EXHIBIT 99.7
AGREEMENT
DATED THIS 9TH OCTOBER 2003
BETWEEN:
CRYSTALLEX INTERNATIONAL CORPORATION ("CIC")
AND
URUGUAY MINERAL EXPLORATION INC. ("UME")
CIC and UME shall collectively be herein referred to as the "Parties" or "Party"
individually.
This document sets forth the terms and conditions upon which UME shall acquire
all of CIC's Uruguayan gold mining assets through the acquisition of all of the
issued share capital (collectively the "Shares") of all the Uruguayan
subsidiaries of Stel (BVI) Inc. ("Stel") and Crystallex International Capital
Corporation ("CICC") as listed in Schedule "A" (the "Group"). CIC represents and
warrants that Schedule "A", which will be provided before Closing, is a full and
complete list of all of the subsidiaries of the Group.
This Agreement is a legally binding agreement between the parties.
The terms and conditions are as follows:
1. EFFECTIVE DATE:
The Effective Date of this Agreement shall be October 1, 2003.
2. TRANSACTION AND PURCHASE PRICE:
The parties have agreed, subject to the conditions described below, that
UME shall purchase the Shares from Stel and CICC, (the "Transaction"), in
consideration for a cash payment of US$2,000,000 less any Reduction which
may be applicable pursuant to section 4 (the "PURCHASE PRICE"). The
Purchase Price shall be paid in two tranches: half of the Purchase Price
shall be paid no later than 6 months and the second half of the Purchase
Price no later than 12 months, in each case from the Closing Date,
defined herein, (each a "PAYMENT DATE"). To secure the Purchase Price, on
the Closing Date, UME shall issue a pledge agreement ("Pledge Agreement")
and a convertible debenture (the "DEBENTURE") in substantially the forms
attached hereto as Schedule B. The Debenture shall secure and be of a
principal amount ("PRINCIPAL AMOUNT") equal to Two Million Dollars
($2,000,000). The Debenture shall be redeemable for the Principal Amount
less any Reduction (as defined in Section 4) the sum so calculated being
referred to herein as the "REDEEMED AMOUNT".
The Debenture shall be convertible into common shares in the capital of
UME (the "Common Shares") in the event, and only in the event, that UME
defaults in making the payments of the Purchase Price as provided in this
Agreement. Such conversion of the Redeemed Amount will be at the
conversion price per share equal to the volume weighted average price of
the trades of the Common Shares of UME on the TSX Venture (the "TSXV")
for the 5 trading days prior to the date of conversion.
In the Event that CIC converts the Debenture into Common Shares of UME:
(A) in accordance with the terms hereof and the terms of the certificate
evidencing the Debenture, CIC shall tender conversion notice to UME
and UME shall, within five (5) business days, deliver Common Shares
of UME to CIC. Such Common Shares of UME will have restrictions and
conditions as may be required by applicable regulatory authorities;
(B) upon delivery of the Common Shares of UME to CIC, the unpaid portion
of the Purchase Price shall be deemed to be satisfied and paid in
full by UME.
3. (a) LIMITATION ON DISCLOSED CREDITORS
At Closing, CIC shall make a cash payment equal to the amount which the
Disclosed Creditors exceed US$2.5 million as of the Effective Date.
DISCLOSED CREDITORS are defined as those detailed in Schedule "C" (to be
provided before Closing). For the sake of clarity, any amount payable at
Closing pursuant to this section 3 shall not be a Reduction referenced
in section 4.
(b) HEDGE PAYMENT
At closing CIC will procure that Standard Bank London Limited ("SBL")
provides UME with a statement outlining the costs associated with closing
the hedge book ("Settlement Amount"). This statement shall be attached as
Schedule D at the Closing Date. UME shall pay the Settlement Amount to
SBL, which payment shall be in full settlement of the obligations of
Minera San Xxxxxxxx X.X. ("MSG") to SBL in respect of MSG's hedging
obligations. It is the understanding of UME that the Settlement Amount
shall be equal to the product of the number of ounces of gold outstanding
in the Hedge Book multiplied by the difference in US dollars between the
spot price of gold on the Closing Date and the strike price of the hedge
book.
4. REDUCTION OF PURCHASE PRICE
(A) The Purchase Price shall be reduced by the amount ("REDUCTION") of
any UNDISCLOSED LIABILITIES (as herein defined) revealed in the
twelve (12) month period subsequent to the Effective Date and
which are the result of events which occurred prior to Closing.
"UNDISCLOSED LIABILITIES" shall herein be defined as all
liabilities of the Group including operating liabilities, accrued
creditors and trade creditors as at September 30, 2003 but
excluding Disclosed Creditors (as listed in Schedule "C") and
other non accrued/trade creditor liabilities including employee
entitlements, environmental liabilities and rehabilitation
provisions.
Implementation of the Reduction shall be in accordance with sections
4(B),(C) and (D).
(B) UME must serve notice ("REDUCTION NOTICE") on CIC with details of a
claim of any Reduction.
(C) If CIC disputes UME's Reduction Notice, CIC must serve notice
("DISPUTE NOTICE") on UME within 5 Business Days of receiving the
Reduction Notice. The Parties will confer as soon as practical in an
attempt to resolve the dispute. If a resolution is not obtained
within fourteen (14) business days of the receipt by UME of CIC's
Dispute Notice, CIC shall be entitled to engage the independent
expert pursuant to section 5 to resolve the dispute.
(D) If CIC does not serve a Dispute Notice, CIC shall be deemed to have
agreed to the Reduction as set forth in UME's Reduction Notice.
(E) Notwithstanding any other provision of this Agreement no installment
of the Purchase Price shall become due for payment if a Reduction
Notice has been served by UME on CIC and the claim therein has not
been agreed by the Parties or determined by an Expert pursuant to the
provisions of section 5. In such situations the Payment Date shall be
extended to the date being ten (10) business days from the date of
either: the written resolution being delivered by the Expert to UME
or the deemed acceptance date of the Reduction pursuant to sections
4(D) and 5(B).
5. DISPUTE RESOLUTION
(A) If CIC wishes to refer a dispute under section 4(C) to an expert, it
shall serve notice ("EXPERT REFERRAL NOTICE") on UME to that effect.
CIC shall have the right, within ten (10) business days of serving
the Expert Referral Notice upon UME, to appoint an internationally
recognized firm of qualified chartered accountants (which must be one
of the following: Ernst and Young Chartered Accountants LLP,
PricewaterhouseCoopers, KPMG LLP, or Xxxxx Xxxxxxxx LLP) ("THE
EXPERT") to adjudicate the dispute. The appointment of the Expert
shall be subject to:
a. the acceptance of the engagement by the qualified chartered
accountant firm;
b. such qualified chartered accountant firm being independent of
both Parties.
(B) If CIC fails to appoint the Expert within the prescribed time
referenced with section 5(A), the Dispute Notice and the Expert
Referral Notice shall be deemed to have been withdrawn and CIC shall
be deemed to have agreed to the Reduction as set forth in UME's
Reduction Notice as of the 10th business day of CIC serving the
Expert Referral Notice.
(C) The Expert shall be required to accept written submissions from the
Parties as to the amount of Reduction within 14 days of his
appointment and shall state his determination in writing within 28
days of his appointment. In making his determination the Expert may
consult with such other professionally qualified persons as he in his
absolute discretion thinks fit.
(D) The Experts so appointed shall select the person or persons who shall
be engaged in the determination (who shall be independent of both
Parties), may also elect that the determination be made by a service
company controlled by the firm (who shall be independent of both
Parties) in which case that company shall be the Expert for the
purposes of this Agreement.
(E) The costs of engaging the Expert shall be shared equally by the
Parties.
(F) The determination of the Expert as to the Reduction shall be final
and binding on the Parties.
(G) Nothing in this section 5 is intended to exclude the jurisdiction of
any Court relating to the matters of Reduction.
6.1 CLOSING:
Closing shall occur upon the last of the following to occur:
(A) Issuance of the Debenture and Pledge Agreement by UME to CIC;
(B) Payment of the Settlement Amount by UME pursuant to section 3(b)
above and the receipt by MSG and CIC of the Release as hereinafter
defined;
(C) All and each of the conditions set forth in section 8.1 are fulfilled
or waived by UME;
(D) All and each of the conditions set out in Section 8.2 are fulfilled
or waived by CIC;
(E) Cash settlement by CIC, pursuant to section 3, of the amount by which
the Disclosed Creditors exceed $2.5 million as of the Effective Date.
The CLOSING DATE shall herein be defined as the date upon which the last
of the foregoing events of subsections 6.1(A), (B), (C), (D) and (E)
occur. Each of the parties hereto agrees to carry out negotiations in
good faith and use its reasonable best efforts to enable the foregoing
events to occur on or before 22 October, 2003.
6.2 COMPLETION DOCUMENTS
(A) At completion, UME must give to one or more of CIC, Stel and or CICC
(as applicable) the following documents:
a. The executed Debenture and Pledge Agreement.
b. Release in a form satisfactory to CIC and UME from SBL in respect
of any and all liabilities of CIC, MSG, Stel, CICC and other
subsidiaries of CICC (save and except the Group), from all MSG
obligations including indebtedness, hedge book obligations and
guarantees (the "RELEASE").
c. Certified copy of the resolution of the UME board approving the
issuance of the Debenture.
(B) At completion, CIC must give UME the following documents:
a. share certificates for the Shares;
b. completed transfers of the Shares to UME or its nominee,
executed by the transferor and in a form suitable for
registration;
c. the certificate of incorporation, common seal, all statutory,
minute and other record books, share certificate books of each
member of the Group and all unused share certificate forms;
d. all ledgers, journals and books of account of each member of the
Group;
e. the written resignations of:
i. all directors of each member of the Group; and
ii. the secretary of each member of the Group.
f. Release.
g. registration of UME or its nominee, as the holder of the Shares
in the books of each respective member of the Group, subject to
the payment of stamp duty (if any) on those Shares;
h. resignations of the directors and officers of each member of the
Group.
7. DUE DILIGENCES:
CIC shall immediately make available all corporate records relating to
the Group, in any event prior to October 15, 2003.
UME shall immediately make available to CIC and/or its advisors all
publicly available financial information on UME.
CIC shall conduct due diligence upon UME through the review of publicly
available information as well as corporate data and shall be deemed to be
completed on October 15, 2003.
8.1 CONDITIONS IN FAVOUR OF UME
(A) UME and CIC have obtained all necessary stock exchange, securities
commission and any other regulatory approvals to complete the
Transaction.
(B) On or before the Closing Date, confirmation in writing of the
approval of the transaction contemplated herein by the Board of
Directors of UME.
(C) On or before the Closing Date, SBL provides the Release.
(D) The representations and warranties of CIC shall be true and correct
as of the Closing Date.
(E) On Closing, the Group shall have no trade creditors or accrued
creditors with the exception of those Disclosed Creditors as listed
on Schedule "C".
(F) The directors and officers of each member of the Group shall have
resigned.
(G) CIC will pay in full any and all monies remaining due to SBL under
the terms of its existing project loan for MSG, which amount is
estimated at US$210,000 as of the date hereof ("Project Loan
Payment").
8.2 CONDITIONS IN FAVOUR OF CIC
(A) The results of the due diligence review of UME conducted by CIC, and
its representatives must be to the satisfaction of CIC in its sole
discretion. Due diligence shall be deemed to be completed to the
satisfaction of CIC on October 15, 2003 unless advised by CIC prior
to that date.
(B) UME and CIC have obtained all necessary stock exchange, securities'
commission and other regulatory approvals to complete the
Transaction.
(C) On or before the Closing Date, confirmation in writing of the
approval of the transaction contemplated herein by the Board of
Directors of CIC.
(D) On or before the Closing Date, SBL provides the Release.
(E) On or before the Closing Date, UME undertakes to make application to
the TSXV for the listing of the common shares in the capital of UME
underlying the Debenture.
(F) UME shall have delivered the Debenture to CIC.
(G) The representations and warranties of UME shall be true and correct
as of the Closing Date.
9. CONDITIONS SUBSEQUENT
The Parties agree, covenant and undertake that subsequent to Closing
that:
(A) the drill rigs presently on the sites of the Group, shall remain on
site for a minimum period of 90 days from the date hereof.
(B) Subsequent to 90 days from the date hereof, and upon receipt of a
written notice of CIC, UME shall convey title to two (2) drill rigs
(details to be specified by CIC) to CIC for US$1 or upon terms
otherwise satisfactory to CIC and UME which will allow the conveyance
to occur on a tax efficient basis for both parties.
(C) CIC will be responsible for all costs associated with the transfer of
title and the removal of the rigs from the site.
10. INTERIM PERIOD
During the period from the Effective Date until the Closing Date:
(A) UME shall have the right to have a technical representative on site.
CIC shall provide UME's technical representative with the authority
(authority equal to that of Group senior management) to have
unlimited physical access to all areas and information of and about
the Group and the Group business. UME's technical representative
shall be privy to and shall be invited to participate in all Group
staff and management meetings and to be provided with all reports and
summaries of the business operations of the Group.
(B) CIC shall procure that each and every material asset of every entity
comprising the Group remains with that entity, and is not depleted,
distributed, disbursed or otherwise lost to the subject entity, other
than in the ordinary course of business.
(C) CIC shall procure that the Group does not incur any liability or
undertake any commitments in excess of US$50,000 without the prior
written approval of UME or its representatives other than in the
ordinary course of business.
(D) CIC shall procure that all gold produced shall either remain on site
and shall not, without the prior written consent of UME, be delivered
to the refiner. All proceeds from the sale of any gold produced and
shipped to the refiner after the Effective Date shall remain an asset
of the Group and shall be deposited into the offshore gold sales
proceeds account held by and secured to SBL. Any remittances from the
gold sales proceeds account after the Effective Date shall be solely
for the Group's use, and shall only be removed in accordance with the
loan documentation between CIC, the Group and SBL, and only in
accordance with the normal operating needs of the Group.
(E) CIC shall procure that the Group continues to operate on a going
concern basis and procure that all insurances, stocks, stores, spare
parts, gold in circuit etc. are maintained in the ordinary course of
business consistent with past practices and the plant is maintained
in the current state of repair.
(F) CIC shall procure that, until the Closing Date, each entity within
the Group shall not enter into any transaction, engage in activity or
undertake any liability or commitment of any nature whatsoever,
otherwise than in the ordinary course of business, without the prior
written consent of UME.
(G) Neither the Group nor CIC shall dispose, license or transfer rights
to any of the Group's assets or rights thereto other than in the
ordinary course of business.
(H) CIC shall procure that neither CIC nor any member of the Group shall
materially increase the annual level of compensation nor grant any
bonuses, benefits or other forms of direct or indirect compensation
to any officer, director, consultant or employee of the Group.
(I) Neither CIC nor any member of the Group shall increase, terminate,
amend or otherwise modify and plan for the benefit of employees of
the Group.
(J) Neither CIC nor any member of the Group shall declare or pay any
dividends, redeem any securities of the Group, make any distributions
of the Group's assets, except as set forth herein, pay any extra
ordinary fees or commissions or otherwise cause the assets of the
Group to be distributed to shareholders or any person, firm or
company related or unrelated to the Group.
(K) Neither CIC nor any member of the Group shall draw down any funds
under existing credit lines or otherwise of the Group, except as
reasonably necessary for the ordinary operation of the Group's
business.
(L) CIC shall procure that neither CIC nor any member of the Group shall
undertake any non-arm's length or related party transactions of any
kind relating to the Group or its assets, except as set forth herein.
(M) Neither CIC nor any member of the Group shall undertake any capital
expenditures relating to the Group's business, except routine
maintenance in the ordinary course of the Group's business or except
as committed prior to the Effective Date and as disclosed to UME.
(N) CIC shall procure that neither CIC nor any member of the Group shall
acquire any other business, operating unit or company or significant
assets and shall not make any investments in or loans to any person,
firm or company relating to the Group or the Group's assets.
(O) CIC shall procure that CIC and all members of the Group ensure that
all commitments, undertakings, obligations of the mineral titles,
permits and licenses of the Group remain current, valid and in
effect.
(P) Neither CIC nor any members of the Group shall enter into any
contracts, agreements or arrangements relating to the Group with
third parties outside of the ordinary course of business of the
Group.
(Q) CIC shall procure that no entities within the Group issue any shares
or securities convertible or exchangeable into shares of any of the
entities within the Group.
(R) CIC shall procure that any shareholder loans or any other loans to
any members of the Group made by CIC or any of CIC subsidiaries or by
any person or company associated or affiliated with the Group or CIC
shall be wholly forgiven and discharged prior to the Closing Date.
Any related tax effects shall be the sole responsibility of CIC.
(S) CIC shall procure that the Group maintains all records, information,
geological and mining databases and any proprietary information and
documentation relating to the Group. It is acknowledged that all
historical data relating to the Group is included within the assets
of the Group to be acquired by UME.
(T) CIC shall provide and procure the delivery of and availability to UME
of the consolidated audited financial statements of the Group and the
individual accounts for each individual member of the Group for the
most recent financial year and the consolidated management accounts
and the individual accounts for each individual member of the Group
for the most recently completed period.
(U) CIC shall use its reasonable best endeavours to promote the terms of
this sale and the transfer of the business to UME, to the Government
and relevant authorities in Uruguay and in any other countries, and
to all employees, suppliers and customers of the Group.
(V) In the event that the Group requires additional working capital
beyond that generated from internal cash flow, the amount shall be
agreed by both CIC and UME and shall be provided equally by both
parties.
11. REPRESENTATIONS AND WARRANTIES
(A) CIC hereby makes the representations and warranties contained in
Schedule "E" hereto. All representations and warranties made by CIC
herein (within the main body of this Agreement and within any
Schedules) are made as of the Effective Date and as of the Closing
Date with the same force and effect as if they had been made as at
the Closing Date.
(B) UME hereby makes the representations and warranties contained in
Schedule "F" hereto. All representations and warranties made by UME
herein (within the main body of this Agreement and within any
Schedules) are made as of the Effective Date and as of the Closing
Date with the same force and effect as if they had been made as at
the Closing Date.
(C) The representations and warranties contained herein shall survive the
Closing Date for a period of 1 year from the Closing Date.
12. TERMINATION; SURVIVAL AND REMEDIES UPON TERMINATION
(A) Termination by Mutual Agreement. This Agreement may be terminated
upon mutual written agreement between the parties at any time.
(B) Termination for Default. It shall be a material default hereunder
if:
a. A party shall become insolvent, make a general assignment for the
benefit of creditors, have its assets become subject to the
appointment of a receiver, file a voluntary petition in
bankruptcy (or similar law for the protection of debtors) or
have filed against it an involuntary petition in bankruptcy (or
similar law for the protection of debtors) which is not
dismissed within sixty (60) days; or
b. If a party fails to perform any material term or provision or
satisfy any material condition of this Agreement within ten (10)
days after written notice of nonperformance.
Upon a material default, the non-defaulting party may terminate this
Agreement and/or seek all available remedies at law or in equity
except as otherwise limited by the terms of this Agreement.
(C) Termination by Reason of Force Majeure. Should an event of Force
Majeure (as more particularly defined in Section 14 below) delay a
party's performance of any material obligation under this Agreement
for a period exceeding twenty (20) days, the party whose performance
is not affected by such event may, at its option, terminate this
Agreement.
(D) Remedies: Rights and Obligations of the Parties upon Termination.
Remedies of the parties can only be invoked on the date ending the
applicable curative period as may be set forth herein.
(E) Survival. Except to the extent expressly provided to the contrary,
the following provisions shall survive the termination of this
Agreement: Sections 4, 5, 9, 11, 13.1, 13.2, 13.3, 13.4, 14 and 15.
13.1 CIC INDEMNIFICATION
Effective from and after the completion of the Transaction on the Closing
Date, CIC hereby indemnifies, defends and holds UME harmless with respect
to any and all demands, claims, actions, suits, proceedings, assessments,
judgments, costs, losses, damages, liabilities and expenses, including,
without limitation, reasonable attorneys' fees, and court costs and
litigation expenses (including all expenses incurred by UME in
arbitration, trial and appellate proceedings) (collectively "UME LOSSES")
reasonably and necessarily incurred by UME to the extent arising out of
any of the activities of CIC or of any member of the Group occurring
prior to the Closing Date, as well as those arising from CIC's material
breach of any of its representations, warranties or covenants under this
Agreement.
13.2 UME INDEMNIFICATION
Effective from and after the completion of the Transaction on the Closing
Date, UME hereby indemnifies, defends and holds CIC harmless with respect
to any and all demands, claims, actions, suits, proceedings, assessments,
judgments, costs, losses, damages, liabilities and expenses, including
without limitation, reasonable attorneys' fees, and court costs and
litigation expenses (including all expenses incurred by CIC in
arbitration, trial and appellate proceedings) (collectively "CIC Losses")
reasonably and necessarily incurred by CIC to the extent arising out of
UME's material breach of any of its representations, warranties or
covenants under this Agreement.
13.3 LIMITATION
No claims for indemnification may be made by UME against CIC or by CIC
against UME under this Agreement in respect of any loss arising in
connection with any misrepresentation, breach of warranty or breach of
covenant made or given by UME or CIC, as applicable, unless the aggregate
of all losses suffered or incurred by UME or CIC, as applicable, in
respect of all such misrepresentations or breaches of warranty, exceeds
US$50,000. The maximum aggregate liability of CIC or UME for losses
hereunder shall not exceed an amount equal to US$2.0 million. For the
sake of clarity, nothing in this section shall affect the validity or
enforceability of the Reduction.
13.4 EXCLUSIVE REMEDY
The rights of indemnity set forth in this section are the sole and
exclusive remedy of each party in respect of any misrepresentation,
breach of warranty or breach of covenant by the other party hereunder.
14. FORCE MAEJURE
The failure of a party to perform its obligations under this Agreement,
shall be excused, in so far as it proves:
(A) that the failure was due to an impediment beyond its reasonable
control;
(B) that it could not reasonably be expected to have taken into account
the impediment or event and its effects upon the ability to perform
at the time of the execution of this Agreement, and
(C) that it could not reasonably have avoided or overcome its effects.
(collectively "FORCE MAJEURE").
Force Majeure shall include, without limitation, terrorism, acts of God,
fires, war, riots, labor disputes, sabotage, and unusually severe
weather, but shall not include material shortages or inability to obtain
equipment, components or supplies. The party whose performance is
affected by Force Majeure shall give prompt notice to the other party of
the date of commencement of the Force Majeure, the nature thereof, and
the expected duration; use its best efforts to avoid or remove the Force
Majeure to the extent that it is able so to do; and make up, continue on
and complete performance when such cause is removed to the extent it is
able so to do. In the case of Force Majeure, the contractual time
provided for performance or delivery shall be extended for a number of
days beyond the initial date of performance or delivery equal to the
duration of the event of Force Majeure. In the event any such failure to
perform under this Agreement as a result of Force Majeure continues for
more than twenty (20) days, the party not affected thereby shall have the
right to terminate this Agreement, with immediate effect by written
notice sent to the other party pursuant to Section 14.
15. CONFIDENTIALITY:
The provisions of the Confidentiality Agreement dated August 1, 2003
between the parties shall enure and continue to be valid and enforceable
for a period of 2 years from the date of Closing. As the Parties are
respectively subject to applicable corporate and securities laws and
regulations, nothing in this Agreement or the Confidentiality Agreement
shall prohibit either Party from making public disclosure with respect to
this Agreement to comply with applicable corporate and securities laws
and regulations.
16. EXPENSES
Parties shall be responsible for payment of their own expenses,
including legal and accounting fees, in connection with the transactions
contemplated hereby.
17. NOTICES
Any notice given in connection with this Agreement shall:
(A) be delivered by hand; or
(B) be sent by prepaid certified post;
(C) be sent by prepaid telegram or cablegram; or
(D) be sent by facsimile (if the party has its own facsimile receiver),
to the address of the party concerned as appearing at the commencement of
this Agreement or such other address as a party may from time to time
specify by notice in writing to the other parties as its address for
notices.
A notice shall be deemed to have been duly given:
(A) if delivered on the date of delivery;
(B) if sent by post, 4 days after posting;
(C) if sent by telegram or cablegram, on the day following the day on
which the text of the notice is given to the post office for
transmission;
(D) if sent by facsimile, on the day that the facsimile is transmitted.
18. STANDSTILL
The parties hereto agree that from the Effective Date and until the
Closing Date they shall not permit any of their respective officers,
directors, employees, affiliates, agents, consultants, advisors or
representatives to solicit, initiate, encourage or participate in any
discussions or negotiations with any third party concerning:
(A) any sale of any material portion of the business or assets of the
Group; or
(B) any acquisition or disposition of shares of the entities comprising
the Group or any merger, amalgamation, consolidation, business
combination or other similar transaction involving the Group;
19. NOTICE OF MATERIAL CHANGES
If, at any time between the Effective Date and the Closing Date of the
Transaction a material change occurs in the business, financial
condition, prospects, assets or operations of the Group, CIC shall
forthwith provide written notice of such change of UME.
If, at any time between the Effective Date and the Closing Date of the
Transaction, a material change occurs in the business, financial
condition, prospects, assets or operations of UME, UME shall forthwith
provide written notice of such change to CIC.
20. GOVERNING LAW
This agreement shall be governed by and construed under the laws
applicable in the Province of Ontario, Canada.
21. SCHEDULES
The Schedules appended to this Agreement shall be part of the Agreement
and be of full force and effect as provisions of this Agreement.
22. BINDING EFFECT
This Agreement shall survive and shall be legally binding and enforceable
against the parties hereto, and their respective successors and assigns,
in accordance with its terms.
AGREED THIS 9TH DAY OF OCTOBER, 2003 AS EVIDENCED BY THE SIGNATURE OF EACH PARTY
HERETO BELOW
URUGUAY MINERAL EXPLORATION INC.
Per: /s/ X. Xxxxxx
-------------------------------
CRYSTALLEX INTERNATIONAL CORPORATION
Per: /s/ X. X. Xxxxx
--------------------------------
SCHEDULE "A"
ENTITIES COMPRISING THE GROUP AND THEIR ISSUED AND OUTSTANDING SHARE CAPITAL
(TO BE PROVIDED BY CIC PRIOR TO CLOSING)
1. Minera San Xxxxxxxx X.X.
a. Authorized Share Capital:
b. Issued Share Capital:
c. Ownership of Issued Share Capital:
2. Glendora S.A.
a. Authorized Share Capital:
b. Issued Share Capital:
c. Ownership of Issued Share Capital:
3. Dalvan S.A.
a. Authorized Share Capital:
b. Issued Share Capital:
c. Ownership of Issued Share Capital:
4. Montemura S.A.
a. Authorized Share Capital:
b. Issued Share Capital:
c. Ownership of Issued Share Capital:
5. Bolir S.A.
a. Authorized Share Capital:
b. Issued Share Capital:
c. Ownership of Issued Share Capital:
6. Brimol S.A.
a. Authorized Share Capital:
b. Issued Share Capital:
c. Ownership of Issued Share Capital:
SCHEDULE "B"
CONVERTIBLE DEBENTURE AND SHARE PLEDGE OF UME
SCHEDULE "C"
DISCLOSED CREDITORS -- TRADE CREDITORS AND ACCRUED
CREDITORS AS AT THE EFFECTIVE DATE
(TO BE PROVIDED BY CIC PRIOR TO CLOSING)
DRAFT NOTE -- DISCLOSED CREDITORS WILL INCLUDE AN ASSESSMENT OF ALL UNPAID
CORPORATE TAXES AND ROYALTY PAYMENTS RELATING TO BUSINESS CONDUCTED PRIOR TO
EFFECTIVE DATE.
DRAFT NOTE: THIS SCHEDULE SHOULD NOT INCLUDE ACCRUED EMPLOYEE ENTITLEMENTS OR
ENVIRONMENTAL AND REHABILITATION PROVISIONS.
SCHEDULE "D"
SETTLEMENT AMOUNT
(TO BE PROVIDED BY CIC (VIA SBL) PRIOR TO CLOSING)
SCHEDULE "E"
CIC REPRESENTATIONS AND WARRANTIES
Representations and warranties set out in this schedule in respect of the Group
shall be read and construed to be given by CIC in respect of each member of the
Group.
These warranties are made as at the Effective Date and shall be deemed also to
be made as at the Closing Date.
"BUSINESS" means the business of each member of the Group, if applicable.
1. ACCURACY OF INFORMATION
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1.1 Information accurate
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All information given by or on behalf of CIC or its advisers to UME whether
before or after the Effective Date or before the Closing Date in respect of the
Group, the Shares subject of the Agreement and the assets and liabilities of the
Group is accurate and not misleading.
2. CONDUCT OF BUSINESS
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2.1 Compliance with law
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The Group is in material compliance with all applicable laws in the conduct of
Business by each member of the Group.
2.2 Conduct and practices
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The Group only engages in conduct or practices in respect of the Business, which
materially comply with all applicable laws (including, but not limited to, any
consumer protection, fair trading, restrictive trade practices or anti-trust
legislation).
2.3 Activities of the Group
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Except as disclosed herein, no member of the Group is under any obligation to
repay any loans, issue or allot or has granted to any person the right to call
for the issue or allotment of any securities in itself at any time.
2.4 Entities comprising the Group and their respective Issued Share Capital
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Schedule A of this Agreement lists of all of the subsidiaries of Stel (BVI) Inc.
Schedule A also lists the authorized and issued share capital of the Group.
Schedule A is complete, true and accurate in all respects. As at the Closing
Date, all of the Shares are free of all mortgages, charges, liens and other
encumbrances and that no person, firm or corporation has any agreement or option
or right capable of becoming an agreement for the purchase from CIC, CICC or
Stel (BVI) Inc. of any of the Shares, except as provided herein.
3. POSITION SINCE THE LAST AUDITED ACCOUNTS
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Since December 31, 2002, and except as has been disclosed by CIC to UME or as
disclosed in CIC's annual information form dated August 8, 2003:
(a) the Business has been conducted in the ordinary course of ordinary business
and in a proper and efficient manner;
(b) the Group has not disposed of any asset of the Business except in the
ordinary course of ordinary business;
(c) the Group has not acquired any asset of the Business except in the ordinary
course of business; and
(d) there has been no material adverse change affecting the Business, the
assets of the Business or the financial or trading position or prospects of
the Business.
4. CONTRACTS
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4.1 No contracts
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With the exception of the contractual relationship with SBL, the Group has not
entered into any contract, arrangement or understanding with any person other
than contracts within the ordinary course of business of the Business and on
arms length terms.
4.2 Offers outstanding
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Any offer, tender or quotation made by any of the Group in respect of the
Business which is outstanding and capable of acceptance by a third party, was
made in the ordinary course of business.
5. GROUP NOT A PARTY TO ANY LITIGATION
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5.1 To the best knowledge and belief of CIC, the Group is not:
(a) a party to any prosecution, litigation or arbitration proceedings; or
(b) subject to any administrative or governmental investigation.
5.2 No litigation pending or threatened
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To the best knowledge and belief of CIC, no prosecution, litigation, proceeding
or investigation referred to in Warranty 5.1 is pending or threatened.
6. SOLVENCY
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6.1 No liquidation or winding-up
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To the best knowledge and belief of CIC, neither the Group nor any member of the
Group has gone into liquidation nor passed a winding-up resolution.
6.2 No petition
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To the best knowledge and belief of CIC, no petition or other process for
winding-up has been presented or threatened against the Group or any member of
the Group and there are no circumstances justifying such a petition or other
process.
6.3 No writ of execution
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To the best knowledge and belief of CIC, no writ of execution has issued against
the Group or any member of the Group or any property of the Group or any member
of the Group and there are no circumstances justifying such a writ.
6.4 No receiver
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To the best knowledge and belief of CIC, no receiver or receiver/manager of any
part of the undertaking or assets of the Group has been appointed or is
threatened or expected to be appointed and there are no circumstances justifying
such an appointment.
7. RECORDS
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To the best knowledge and belief of CIC, at all times since CIC has held an
interest in the Group, all records of the Group in all material respects:
(a) have been fully and accurately maintained;
(b) comply with all applicable laws requirements.
8. TAXES AND DUTIES AND GOVERNMENTAL ROYALTIES
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Any tax, duty or governmental royalties payable by the Group or any member of
the Group has been paid for each tax year (which for the purposes of this clause
means the year or other period of time in respect of which taxes or duties or
royalties respectively are assessable against any member of the Group in any
applicable jurisdiction) up to but excluding the current tax year and in respect
of the current tax year reasonable provision has been made in the accounts for
the payment of taxes, duties and royalties.
9. OTHER ROYALTIES
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Save and except as disclosed in the Disclosed Creditors, all royalties due and
payable by the Group or any member of the Group to landowners and other
non-governmental entities have been fully paid and also reasonable provision has
been made for all such royalties in respect of any production which has
occurred and on which the royalties are calculated but not yet due and payable.
10. DISCLOSED CREDITORS
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The information in Schedule C is an exhaustive list of the Disclosed Creditors
which include identified trade creditors and identified accrued creditors as of
the Effective Date, and the indebtedness of the Group to those identified trade
creditors and identified accrued creditors (including royalties) is full,
complete and true as of the Effective Date.
SCHEDULE "F"
UME REPRESENTATIONS AND WARRANTIES
ORGANIZATION, GOOD STANDING AND QUALIFICATION.
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UME has been duly incorporated and is validly subsisting as a corporation under
the laws of its jurisdiction of incorporation, with corporate power and
authority to own, lease and operate its properties and assets and carry on its
businesses as currently owned and carried on and is duly registered, licensed or
qualified to carry on business in each jurisdiction in which the nature of the
business now being carried on or the property owned or leased by it makes such
registration, licensing or qualification necessary.
CAPITAL STRUCTURE.
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The authorized capital of UME consists of an unlimited number of common shares
("Common Shares") and an unlimited number of preferred shares, of which
36,307,982 Common Shares and no preferred shares are issued and outstanding as
at the date hereof UME has no Common Shares reserved for issuance. All of the
outstanding shares of capital stock of UME are validly issued, fully paid and
non-assessable.
AUTHORITY AND APPROVAL.
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UME has all requisite corporate power and authority and has taken all action
necessary in order to execute, deliver and perform its obligations under this
Agreement and to issue the Debenture. This Agreement and the Debenture have been
duly executed and delivered by UME and each constitute a legal, valid and
binding agreement of UME enforceable against UME in accordance with its terms
subject to bankruptcy, insolvency and other similar laws affecting creditors'
rights generally and general principles of equity. UME has taken all necessary
corporate action to allot, reserve and authorize the issuance of the Common
Shares which are issuable upon the conversion of the Debenture and upon
conversion of the Debenture, the underlying Common Shares will be validly
issued, fully paid and non-assessable.
NO VIOLATION.
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UME is not in violation of its articles of incorporation or by-laws and is not
in default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed of
trust, loan agreement, evidence of indebtedness, note, lease or other agreement,
understanding or instrument to which it is a party or by which it may be bound
or to which any of its property or assets is subject. The execution, delivery
and performance of this Agreement, the issuance of the Debenture and the
consummation of the Transaction:
(a) do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of UME pursuant to any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which UME is a party or by which UME is bound or to which any of the
property or assets of UME is subject (other than conflicts, breaches,
defaults, liens, charges and encumbrances that would not, individually or
in the aggregate, be reasonably likely to have a material adverse effect);
(b) do not and will not result in any violation of the provisions of the
articles of incorporation or by-laws of UME or any applicable laws.
COMPANY REPORTS.
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UME is a reporting issuer not in default in Alberta, British Columbia, Ontario
and Quebec (the "Reporting Jurisdictions") and has filed with securities
regulators in the Reporting Jurisdictions true and complete copies of all
documents required to be filed under applicable securities laws. As of the date
thereof, UME's annual information form dated October 18, 2002 and its unaudited
interim financial statements dated April 28, 2003 (the "Company Reports") were
true, complete and correct in all material respects, constituted full, true and
plain disclosure of all material facts relating to UME and did not contain any
misrepresentation. As of the date of this Agreement, the Company Reports
constitutes full, true and plain disclosure of all material facts relating to
UME and do not contain any misrepresentation.
FINANCIAL STATEMENTS.
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Each of the balance sheets included or incorporated by reference in the Company
Reports (including the related notes) fairly presents, in all material respects,
the financial position of UME as of its date and each statement of operations
and cash flows included or incorporated by reference in the Company Reports
(including the related notes) fairly presents, in all material respects, the
results of operations, retained earnings and cash flows, as the case may be, of
UME for the periods set forth therein (subject, in the case of unaudited
statements, to notes and normal year-end adjustments that are not material in
amount or effect), in each case in accordance with generally accepted accounting
principles in Canada, consistently applied during the periods involved, except
as may be noted therein.
ABSENCE OF UNDISCLOSED LIABILITIES.
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Except as disclosed in the Company Reports, there are no obligations or
liabilities (including in respect of obligations and liabilities disclosed in
the Company Reports, any change in those obligations or liabilities) whether or
not accrued, contingent or otherwise and whether or not required to be
disclosed, except for those that would not, individually or in the aggregate, be
reasonably likely to have a material adverse effect on UME or prevent or
materially delay or impair the ability of UME to consummate the Transaction.
