "CERRO SAN XXXXX PROJECT LANDS" shall mean the Properties and
adjacent lands that now or hereafter are operated with the Properties as a
single mining operation.
1.4 "EFFECTIVE DATE" shall mean February 12, 2003.
1.5 "MINERALS" shall mean all ores, metals, minerals, tailings,
concentrates and other mineral products mined, extracted, produced, removed and
sold from the Properties..
1.6 "MSX" shall mean Minera San Xavier, S.A. de C.V., a company
organized and existing under the laws of Mexico, its successors and assigns.
1.7 "PROPERTIES" shall mean the real property and associated
concessions, minerals, mineral rights, mining and other properties rights that
are described in Attachment 1 to this Deed and/or that are acquired or held by
MSX, any of its Affiliates or any of their respective successors and assigns for
the benefit of the Cerro San Xxxxx Project on or after the Effective Date,
together with all replacements, renewals or extensions of the foregoing.
1.8 "ROYALTY" shall mean the net smelter return production royalty
granted to Glamis pursuant to Article II.
D-1
II. GRANT OF ROYALTY
2.1 GRANT. FOR GOOD AND VALUABLE CONSIDERATION RECEIVED, the
receipt and sufficiency of which MSX hereby acknowledges, MSX grants to Glamis a
royalty (the "Royalty") on the Net Returns of all Minerals mined and removed
from the Properties and sold or deemed to have been sold by or for MSX, on the
terms and conditions herein specified.
2.2 PERCENTAGE OF NET RETURNS.
(a) Refined Gold. The percentage of Net Returns to be
paid to Glamis for refined gold produced from Minerals mined from the Properties
shall be based as follows:
Monthly AverageGold
Price Per Ounce Percentage of Net Returns
------------------- -------------------------
Less than $325.00 0.0%
$325.00 -$349.99 0.5%
$350.00 -$374.99 1.0%
$375.00 -$399.99 1.5%
$400.00 or above 2.0%
(b) Other Products. In the event that MSX causes silver
or other refined metals other than refined gold to be produced from Minerals
mined from the Properties, or in the event that MSX sells raw ore, dore or
concentrates produced from Minerals mined from the Properties, the percentage of
Net Returns to be paid Glamis for such products shall be that percentage set
forth in Section 2.2(a) determined based on the price of gold as provided in
Section 2.3.
2.3 CALCULATION OF NET RETURNS. It is the intention of the Parties
that the Royalty be based upon the value, at the boundary of the Cerro San Xxxxx
Project Lands, of the Minerals produced and sold or deemed sold, determined by
reference to published prices for refined gold, silver and other metals and the
actual proceeds of sales for other Minerals, all as provided in Section 2.3(a)
below. Glamis acknowledges that it may be necessary or appropriate to process,
treat or upgrade Minerals of the Cerro San Xxxxx Project Lands before they are
sold and that, to determine the value of such Minerals at the boundary of the
Cerro San Xxxxx Project Lands, MSX shall be entitled to deduct all costs and
only those costs incurred or deemed incurred by MSX after the Minerals leave the
Cerro San Xxxxx Project Lands. Therefore, the Parties agree that as used this
Agreement, "Net Returns" shall mean Gross Proceeds (as defined in Section 2.3(a)
below) less Costs and Expenses (as defined in Section 2.3(b) below).
(a) Gross Proceeds. As used in this Agreement, "Gross
Proceeds" shall mean and shall be calculated as follows:
(i) Refined Gold. If MSX causes refined gold to
be produced from Minerals mined from the Properties, the Royalty shall be paid
on the refined gold, as herein provided. For purposes of determining the
Royalty, the refined gold shall be deemed to have been sold at the Monthly
Average Gold Price, and the Gross Proceeds shall be determined by multiplying
Gold Production during the calendar month by the Monthly Average Gold Price for
that month. As used herein, "Gold Production" shall mean the quantity of refined
gold out-turned during the calendar month to MSX's pool account by an
independent third-party refinery from Minerals produced from the Properties, on
either a provisional or final settlement basis. As used herein, "Monthly Average
Gold Price" shall mean the average Xxxxxx Xxxxxxx Xxxxxx
X-0
Association P.M. Gold Fix, calculated by dividing the sum of all such prices
reported for the month by the number of days for which such prices were
reported.
(ii) Refined Metals Other Than Gold. If MSX
causes silver or other refined metals other than refined gold to be produced
from Minerals mined from the Properties, the Royalty shall be paid on the
refined metal produced, as herein provided, and the Gross Proceeds shall be
determined by multiplying Refined Metal Production during the calendar month by
the Monthly Average Refined Metal Price for that month. As used herein, "Refined
Metal Production" shall mean the quantity of Refined Metal out-turned during the
calendar month to MSX's pool account by an independent third-party refinery from
Minerals produced from the Properties, on either a provisional or final
settlement basis. As used herein, "Monthly Average Refined Metal Price" shall
mean the average New York Refined Metal Price as published by Metals Week,
calculated by dividing the sum of all such prices reported for the calendar
month by the number of days for which such prices were reported.
(iii) Raw Ore, Dore or Concentrates. Subject to
Section 2.4, if MSX sells raw ore, dore or concentrates produced from Minerals
mined from the Properties, then the Gross Proceeds shall be equal to the amount
of the proceeds actually received by MSX during the calendar month from the sale
of such raw ore, dore or concentrates.
(b) Costs and Expenses. As used in this Agreement, "Costs
and Expenses" shall mean all costs, charges, and expenses paid or deemed
incurred by MSX for or with respect to Minerals produced from the Properties,
after such Minerals leave the Cerro San Xxxxx Project Lands, including, without
limitation:
(i) charges for treatment in the smelting and
refining processes (including handling, processing, interest, provisional
settlement fees, sampling, assaying and representation costs, penalties and
other processor deductions);
(ii) actual costs of transportation (including
loading, freight, insurance, security, transaction taxes, handling, port,
demurrage, delay, and forwarding expenses incurred by reason of or in the course
of such transportation) of Minerals (with respect to which Royalty is paid) from
the Cerro San Xxxxx Project Lands to the place of treatment as described in
Section 2.3(b)(i) above and then to the place of sale;
(iii) costs or charges of any nature for or in
connection with insurance, storage, or representation at a smelter or refinery
for Minerals;
(iv) actual sales and brokerage costs paid to
third-parties, if any, on Minerals for which the Royalty is based on actual
proceeds received by MSX and an allowance for reasonable sales and brokerage
costs paid to third-parties, if any, for refined metals that are subject to the
Royalty provided in Section 2.3(a)(i),(ii) and (iii); and
(v) sales, use, severance and any other tax
based directly upon, measured by and actually assessed against the value or
quantity of Minerals produced, but excluding any and all taxes and any payments,
taxes, and fees: (X) based upon the net or gross income of MSX or any owner or
operator of the Properties or the Cerro San Xxxxx Project; (Y) based upon the
value of the Properties or the Cerro San Xxxxx Project, the privilege of doing
business, or other similarly based payments, taxes or fees; and (Z) not based
directly upon and actually assessed against the value or quantity of Minerals
produced.
D-3
In the event that smelting and/or refining are carried out in facilities owned
or controlled by MSX or any Affiliate of MSX, then charges, costs and penalties
for such operations, including without limitation for loading, transportation
and associated insurance, shall mean the amount that MSX would have incurred if
such operations were carried out at facilities not owned or controlled by MSX or
any Affiliate of MSX then offering comparable custom services for comparable
products on prevailing terms.
2.4 SALES TO AFFILIATES. MSX shall be permitted to sell Minerals
from the Properties in the form of raw ore, dore, or concentrates to an
Affiliate of MSX, provided that such sales shall be considered, solely for the
purpose of computing the Royalty, to have been sold at prices and on terms no
less favorable than those that would be extended to an unaffiliated third party
under similar circumstances.
2.5 COMMINGLING. MSX shall have the right of mixing or
commingling, at any location and either underground or at the surface, Minerals
produced from the Properties with Minerals produced from other lands, provided
that MSX shall determine the weight, grade or volume of, sample and analyze all
such Minerals before the same are so mixed or commingled. Any such determination
of weight, grade or volume, sampling and analysis shall be made in accordance
with sound sampling and analytic practices, and procedures. The weight, grade or
volume and the analysis so derived shall be used as the basis of allocation of
Royalty payable to Glamis hereunder in the event of a sale by MSX of Minerals so
mixed or commingled.
III. PAYMENT OF ROYALTY
3.1 ACCRUAL AND PAYMENT OF ROYALTY. The obligation to pay Royalty
shall accrue upon the out-turn of refined metals meeting the requirements of the
specified published price to MSX's account or the sooner sale of unrefined
metals, dore, concentrates, ores or other mineral products, as herein provided.
Royalties shall become due and payable quarterly on the fifteenth (15th) day of
the month next following the end of the calendar month in which the same accrue.
In the event that MSX determines that any payment of Royalty was underpaid or
overpaid, MSX shall correct such overpayment or underpayment by adjustment to
the amount of the next subsequent payment of Royalty following such
determination.
3.2 PROVISIONAL STATEMENTS. Where out-turn of refined metals is
made by an independent third-party refinery on a provisional basis, the Gross
Proceeds and the Royalty paid to Glamis for such metals in any month shall be
based upon the amount of refined metal credited by such provisional settlement,
but shall be adjusted in subsequent statements to account for the amount of
refined metal established by final settlement by the refinery.
3.3 MONTHLY STATEMENTS. Royalty payments shall be accompanied by a
statement showing in reasonable detail the following: (a) the quantities and
grades of the refined metals, dore, concentrates, other mineral products, or
ores produced and sold or deemed to have been sold by MSX in the preceding
calendar month; (b) the average monthly price determined as provided in Section
2.3(a)(i) and (ii) for refined metals on which Royalty is due; (c) the proceeds
of sale for other Minerals on which Royalty is due, determined as provided in
Section 2.3(a)(iii) and Section 2.4; (d) Costs and Expenses; and (e) other
pertinent information in sufficient detail to explain the calculation of the
Royalty payment. Monthly royalty statements also shall list the quantity and
quality of any dore that has been retained as inventory for more than sixty (60)
days.
D-4
3.4 GLAMIS' ELECTION WITH RESPECT TO INVENTORY UPON RECEIPT OF
MONTHLY STATEMENT. Glamis shall have fifteen (15) days after receipt of each
monthly statement rendered to it pursuant to Section 3.3 to either:
(a) request that inventoried dore be deemed sold as
provided in Section 2.3(a)(i) and (ii) above as of the fifteenth (15th) day of
the month for which the monthly statement was rendered, utilizing the mine
weights and assays for such dore and utilizing a deemed charge for all Costs and
Expenses as specified in Section 2.4 above which shall be based upon the most
recent charges to MSX for such items; or
(b) elect to wait until the time that refined gold or
silver from such dore is actually out-turned to MSX or such dore is sooner sold
by MSX.
The failure of Glamis to respond within the fifteen (15) day period shall be
deemed to be an election under (b) above. No Royalty shall be due with respect
to stockpiles of ores or concentrates unless and until such ores or concentrates
are actually sold.
3.5 OBJECTIONS TO ROYALTY PAYMENTS/AUDITS. All Royalty Payments
made during each calendar year shall be considered final and in full
satisfaction of all obligations of MSX with respect thereto, unless Glamis gives
MSX written notice describing and setting forth a specific objection to the
determination thereof within ninety (90) days following the end of the calendar
year during which such Royalties were paid. During the ninety (90) day period,
Glamis shall have the right, upon reasonable notice and at a reasonable time, to
have MSX's accounts and records relating to the calculation of the Royalties
paid during such calendar year audited by Glamis or an independent certified
public accountant acceptable to Glamis and MSX. If such audit determines that
there has been a deficiency or an excess in the payment made to Glamis, such
deficiency or excess shall be resolved by adjusting the next monthly Royalty
payment due hereunder, or by direct payment if no monthly Royalty payment
follows the audit determination. Glamis shall pay all costs of such audit unless
a deficiency of ten percent (10%) or more of the amount due to Glamis is
determined to exist. MSX shall pay the costs of such audit if a deficiency of
ten percent (10%) or more of the amount due to Glamis is determined to exist.
All books and records used by MSX to calculate Royalties due hereunder shall be
kept in accordance with generally accepted account principles, consistently
applied. Failure on the part of Glamis to make a claim on MSX for adjustment
within such ninety (90) day period shall establish the correctness and preclude
the filing of exceptions thereto or making of claims for adjustment thereon.
3.6 TAKE IN KIND ELECTION. At the beginning of each calendar year
during which MSX may produce Minerals from the Properties, Glamis may elect to
take its Royalty in kind for the following calendar year. G1amis must notify MSX
of its election to take its Royalty in kind not less than thirty (30) days prior
to the beginning of the calendar year. If no notice is given by Glamis to MSX,
Glamis shall be deemed to have elected to not take its Royalty in kind. In the
event Glamis elects to take its Royalty in kind, Glamis shall receive its
proportionate interest of concentrates, dore or other processed materials that
MSX has not yet removed from the Properties Cerro San Xxxxx Project Lands for
delivery to the smelter, refiner or other purchaser. In such cases, Glamis shall
be solely responsible for the loading and transporting of such in kind materials
and shall further be responsible for all further Costs and Expenses with respect
to such materials as defined in Section 2.3(b). Any election by Glamis pursuant
to this Section 3.6 shall remain in effect for the entire calendar year for
which such election was made.
D-5
IV. NATURE OF INTEREST/BINDING EFFECT
4.1 NATURE OF ROYALTY. The Royalty is a strictly passive and
non-participating interest and shall not entitle Glamis to participate in any
decisions whatsoever concerning the Properties, the Cerro San Xxxxx Project, or
operations thereon.
4.2 BINDING EFFECT. The Royalty shall be deemed to be a burden
upon the Properties and shall run with the land such that it shall be binding
upon any and all successors-in-interest of MSX, whether by sale or transfer or
by operation of law.
4.3 FURTHER ASSURANCES AND CONTINUING OBLIGATIONS. MSX agrees to
execute and record or register such documents or to take such other actions as
may be necessary under local law to evidence Glamis' Royalty in the appropriate
records and registries in Mexico. Notwithstanding the foregoing, it is
understood and acknowledged by the Parties that such registration may not be
possible. Therefore, it is further understood and agreed that MSX shall remain
liable for all Net Returns that may become due to Glamis under this Royalty
Deed, regardless of any transfers by MSX, its successors or assigns, of all or
any interest in the Cerro San Xxxxx Project or in the Properties.
V. GENERAL
5.1 BOOKS AND RECORDS. MSX shall keep accurate records and books
of account for all mining operations conducted by it or under its control on the
Properties, showing particularly the quantity, grade and composition of all
Minerals, all receipts from the sale thereof and all Costs and Expenses. In
addition to it audit rights under Section 3.5, Glamis, upon demand but not more
frequently than once in any six month period, at its sole cost and expense and
at reasonable times and places, may conduct or perform any or all of the
following activities: (i) inspect the Properties and any sites utilized in
connection with operations thereon or the processing, storage or transportation
of any Minerals; and (ii) inspect, review and copy any and all books, records,
documents, correspondence, mine plans, geological data, studies and other
information, of all types and descriptions whatsoever, pertaining or relating in
any way to the calculation of Royalty payable pursuant to this Deed, mining or
other operations conducted on the Properties or the processing, storage or
transportation of any Minerals.
5.2 GOVERNING LAW/VENUE. This Deed shall be governed and
interpreted in accordance with the laws of the State of Nevada, without regard
to choice or conflict of laws rules or principles. The exclusive venue for any
action brought to enforce or interpret this Agreement shall be Reno, Nevada. The
Parties may bring such an action in any federal or state court in Reno, Nevada.
The Parties (i) agree to submit to the jurisdiction of such court and (ii) agree
that such venue and jurisdiction is fair, reasonable, appropriate and
convenient.
5.3 ATTORNEY'S FEES. In the event of litigation arising under or
relating to this Deed or the calculation and payment of Royalty under this Deed,
the prevailing party in such action shall be entitled to recover all reasonable
costs and expenses of such suit (including the costs and expenses of any
appeals), including reasonable attorneys' fees.
5.4 NOTICES AND PAYMENTS. All payments, notices and other
communications required or permitted under this Deed shall be given in writing
and delivered by hand, United States certified mail, overnight courier, or
facsimile at the following addresses:
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If to Glamis: Glamis de Mexico, S.A. de C.V
Attn: Secretary
c/o Glamis Gold Ltd.
0000 Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
FAX: 000-000-0000
If to MSX: Minera San Xavier, S.A. de C.V
c/o Metallic Management Inc.
ATTN: President and CEO
00000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
FAX: 000-000-0000
A Party may change its address hereunder by written notice to the other
Party All notices shall be effective and shall be deemed delivered (i) if by
hand, by certified mail, or by overnight courier, on the date of delivery if
delivered during normal business hours, and, if not delivered during normal
business hours on the next business day following delivery, (ii) if by
electronic communication, on the next business day following receipt of
electronic communication, and (iii) if by mail, on the next business day after
actual receipt. For the purposes of the foregoing, "normal business hours" shall
mean 8:00 a.m. to 5:00 p.m., local time, and "business day" shall mean any day
other than Saturday, Sunday or a legal holiday in the local jurisdiction.
Executed as of the Effective Date.
"MSX"
Minera San Xavier, S.A. de C.V.,
a Mexico company
By: /s/ Xxxxxxx A/ Jeannes
Xxxxxxx X. Jeannes, Director
By: /s/ Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx, Director
"GLAMIS"
GLAMIS de MEXICO, S.A. de C.V.,
a Mexico company
By: /s/ Xxxxxxx X. Jeannes
Xxxxxxx X. Jeannes, Director
D-7
State of COLORADO )
) ss
county of DENVER )
The foregoing instrument was acknowledged before me this 12th day of
February 2003, by Xxxxxxx X. Jeannes, as Director of Minera San Xavier, S.A. de
C.V., as its free act and deed.
Witness my hand and official seal.
/s/ Xxxxxx Xxxxx
Notary Public
State of COLORADO )
) ss
county of DENVER )
The foregoing instrument was acknowledged before me this 12th day of
February 2003, by Xxxx X. Xxxxxxxx, as Director of Minera San Xavier, S.A. de
C.V., as its free act and deed.
Witness my hand and official seal.
/s/ Xxxxx Parcel
Notary Public
State of COLORADO )
) ss
county of DENVER )
The foregoing instrument was acknowledged before me this 12th day of
February 2003, by Xxxxxxx X. Jeannes, as Director of Glamis de Mexico, S.A. de
C.V., a corporation organized and existing under the laws of Mexico, as its free
act and deed.
Witness my hand and official seal.
/s/ Xxxxxx Xxxxx
Notary Public
[NOTARIES AS REQUIRED BY MEXICO LAW]
D-8
ATTACHMENT 1
to Royalty Deed dated February 12, 2003, between
Minera San Xavier, S.A. de C.V., a company organized and
existing under the laws of Mexico ("MSX"), as grantor, and
Glamis de Mexico, S.A. de C.V
THE PROPERTIES
1-1
EXHIBIT E
AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
THIS AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT (this "Agreement") is
entered into effective as of _____________, 2003 (the "Effective Date") by and
among RALEIGH MINING INTERNATIONAL LIMITED, a corporation continued and existing
under the laws of the Province of Ontario, Canada ("Raleigh"); GLAMIS de MEXICO,
S.A. de C.V., a company organized and existing under the laws of Mexico
("Glamis"); and MINERA SAN XAVIER, S.A. de C.V., a corporation organized and
existing under the laws of Mexico ("MSX"). Glamis, Raleigh, and MSX are at times
referenced in this Agreement individually as a "Party" and collectively as the
"Parties.
RECITALS
A. MSX holds the entire ownership and operating interest in the
Cerro San Xxxxx Project situated in the State of San Xxxx Potosi in Mexico.
B. As of January 21, 1998, Raleigh owned all of the issued and
outstanding common shares of the capital stock of MSX (the "Common Shares"),
except for one share owned by Xx. Xxxxx X. Xxxxxx, the President of Raleigh
("Xx. Xxxxxx").
C. Pursuant to that certain Stock Acquisition and Shareholder's
Agreement dated effective as of January 21, 1998 (the "Cambior Agreement"),
Raleigh and Xx. Xxxxxx conveyed to Cambior de Mexico, S.A. de C.V. ("Cambior")
an undivided fifty percent (50%) of the Common Shares.
D. Effective May 9, 2000, Glamis acquired Cambior's Common Shares
and succeeded to Cambior's rights and obligations under the Cambior Agreement.
E. Pursuant to that certain Share Purchase Agreement dated as of
February 12, 2003 (the "SPA"), by and among Glamis, Raleigh, MSX and Metallica
Resources Inc., a Canadian federal corporation ("Metallica"), Glamis conveyed
its Common Shares (the "Glamis Shares") to Raleigh, subject to certain payment
and other obligations represented by and contained in the SPA, a Promissory Note
dated February 12, 2003, from Raleigh, as Maker, and Metallica, as Guarantor, to
Glamis, as Holder (the "Promissory Note"), and other instruments.
E-1
F. The SPA specified that, if Raleigh did not make the first
payment due under the terms of the Promissory Note, the following would occur:
(i) the Glamis Shares would be returned to Glamis, as liquidated damages; (ii)
Raleigh promptly would transfer to Glamis an additional number of Common Shares
held by Raleigh equal to one percent (1%) of the issued and outstanding Common
Shares (the "Additional Shares"), such that upon the return of the Glamis Shares
and the transfer of the Additional Shares, Glamis would own fifty one percent
(51%) of the issued and outstanding Common Shares; (iii) upon delivery of the
Additional Shares to Glamis, the Escrow Agent (defined in the SPA) would return
to Raleigh the Promissory Note and the Royalty Deed (defined in the SPA); and
(iv) Raleigh, Glamis and MSX would enter into this Agreement.
G. Raleigh did not make the first payment under the terms of the
Promissory Note when the same became due, the Glamis Shares were returned to
Glamis on the Effective Date, the Additional Shares have been delivered to
Glamis effective as of the Effective Date, and the Promissory Note and Royalty
Deed have been returned to Raleigh.
H. As required by the SPA, the Parties desire to enter into this
Agreement and to govern the management of MSX's affairs, the financing for
developing the Project and bringing it into commercial production, the marketing
of such production, and the relations between Glamis and Raleigh as shareholders
of MSX from and after the Effective Date, all in accordance with the terms and
conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the foregoing, of the mutual
promises and covenants set forth herein, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree to amend and restate the Cambior Agreement in its entirety as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement and Exhibits hereto,
the following terms shall have the meanings set forth below:
E-2
"ADDITIONAL SHARES" shall have the meaning assigned to it in Recital F.
"ADMINISTRATION" means any activity of an administrative or general
nature conducted in connection with any other aspect of Operations or in
connection with Operations generally.
"AFFILIATE" means any person, partnership, joint venture, corporation
or other entity or form of enterprise that directly or indirectly controls, is
controlled by, or is under common control with, a Party. For purposes of the
preceding sentence, "control" means possession, directly or indirectly, of the
power to direct or cause direction of management and policies through ownership
of voting securities, contract, voting trust or otherwise.
"AGREEMENT" means this Amended and Restated Shareholders' Agreement,
and all exhibits, which are fully incorporated herein by reference subject to
the provisions of Section 1.4 below.
"AMENDED BYLAWS" means the amendments to the bylaws or other
Organizational Documents of MSX adopted in accordance with the provisions of the
Cambior Agreement, as amended and restated in Article IV of this Agreement.
"APPLICABLE LAW" means all applicable federal, state, provincial, local
and other governmental or judicial laws, statutes, rules, regulations,
ordinances, and, to the extent promulgated or issued, decrees and orders.
"AREA OF INTEREST" means the entire area encompassed within the
exterior boundaries of the Properties described on Exhibit A.
"ASSETS" means the Properties, Products, and all other real and
personal property, tangible and intangible, held or owned from time to time by
MSX.
"BOARD OF DIRECTORS" or "BOARD" means the Board of Directors of MSX.
"BONA FIDE OFFER" shall have the meaning set forth in Section 8.1.
E-3
"BUDGET" means a detailed estimate of all costs and expenses to be
incurred by MSX with respect to a Program and a schedule of cash advances to be
made by the Shareholders in accordance with the terms of this Agreement.
"CAMBIOR AGREEMENT" shall have the meaning assigned to it in Recital C
to this Agreement.
"COMMENCEMENT OF COMMERCIAL PRODUCTION" means and shall be deemed to
have occurred on the date that a cumulative total of ten thousand (10,000)
gold-equivalent ounces of dore or mineral concentrate from production from the
Project have been delivered for refining to a commercial refiner.
"COMMON SHARES" means the common shares of the capital stock of MSX.
"CONCESSIONS" means the mining concessions, or applications for mining
concessions, or interests therein, described in Exhibit A to this Agreement,
together with or applications as described in all the rights, privileges,
benefits, appurtenances, covenants and positive and negative servitudes
associated therewith.
"CONSTRUCTION" means the erection, construction and installation of all
facilities, improvements and infrastructure, including but not limited to
buildings, plants, pits, machinery and equipment, for the Mining, handling,
processing and other beneficiation of Minerals, and the preparation of the
Project for Mining subsequent to the Construction Release Date.
"CONSTRUCTION RELEASE" means the approval by the Board of a Definitive
Feasibility Study and authorization by the Board to commence Construction
pursuant to the approved Definitive Feasibility Study.
"CONSTRUCTION RELEASE DATE" means the date on which the approvals and
authorizations required for Construction Release are or have been granted.
"CONTRACT" means any agreement, contract, promise, arrangement or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"COVER AMOUNT" shall have the meaning set forth in Section 3.2.7.
E-4
"DEFINITIVE FEASIBILITY STUDY" means a Feasibility Study approved by
the Board of Directors.
"DEVELOPMENT" means all preparation for the removal and recovery of
minerals, including, but not limited to, preparation of a Feasibility Study and
Construction
"DEVELOPMENT EXPENDITURES" means all Expenditures incurred for the
Development and Construction from the Construction Release Date until the
Commencement of Commercial Production.
"DIRECTOR" or "DIRECTORS" means a director or the directors, as the
case may be, of MSX.
"EFFECTIVE DATE" means the date first set forth above.
"EQUITY CONTRIBUTION" means the respective equity contribution made or
deemed to have been made by Glamis and Raleigh to MSX in consideration of the
issuance to them of the Common Shares, as provided in Section 4.6.1.
"ESCROW PERIOD" means the period from February 12, 2003 until the
Effective Date, during which the Glamis Shares were in escrow pursuant to the
SPA.
"EXPENDITURES" shall be interpreted broadly and means expenditures
incurred in connection with the Project, the conduct of operations or the
corporate affairs of MSX, including:
(a) all fees and other payments of whatever
nature in relation to the Properties;
(b) labor charges as follows:
(i) salaries and wages of employees
directly engaged in the conduct of
Operations, and salaries and wages
of technical employees who are
temporarily assigned to and
directly employed in the conduct of
Operations;
E-5
(ii) the cost of holiday, vacation,
sickness, disability benefits and
other customary allowances paid to
the employees whose salaries and
wages are chargeable to Operations;
(iii) expenditures or contributions made
pursuant to assessments imposed by
governmental authority which are
applicable in respect of employee
salaries and wages chargeable to
Operations;
(iv) reasonable personal expenses of
those employees whose salaries and
wages are chargeable to Operations;
(c) the cost of established plans for employees'
group life insurance, hospitalization,
pension, retirement, stock purchase, thrift,
and other benefit plans of a like nature,
applicable to the Manager's labor cost
chargeable to Operations;
(d) materials, equipment, supplies, and services
("Material") purchased or furnished for use
on or for the benefit of the Project. The
charges for any Material provided by the
Manager or an Affiliate of the Manager shall
not exceed the prevailing charges or rates
for such Material or services in the
vicinity of the Project, and those services
performed by the Manager or an Affiliate of
the Manager shall be under the same terms
and conditions as are customary and usual in
the vicinity of the Properties in contracts
with independent contractors who are doing
work of a similar nature;
(e) transportation of employees and Material
necessary for Operations;
(f) the cost of contract services and utilities
procured from outside sources;
E-6
(g) all costs or expenses necessary for the
repair or replacement of Assets made
necessary because of or losses incurred by
fire, flood, storm, accident, or any other
cause;
(h) all costs and expenses of handling,
investigating, and settling litigation or
claims arising in connection with Operations
or necessary to protect or recover the
Assets, including but not limited to,
attorneys' fees, court costs, cost of
investigation, or procuring evidence and
amounts paid in settlement or satisfaction
of any such litigation or claims;
(i) all taxes of every kind and nature assessed
or levied upon or in connection with the
Assets, Operations or production derived
therefrom, which taxes have been paid by the
Manager for the benefit of MSX or its
shareholders;
(j) premiums paid for insurance on the Assets or
Operations for the protection of the Assets
or the Project;
(k) all indirect expenditures incurred by the
Manager in connection with the Project or
Operations as allocated by the Manager,
acting reasonably;
(l) Property acquisition and maintenance costs;
and
(m) any other expenditures (including those for
capital equipment and working capital) not
covered or dealt with in the foregoing
provisions that are incurred by or on behalf
of MSX or the Manager, in Mexico or
elsewhere, for the necessary and proper
conduct of the Project or Operations and
pursuant to any applicable provisions of
this Agreement, or with respect to the
Administration or corporate expenses,
obligations or liabilities of MSX.
E-7
"EXPLORATION" means all activities directed toward or in support of
ascertaining the existence, location, extent, quantity, quality or commercial
value of deposits of Minerals on the Properties.
"FEASIBILITY STUDY" means a detailed written report of the results of a
comprehensive study of the viability of placing the Mine into production. A
Feasibility Study recommending production shall include a description of the
methods and costs of bringing the Mine into production and operation and shall
include a reasonable assessment of the estimated recoverable reserves of ore,
the estimated average composition and content of the valuable Minerals that may
be produced, a description of the work, equipment and supplies estimated to be
required to bring the Mine into commercial production and the estimated cost
thereof, a description of the mining methods to be employed and a financial
appraisal of the proposed operations. The Manager shall select the entity that
will prepare the Feasibility Study, and such entity may be an Affiliate of the
Manager, or outside consultants selected by the Manager, or a combination
thereof, as decided by the Manager in its discretion; provided, however, that
the Feasibility Study shall be comparable in quality, detail and coverage to
those prepared by outside consultants for comparable projects for purposes of
seeking third party project debt financing. The Feasibility study may be based
upon and/or incorporate studies and work performed prior to the Effective Date.
Copies of the Feasibility Study (if and when completed) shall be delivered to
each of MSX, Raleigh and Glamis.
"GLAMIS" means Glamis de Mexico, S.A. de C.V., a corporation organized
and existing under the laws of Mexico.
"GLAMIS SHARES" means the Common Shares issued to Glamis that were
conveyed by Glamis, in escrow, to Raleigh and, upon default by Raleigh of the
first payment due under the Promissory Note, were returned to Glamis, all
pursuant to the SPA, and all as described in the Recitals.
"IVA" means value added taxes or similar or related taxes, levies,
tariffs and assessments.
E-8
"JAG" means the Judicial Arbiter Group, Inc. situated in Denver,
Colorado. "LIBO RATE" or LIBOR" means, for any calendar month or part thereof,
the 30 day interest rate that appears on the Xxxxxx'x screen LIBO page as of
11:00 a.m. London time on the last day of such month. If more than two such
rates appear on the Reuters' screen LIBO page, the interest rate will be the
arithmetic average (rounded upward if necessary), to the nearest one-sixteenth
(1/16th) of one percent (1%) of such offered rates. If for any reason (i) the
interest rate shall not be able to be determined by reference to the Reuters'
screen LIBO page or (ii) the Reuters' screen LIBO page shall show LIBO quotes
from two or less banks or (iii) the banks whose LIBO quotes are shown on there
Reuters' screen LIBO page shall not be major international banks or (iv) the
services of the Reuters' screen LIBO page shall cease to be available as a
result of a discontinuation of such services, then the Shareholders shall use
the average of three leading banks which are internationally recognized as major
participants in the Eurodollar interbank market in London selected by the
Shareholder to whom interest is to be paid. "REUTERS' screen LIBO page" means
the display of London interbank offered rates of major banks for Eurodollar
deposits designated as page "LIBO" on the Reuters' monitor money rates service
(or such other page as may replace the LIBO page on screen services provided by
Reuters for the purpose of displaying such London Interbank offered rates for
Eurodollar deposits).
"LIENS" means any and all liens, pledges, burdens, charges, royalties,
encumbrances, mortgages, options, security interests, rights, interests, claims,
demands, leases, rights of first refusal, equitable titles, interests and
restrictions of any kind including any restriction on use, voting, Transfer,
receipt of income, or exercise of any other attribute of ownership.
"MANAGER" means the person or entity appointed pursuant to Section 6.1
to manage, conduct and carry out Operations and the affairs of MSX with respect
to the Project, or any successor. SSX shall serve as the initial Manager from
and after the Effective Date.
"MARKETING" means all of those activities that are associated with the
sale and delivery of Products produced by MSX
"MINE" means the Cerro San Xxxxx open-pit, heap xxxxx gold and silver
mine, together with associated production and processing facilities, and other
related facilities, improvements and infrastructure, with an anticipated
throughput of not less than eight million tons of ore per
E-9
year, all of which, subject to the terms of this Agreement, may be constructed
and developed on the Properties.
"MINERALS" means all ores, metals, minerals and mineral resources of
any and all kinds or description whatsoever.
"MINING" means the mining, extracting, producing, handling, milling,
processing or other beneficiation of Products, and all activities incident
thereto, including but not limited to the providing of maintenance and other
general services in respect thereof.
"MSX" means Minera San Xavier, S.A. de C.V., a corporation organized
and existing under the laws of Mexico.
"NET CASH FLOW" shall have the meaning assigned to it in Section 4.3.2.
"NET PROFITS INTEREST" shall have the meaning set forth in Exhibit B to
this Agreement.
"NON-ARBITRAL MATTERS" means matters that are not subject to
arbitration under this Agreement, namely, approval of a Definitive Feasibility
Study, approval of Programs and Budgets, approval of Construction Release, and
decisions on the part of MSX to merge, reorganize, issue Common Shares or other
equity securities, grant Liens upon any of the Assets (other than as
contemplated under this Agreement) or Transfer any right, title or interest in
the Assets (other than Transfers of immaterial Assets in the ordinary course of
business), as well as the decision as to whether or not a particular matter
constitutes a Technical Matter (subject to arbitration under Section 5.1), a
non-technical matter (subject to arbitration under Section 5.2) or a
Non-Arbitral Matter (not subject to arbitration).
"NON-TECHNICAL MATTERS" means any matters that are not Technical
Matters and shall include any dispute or conflict concerning whether a matter is
a Technical Matter or a Non-Technical Matter.
"OPERATIONS" means activities or operations conducted upon or with
respect to the Properties, Assets or Project pursuant to this Agreement and
includes without limitation Administration, Exploration, Development,
Construction, Mining and Marketing.
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"ORGANIZATIONAL DOCUMENTS" means the articles, deed or certificate of
incorporation or amalgamation or continuance (as the case may be, depending upon
the jurisdiction of incorporation) and the bylaws of a corporation.
"OWNERSHIP INTEREST" means the percentage ownership of a Shareholder in
the Common Shares as such interest may from time to time be adjusted hereunder.
As of the Effective Date, Glamis shall hold a fifty-one percent (51%) Ownership
Interest, and Raleigh shall hold a forty-nine percent (49%) Ownership Interest.
Ownership Interests shall be calculated to three decimal places and rounded to
two (e.g., 1.515% rounded to 1.52%). Decimals of .005 or more shall be rounded
up to .01, and decimals of less than .005 shall be rounded down.
"PARTIES" means Raleigh, Glamis and MSX collectively.
"PARTY" means Raleigh, Glamis or MSX, as the case may be.
"PRODUCTS" means all marketable Minerals produced from the Properties
pursuant to this Agreement.
"PROGRAM" means a description in reasonable detail of Operations to be
conducted by the Manager during a specified period of time.
"PROJECT" means the Cerro San Xxxxx gold and silver mining project in
San Xxxx Potosi, Mexico, and all Assets, activities, Operations and business
with respect thereto, subject to the limitations set forth in Section 3.1.7 of
this Agreement
"PROMISSORY NOTE" shall have the meaning assigned to it in Recital E to
this Agreement.
"PROPERTY" or "PROPERTIES" means those interests in the Concessions,
real property, Minerals, rights, water rights, easements and related mining and
other property rights described in Exhibit A and all additional property rights
that are acquired and held from time to time by MSX in accordance with the terms
and conditions of this Agreement.
"RALEIGH" means Raleigh Mining International Limited, a corporation
organized and existing under the laws of the Province of Ontario, Canada.
E-11
"REIMBURSEMENT AMOUNT" shall have the meaning assigned to it in Section
4.3.1.
"SALE" shall have the meaning set forth in Section 8.1.
"SERVICES AGREEMENT" means the agreement to be entered into between MSX
and the Manager as of the Effective Date pursuant to Section 4.1 , which
agreement shall be on the identical terms as the Services Agreement between MSX
and SSX that was terminated pursuant to the SPA.
"SHAREHOLDERS" means the owners of Common Shares (and of Ownership
Interests) as described herein and their successors in interest and permitted
assigns.
"SPA" means certain Share Purchase Agreement dated as of February 12,
2003 (the "SPA"), by and among Glamis, Raleigh, and Metallica that is described
more particularly in Recital E to this Agreement.
"SSX" means Servicio San Xavier, S.A. de C.V., an Affiliate of Glamis.
"TECHNICAL MATTERS" mean any dispute or conflict arising out of or in
connection with this Agreement relating to any matter of a purely technical
nature regarding Operations.
"TRANSFER" means sell, grant, option, assign, mortgage, hypothecate,
encumber, pledge or otherwise commit or dispose of in any manner.
"TRANSFERRED EMPLOYEES" means those employees of MSX who were hired by
MSX from Servicio San Xavier, S.A. de C.V., a Mexico corporation, pursuant to
the SPA.
1.2 Currency. Unless otherwise expressly specified, all currency
amounts set forth herein are stated in the lawful currency of the United states
of America
1.3 Section References. Unless otherwise expressly specified, all
references in this Agreement to Articles and Sections shall be references to the
Articles and Sections of this Agreement.
1.4 Exhibits. The Exhibits to this Agreement shall be construed
with and as an integral part of this Agreement. In the event of be any conflict
or inconsistency between the
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terms and conditions of this Agreement and those of any Exhibit, the terms and
conditions of this Agreement shall in all instances prevail and govern.
1.5 Use of "Herein" and "Hereunder". All references to the work
"herein" and the word "hereunder" contained in this Agreement refer to this
entire Agreement and not just to the particular sentence, provision, section or
Article in which that word appears.
ARTICLE II
REPRESENTATIONS, WARRANTIES,
UNDERTAKINGS AND INDEMNIFICATION
2.1 Mutual Representations and Warranties. Each of Raleigh and MSX
represents and warrants to Glamis, and Glamis represents and warrants to Raleigh
and MSX, effective as of the Effective Date, as follows: (i) it is a corporation
duly incorporated, validly existing, and in good standing in its jurisdiction of
incorporation; (ii) it has the necessary corporate power, authority and capacity
to execute and deliver this Agreement and to perform the transactions
contemplated herein; (iii) the execution of this Agreement and the completion of
the transaction described herein will not violate or result in the breach of any
bylaw, agreement, covenant, law, rule, regulation or administrative order or
other legal restriction or requirement by which either Party or its properties
may be bound; and (iv) upon due execution and delivery, this Agreement shall
constitute its valid agreement, binding and enforceable against it in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally, and except as may be limited by general principles of equity.
2.2 Raleigh's Additional Representations and Warranties. Raleigh
represents and warrants to Glamis, effective as of the Effective Date, as
follows:
2.2.1 Capitalization and Delivery of Additional Shares.
(a) The authorized equity securities of MSX
consist of 17,044,354 shares of common
stock, par value ONE NEW MEXICAN PESO
E-13
(MEX$1.00) per share, of which 17,044,354
shares are issued and outstanding.
(b) During the Escrow Period, Raleigh was the
record and beneficial owner of 85,221,770
Common Shares and was the beneficial owner
of the remaining 85,221,770 Common Shares
(the latter representing the Glamis Shares
held in escrow), free and clear of all
Liens, and all such stock has been duly
authorized and validly issued.
(c) The Additional Shares delivered to Glamis
were, as of the date of delivery to Glamis,
free and clear of all Liens. The Additional
Shares have been duly authorized and validly
issued, and that all stock powers or
endorsements necessary to properly transfer
those Shares to Glamis under the laws of
Mexico have been executed and delivered. The
transfer of the Additional Shares have been
properly registered on the books of MSX.
(d) The Glamis Shares are free and clear of all
Liens, except any Liens that may have been
granted or created by Glamis.
(e) Neither Raleigh nor MSX has: (i) sold,
pledged or encumbered any of the Shares,
(ii) entered into any agreement or
commitment to sell, pledge or encumber any
of the Shares, or (iii) entered into any
agreement or commitment to issue any Shares.
(f) As of the Effective Date, Raleigh is the
record and beneficial owner of 85,221,769
Common Shares, free and clear of all Liens,
and all such stock has been duly authorized
and validly issued.
2.2.2 Maintenance of MSX Assets - Affirmative Covenants.
During the Escrow Period Raleigh and MSX have: (a) maintained the MSX Assets
free and clear of all claims, Liens, encumbrances, assessments and rights of
third parties, other than those in existence on February 12, 2003, and such
agreements or commitments to encumber the MSX
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Assets or rights of third parties in the MSX Assets that expired or terminated
automatically by their terms prior to or on the last day of the Escrow Period;
(b) made all payments and performed all obligations required by leases,
licenses, permits, concessions, contracts and other agreements related to or
included in Properties or the MSX Assets; (c) maintained the Properties and all
leases, licenses, permits, concessions, contracts and other agreements related
to or included in the Properties in full force and effect; and (d) maintained
all of the Common Shares of MSX free and clear of all claims, Liens,
encumbrances, assessments and rights of third parties, other than the rights of
Glamis under the SPA, other than those in existence on February 12, 2003, and
such agreements or commitments respecting the Common Shares of MSX or rights of
parties in the Common Shares of MSX that, expressly and in writing, were to
become effective only by Raleigh's payment to Glamis of the first payment due
under the Promissory Note (defined in the SPA) and, such payment having not been
made, are now void ab initio. As of the Effective Date, the MSX Assets and all
of the Common Shares of MSX are free and clear of all claims, Liens,
encumbrances, assessments and rights of third parties, other than those in
existence on February 12, 2003.
2.2.3 Maintenance of MSX Assets - Negative Covenants.
During the Escrow Period neither Raleigh nor MSX has done or permitted to be
done any of the following: (a) disposed of all or a substantial part of the MSX
Assets necessary to achieve the purposes of the business of MSX; (b) commenced
the liquidation of the business of MSX; (c) pledged, mortgaged, encumbered or
otherwise burdened any of the MSX Assets or the shares of MSX; (d) issued
additional Common Shares or other capital stock of MSX; (e) sold any of the
Common Shares; and (f) entered into any agreement or commitment to do any of the
foregoing, except such agreements and commitments MSX expressly and in writing,
were to become effective only by Raleigh's payment to Glamis of the first
payment due under the Promissory Note (defined in the SPA) and, such payment
having not been made, are now void ab initio. As of the Effective Date, there
are no agreements or commitments still in effect to do any of the things
identified in the preceding clauses (a) through (e).
2.2.4 Intercompany Debt. There is no intercompany or
shareholder debt on the part of MSX (including without limitation any debt or
liabilities whatsoever to any member of the Metallica Group).
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2.2.5 Taxes. MSX has filed or caused to be filed all tax
returns that are or were required to be filed by it during the Escrow Period
pursuant to Applicable Law; and all such tax returns are true, correct and
complete.
2.2.6 Books and Records. The books of account, minute books
and similar or related records of MSX have been maintained during the Escrow
Period in all material respects in accordance with sound business practices and
the requirements of Applicable Law. The minute books of MSX contain accurate and
complete records of all meetings held of, and corporate action taken by, the
Shareholders, the Board of Directors and committees of the Board of Directors
and committees of the Board of Directors of MSX during the Escrow Period, and no
meeting of any Shareholders, Board of Directors or committee has been held
during the Escrow Period for which minutes have not been prepared and are not
contained in such minute books.
2.2.7 Ownership of Concessions and Properties. MSX owns the
entire and undivided title to, and holds exclusive possession and control of,
the Concessions and the other interests constituting the Properties that are
described in Exhibit A, free and clear of all defects, Liens, and adverse claims
of any nature and quality whatsoever, except for those in existence as of
February 12, 2003.
2.2.8 Compliance with Applicable Law. To the best of the
knowledge and belief of each member of the Metallica Group, during the Escrow
Period, MSX has conducted all of its activities on the Properties in all
material respects in accordance with Applicable Law. Except for conditions in
existence as of February 12, 2003, the Property is, to the best knowledge and
belief of each member of the Metallica Group, free and clear of any hazardous or
toxic material, pollution or other adverse environmental condition that may give
rise or to environmental liability under any Applicable Law.
2.2.9 Full Disclosure. To the best knowledge and belief
each member of the Metallica Group, there exist no material facts or
circumstances which have not been disclosed to Glamis in writing and which
should be disclosed to prevent the representations and warranties set forth in
this Section 2.1 from being materially misleading.
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2.3 Survival. All of the representations and warranties set forth
in Sections 2.1 and 2.2 shall survive the execution and delivery of this
Agreement and shall remain in full force and effect for a period of two (2)
years from and after the Effective Date.
2.4 Accrued Liabilities and Obligations. Raleigh shall be solely
responsible for and shall pay, without contribution or reimbursement from MSX or
Glamis, all costs, expenses, liabilities and obligations associated with,
arising out of, relating to MSX or the Cerro San Xxxxx Project incurred, arising
or accruing during the Escrow Period (the "Raleigh Liabilities"). Raleigh shall
fund such costs, expenses, liabilities and obligations through reimbursements to
MSX or its designee. For purposes of this Section 2.5, the Raleigh Liabilities
shall include, but shall not be limited to, the following: (a) all salaries,
wages and benefits accrued during the Escrow Period for all of MSX employees,
including the Transferred Employees d; and (b) all severance pay, accrued
benefits and other consideration that became payable to the Transferred
Employees pursuant to the SPA by virtue of the termination of their employment
with SSX. Nothing in this Section 2.4 shall be construed as limiting or
abrogating in any way any of the representations and warranties of the Raleigh
set forth in Section 2.1 or 2.2 or any of the indemnities set forth in Section
2.5. No qualification or limitation to any representation and warranty set forth
in this Agreement shall be construed as limiting or abrogating any of the
funding obligations set forth in this Section 2.4.
2.5 Indemnity. Raleigh hereby agrees to indemnify and hold Glamis
and MSX harmless against any and all losses, claims, costs, expenses, damages or
liabilities (including, without limitation, reasonable attorneys' fees) and
causes of action arising out of or based upon any breach by Raleigh of any
representation, warranty, covenant or agreement made by Raleigh in Section 2.1
or Section 2.2 of this Agreement.
Glamis hereby agrees to indemnify and hold Raleigh harmless against any
and all losses, claims, costs, expenses, damage or liabilities (including,
without limitation, reasonable attorneys' fees) and causes of action arising out
of or based upon any breach by Glamis of any representation, warranty, covenant
or agreement made by Glamis in Section 2.1 of this Agreement.
E-17
ARTICLE III
MEETINGS, VOTING RIGHTS AND RELATED MATTERS
Pursuant to Article V of the Cambior Agreement, certain revisions were
made to MSX's Organizational Documents to govern Shareholder meetings, voting
rights and related matters. Because Article V of the Cambior Agreement governs
meetings, voting rights and related matters relating to Shareholders and
Shareholders' rights, those provisions are being restated in their entirety,
with minor modifications, in this Article III. Within thirty (30) days after the
Effective Date, Raleigh and Glamis, as owners of all of the Common Shares, shall
take such actions and shall execute such instruments so as to further revise and
amend MSX's Organizational Documents, as the same are in effect as of the
Effective Date, to be consistent with this Article III.(1)
3.1 Shareholders' Meetings, Quorum and Voting Rights.
3.1.1 General.
(a) Meetings of the Shareholders of MSX may be
either ordinary or extraordinary
shareholders' meetings. Meetings for which
the agenda consists of items to be dealt
with at ordinary meetings shall be ordinary
meetings. All other meetings shall be
extraordinary meetings. Ordinary
Shareholders' meetings must be held at least
once a year within the first four months
following the closing of the fiscal year of
MSX.
(b) Meetings of the Shareholders of MSX called
for the purpose of passing on matters
stipulated in Article 182 of the General Law
of Commercial Corporations of Mexico shall
be extraordinary Shareholders' meetings.
------------------
(1) The changes to be made in MSX's Organizational Documents, to be consistent
with this Article III, are as follows: (a) Section 5.2.2 [of the Cambior
Agreement], "Election of Directors During Equity Contribution," is to be deleted
in its entirety; (b) Section 5.2.3 [of the Cambior Agreement], "Election of
Directors After Equity Contribution," is to be modified by changing the Section
name to "Election of Directors," by deleting the commas after "MSX" and
"Period," and by deleting the words "after the Equity Contribution Period;" and
(c) Section 5.26 [of the Cambior
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3.1.2 Voting. In all meetings, each Common Share shall be
entitled to one vote.
3.1.3 First Call.
(a) Ordinary meetings shall be considered
legally installed on first call whenever
attended by the Shareholders representing at
least fifty percent (50%) plus one (1) of
all the Common Shares outstanding evidencing
the capital stock of MSX, provided that all
the Shareholders of MSX are present or
represented at the meeting. . Subject to
Section 3.1.7, resolutions will be valid and
binding when adopted by the affirmative vote
of Common Shares representing at least fifty
percent (50%) plus one (1) of all the Common
Shares outstanding representing the capital
stock of MSX.
(b) Extraordinary meetings shall be legally
installed on first call whenever attended by
the holders representing at least
seventy-five percent (75%). of all the
Common Shares outstanding evidencing the
capital stock of MSX. Subject to Section
3.1.7 , resolutions will be valid and
binding when adopted by the affirmative vote
of Common Shares representing at least fifty
percent (50%) plus one (1) of all the Common
Shares outstanding representing the capital
stock of MSX.
3.1.4 Second Call.
(a) On second and subsequent call, ordinary and
extraordinary Shareholders' meetings shall
be considered legally installed whenever
attended by Shareholders representing at
least fifty percent (50%) of all the Common
Shares outstanding evidencing the capital
stock of MSX. Subject to Section 3.1.7,
resolutions will
------------------
Agreement] shall be revised in its entirety to read as follows: "The Shareholder
that has the right to designate the Manager shall also have the right to
designate the Officers of MS."
E-19
be valid and binding when adopted by the
affirmative vote of Common Shares
representing no less than fifty percent
(50%) of all Common Shares outstanding
representing the capital stock of MSX.
3.1.5 Exercise of Voting Rights. Except as expressly
provided herein, each Shareholder undertakes to exercise its voting rights over
Common Shares held by it in accordance with this Agreement.
3.1.6 Meetings. All Shareholders' meetings shall be held
pursuant to the following procedure:
(a) Shareholders' meetings shall be held at the
corporate domicile of MSX. They shall be
called by resolution of the Board of
Directors upon the request of any
Shareholder or by any statutory auditor by
publication in the Federal Official Daily
and in one of the newspapers of largest
circulation in the corporate domicile of the
Corporation, at least fifteen (15) days (in
case of first call) or four (4) days (in
case of subsequent calls) prior to the date
set forth for the meeting, stating the day,
hour and place where the meeting will be
held, as well as the agenda and, in
addition, it must be sent to all
Shareholders registered in the ledger book
by certified mail return receipt requested
or by any other means by which actual
receipt can be confirmed. The call shall be
signed by the person or persons making it.
(b) Shareholders' meetings may be held without
notice if all Shareholders have so agreed
and if all the outstanding Common Shares are
represented at the time the meeting is held.
Notice will likewise not be necessary if the
meeting is adjourned and continued at a
later date, in which case all the
circumstances shall be set forth in the
corresponding minutes.
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(c) The Shareholders may attend and participate
in meetings in person or by duly executed
general or special proxy consisting of a
simple letter in case of a special proxy.
(d) If, pursuant to Sections 3.1.3 or 3.1.4
hereof, the minimum Common Shares required
are present, the person presiding at the
meeting will declare the meeting validly
installed and shall proceed with the agenda.
(e) The Chairman of the Board shall preside at
the meetings and in his absence, they will
be presided by another member of the Board
nominated by the Shareholder that designated
the then current Manager, and, in the event
there are no Board members present at the
meeting, it will be presided by any person
present who is elected by the Shareholders
for such purpose.
(f) The Secretary of the meeting shall be
appointed by the Chairman and shall prepare
the minutes of the meeting and the
corresponding file which must contain:
(1) a copy of the Federal Official
Daily and of the newspaper in which
the call was published, if any, as
well as evidence of the call having
been received by the Shareholders
by certified mail return receipt
requested or by any other means by
which actual receipt can be
confirmed;
(2) an attendance roll;
(3) the proxies;
(4) a copy of the minutes; and
(5) a copy of any other document
submitted to the Shareholders for
their consideration.
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(g) Resolutions adopted at a meeting shall be
binding on all of the Shareholders,
including those absent or dissenting, and
shall be non-appealable. The Board of
Directors shall have the duty and the powers
to comply with the resolutions adopted at
Shareholders' meetings and to take all
necessary measures to execute all agreements
that may be required to that effect.
(h) Resolutions adopted other than at meetings
of Shareholders by the unanimous vote of the
Shareholders which represent all of the
Common Shares of MSX entitled to vote, shall
have, for all legal effects, the same
validity as if they had been adopted at a
ordinary or extraordinary Shareholders'
meeting, respectively, as long as they are
confirmed by all of the respective
Shareholders in writing.
3.1.7 Single Purpose Company; Decision Requiring Unanimous
Shareholder Consent. Notwithstanding any other provision of this Agreement to
the contrary, any decision on the part of MSX to engage in any business or
activity other than in connection with the Exploration, Development, Mining or
other Operations with respect to the Properties encompassed within the Area of
Interest shall require the unanimous consent of all Shareholders. Additionally,
no Common Shares of MSX shall be issued to any third party without the unanimous
consent of all Shareholders.
3.2 Board of Directors.
3.2.1 Number of Directors. The management of MSX shall be
vested in a Board of Directors composed of four (4) members. The Shareholders
shall elect directors in accordance with Sections 3.2.2 and 3.2.3 hereof and may
also elect an alternate for each primary member of the Board of Directors, who
may replace any Director named by such Shareholders from time to time.
Alternates may attend any meeting of the Board but may only vote in the absence
of a corresponding primary Director. The members of the Board need not be
Shareholders.
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3.2.2 Election of Directors. The Shareholders of MSX shall
have the right to elect the members of the Board of Directors as set forth
herein below according to the following Ownership Interest respectively held by
them:
Number of Directors
Ownership Interest to be Designated
------------------ ----------------
less than 20% 0
20% or more but less than 50% 1
50% 2
more than 50% but up to and including 80% 3
more than 80% 4
3.2.3 Chairman of the Board. The Shareholder who has the
right to designate the Manager shall be entitled to designate a person from
among those designated by it for appointment as Director to act as Chairman, and
each Shareholder shall cause those Directors designated by it to vote in favor
of the appointment of such person as Chairman.
3.2.4 Quorum. A majority of Directors shall constitute a
quorum at any meeting of the Board of Directors. All decisions to be taken by
the Board shall be taken by resolution. In order to be validly adopted,
resolutions of the Board shall require the affirmative vote of not less than a
majority of the Directors present and voting on the issue.
3.2.5 Meetings. The meetings of the Board of Directors
shall be held at the domicile of MSX or at any such other place as may be agreed
by the Directors. The meetings of the Board of Directors shall be held on a
regular basis at least quarterly with ten (10) days prior written notice by the
Chairman of the Board, or on his authority setting forth the hour, date and
place where the meeting will be held and the corresponding agenda. The Chairman
of the Board shall call a meeting of the Board upon the request of any Director.
In lieu of meetings, the Board may hold telephone conferences, so long as all
decisions are adopted unanimously and immediately confirmed in writing.
3.2.6 Minutes of Meetings. Minutes of the Board of
Directors meetings shall be prepared by the Secretary for each Board of
Directors' meeting, which minutes shall be transcribed in the corresponding
minute books and shall be signed by the Chairman of the Board and the Secretary.
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3.2.7 Designation of Officers. The Shareholder that has the
right to designate the Manager shall also have the right to designate the
Officers of MSX.
3.2.8 Non-Arbitral Matters. The decisions of the
Shareholders and/or the Directors, as the case may be, in accordance with the
provisions of this Article III, shall not be subject to arbitration.
ARTICLE IV
CONDUCT OF OPERATIONS
4.1 Manager; Services Agreement. Operations shall be managed,
conducted and carried out by the Manager pursuant to the Services Agreement. The
initial Manager shall be SSX or such other person or entity that may be
designated by Glamis. Glamis shall have the right to designate or replace the
Manager so long as it continues to hold at least fifty percent (50%) of the
Common Shares. Glamis shall have the right to designate itself or any of its
Affiliates to serve as Manager. The Manager shall be considered to be an
independent third party contractor for all purposes of this Agreement. The
Manager shall resign or be replaced only pursuant to the procedures specified in
the Services Agreement.
4.2 Operations: Presentation and Approval of Programs and Budgets.
Operations shall be conducted only pursuant to Programs and Budgets presented to
the Board by the Manager pursuant to the Services Agreement and approved by the
Board pursuant to Section 3.2.4. Within sixty (60) days following the Effective
Date, the Manager shall prepare and submit to the Board a Program and Budget for
the remainder (if any) of calendar year 2003 and calendar year 2004. All other
Programs and Budgets shall be prepared and submitted as required by the Services
Agreement. Immediately following approval of a Program and Budget by the Board
requiring an increase in capital, the Shareholders covenant to take all such
action, either through a meeting of Shareholders or a unanimous resolution or
consent of Shareholders, to approve such Program and Budget and to authorize the
increase in MSX capital and issuance of Common Shares (with their distribution
by the Board to the Shareholders as such capital is contributed) required
thereby. Except as provided in Section 4.3.1 with respect to Programs and
Budgets for Development and Construction after the Construction Release Date
until the Commencement of
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Commercial Production, by notice to the Board within twenty (20) days after the
final Board vote approving a Program and Budget, a Shareholder may elect to
contribute to such Program and Budget in some lesser amount than its respective
ownership Interest, or not at all, in which cases its Ownership Interest shall
be adjusted as provided in Section 4.6. If a Shareholder fails to so notify the
Board, it shall be deemed to have elected to contribute to such Program and
Budget and to subscribe for Common Shares in proportion to its respective
Ownership Interest as of the beginning of the period covered by that Program and
Budget. Each adopted Program and Budget, regardless of length, shall be reviewed
at least once a year at a meeting of the Board. In the event that the Board
fails to approve a proposed Program and Budget, such failure shall be a
Non-Arbitral Matter and the Shareholders shall be obligated to cause the Board
to approve a Program and Budget necessary to maintain the Assets in good
physical condition and full legal validity until such time as a Program and
Budget shall have been approved by the Board.
4.3 Funding of Expenditures: Cash Calls.
4.3.1 Development Expenditures. Glamis shall provide all
necessary funding for Expenditures for the Development and Construction of
Mining and processing facilities at the Project after the Construction Release
Date until the commencement of Commercial Production (the "Development
Expenditures"). Following the Commencement of Commercial Production, Glamis
shall receive eighty percent (80%) of Net Cash Flow (as defined and calculated
in Section 4.3.2) from the Project until Glamis has received an amount (the
"Reimbursement Amount") equal to all of the Development Expenditures incurred
plus interest at LIBOR plus one and one-half percent (1 1/2%). The remaining
twenty percent (20%) of Net Cash Flow shall be distributed to the Shareholders
in proportion to their respective Ownership Interests. After Glamis receives the
Reimbursement Amount, Net Cash Flow shall be divided according to the
Shareholders' respective Ownership Interests as provided in Section 4.3.3.
Following the Commencement of Commercial Production, each Shareholder will be
responsible for its share of any further costs and expenses as provided in
Section 4.3.3. Neither the Development Expenditures nor the Reimbursement Amount
shall be considered in the calculation of the Shareholders' Ownership Interests
pursuant to Section 4.6.
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4.3.2 Net Cash Flow. "Net Cash Flow" means and shall be
calculated by determining all revenues received from the sale of Products, and
any other revenues received (including without limitation interest income,
insurance proceeds and proceeds from the sale of equipment or other Assets), and
deducting therefrom all cash payments for all Expenditures and liabilities
incurred for the Exploration, Development and Construction or replacement of
Mining and processing facilities upon the Property, and the Mining, processing,
treatment, transportation, refining, sales and Marketing of Products from the
Property, including actual cash amounts contributed to a separate account as a
sinking fund for future reclamation expenses, plus a working capital reserve
equal to not less than two weeks of expenditures necessary for Mining,
processing, treatment, transportation, refining, sales and Marketing of
Minerals, all in accordance with generally accepted accounting principles
consistently applied. No Expenditures deducted for purposes of calculating Net
Cash Flow shall be included in determining the Reimbursement Amount. In
calculating Net Cash Flow, any capital expenditures incurred after the
Commencement of Commercial Production, including capitalized Exploration and
deferred Mining, shall be deducted at their actual cost at the time they are
incurred. If, in any period after the Commencement of Commercial Production, an
operating loss results, the amount of the loss shall be considered as and shall
be included with outstanding Expenditures and carried forward in determining Net
Cash Flow for subsequent periods.
4.3.3 Other Expenditures. Notwithstanding any provision of
this Section 4.3 or other provisions of this Agreement to the contrary, it is
the understanding and agreement of the Parties that all cash flow resulting from
the sale of Products on behalf of MSX shall be retained by MSX (or the Manager
on behalf of MSX) and applied to Operations prior to the making of any
distributions or dividends to the Shareholders pursuant to Section 4.3.1 and
prior to the Manager making cash calls upon the Shareholders or Shareholders
pursuant to this Section 4.3.3. After the Commencement of Commercial Production
and subject to Section 4.3.1 and Section 4.2, the Manager shall submit on behalf
of MSX or, as applicable, shall cause MSX to submit, prior to the last day of
each month, to each Shareholder who has elected or is deemed to have elected to
contribute to the approved Program and Budget (pursuant to Section 4.2) a
billing for estimated cash requirements needed for an adopted Program and Budget
for the next month. Within ten (10) days after receipt of each billing, each
such Shareholder shall advance to the Manager or MSX, as applicable, its
proportionate share of the estimated amount in accordance
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with its then current Ownership Interest and, concurrent with such advance, the
Board shall cause Common Shares to be distributed to such Shareholder in
proportion to the amount advanced. Time is of the essence in the payment of such
xxxxxxxx. The Manager, on behalf of MSX, or MSX, as applicable, shall at all
times maintain a cash balance (for working capital and sustaining capital) to
cover anticipated future disbursements for a period of approximately thirty (30)
days, and the Manager shall be entitled to make such cash calls as may be
necessary to maintain such a balance. All funds in excess of immediate cash
requirements shall be invested in interest-bearing accounts with a bank selected
by the Manager or MSX, as applicable. A Shareholder that fails to meet cash
calls in the amount and at the times specified in this Section 4.3.3 shall be in
default, and the non-defaulting Shareholder shall have those rights and remedies
which are stipulated in Sections 4.5, 4.6 and 4.7. Unless otherwise agreed by
the Shareholders, the payment of cash calls by each Shareholder shall be
completed through the exercise of pre-emptive rights to subscribe Common Shares.
Elections by Shareholders under Section 4.6 to contribute to approved Programs
and Budgets and to subscribe for a corresponding number of Common Shares in
conjunction with the performance of such Program and Budget shall be
irrevocable.
4.4 Audits. Within twelve (12) months following the end of any
calendar year, the non-managing Shareholder (i.e., the Shareholder that did not
designate the then current Manager) may request that an audit of the accounting
and financial records of MSX (and/or of the accounting and financial records of
the Manager relating to MSX and the Project) for such calendar year be completed
at its own expense. The audit shall be conducted by a firm of certified public
accountants of international standing selected by the non-managing Shareholder.
All written exceptions to and claims upon the Manager for discrepancies
disclosed by such audit shall be made not more than three (3) months after
receipt of the audit report. If the non-managing Shareholder fails to request an
audit within such 12-month period or fails to give notice of any such exception
or claim within such three-month period, the financial records of the Manager in
respect of such calendar year shall be conclusively deemed to be correct, absent
manifest error.
4.5 Adjustment of Ownership Interests. A Shareholder's Ownership
Interest shall be adjusted as follows:
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(a) upon an election by a Shareholder pursuant
to Section 4.6 to contribute less to an
adopted Program and Budget than the
percentage reflected by its Ownership
Interest; or
(b) in the event of a default by a Shareholder
in making its agreed-upon contribution to an
adopted Program and Budget, followed by an
election by the other Shareholder to invoke
Section 4.7; or
(c) upon the withdrawal or deemed withdrawal by
a Shareholder pursuant to Section 4.6.4; or
(d) upon the acquisition of less than all of the
Ownership Interest of the other Shareholder,
however arising.
4.6 Elections by Shareholders. A Shareholder may elect, as
provided in Section 4.2, to limit its contributions to an adopted Program and
Budget as follows:
(a) to some lesser amount than its respective
Ownership Interest; or
(b) not at all.
4.6.1 Recalculation of Interests At Time of Election. If a
Shareholder elects pursuant to Section 4.2 to contribute to an adopted Program
and Budget some lesser amount than its respective ownership Interest, or not at
all, the Ownership Interest of that Shareholder shall be recalculated at the
time of such election by dividing: (i) the sum of (a) the Shareholder's total
actual and deemed contributions to MSX as of the date of such election, and (b)
the amount, if any, the Shareholder elects to contribute to the adopted Program
and Budget; by (ii) the sum of (a) and (b) above for all Shareholders; and then
multiplying the result by one hundred (100). The Ownership Interest of the other
Shareholder shall thereupon become the difference between one hundred percent
(100%) and the recalculated Ownership Interest. Each Shareholder shall, to the
extent that it contributes to an adopted Program and Budget, be entitled to
subscribe such number of Common Shares through such contributions as shall
result in the Ownership Interest of such Shareholder as calculated hereunder
being equal to its percentage interest in Common Shares of MSX and each such
Shareholder's rights to subscribe Common Shares shall be deemed to have
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been exercised or waived accordingly, as applicable. Solely for purposes of this
Section 4.5.5, upon the Effective Date, the total equity contribution of the
Shareholders to MSX shall be deemed to be Forty Million Dollars ($40,000,000),
of which Glamis shall be deemed to have contributed fifty-one percent (51%) or
Twenty Million Four Hundred Thousand Dollars ($20,400,000) and Raleigh shall be
deemed to have contributed forty-nine percent (49%) or Nineteen Million Six
Hundred Thousand Dollars ($19,600,000).
4.6.2 Recalculation of Interests Upon Completion. When an
approved Program is completed, each Shareholder's Ownership Interest which has
been calculated pursuant to Section 4.6.2 shall be recalculated by dividing
(i) the Shareholder's total actual and
deemed contributions; by
(ii) the sum of the total actual and
deemed contributions for all
Shareholders; and multiplying the
result by one hundred (100).
However, if there is a Board-approved amendment of a previously approved Program
and Budget, and such amendment reduces the previously approved Budget by
twenty-five percent (25%) or more, or the Manager fails to expend at least
seventy-five percent (75%) of the approved Budget, a Shareholder that has
elected to limit its contribution pursuant to Section 4.2 shall be offered a
one-time option, which may be exercised within sixty (60) days by giving written
notice to the other Shareholder, to contribute such amounts to MSX as would
restore the Shareholders to their respective Ownership Interests existing
immediately prior to the original approval of the Program and Budget.
4.6.3 Deemed Withdrawal of Shareholder. If a Shareholder's
Ownership Interest is reduced to ten percent (10%) or less pursuant to the
provisions of this Article IV, such Shareholder's Ownership Interest and its
corresponding percentage interest in Common Shares shall be deemed to have been
sold and transferred to the other Shareholder in exchange for a ten percent
(10%) Net Profits Interest in the Properties. Such Net Profits Interest shall be
calculated and paid in accordance with the provisions of Exhibit B. The
Shareholders shall execute and deliver all such documents, deliver and endorse
appropriate share certificates, and perform all
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such other acts as may be necessary or desirable to give effect to such sale and
transfer and the grant of the Net Profits Interest.
4.7 Default in Contribution. If a Shareholder fails to make an
agreed contribution when due or timely to fund a cash call required by an
approved Program and Budget, the non-defaulting Shareholder shall have the
right, but not the obligation, to contribute or fund all or any portion of the
amount in question (with such amount actually funded or contributed by the
non-defaulting Shareholder being referred to hereinafter as the "Cover Amount").
In the event that the non-defaulting Shareholder makes such a contribution, the
Ownership Interests of the Shareholders shall immediately be recalculated in
accordance with the provisions of Section 4.6, provided that, in making such
recalculation and all subsequent calculations of Ownership Interests pursuant to
this Agreement: (i) the defaulting Shareholder shall receive no credit
whatsoever (as an actual, deemed or elected contribution) for amounts that such
Shareholder failed timely to pay or contribute; and (ii) the amount of the
non-defaulting Shareholder's actual, deemed and elected contributions shall be
increased by an amount equal to one hundred and fifty percent (150%) of the
Cover Amount.
4.8 Acquisitions Within Area of Interest. During the term of this
Agreement the acquisition of any right, title or interest in or to any real
property, Minerals, Mineral rights, water, water rights, easements,
improvements, appurtenances or other assets within the Area of Interest shall be
an opportunity solely for MSX and no Party (other than MSX) or its Affiliates
(other than MSX) shall, without the prior written consent of all other Parties,
acquire any such right, title or interest for its own or any third party's
account or benefit. Each of the Parties shall be free to pursue any acquisitions
in Minerals, mining concessions or interests therein situated outside of the
Area of Interest for its own or any third party's account or benefit, without
any obligation to any of the other Parties hereunder.
4.9 Bonds and Sinking Funds. Manager shall have the right, at any
time and from time to time, to require MSX to establish, through cash sinking
funds, cash reserves, bonds or a combination thereof ("Reserve Instruments"),
sufficient monetary protection to cover any reasonably anticipated liabilities
or obligations, including without limitation reclamation, mine closure, cleanup
and other liabilities and obligations, whether environmental or otherwise, with
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respect to the Project, the Properties or the Assets. Manager shall make written
recommendations to the Board setting forth proposed amounts of coverage and the
type or types of Reserve Instruments to be employed. The Board shall promptly
meet to consider such recommendations. Notwithstanding Section 3.2.8 to the
contrary, in the event of a deadlock by the Board (i.e., a tie vote) with
respect to the approval of any aspect of Manager's recommendations, such
disagreement shall be subject to arbitration in accordance with the provisions
of Article V of this Agreement. Manager shall have the right and standing to
intervene in any such arbitration.
ARTICLE V
DISPUTES
5.1 Arbitration of Disputes. Except for Non-Arbitral Matters, any
dispute or claim arising under or with respect to this Agreement (inclusive of
Exhibits) or the breach, termination, validity, performance or interpretation
thereof that is not otherwise resolved shall be resolved and determined
exclusively by arbitration in accordance with this Article V. Either Shareholder
may refer any such matter to arbitration by written notice to the other
Shareholder. No person will be appointed as an arbitrator hereunder unless such
person agrees in writing to act.
5.1.1 Technical Matters. If the dispute to be resolved is a
Technical Matter, the dispute or matter will be heard by a single arbitrator
selected by agreement between the Shareholders (or, failing such agreement
within ten days after receipt of notice that a matter is being submitted to
arbitration pursuant to Section 5.1, by the Judicial Arbiter Group, Inc. ["JAG"]
situated in Denver, Colorado) and suitably qualified regarding the subject
matter of the dispute. Each Shareholder will be entitled to suggest a solution
to the dispute, and the arbitrator will determine the matter by selecting one of
the two proposed solutions being that one, which, in his view, would best
contribute to the reasonable, prudent, and efficient development of the
Properties or the conduct of operations, as applicable. The arbitrator shall not
consider the financial position of the respective Shareholders in making his
determination.
5.1.2 Non-Technical Matters. Each Shareholder shall be
entitled to appoint a qualified person to act as arbitrator and, within ten days
after receipt of notice that a matter is
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being submitted to arbitration, the Shareholders will attempt to agree on the
appointment of the arbitrator from JAG. If the Shareholders cannot agree on an
arbitrator from JAG, or if the person selected is unwilling or unable to act,
the arbitrator shall be appointed by JAG. The person from JAG shall act as
chairman of the tribunal.
5.2 Conduct of Arbitration. Except as specifically provided in
this Article V, an arbitration hereunder will be conducted in English and in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, including the Optional Rules for Large Complex Commercial Disputes
(collectively, the "Rules"), regardless of the monetary amount of the claim or
dispute. The arbitrator(s) will fix a time and place in Denver, Colorado for the
purpose of hearing the evidence and representations of the Shareholders and will
preside over the arbitration and determine all questions of procedure not
provided for under the Rules or this Article V. After hearing any evidence and
representations that the Shareholders may submit, the arbitrator(s) will make an
award and reduce the same to writing and deliver one copy thereof to each of the
Shareholders. The decision of the arbitrator(s) will be made within forty-five
(45) days after their (his/her) appointment, subject to any reasonable delay due
to unforeseen circumstances. In the case of an award of monetary damages, the
arbitrator(s) shall be entitled to award interest thereon from the earlier of
the date on which the arbitration proceedings are instituted or on the date on
which the relevant obligations became exigible. The award of the single
arbitrator will be final and binding upon each of the Shareholders and may be
registered and enforced thereafter in any court in any jurisdiction.
5.3 Costs of Arbitration. Each Shareholder shall participate in
any arbitration proceedings at its own expense, and expenses of arbitration
shall be borne equally by the Shareholders.
ARTICLE VI
CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS
6.1 Confidentiality Standard. The financial terms of this
Agreement and all information obtained in connection with the performance of
this Agreement, including information relating to MSX, the Assets, or to the
conduct of Operations, shall be the exclusive
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property of the Shareholders and, except as provided in Section 6.2, shall not
be disclosed to any third party or the public without the prior written consent
of the other Shareholder, which consent shall not be unreasonably withheld.
6.2 Exceptions to Consent Requirement. The consent required by
Section 6.1 shall not apply to a disclosure:
(a) to an Affiliate, consultant, contractor or
subcontractor that has a bona fide need to
be informed;
(b) to any third party to whom the disclosing
Shareholder contemplates a Transfer of all
or part of its Ownership Interest;
(c) to a governmental agency or to the public
that the disclosing Shareholder believes in
good faith is required by pertinent law or
regulation or the rules of any stock
exchange;
(d) to financial institutions and bona fide
third party financial investors; or
(e) resulting from the establishment and use of
a data room in response to a take-over bid
or other form of proposed corporate
combination.
In any case to which this Section 6.2 is applicable, the disclosing Shareholder
shall give notice to the other Shareholder concurrently with the making of such
disclosure. As to any disclosure pursuant to Sections 6.2 (a) or (b), only such
confidential information as such third party shall have a legitimate business
need to know shall be disclosed and such third party shall first agree in
writing to protect the confidential information from further disclosure to the
same extent as the Shareholders are obligated under this Article VI.
6.3 Press Releases and Public Announcements. The Shareholders
shall use all reasonable efforts to ensure that public announcements or reports
(including press releases) by any Shareholder (the "Reporting Shareholder") of
any information relating to this Agreement, MSX, the Assets, and Operations
conducted hereunder (whether given to stock exchanges or
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otherwise) shall be made only on the basis of agreed texts approved in good
faith in advance of issuance by the other Shareholders. The Reporting
Shareholder accordingly agrees with the other Shareholders that it will, in
advance of reporting to a stock exchange or to other authorities having
jurisdiction, or in other similar circumstances, advise the other Shareholders
of the text of the proposed report and provide the other Shareholders with the
opportunity to make comments upon and changes to the form and content thereof
before the same is issued. Such comments or changes, as the case may be, shall
be communicated to the Reporting Shareholder within a reasonable time having due
regard to the urgency of the announcement but, in any event, not later than
forty-eight (48) hours after its communication to the other Shareholders.
6.4 Duration of Confidentiality Requirement. The provisions of
this Article VI shall apply during the term of this Agreement and for two years
following termination of this Agreement and shall continue to apply to any
Shareholder who withdraws, who is deemed to have withdrawn, or who Transfers its
Ownership Interest, for two years following the date of such occurrence.
ARTICLE VII
PRE-EMPTIVE RIGHTS
7.1 Pre-emptive Right. Subject to Article IV, the Shareholders
agree that all capital contributions to MSX by the Shareholders, shall, unless
otherwise agreed by the Shareholders, be in the form of subscriptions for Common
Shares and that the Common Share capital of MSX shall be increased by the
Shareholders from time to time to meet the capital requirements of MSX pursuant
to share subscription resolutions consistent with the Programs and Budgets
approved by the Board of Directors. Each Shareholder shall have the right to
subscribe to additional Common Shares or such portion thereof, to be issued
after the date hereof, in proportion to the number of Common Shares owned by
such Shareholder at the time of such issuance to the total number of Common
Shares then outstanding, at the same price and upon the same terms and
conditions as those offered to the other Shareholder or third parties, subject
to the provisions of Section 4.2 and Section 3.1.7 hereof.
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7.2 Right Deemed Waived. Each Shareholder shall have thirty (30)
days from the day of the delivery of a notice by the Chairman of the Board of
Directors of MSX setting forth the exact number of Common Shares available to
such Shareholder, and the price, terms and conditions of the proposed issuance
to decide whether to exercise its right by sending a written notice to the
Chairman to that effect. Such notices shall be delivered by the Chairman to the
Shareholders concurrently with the approval of Programs and Budgets by the Board
of Directors as described in Section 4.2. The right set forth in Section 7.1
shall be deemed to have been waived by any Shareholder which does not exercise
it within the said thirty (30) day period.
7.3 Issuance to Third Party. No Common Share shall be issued to
any third party unless such third party accepts, in writing, to be bound by the
terms of this Agreement. Such issuance shall also be subject to the last
sentence of Section 3.1.7.
ARTICLE VIII
RIGHT OF FIRST OFFER
8.1 Right of First Offer. Except as otherwise provided in Sections
8.2 and 8.3, if a shareholder desires to Transfer all or any part of its
Ownership Interests or Common Shares, the other Participant shall have a right
to acquire same as provided in this Section 8.1 (the "Right of First Offer") and
no Transfer of any Ownership Interests or Common Shares shall be made except in
accordance with the provisions of this Section 8.1.
(a) A Shareholder intending to Transfer all or
any part of its Common Shares shall promptly
notify the other Shareholder of its
intention. The notice shall state the price
and all other pertinent terms and conditions
of the intended Transfer. The other
Shareholder shall have thirty (30) days from
the date such notice is delivered to notify
the transferring Shareholder whether it
elects to acquire the offered Common Shares
at the same price and on the same terms and
conditions as set forth in the notice. If it
does so elect, the Transfer shall be
consummated promptly after notice of such
election is delivered to the transferring
Shareholder.
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(b) If the other Shareholder fails to so elect
within the period provided for in Section
8.1(a), the transferring Shareholder shall
have one hundred and twenty (120) days
following the expiration of such period to
obtain a bona fide offer from a third party
to consummate the Transfer at a price and on
terms no less favorable to the transferring
Shareholder than those offered by the
transferring Shareholder to the other
Shareholder in the notice required in
section 8.1(a) (a "Bona Fide Offer"), and to
provide a true and complete copy of such
Bona Fide Offer, specifically identifying
the proposed transferee, to the
non-transferring Shareholder.
(c) If the transferring Shareholder timely
obtains a Bona Fide Offer pursuant to
Section 8.1(b), the non-transferring
Shareholder shall have the preemptive right
to elect to acquire the Common Shares at
issue itself for a purchase price equivalent
to one hundred five percent (105%) of the
purchase price set forth in the Bona Fide
Offer (and on terms and conditions otherwise
comparable to those set forth in the Bona
Fide Offer); provided that: (i) the
non-transferring Shareholder provides to the
transferring Shareholder written notice of
its election to exercise its pre-emptive
right within fifteen (15) days after its
receipt from the transferring Shareholder of
a true and complete copy of the Bona Fide
Offer; (ii) if Glamis is the
non-transferring Shareholder and the Bona
Fide Offer includes shares of a third party,
Glamis may substitute therefor shares of
Glamis Gold Ltd. of comparable market value;
and (iii) if Raleigh is the non-transferring
Shareholder and the Bona Fide Offer includes
shares of a third party, Raleigh may
substitute therefor shares of Metallica of
comparable market value. If the
non-transferring Shareholder timely provides
such a notice of exercise of its pre-emptive
right, the Transfer to the non-transferring
Shareholder shall be consummated promptly
thereafter.
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(d) If the non-transferring Shareholder does not
timely elect to exercise its pre-emptive
right pursuant to Section 8.1(c), the
transferring Shareholder shall have
forty-five (45) additional days (i.e. to a
date sixty (60) days after the provision to
the non-transferring Shareholder of a copy
of the Bona Fide Offer) to consummate the
sale to the third party in accordance with
the terms and conditions set forth in the
Bona Fide Offer.
(e) If the transferring Shareholder fails to
obtain a Bona Fide Offer within the time
period specified in Section 8.1(b), or to
consummate the Transfer to a third party (in
accordance with a Bona Fide Offer) within
the period set forth in Section 8.1 (c), the
Right of First offer of the other
Shareholder in such Common Shares shall be
deemed to be revived. Any subsequent
proposal to Transfer Common Shares shall be
conducted in accordance with all of the
procedures set forth in this Section 8.1.
8.2 Exceptions to the Right of First Offer. Section 8.1 shall not
apply to the following:
(a) Transfer by a Shareholder of all or any part
of its Ownership Interest or Common Shares
to an Affiliate; or
(b) Corporate merger, consolidation,
amalgamation or reorganization of a
Shareholder by which the surviving entity
shall possess substantially all of the
stock, or all of the property rights and
interests, and be subject to substantially
all of the liabilities and obligations of
that Shareholder.
8.3 Additional Restrictions on Transfer. Without Glamis's prior
written consent, Raleigh shall not Transfer or agree or commit to Transfer any
of its Ownership Interest or Common Shares if such Transfer would prevent or
prejudice Glamis's ability to consolidate MSX on its corporate tax returns.
Without the other Shareholder's prior written consent, no
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Shareholder shall Transfer or agree or commit to Transfer any Ownership Interest
or Common Shares if such Transfer would have an adverse impact on the other
Shareholder's tax liabilities. In connection with any pledge or encumbrance of a
Shareholder's Common Shares or Ownership Interest otherwise permitted pursuant
to the provisions of this Article VIII, that Shareholder shall ensure that the
entity receiving such pledge or encumbrance commits in writing and in advance to
be bound by all of the terms and conditions of this Agreement and to acknowledge
the applicability of the provisions of Section 8.1 (Right of First Offer) to any
foreclosure or other action potentially resulting in a Transfer of or claim upon
the Common Shares or Ownership Interest.
ARTICLE IX
TERM AND TERMINATION
9.1 Term of Agreement. The term of this Agreement shall commence
with the Effective Date and continue for an initial term of twenty (20) years
and for as long thereafter as the Shareholders own Common Shares, unless the
Agreement is earlier terminated as herein provided.
9.2 Termination by Agreement. This Agreement shall terminate as
expressly provided in this Agreement, unless earlier terminated by written
agreement.
9.3 Right to Data After Termination. After termination of this
Agreement pursuant to Section 9.2, each Shareholder shall be entitled to copies
of all information acquired hereunder before the effective date of termination
not previously furnished to it, but a terminating or withdrawing Shareholder
shall not be entitled to any such copies after any other termination or any
withdrawal.
9.4 Liquidation. Any liquidation and dissolution of MSX shall be
conducted in accordance with applicable law, including the corporate laws
applicable to MSX.
9.5 Unilateral Termination. After Commencement of Commercial
Production on the Property, a Shareholder may unilaterally terminate its
participation in this Agreement by delivery of its Common Shares and all of its
other securities, if any, that it holds in the capital of MSX to
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MSX for cancellation. Such Shareholder shall be liable for any outstanding cash
calls and shall post a bond for its proportionate share of any accrued
obligation of MSX, including environmental and other mine closure obligations,
as determined at the time of such termination.
ARTICLE X
DOCUMENTS, RECORDS, REPORTS AND AUDITORS
10.1 Maintenance at Registered Office. The Manager shall cause MSX
to keep at its registered office, the documents, copies, registers, minutes, and
records which MSX is required by Mexican law to keep at its registered office or
such other place as the case may be.
10.2 Books of Account. The Manager shall cause to be kept proper
books of account and accounting records in respect of all financial and other
transactions of MSX in order to properly record the affairs and condition of MSX
and to comply with Mexican law.
10.3 Inspection. Either Shareholder of MSX shall be entitled to
inspect the accounting records of MSX.
10.4 Financial Statements. The Board of Directors shall, from time
to time, at the expense of MSX, cause to be prepared and laid before MSX in
general meeting, such financial statements and reports as are required by
Mexican law.
10.5 Auditors. The Board of Directors shall appoint auditors and
cause the financial records of MSX to be audited periodically and as required by
Mexican law.
ARTICLE XI
FURTHER ASSURANCES AND REQUIRED ACTIONS
11.1 Further Assurances. Each of the Shareholders shall take from
time to time such actions and execute such additional instruments as may be
reasonably necessary or convenient to implement and carry out the intent and
purpose of this Agreement.
11.2 Actions to be Taken. Promptly following the Effective Date,
the Parties shall take all such action as may be necessary or desirable to do
the following: (a) grant new Powers of
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Attorney to individuals and/or entities designated by Glamis and revoking
precedessor Powers of Attorney (as appropriate); (b) appoint new officers of MSX
as designated by Glamis and removing precedessor officers (as appropriate); (c)
appoint one Director and one alternate Director by Raleigh and appoint three
Directors and three alternate Directors by Glamis and removing predecessor
Directors (as appropriate); and (d) amend MSX's By-Laws as stated in Article III
of this Agreement to be consistent with Article III.
ARTICLE XII
GENERAL PROVISIONS
12.1 Notices. Any notice, payment or other communication hereunder
shall be given in writing and delivered by hand, by registered air mail,
telefax, or by overnight courier. Any such notice shall be given to each of the
Shareholders at their following addresses:
If the notice is to Raleigh to:
Raleigh Mining International Limited
c/o Metallica Management Inc.
00000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Chairman and CEO
If notice is to Glamis, to:
Glamis de Mexico S.A. de C.V.
c/o Glamis Gold Ltd.
0000 Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
FAX: 000-000-0000
Tel: 000-000-0000
Attn: Sr. Vice-President and General Counsel
or to any other addresses that any Shareholder may at any time designate by
written notice to the other Shareholder.
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All notices shall be effective and shall be deemed delivered (i) if by
hand, or by overnight courier, on the date of delivery if delivered during
normal business hours, and, if not delivered during normal business hours, on
the next business day following delivery, (ii) if by electronic communication,
on the next business day following receipt of the electronic communication, and
(iii) if by mail, on the next business day after actual receipt.
12.2 Waiver. The failure of a Shareholder to insist on the strict
performance of any provision of this Agreement or to exercise any right, power
or remedy upon a breach hereof shall not constitute a waiver of any provision of
this Agreement or limit the Shareholder's right thereafter to enforce any
provision or exercise any right.
12.3 Modification. No modification of this Agreement shall be valid
unless made in writing and duly executed by all of the Parties.
12.4 Force Majeure. Except for the obligation to make payments when
due hereunder, the obligations of a Shareholder shall be suspended to the extent
and for the period that performance is prevented by any cause, whether
foreseeable or unforeseeable, beyond its reasonable control, including, without
limitation, labor disputes (however arising and whether or not employee demands
are reasonable or within the power of the Shareholder to grant); acts of God;
laws, regulations, orders, proclamations, instructions or requests of any
government or governmental entity; judgments or orders of any court; inability
to obtain on reasonably acceptable terms any public or private license, permit
or other authorization; curtailment or suspension of activities to remedy or
avoid an actual or alleged, present or prospective violation of federal, state
or local environmental standards; acts of war or conditions arising out of or
attributable to war, whether declared or undeclared; riot, civil strife,
insurrection or rebellion; fire, explosion, earthquake, storm, flood, sink
holes, drought or other adverse weather condition; delay or failure by suppliers
or transporters of materials, parts, supplies, services or equipment or by
contractors' or subcontractors' shortage of, or inability to obtain, labor,
transportation, materials, machinery, equipment, supplies, utilities or
services; accidents; breakdown of equipment, machinery or facilities; or any
other cause whether similar or dissimilar to the foregoing. The affected
Shareholder shall promptly give notice to the other Shareholder of the
suspension of performance, stating therein the nature of the suspension, the
reasons therefor, and
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the expected duration thereof. The affected Shareholder shall resume performance
as soon as reasonably possible. During the period of suspension the obligations
of the Shareholders to advance funds pursuant to this Agreement shall be reduced
to levels consistent with then current levels of Operations.
12.5 Governing Law; Language. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of Nevada and the
federal laws of the United States applicable therein, without regard to choice
or conflict of laws rules or principles. This original Agreement shall be
executed in English, and English shall govern between the Shareholders
notwithstanding the translation of the Agreement into Spanish for any purpose.
12.6 Headings. The headings inserted in this Agreement are inserted
only for convenience and in no way define, limit, or describe the scope or
intent of this Agreement or affect its terms and provisions.
12.7 No Implied Covenants. There are no implied covenants contained
in this Agreement. The Parties expressly acknowledge obligations of good faith
and fair dealing in their relations with each other pursuant to this Agreement.
The Parties expressly disclaim any fiduciary duty to each other.
12.8 Interpretation. In the event that an arbitral tribunal or
other authority of competent jurisdiction determines that any term, part, or
provision of this Agreement is unenforceable, illegal, or in conflict with any
laws to which this Agreement is subject, the Shareholders intend that such
authority reform that term, part, or provision within the limits permissible
under the law in such manner as to approximate most closely the intent of the
Shareholders to this Agreement; provided that, if the court cannot make such
reformation, then that term, part, or provision shall be considered severed from
this Agreement. The remaining portions of this Agreement shall not be affected,
and this Agreement shall be construed and enforced as if it did not contain that
term, part, or provision.
12.9 Survival of Terms and Conditions. The following provisions of
this Agreement shall survive the termination of this Agreement to the fullest
extent necessary for their
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enforcement and the protection of the Shareholder in whose favor they run:
Articles II, V and VI, and Sections 4.6, 4.7, 9.3, 12.2 and this Section 12.9.
12.10 Entire Agreement. This Agreement contains the entire
understanding of the Shareholders and from and after the Effective Date
supersedes all prior agreements and understandings between the Shareholders
relating to the subject matter hereof, including, without limitation, the
following: (a) the Cambior Agreement, provided that all claims, liabilities and
actions accruing under the Cambior Agreement prior to the Effective Date shall
survive this termination of the Cambior Agreement; and (b) the SPA, provided
that all representations, warranties and guaranties contained in the SPA shall
survive the execution and delivery of this Agreement. In the event of any
conflict between this Agreement and any Exhibit attached hereto, the terms of
this Agreement shall be controlling.
12.11 Counterparts, Successors and Assigns. This Agreement may be
executed in one or more original counterparts, all of which shall constitute one
and the same instrument. This Agreement shall be binding upon and inure to the
benefit of the respective successors and permitted assigns of the Shareholders.
12.12 Time of Essence. Time is of the essence of this Agreement.
12.13 Notices of Default of Glamis Affiliates. In the event that
Raleigh believes that a default or breach has occurred under any agreement
between MSX and an Affiliate of Glamis (an "Affiliate Agreement") and desires
that a notice of default or breach be provided to the Glamis Affiliate, Raleigh
shall make such a request in writing to the Board. In the event that, pursuant
to the procedures set forth in Article III, the Board elects not to provide such
a notice of default or breach to the Glamis Affiliate, Raleigh shall
nevertheless have the right to provide such a notice on its own on behalf of
MSX. In any dispute that ensues with the Glamis Affiliate at issue, Raleigh
shall be obligated to manage, conduct and fund the prosecution (and/or defense)
of such dispute, including without limitation all costs of a litigation,
arbitration and attorneys fees, as the case may be, on its own and without
assistance from Glamis or the Manager; provided that in any such litigation or
arbitration in which Raleigh prevails, Glamis shall reimburse Raleigh its
reasonable and documented costs and attorneys' fees.
E-43
12.14 Limitation. Glamis's responsibilities and obligations
hereunder with respect to the funding of the Development Expenditures shall
cease and terminate if and when Glamis ceases to own Common Shares or Ownership
Interests.
12.15 Tax Returns. Pursuant to the Services Agreement, Manager shall
prepare and file all tax returns on behalf of MSX.
12.16 Foundation Board. To the extent that they have the right,
power and authority to do so,, each of MSX and Raleigh shall take such actions
as may be required for a designated representative of Glamis to be appointed to
the board of directors of the foundation known as "Fundacion Pro Preservacion
Del Pueblo de Cerro de San Xxxxx, A.C."
IN WITNESS WHEREOF, the Shareholders hereto have executed this
Agreement as of the date first above written.
"RALEIGH"
RALEIGH MINING INTERNATIONAL LIMITED
By: ________________________________
Name: ______________________________
Title: _____________________________
By: ________________________________
Name: ______________________________
Title: _____________________________
"GLAMIS"
GLAMIS de MEXICO, S.A. de C.V.
By: ________________________________
Name: ______________________________
Title: _____________________________
E-44
"MSX"
Xxxxxxx San Xavier, S.A. de C.V.
By: ________________________________
Name: ______________________________
Title: _____________________________
By: ________________________________
Name: ______________________________
Title: _____________________________
E-45
LIST OF EXHIBITS
Exhibit A - The Properties
Exhibit B - Net Profits Interest
E-46
EXHIBIT F
TERMINATION AGREEMENT
This Termination Agreement is made effective as of the 12th day of
February 2003 (the "Effective Date"), between Minera San Xavier, S.A. de C.V., a
company organized and existing under the laws of Mexico ("MSX"), and Servicio
San Xavier, S.A. de C.V., a corporation organized and existing under the laws of
Mexico ("SSX").
RECITALS
A. SSX is an affiliate of Glamis de Mexico, S.A. de C.V., a
corporation organized and existing under the laws of Mexico ("Glamis").
B. Prior to the Effective Date, Glamis owned fifty percent (50%)
of all of the issued and outstanding capital stock of MSX and, except for one
share held by Xx. Xxxxx X. Xxxxxx ("Xx. Xxxxxx," the Chairman of Raleigh),
Raleigh Mining International Limited, a company organized and existing under the
laws of the Province of Ontario, Canada ("Raleigh") owned the other fifty
percent (50%) of all of the issued and outstanding capital stock of MSX.
C. As of the Effective Date, and pursuant to that certain Share
Purchase Agreement dated as of the Effective Date (the "Share Purchase
Agreement") among MSX, Glamis, Raleigh, and Metallica Resources Inc., a Canadian
federal corporation ("Metallica"), Glamis has sold to Raleigh all of Glamis'
interest in MSX, and Raleigh is the owner of all of the issued and outstanding
capital stock of MSX, except for the one share held by Xx. Xxxxxx.
D. MSX and SSX entered into that certain Service Agreement dated
January 21, 1998 (the "Service Agreement") with regard to the provision by SSX
of certain services to MSX in connection with the Cerro San Xxxxx gold and
silver mining project in San Xxxx Potosi, Mexico, that is owned and operated by
MSX (the "Cerro San Xxxxx Project").
E. MSX and SSX mutually desire to terminate the Service Agreement
effective as of the Effective Date on the following terms and conditions.
Now, therefore, in consideration of the foregoing and of other good and
valuable consideration received and to be received, the receipt and sufficiency
of which MSX and SSX acknowledge, MSX and SSX agree as follows:
AGREEMENT
1. Termination. The Service Agreement is terminated as of the
Effective Date.
2. Final Invoice. Within sixty (60) days following the Effective
Date, SSX shall render to MSX a final invoice for all for all services rendered
to MSX through the Effective Date pursuant to the Service Agreement and for all
other costs and expenses incurred by SSX pursuant to the Service Agreement as of
the Effective Date. Within thirty (30) days following receipt of
F-1
such final invoice, MSX shall pay the full amount due thereon to SSX. Payment
shall be made in the manner and to the address specified in the Service
Agreement.
3. Transfer of SSX Employees. From and after the Effective Date,
the SSX employees listed on Attachment 1 to this Termination Agreement (the
"Transferred Employees") shall be the employees of MSX and MSX shall be
responsible for and shall pay to the Transferred Employees the following: (i)
all salaries, wages and benefits; and (ii) all severance pay, accrued benefits
and other consideration that may become payable to the Transferred Employees by
virtue of the termination of their employment with SSX.
4. No Solicitation. With the exception of the MSX Employees, MSX
agrees that for a period of one (1) year following the Effective Date, MSX shall
not make any offer or employment or otherwise solicit for employment any person
presently employed by SSX, without the prior written consent of SSX.
5. Further Assistance. For a period of up to six (6) months
following Closing, SSX agrees to make available the services of its employee,
Xxxxxxx Xxxxx, for telephone and personal consultations as reasonably necessary
to MSX in connection with its permitting activities for the Cerro San Xxxxx
Project. Such consultations shall be limited so as not to materially interfere
with Mr. Dodge's activities for the benefit of SSX. All expenses incurred by SSX
or Mr. Dodge in connection with Mr. Dodge's consultations shall be paid by MSX.
This provision shall not apply if and after Mr. Dodge becomes an employee of MSX
or Raleigh or otherwise ceases to be an employee of SSX or Glamis.
6. Governing Law/Venue. This Termination Agreement shall be
governed and interpreted in accordance with the laws of the State of Nevada,
without regard to choice or conflict of laws rules or principles. The exclusive
venue for any action brought to enforce or interpret this Termination Agreement
shall be Reno, Nevada. Such an action may be brought in any federal or state
court in Reno, Nevada. MSX and SSX (i) agree to submit to the jurisdiction of
such court and (ii) agree that such venue and jurisdiction is fair, reasonable,
appropriate and convenient.
7. Binding Effect. This Termination Agreement shall be binding
upon and shall inure to the benefit of MSX and SSX and their respective
successors and assigns.
F-2
Executed as of the Effective Date.
"MSX"
Minera San Xavier, S.A. de C.V.,
a Mexico company
By: /s/ Xxxxxxx X. Jeannes
Name: Xxxxxxx X. Jeannes
Title: Director
"SSX"
Servicio San Xavier, S.A. de C.V.,
a Mexico company
By: /s/ Xxxxxxx X. Jeannes
Name: Xxxxxxx X. Jeannes
Title: Director
F-3
EXHIBIT G
GUARANTY
THIS GUARANTY is made effective as of this 12th day of February 2003
(the "Effective Date"), by Metallica Resources Inc., a Canadian federal
corporation ("Metallica"), as guarantor, in favor and for the use and benefit of
Glamis de Mexico, S.A. de C.V., a corporation organized and existing under the
laws of Mexico ("Glamis").
RECITALS
A. Metallica is the direct corporate parent of Raleigh Mining
International Limited, a company organized and existing under the laws of the
Province of Ontario, Canada ("Raleigh"). As of the Effective Date, Raleigh owns
all of the issued and outstanding capital stock of Minera San Xavier, S.A. de
C.V., a company organized and existing under the laws of Mexico ("MSX"), except
for one share held by Xx. Xxxxx X. Xxxxxx ("Xx. Xxxxxx," the President of
Raleigh).
B. Raleigh acquired fifty percent (50%) of all of the issued and
outstanding capital stock of MSX on the Effective Date from Glamis pursuant to
that certain Share Purchase Agreement (the "Agreement") made effective as of the
Effective Date, by and among Metallica, Raleigh, Glamis, and MSX.
C. As the direct corporate parent of Raleigh, Metallica will
receive direct and indirect benefits from Raleigh's purchase of Glamis' shares
in MSX pursuant to the Agreement and, as a material inducement to Glamis to
enter into the Agreement and sell its shares of MSX to Raleigh, Metallica has
agreed to guarantee the performance of the obligations of Raleigh and MSX under
the Agreement and the Promissory Note, Royalty Deed, Termination Agreement,
Escrow Instructions and other instruments executed by Raleigh and/or MSX
pursuant to the Agreement.
NOW, THEREFORE, in consideration of the premises and of the benefits to
be derived by Metallica from Glamis's entering into the Agreement and selling
Glamis's shares of MSX to Raleigh, Metallica covenants, undertakes and agrees as
follows for the use and benefit of Glamis:
1. Definitions. All capitalized terms in this Guaranty shall have
the meanings assigned to them in the Agreement, unless otherwise defined in this
Guaranty.
2. Guaranty.
(a) Metallica, as a direct and primary obligor, hereby
unconditionally and absolutely guarantees to Glamis the full and timely
performance of all of Raleigh's and MSX's obligations under the Agreement, the
Promissory Note, the Royalty Deed, the Termination Agreement, the Escrow
Instructions and any other instruments executed by Raleigh and/or MSX and
delivered to Glamis or the Escrow Agent on or after the Effective Date pursuant
to the Agreement or the Escrow Instructions. The Agreement, Promissory Note,
Royalty Deed, Termination Agreement, Escrow Instructions and such other
instruments so executed by Raleigh and/or MSX may be referenced collectively in
this Guaranty as the "Guaranteed Instruments."
G-1
(b) Without limiting the generality of the foregoing,
Metallica specifically agrees that in the event that Raleigh does not make any
payment of the Purchase Price at the time specified in Section 5(a) of the
Agreement or in the Promissory Note, Metallica shall pay the same; provided,
however, that if Raleigh fails to make the Six Million Dollar ($6,000,000)
payment due to Glamis twelve (12) months from the Effective Date as specified in
Section 5(a)(ii) of the Agreement and Metallica does not have the financial
ability to make such payment in cash on Raleigh's behalf, then Metallica may
make all or part of that payment by delivering to Glamis fully registered and
freely tradable common shares of Metallica, together with such duly executed
stock powers or endorsements as are necessary to properly transfer the Metallica
shares from Metallica to Glamis under the laws of Canada. The Metallica shares
so delivered shall be priced at the greatest allowable discount under applicable
Canadian and/or TSE rules from the average closing price of Metallica shares on
the Toronto Stock Exchange for twenty (20) trading days preceding the date on
which the payment became due to Glamis. In the event that Metallica elects to
deliver common shares to Glamis in lieu of cash as provided in this Section
2(b), the following terms and covenants shall apply:
(i) In the event that Glamis wishes to sell more
than one hundred thousand (100,000)
Metallica shares during any ten (10) day
trading period, Glamis shall provide
Metallica not less than forty-eight (48)
hours notice to provide Metallica the
opportunity to place the shares at the
then-prevailing market price. If Metallica
is unable to place the shares or fails to
respond to Glamis with the forty-eight (48)
hour period, Glamis shall be free to sell
the shares in the open market;
(ii) In the event that Metallica intends to
conduct any equity financing by way of
public issue or private placement while
Glamis still holds Metallica shares,
Metallica shall notify Glamis of the same
and shall provide Glamis the opportunity,
exercisable at Glamis's sole discretion, to
sell all or a portion of its shares in the
same transaction. The maximum number of
Glamis's Metallica shares to be included in
the equity financing shall be the same
percentage of the total shares to be issued
as Glamis's Metallica shares represent of
the total issued and outstanding shares of
Metallica prior to the equity financing; and
(iii) Metallica shall warrant to Glamis, at the
time of delivery of the Metallica shares,
that: (A) Metallica is the lawful and
registered owner of the Metallica shares,
free and clear of all claims, liens,
encumbrances, assessments and rights of
third parties; (B) no third party has
subscribed to or has any right to subscribe
to the purchase or other acquisition of the
Metallica shares; and (C) neither Glamis nor
Metallica is or will be required to give any
notice or to obtain any consent from any
person, entity or governmental authority in
connection with the transfer to Glamis of
the Metallica shares.
G-2
3. Representations and Warranties. Metallica represents and
warrants to Glamis that:
(a) Relationship to Raleigh. Metallica is the direct
corporate parent of Raleigh. As of the Effective Date Raleigh is the direct
corporate parent of MSX. Metallica will benefit directly and indirectly by
Glamis's entering into the Agreement.
(b) Organization and Good Standing. Metallica is a
corporation duly incorporated and validly existing under the law of the
jurisdiction of its incorporation and. is qualified to conduct business and is
in good standing in those jurisdictions where necessary to carry out the
purposes of this Guaranty; has a1l requisite legal rights and full power and
authority to own and operate its assets and properties as currently owned and
operated and to carry on its business as now being conducted; and is not in
default under or in violation of any provision of its charter or other
organizational documents.
(c) Capacity and Authorization. Metallica has the legal
right and full power and authority to enter into, deliver and perform this
Guaranty; all corporate and other actions required to be taken in order to
permit Metallica to enter into, deliver and perform this Guaranty have been
properly and validly taken; and all government, shareholder and other consents,
if any, currently required to be obtained for such purposes have been obtained
and remain in effect.
(d) No Conflicts. Neither the execution, delivery or
performance of this Guaranty by Metallica will: (a) contravene, conflict with or
result in a violation or breach of any provision of the charter or
organizational documents of Metallica or of any resolution of the board of
directors or stockholders of Metallica; (b) contravene, conflict with or result
in a violation or breach of, or give any governmental body or other person or
entity the right to challenge such execution, delivery or performance or to
exercise any remedy or obtain any relief under, any existing legal requirements,
order, decree, contract, agreement or commitment to which Metallica may be
subject; or (c) contravene, conflict with or result in a violation or breach of
any of the terms or requirements of, or give any governmental body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any existing
governmental consent, license, permit, approval or authorization.
(e) Consents. Metallica is not and will not be required
to give any notice to or obtain any consent, license, permit, approval or
authorization from any person or entity in connection with the execution,
delivery and performance of this Guaranty.
(f) Valid and Binding Obligations. This Guaranty has been
duly executed and delivered by Metallica and is valid, binding and enforceable
against it in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally, and except as may be limited by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding at law or in equity.
4. No Exhaustion. Metallica hereby waives any legal or equitable
requirement that Glamis institute any action or exhaust any remedies against
Raleigh and/or MSX before proceeding under the Guaranty contained in Section 2.
Glamis shall have no obligation to
G-3
provide Metallica with any information or notice whatsoever regarding the
following: (i) any amendment or modification of any of the Guaranteed
Instruments; or (ii) any performance or non-performance by Raleigh or MSX of its
or their obligations under any of the Guaranteed Instruments. Raleigh and/or MSX
may amend, enlarge, or replace the terms of any or all of the Guaranteed
Instruments, or any of its or their obligations thereunder without the consent
of Metallica and without effect upon the validity of this Guaranty. This
Guaranty shall be binding and enforceable upon Metallica withstanding any
bankruptcy or similar or related filing or liquidation or dissolution on the
part of Raleigh or MSX.
5. No Release or Impairment. The obligations, covenants,
agreements and duties of Metallica under this Guaranty shall not be released,
diminished or impaired in any manner whatsoever without the written consent of
Glamis, notwithstanding any act, omission or thing that might, but for the
provision hereof, otherwise operate as a legal or equitable discharge of
Metallica, including but not limited to any or all of the following: (a) any
assignment, endorsement or transfer, in whole or in part, of any or all of the
Guaranteed Instruments, or Metallica's, Raleigh's or MSX's obligations
thereunder, although made without notice to or the consent of Metallica; (b) any
waiver, release or discharge by Glamis of the performance or observance by
Metallica, Raleigh or MSX of any of the agreements, covenants, terms or
conditions contained in any of the Guaranteed Instruments or in this Guaranty;
(c) any extension or shortening of the time for performance of, or other
adjustment, indulgence, forbearance or compromise of, any or all of Raleigh's,
MSX's or Metallica's obligations under any of the Guaranteed Instruments; (d)
the renewal, rearrangement, modification or amendment, whether material or
otherwise, of any duty, agreement, covenant or obligation of Metallica, Raleigh
or MSX set forth in any of the Guaranteed Instruments; (e) the voluntary or
involuntary liquidation, sale, dissolution or other disposition of all or
substantially all of the assets of any or all of Metallica, Raleigh or MSX; (f)
any receivership, insolvency, bankruptcy, reorganization or other similar or
related proceedings or the lack of corporate capacity or power, affecting any or
all of Metallica, Raleigh or MSX, or any of their assets; (g) the operation of
law or any other cause, whether similar or dissimilar to the foregoing; (h) the
failure by Glamis to file or enforce a claim against the estate, successors or
assigns of Raleigh or MSX, or any beneficiary of any liquidation or dissolution
of Raleigh or MSX or any other person or entity; (i) any defenses, setoffs or
counterclaims that may be available to Metallica, Raleigh or MSX or any of them,
or any other person or entity; or (j) any neglect, delay, omission, failure or
refusal of Glamis to take or prosecute any action for the performance of any
obligation of Metallica, Raleigh or MSX arising under the Guaranteed
Instruments.
6. Waiver of Notices. Metallica hereby expressly waives notice of
all forms of notices and demands, including presentment for payment, notice of
nonpayment, protest and notice thereof, notice of dishonor, notice of
acceleration, and diligence in bringing suit against any persons liable or
potentially liable for performance of any of Raleigh's and/or MSX's obligations
under any of the Guaranteed Instruments.
7. Cumulative Remedies. All rights and remedies of Glamis under
this Guaranty are cumulative of each other and of every other right or remedy
that Glamis may otherwise have at law or in equity or under any other contract
or document, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other rights or
remedies.
G-4
8. Notices. Any notice or other communication hereunder shall be
given in writing and delivered by hand, by overnight courier or by facsimile at
the following addresses:
If to Glamis: Glamis de Mexico, S.A. de C.V
Attn: Secretary
c/o Glamis Gold Ltd.
0000 Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
FAX: 000-000-0000
with copy to: Glamis Gold Ltd.
Attn: Sr. Vice-President and General Counsel
0000 Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
FAX: 000-000-0000
If to Metallica: Metallica Resources Inc.
c/o Metallic Management Inc.
Attn: President and CEO
00000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
FAX: 000-000-0000
Metallica and Glamis may change its address hereunder by written notice to the
other. All notices shall be effective and shall be deemed delivered (i) if by
hand, or by overnight courier, on the date of delivery if delivered during
normal business hours, and, if not delivered during normal business hours on the
next business day following delivery, (ii) if by electronic communication, on
the next business day following receipt of electronic communication, and (iii)
if by mail, on the next business day after actual receipt. For the purposes of
the foregoing, "normal business hours" shall mean 8:00 a.m. to 5:00 p.m., local
time, and "business day" shall mean any day other than Saturday, Sunday or a
legal holiday in the local jurisdiction.
9. Attorney's Fees. If Metallica should breach or fail to perform
any provision of this Guaranty, Metallica agrees to pay Glamis all costs and
expenses (including court costs and reasonable attorneys' fees, whether or not
suit is commenced) incurred by Glamis in the enforcement of this Guaranty.
10. Governing Law/Venue. This Guaranty shall be governed and
interpreted in accordance with the laws of the State of Nevada, without regard
to choice or conflict of laws rules or principles. The exclusive venue for any
action brought to enforce or interpret this Guaranty shall be Reno, Nevada. Such
an action may be brought in any federal or state court in Reno, Nevada.
Metallica agrees to submit to the jurisdiction of such court and agrees that
such jurisdiction and venue is fair, reasonable, appropriate and convenient.
11. Binding Effect. This Guaranty shall be binding upon and inure
the benefit of the respective successors and assigns of Metallica and Glamis.
G-5
IN WITNESS WHEREOF, this Guaranty has been executed and made effective
as of the Effective Date by Metallica Resources Inc.
"METALLICA"
METALLICA RESOURCES INC.,
a Canadian federal corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: Secretary
G-6
EXHIBIT H
to
Share Purchase Agreement
dated February 12, 2003, among
Glamis de Mexico, S.A. de C.V., Raleigh Mining International Limited,
Metallica Resources, Inc. and Minera San Xavier, S.A. de C.V.
LIST OF TRANSFERRED EMPLOYEES
COMPLETE NAME DATE OF HIRING TYPE OF CONTRACT
----------------------------------------------------------------------------------
OFFICE:
----------------------------------------------------------------------------------
XXXXXXX XXXXX XXXXXXX May 2, 1997 Full time
----------------------------------------------------------------------------------
XXXXXX XXXXXXX XXXXX XXXXXXX March 2, 1998 Full time
----------------------------------------------------------------------------------
XXXX XXXX XXXXXXX XXXXXXX March 23, 1998 Full time
----------------------------------------------------------------------------------
XXXX XXXXXX XXXXXX January 16, 2002 Full time
----------------------------------------------------------------------------------
XXXXXX XXXXXXX XXXXXXX XXXXXXX July 1, 2002 Full time
----------------------------------------------------------------------------------
XXXXX XXXXXXX XXXXXX (Custodian) January 11, 1999 Full time
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
WATHCMEN:
----------------------------------------------------------------------------------
XXXXXXX XXXXXXXX XXXXX March 23, 1998 Full time
----------------------------------------------------------------------------------
XXXXXX XXXXXXXX XXXXX February 1, 1998 Full time
----------------------------------------------------------------------------------
XXXXXXXX XXXXXXXX XXXXXXXX May 18, 1998 Full time
----------------------------------------------------------------------------------
XXXXXXXXXX XXXXXXX XXXXXX May 18, 1998 Full time
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
INAH ARCHEOLOGY WORK CREW:
----------------------------------------------------------------------------------
XXXXXXX XXXXX XXXXXXXXX January 1, 2003 Temporary 3 months
----------------------------------------------------------------------------------
XXXX XXXXX XXXXXXX January 1, 2003 Temporary 3 months
----------------------------------------------------------------------------------
XXXXXX XXXXXXX XXXXX January 1, 2003 Temporary 3 months
----------------------------------------------------------------------------------
XXXXXXX XXXXXXXX XXXXXXX January 1, 2003 Temporary 3 months
----------------------------------------------------------------------------------
XXXX XXXXXXX XXXXX XXXXXX January 1, 2003 Temporary 3 months
----------------------------------------------------------------------------------
XXXXXX XXXXX XXXXXXXX January 1, 2003 Temporary 3 months
----------------------------------------------------------------------------------
XXXXXXXX
----------------------------------------------------------------------------------
XXXX XXXXXXX XXXXX January 1, 2003 Temporary 3 months
----------------------------------------------------------------------------------
XXXXXX XXXXX XXXXX January 1, 2003 Temporary 3 months
----------------------------------------------------------------------------------
XXXXX XXXXXXXX XXXXXXX I January 1, 2003 Temporary 3 months
----------------------------------------------------------------------------------
XXXXX XXXXXXXX XXXXXXX XX January 1, 2003 Temporary 3 months
----------------------------------------------------------------------------------
XXXXXX XXXXXX XXXXXXX January 1, 2003 Temporary 3 months
----------------------------------------------------------------------------------
XXXXXX XXXXXX XXXXXX January 1, 2003 Temporary 3 months
----------------------------------------------------------------------------------
XXXXXX XXXXXXXXX XXXXXXX January 1, 2003 Temporary 3 months
----------------------------------------------------------------------------------
H-1
